The Affordable Care Act: An Early Progress Report

1. The Affordable Care Act:An Early Progress Report David Grande, MD, MPA Senior Fellow, Leonard Davis Institute of Health Economics Assistant Professor of Medicine University of Pennsylvania February 5, 2014

2. Coverage Financial security Better health

4. Insurance Pricing • We can experience rate – vary premiums based on health status • More affordable insurance for the healthy • Sick get priced out • We can community rate - “everyone” is charged same premium • More affordable insurance for the sick • Healthy don’t want to join and drop out • Insurance market outside of ESI has been a failure

5. The Affordable Care Act Eliminate Medical Underwriting or “pre-existing conditions” Subsidize or Provide Coverage Individual Mandate

6. Affordability • How much do you have to pay for insurance? (i.e. premium credits) • Premium contributions as % of income • How much cost sharing do you have to shoulder at the point of care? (i.e. cost-sharing subsidies) • Cost sharing subsidies increase actuarial value of insurance for low income individuals (70-94%) Source: Kaiser Family Foundation: Summary of the New Health Reform Law

7. Example: • 35 year old earning $30,000 per year (260% of FPL) • Contribute 8.4% of income ($210/month) • Calculate subsidy from “benchmark Silver plan” • $287-$210 = $77/month – apply to any plan • Subsidies tied to prices in local markets • Individual $ exposure: age, income, benefit design • Public $ exposure: prices in local markets Source: Center for Budget and Policy Priorities; HealthCare.gov

8. Coverage Projections 2019 Source: Congressional Budget Office, February 2014

9. It will take about 3 years…

12. Marketplace Enrollment as % Eligible by State~2 million enrolled(January 2014) Source: Kaiser Family Foundation

13. Awareness of Marketplaces Among Uninsured December 2013 Source: Robert Wood Johnson Foundation / Perry Undem Research/Communication 2014

14. 77% have not visited MarketplaceWhy not? Source: Robert Wood Johnson Foundation / Perry Undem Research/Communication 2014

15. What do they know about the ACA? Source: Robert Wood Johnson Foundation / Perry Undem Research/Communication 2014

16. If the young and healthy don’t buy…will there be a “death spiral”?

17. Temporary Reinsurance ProgramAdverse Selection – Catastrophic Losses within a Plan Goal: Protect against actuarial uncertainty in early years of ACA (encourage plan participation)

18. Temporary Risk Corridor ProgramAdverse Selection – Sicker than Expected Enrollees within a Plan (Marketplace Plans) Goal: Protect against actuarial uncertainty in early years of ACA (encourage plan participation)

20. Risk Adjustment ProgramAdverse Selection Across Plans Goal: Long-term mechanism to guard against cream skimming in community rated private market

23. Source: Kaiser Family Foundation

24. Healthy PA Proposal • Changes to existing Medicaid program • Collapse to 2 plans – low risk & high risk • Charge monthly premiums > 50% FPL • More limited benefits • Expansion population • Marketplace plans • Requirements: • Wellness program (HRA, annual exam, timely payment) • Job search requirements

25. Healthy PA Questions • Disruptions of coverage due to premiums • Experience in other states: 10-50% disenrollment • Administrative burden • Verification systems • Cost neutrality • What are the assumptions?

26. The Future • Coverage: • likely close to target • Risk Pool: • unknown but risk of premium spike low • premiums lower than expected • Satisfaction: • Resolution of early enrollment problems • Limited networks • High deductibles • Politics: • Will states get on board with implementation?

27. Google Searches 9-29-13 through 2-1-14 Source: Google Trends