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National Center for Policy Analysis Ideas Changing the World

Healthcare Regulatory Update: What’s on the Affordable Care Act Horizon SHRM-Texas State Council Texas Legislative HR Round Up April 04, 2013 by Devon M. Herrick Ph.D. Senior Fellow National Center for Policy Analysis. National Center for Policy Analysis Ideas Changing the World.

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National Center for Policy Analysis Ideas Changing the World

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  1. Healthcare Regulatory Update:What’s on the Affordable Care Act Horizon SHRM-Texas State CouncilTexas Legislative HR Round UpApril 04, 2013byDevon M. Herrick Ph.D.Senior FellowNational Center for Policy Analysis National Center for Policy Analysis Ideas Changing the World

  2. Why Reform U.S. Health Care? U.S. Health Care System Problems Access is problematic Qualify is inconsistent Cost is too high 2 Ideas Changing the World

  3. U.S. Health Care Quality U.S. Health Care Quality is Inconsistent IOM up to 98,000 die from medical errors Drug errors injure 1.5 million each year Two million hospital-acquired infections 3 Ideas Changing the World

  4. U.S. Health Care Cost U.S. Health Care Cost is High U.S. firms spend 8% of payroll on health benefits Medical spending is rising at twice the rate of national income Medical prices are rising at three times the rate of inflation No effective cost control Ideas Changing the World 4

  5. U.S. Health Care Expenditure as Percent of GDP 18% $2.7 trillion $27 billion 5.2% 5 Ideas Changing the World

  6. HealthCareInflation 2500% Medical Care 2000% Health Coverage Very Common 1500% 1000% All Goods 500% Health Coverage Not Common 0% 6 Ideas Changing the World Source: Consumer Price Index (CPI)

  7. Uninsured U.S. Residents(1993 to 2011) 49 million (15.7%) 38 million (15.3%) Ideas Changing the World 7

  8. Patient Protection and Affordable Care Act Individual Mandate Employer Pay or Play Mandated Acceptance Mandated Benefits Subsidized Insurance Exchange Medicaid Coverage for Poor 8 Ideas Changing the World

  9. Health Reform Proposals Individual Mandates • Requires coverage (difficult to enforce) • Standard Benefits (reduces consumer choice) • 30 million uninsured in 2022; 4 million will pay fines according to CBO • Will boost employee health plan participation 9 Ideas Changing the World

  10. Uninsured: Motorists vs. Health MotoristsHealth Mass. Missouri Delaware Penn. New Mexico Arkansas Avg. Kansas Arizona Illinois 10 Ideas Changing the World

  11. Take Up Rates for Mandatory Coverage in Massachusetts Individuals State Subsidized Plans Employer Plans 11 Ideas Changing the World

  12. Patient Protection and Affordable Care Act Employer Mandate U.S. firms with 50 or more FT for FTE Full time = 120 hours per month Full time equivalent = 120 hours of part time labor Fine for Unaffordable Coverage = $3,000 each worker whose contributions >9.5% of pay Fine for not providing coverage = $2,000 per worker minus first 30 workers 12 Ideas Changing the World

  13. Health Reform Proposals Employer Mandates • Mandates employee coverage (tax on labor) • Helps small business (inhibits firms from growing beyond 50 workers) • Helps workers (adversely impacts low-wage workers) • Millions may drop employer coverage • Segment labor market (low and high wage firms) 13 Ideas Changing the World

  14. Health Insurance Regulation Mandated Acceptance • Helps the sick (drives up cost a for healthy) • Inappropriate incentives (recruit healthy/avoid sick) • Invites gaming the system • Doesn’t work without an individual mandate 14 Ideas Changing the World

  15. Annual Cost of Medical Care by Age 0-4 5-14 15-24 25-34 35-44 45-54 55-64 65-74 75+ 15 Ideas Changing the World

  16. Health Insurance Regulation Mandated Benefits • PPACA requires “essential benefits” • Bans limited benefit health plans • Invites special interest lobbying • Bans annual and lifetime benefit caps • Limits cost-sharing 16 Ideas Changing the World

  17. Employer Health Insurance Tax Subsidy (per family) <$10,000 $10,000- $19,999 $20,000- $29,999 $30,000- $39,999 $40,000- $49,999 $50,000- $74,999 $75,000- $99,999 $100,000- $149,999 $150,000+ Ideas Changing the World 17

  18. Exchange Subsidies(2014) Maximum % of Income on Premiums 100%-132% FPL 2.00% of income 133%-150% FPL 3.00% - 4.00% of income 150%-200% FPL 4.00%- 6.30% of income 200%-250% FPL 6.30%- 8.05% of income 250%-300% FPL 8.05%- 9.50% of income 300%-400% FPL 9.50% of income Ideas Changing the World 18

  19. Federal Poverty Level (2013) Income Eligibility Thresholds Individual Family of Two Family of Four 100% $11,490 $15,510 $23,550 138% $15,856 $21,404 $32,499 200% $22,980 $31,020 $47,100 300% $34,470 $46,530 $70,650 400% $45,960 $62,040 $94,200 19 Ideas Changing the World

  20. Exchange Subsidies(2013) Maximum Premium after Subsidy Individual Family of Four ($4,750) ($12,250) 100%-132% FPL $230 - $300 $470 - $620 133%-150% FPL $460 - $700 $940 - $1,410 150%-200% FPL $700 - $1,450 $1,410 - $2,970 200%-250% FPL $1,450- $2,300 $2,970 - $4,740 250%-300% FPL $2,300- $3,275 $4,740 - $6,710 300%-400% FPL $3,275 - $4,365 $6,710 - $8,950 20 Ideas Changing the World

  21. Health Insurance Subsidies(family of four by age) Age 25 Income $31,168 Employer Plan Age 25 Income $31,168 Low-Cost Region Age 55 Income $93,700 High-Cost Region Age 40 Income $31,168 High-Cost Region 21 Ideas Changing the World

  22. PPACA Obstacles to Overcome Structural Flaws • An impossible mandate • A bizarre system of subsidies • Perverse incentives for insurers • Perverse incentives for employers • Perverse incentives for individuals • Impossible expectations/tattered safety net 22 Ideas Changing the World

  23. National Center for Policy Analysis Making Ideas Change the World Ideas Changing the World

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