Background on the ACA: What’s in place, what yet to come

1. Background on the ACA: • What’s in place, what yet to come • Peter C. Damiano • Director, Public Policy Center and Professor, College of Dentistry • University of Iowa • peter-damiano@uiowa.edu • Johnson County League of Women Voters • Series on the US Constitution • May 10, 2012

2. Today’s Topics • What’s driving health reform discussion • The Patient Protection and Affordable Care Act (ACA) • Already enacted • Planned for 2014 and beyond • Issues for Iowa regardless of ACA’s future

3. Our current political environment and the need for information

4. Why Reform Health Care in US • Cost • Access to Care • Quality

5. What do we spend on health care per person in US? • $500 Billion • $1 Trillion • $3 Trillion • $10 Trillion • Average cost-$8086/person • 4 times 1990 spending • 10 times 1980 spending

6. Health Care Costs Average spending on health per capita ($US ) Total health expenditures as percent of GDP

7. Access (insurance coverage) • 50 million uninsured (16.3%) • Up 13 million in past 10 years • Among insured • 55% have employer based insurance (from 64% in 1999) • 15% Medicare • 16% Medicaid

8. Uninsured Adults in 2011 • 57 % in low-income families (those earning less than about $30,000 for a family of four) • 41% > one year • 36% in moderate-income families (earning between $30,000 and $56,000). • • 23% > one year • 12% in higher income families (earning above $89,000) • • 4% > one year • 80% of all are employed at least part time Source: The Income Divide in Health Care: How the Affordable Care Act Will Help Restore Fairness to the U.S. Health System. The first Commonwealth Fund Health Insurance Tracking Survey of U.S. Adults. Sara R. Collins, et al. February 7, 2012

10. * *Cost estimated to be $28,500 in 2019

11. The Patient Protection and Affordable Care Act (PPACA) • Signed into law March 2010 • Emphasis on: • Individual insurance market • Small business insurance market • Few implications for large employer-based insurance • Already self-insured

12. What have we created?

13. Market-based reform • Right of center approach to reform: • Similar to proposals by Richard Nixon, Robert Dole and Mitt Romney • Left of center approach-single payer • Uses primarily private insurance companies: • Some Gov’t program expansion

14. How bad is the problem?

15. Cost of reform • Total cost: $940 billion first ten years • Impact on deficit: $124 Billion in reductions in the deficit first ten years $1.2 Trillion second ten years Source: Congressional Budget Office, March 2010

16. Coverage in new plan • Net 32 million more insured • Decline of 3 million from employers • Decline of 5 million from non-group 24 million Source: CBO report to Congress, March 2010

17. Policies Already in Place 25 reforms enacted in 2010 18 of 21 enacted in 2011

18. Policies in place (2010) • Coverage of children up at age 26 on parent’s policies • Development of state/federal high risk pools • Elimination of pre-existing conditions for children • Requires insurance companies to pay out at least 80% of premiums for services

19. Policies in place (2010) • Insurance companies banned from rescinding coverage because of illness and imposing yearly and lifetime caps on coverage. • Small-business tax credits: Small businesses (fewer than 25 employees and average wages under $50,000) that offer health care benefits eligible for tax credits of up to 35% of premiums for 2 years

20. Policies in place (2010) • Establish process for reviewing health plan premium increases and justify increases. • Require states to report on trends in premium increases and recommend if plans should be excluded from Exchange based on unjustified premium increases.

21. Financing and taxes (2010) • 10% tax on Indoor Tanning Services • Non-profit hospitals must conduct community needs assessment and develop a financial assistance policy or face $50,000 tax for failure to meet this

22. If the ACA goes through unchanged 2014-19

23. Future policies (2014) • Individual mandate begins. • Affects 6% of population (Urban Institute study) • Most of whom want coverage • Large employer mandate begins (over 50 employees only) • Medicaid expansion begins. • Health insurance Exchanges begin

24. Exchanges generally • Health insurance marketplace (bazaar) • Offer regulated products that meet standards • Require two multi-state plans in each Exchange (federal employee plans) • At least one plan must be offered by a non-profit entity

25. Coverage for children • Medicaid: up to 133% of FPL • CHIP: up to state approved level • 200-300% FPL • Exchange: 300% of FPL and up

26. Coverage for Adults • Medicaid: up to 133% of FPL • Gets rid of categorical eligibility • Exchange: 133% of FPL and up

27. Income eligibility for subsidy (%FPL)

28. Health Insurance Exchange • American Health Benefit Exchanges • Individuals • 100-200% FPL: $1,983/individual and $3,967/family; • 200-300% FPL: $2,975/individual and $5,950/family; • 300-400% FPL: $3,987/individual and $7,973/family

29. Essential Benefits Package Must Include • Ambulatory patient services • Emergency services • Hospitalization • Maternity and newborn care • Mental health and substance use disorder services, including behavioral health treatment • Prescription drugs • Rehabilitative and habilitative services and devices • Laboratory services • Preventive and wellness services and chronic disease management, and • Pediatric services, including oral and vision care

30. Issues Iowa will face whether or not the ACA goes through as planned

31. Upcoming issues in Iowa • Medicaid/IowaCare • Increasing enrollment • Medical/Health homes • Eligibility system • Cost in SSI/Dual eligibles Iowa Health Information Network • Shared health and billing information • Potential for improved quality and reduced costs

32. Upcoming issues in Iowa • Safety Net Providers • Likely to remain essential for portions of population • How best to integrate with private sector Accountable Care Organizations • Is this the right model? • Who wins, who loses, who gets to participate

33. What will affect if the ACA goes through as planned

34. Supreme Court Decision How much of a factor will this decision be in the election?

35. “States’ Right?”

36. Supreme court challenge • March 26-28: Supreme Court heard challenge, 6 hours of argument • Decision likely late June • Focus: • Individual mandate and can it be separated from the rest of the law • Jurisdictional issue: can they rule before a tax goes into affect (the fine–1867 Anti-injunction act) • Medicaid expansion and cost to the state • Declined considering penalties to states as employers (1985 ruling that states must comply with employer-related laws)

37. Supreme Court Schedule Most time since 1966 • March 26: The anti-injunction act (tax) (90 minutes) • March 27: Individual mandate and commerce clause (120 minutes) • March 28: Severability (90 minutes) • March 28: State sovereignty in Medicaid expansion (60 minutes)

38. DC Court of Appeal Ruling November 7, 2011 ruling • Majority opinion: Laurence H. Silberman • 2-1 in support of individual mandate “The right to be free from federal regulation is not absolute, and yields to the imperative that Congress be free to forge national solutions to national problems, no matter how local — or seemingly passive — their individual origins,” he wrote. The fact that Congress may have never issued an individual mandate to purchase something before, a central argument for many opposing the law, “seems to us a political judgment rather than a recognition of constitutional limitations,” NY Times, Nov. 8, 2011

39. Devil is in the details • Implementation is critical • State and Federal level • Cost containment critical • Care and premiums in the exchange • What would we replace with?

40. Discussion