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HOW HEALTH CARE REFORM AFFECTS YOU. SHELDON F. KURTZ PERCY BORDWELL PROFESSOR OF LAW UNIVERSITY OF IOWA LAW SCHOOL. The Laws ( “ Americare ” ). Patient Protection and Affordable Care Act of 2010 Signed into law on March 23, 2010 Passed House 219 (D) to 212 ( 34 D; 178 R; no abstentions)
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HOW HEALTH CARE REFORM AFFECTS YOU SHELDON F. KURTZ PERCY BORDWELL PROFESSOR OF LAW UNIVERSITY OF IOWA LAW SCHOOL
The Laws (“Americare”) • Patient Protection and Affordable Care Act of 2010 • Signed into law on March 23, 2010 • Passed House 219 (D) to 212 ( 34 D; 178 R; no abstentions) • Passed Senate 60 (58 D; 2 I) to 39 (R; 1 abstention-Bunning of Ky) • Health Care and Education Affordability Reconciliation Act of 2010 • Signed into law on March 30, 2010 • Passed House 220 to 207 (3 abstentions) • Passed Senate 56 to 43 (1 abstention)
Seven Significant Features of Health-Care Reform • Requires everyone to have health insurance- the individual mandate • Requires those who can afford insurance but don’t buy it or obtain it from an employer to pay a penalty • Employer Mandate • Health Insurance Exchanges • Provides subsidies or Medicaid to individuals who cannot afford health insurance. • Requires insurance companies to cover all takers • Creates minimum coverages and first-dollar preventive care
Who is Everyone • The new law is expected to add about 32 million people to the insured roles. • Excluded are about 23 million people: • Undocumented workers (about 7-8 million or a little over 1/3 of the uninsured) • Persons eligible for Medicaid who don’t enroll • Individual who opt to pay the penalty (tax) rather than purchase insurance • Those who don’t purchase insurance but are exempt from the penalty because the cost of the insurance =>8% of their household income. • Individuals with a religious objection to receiving health care benefits. (Same test used for claiming an exemption from self-employment taxes under IRC §1402(g)(1))
Where Will People Get Health Coverage • Through their employer • Medicare (>65) • Medicaid • Through an insurance exchange • Indian Health Service • Armed forces- Tricare • Veterans Administration • Health care sharing ministries • A prison system
If >200 employees, new employees automatically enrolled in employer’s plan, if any. If >200 employees, continue enrollment of current employees and notify employees of right to opt out. If don’t like employer’s plan, you can “opt out.” From Your Employer
Penalizes employers with =>50 employees who do not offer coverage if any of its full-time employees receives a premium assistance credit for purchases over an exchange plan In 2014 if employer offers coverage but has any employee who receives a premium credit, employer is penalized: 1/12 of $3,000 for month of the credit per each employee receiving the credit; however, maximum penalty cannot exceed 1/12 of $2,000 for aggregate number of employees over 30. Ex: X Corp has 100 employees, 20 of whom receive premium credit for entire year. X Corp owes government $60,000. If 80 employees received the credit, it would owe $140,000 being the lesser of $2,000x80 or 70 x $2,000. After 2014, the penalty will be indexed. Employer Mandate
Cannot exclude an employee because of a pre-existing condition (Eff. 1/1/2014). Pre-1/12014 High Risk Pools However, as of 6/21/2010 there is current high-risk pool for persons uninsured for at least the 6 previous months having a pre-existing condition can join. This pool was funded with $5 billion. High risk pool plan must cover 65% of health care costs Premiums set as if for a standard population and not for population of persons with a high risk, although premiums can vary (no more that 4:1) to take account of geographic area and family composition. Limits OPM in the high risk pool to $5,950 (single); $11,900 (family) Eligibility for the employer’s group policy cannot be based upon the employee’s health status, medical condition (physical or mental), claims experience, receipt of health care, medical history, genetic information, evidence of insurability Employees are guaranteed renewal of their coverage regardless of their health status, claims experience, or any other factors Rules Relating to Employer Insurance
Requires employers that cover employees to provide employees with income <400% of the FPL whose share of the premium >8% but is <9.8% of their income with a free choice voucher to allow them to buy insurance through exchange. In 2010 that is $43,336 for a single person, $88,200 for a family of four. Voucher equals what employer would have paid to cover employee under the employer’s plan. Allows employees to opt out of employer’s plan in order to find a less expensive plan that can be purchased over the exchange. Employers which provide voucher are free of the penalty for employees buying insurance from an exchange who also receive a subsidy Poorly Paid EmployeesAs of 1/1/2014
And If A Person is Poor (or Near Poor) • Expanded Medicaid for: • Non-medicare eligible individuals <65 with income =<133% FPL • Federal government will pay 100% of the costs of expansion from 2014-16, 95% in 2017, 94% in 2018, 93% in 2019 and 90% in 2020 and beyond. • Pregnant women, parents and adults without dependent children with incomes under 133% of the federal poverty level • In 2010 that is $14,404 for a single person and $29,327 for a family of four
And If A Person is Poor (or Near Poor) • For some, there may be cost sharing subsidies for co-payments and deductibles if income <400% FPL • For individuals or families with income =>100% FPL but <400% FPL, there will be premium assistance to subsidize cost of insurance.
Premium Assistance Credit • Premium assistance credit equals cost of silver policy less amount taxpayer expected to pay for insurance. This runs between 2% to 9.5%, indexed. • E.g., if income for a family of 4 about $30,000 and cost of policy is $10,000, then family should pay 3% of income towards cost or $900. Credit is $9,100. • Same but family has income of $88,000. Here family pays 9.5% of income or $8,360 and credit is $1,640.
What are Exchanges • Health insurance exchanges are places to go (they could be physical but more likely will be electronic web sites) where people can go to purchase health insurance • States must establish by 1/1/2014 • If state fails to create exchange or only creates an HHS unacceptable exchange, HHS will create the state exchange.
Purpose of Exchange • Require plans have and make public disclosure of the following information in plain language: claims payment policies and practices; periodic financial disclosures; data on enrollment, denied claims, and rating practices; information on cost sharing and payments for out-of-network coverage; and enrollee and participant rights. • Require QHPs to make available timely information about the amount of cost sharing for specific items or services. • Maintain an Internet website for enrollees to obtain standardized comparative information about the health plans. • Assign a rating to each health plan in the Exchange based on the relative quality and price of their benefits.
Minimum Essential Coverage • Government sponsored insurance (Medicare, Medicaid, Chips, Tricare, VA, Peace Corp. Indian Health Service) • Employer Sponsored Plan • Plans purchased in individual market over the exchange or directly that meet requirements of act • Grandfathered plans • Catastrophic plan
Subsidy Calculator-Silver Plan Assume single person, age 28, earning $40,000 a year
Subsidy Calculator-Silver Plan Assume single person, age 28, earning $75,000 a year
Subsidy Calculator-Silver Plan Assume married bookstore employee, age 35, earning $50,000 year who has spouse and two children both under age 7.
Subsidy Calculator-Silver Plan Assume married person, age 45, two children ages under 17, earning $90,000
Exchange Purchased Insurance for the 25-year old Iowa-Law Grad working in Rural Iowa
Exchange Purchased Insurance for the 25-year old Iowa-Law Grad working in Chicago
Will “Americare” Really Happen • Suit in Virginia challenging individual mandates • Suit in in Michigan upheld law on a commerce clause challenge • Suit in Florida going forward on issues of individual mandates and imposing Medicaid costs on states • A new Congress • Repeal not likely assuming a presidential veto
Potential Impacts Longer waiting time to see doctor Shortage of doctors and other HCPs Large employer plans are likely to continue; but employees of large employers who discontinue plans could receive wage increases Grandfathered plans over time to look more like non-grandfathered plans as they are required to comply with coverage mandates Funding problems Tensions between the House and Senate and Congress and President Cost savings
