The Affordable Care Act

1. The Affordable Care Act Nonprofit Chamber of Service, Executive Director Survival Series April 17, 2013 annenelson@cphcp.com

2. Health Reform Resource ProjectSheldon Weisgrau, Director • Funded by Kansas Grantmakers in Health: • Kansas Health Foundation • Health Care Foundation of Greater KC • REACH Healthcare Foundation • Sunflower Foundation: Health Care for Kansans • United Methodist Health Ministry Fund • Housed at Kansas Association for the Medically Underserved (KAMU) Health Reform Resource Project

3. Health Reform Resource Project • Assist in public education and stakeholder engagement related to health reform • Provide technical assistance to advocacy organizations and other stakeholders • Assist Kansas entities in securing grants and programs available under the Affordable Care Act (ACA) Health Reform Resource Project

4. What works? • “Best health care system in the world” • Widespread medical technology • State-of-the-art facilities • Advanced research and training • Plentiful specialty care • Center of development for drugs and medical devices • Lots of money in the system, well-paid professionals Health Reform Resource Project

5. Why health reform? • Access • 48.5 million uninsured • 365,000 uninsured in Kansas • Millions more underinsured • Employment-based health insurance declining • Maldistribution of providers, other resources Health Reform Resource Project

6. Kansans with Private Insurance Source: KHI, 2012 Health Reform Resource Project

7. Kansans with Public Insurance Source: KHI, 2012 Health Reform Resource Project

8. Kansas Uninsured Source: KHI, 2012 Health Reform Resource Project

9. Kansas Uninsured (by County) Source: KHI, 2012 Health Reform Resource Project

10. Brown Doni-phan Cheyenne Ne-maha Rawlins Marsh-all Decatur Wash-ington Norton Republic Phillips Smith Jewell Atchison Jack-son Cloud Sherman Pottawatomie Thomas Sheri-dan Riley Clay Osborn Mitchell Graham Rooks Jeffer-son Leavenworth Ottawa Shaw-nee Geary Lincoln Wabaun-see Wallace Logan Gove Trego Dickin-son John-son Ellis Russell Doug-las Saline Osage Morris Ellsworth Miami Frank-lin Lyon Greeley Wich-ita Scott Lane Ness Barton Rush Marion McPher-son Chase Rice Coffey Linn Ander-son Pawnee Hamilton Kearny Finney Hodgeman Stafford Green-wood Harvey Reno Bour-bon Butler Allen Edwards Wood-son Gray Sedgwick Ford Pratt Neo-sho Wilson Stanton Grant Craw-ford Has-kell Kingman Kiowa Elk Cowley Meade Clark Sumner Barber Labette Chero-kee Mont-gom-ery Morton Stevens Sew-ard Coman-chee Harper Chautau-qua 365,000 uninsured in Kansas = all residents in… Wyandotte

11. Why health reform? • Access • Quality • Inconsistent • Disparities • Patients often don’t receive recommended care Health Reform Resource Project

12. Institute of Medicine “...Serious and widespread quality problems exist throughout American medicine. These problems....occur in small and large communities alike, in all parts of the country, and with approximately equal frequency in managed care and fee-for-service systems of care. Very large numbers of Americans are harmed as a result....” -IOM Roundtable, 2002 Health Reform Resource Project

13. Why health reform? • Access • Quality • Cost • Highest in the world • Historically Increasing faster than salaries and inflation • Although not last year • Main driver of long-term budget deficits • Is this changing? Health Reform Resource Project

14. Cumulative Increases in Inflation, Earnings, Insurance Premiums, and Workers’ Contributions Source: Kaiser Family Foundation, 2012 Health Reform Resource Project

15. Health Reform Resource Project

16. Health Reform Resource Project

17. What difference does health insurance make? • The uninsured are: • Less likely to receive preventive and prenatal care • More likely to go without medical care or prescription drugs due to cost • More likely to be diagnosed at later stage of illness • More likely to be hospitalized for avoidable conditions • Less likely to receive recommended care • Less healthy • Earn less • Have higher death rates Health Reform Resource Project

18. What difference does health insurance make? • Institute of Medicine (2004): • The risk of premature death among uninsured Americans is 25% higher than among Americans with health insurance • Estimated 18,000 uninsured die each year because of being uninsured Health Reform Resource Project

19. Community Consequences of Uninsurance • Communities with high rates of uninsurance • More difficulty recruiting and retaining physicians • Specialists less likely to accept referrals or take ER call • Hospitals have less trauma and burn care, more ER crowding and diversion Health Reform Resource Project

20. Community Consequences of Uninsurance • Communities with high rates of uninsurance • More difficulty recruiting and retaining physicians • Specialists less likely to accept referrals or take ER call • Hospitals have less trauma and burn care, more ER crowding and diversion • Insured patients have lower quality, access, and satisfaction Health Reform Resource Project

21. Affordable Care Act • 900+ pages, 10 titles • Access to private health insurance • Expanded Medicaid coverage • Medicare reform • Wellness and prevention • Health care workforce • Fraud and abuse • Access to drugs and biologics • Voluntary long-term care insurance (CLASS) • Revenue measures • Manager’s amendment and reconciliation Health Reform Resource Project

22. ACA – Intertwined Goals • Make better health insurance coverage more available and affordable for legal residents • Reform health care delivery and financing to provide better quality and outcomes, more cost effective care Health Reform Resource Project

23. ACA Snapshot • What it does • Builds on the existing system of coverage • What it doesn’t do • Does not create “government-controlled” or “socialized” health care • Does not create “death panels” • Does not turn the system over to insurance companies Health Reform Resource Project

24. ACA – Key Features • Seven-Part Solution • Premium cost controls • Short-term incentives to increase coverage • New rules regarding scope of coverage and consumer protections • Individual mandate • Health Insurance Marketplaces (Exchanges) • Employer requirements • Expanded Medicaid Health Reform Resource Project

25. 1. Premium Cost Controls • Medical loss ratio requirements • Insurance companies must spend 80/85 percent of premiums on medical services and quality improvement • Make available standardized comparable information on available insurance plans • http://www.healthcare.gov/ • Support to states to create and strengthen insurance rate review Health Reform Resource Project

26. Percentage of Rate Change Requests of 10% or More in Individual Market Source: HHS, 2013 Health Reform Resource Project

27. 2. Short-Term Coverage Expansion • Pre-Existing Condition Insurance Plans (PCIP) • High risk pools for those uninsured for at least 6 months due to pre-existing condition • Early retiree reinsurance program • Federal support to employers who provide coverage for retirees ages 55-64 • Tax incentives for small employers to provide coverage Health Reform Resource Project

28. 3. Scope of Coverage • Patient Bill of Rights • Prohibits rescission • No lifetime dollar limits • Dependents covered through age 26 • Preventive services covered with no out-of-pocket costs • No pre-existing condition exclusions for children • Guaranteed Issue and Community Rating: • Nobody can be denied coverage or charged more due to pre-existing conditions (effective January 1, 2014) Health Reform Resource Project

29. 4. Individual Mandate • Mechanism to discourage “free-riders” under guaranteed issue • Exemptions under certain conditions • Part of “three-legged stool:” • Guaranteed issue • Individual mandate • Tax credits • Alternatives • Employer/union-sponsored plan • Individual insurance through the Marketplace • Public program (Medicare, Medicaid, etc.) Health Reform Resource Project

30. 4. Individual Mandate • Tax penalties • 2014: 1% of income or $95 per uninsured individual (whichever is higher) • 2015: 2% or $325 • 2016 : 3% or $695 Health Reform Resource Project

31. 5. Health Insurance Marketplaces (aka Exchanges) • Established by each state by Oct 1, 2013 • Administered by federal govt if state opts out • For individual and small group markets • Expands to larger employers in 2017 • Provides web-based one-stop shopping • Pooling mechanism for individuals and small businesses • Plans must offer “essential health benefits” package Health Reform Resource Project

32. 6. Employer Requirements • Large employers (50+ employees) that don’t provide coverage may face penalties. • For example: • Employer does not offer minimal essential coverage to full-time employees; and • At least one employee receives government subsidy to purchase insurance in the Marketplace Health Reform Resource Project

33. 7.Expanded Medicaid • By January 1, 2014, Medicaid expands to cover all eligibles with income up to 138% FPL Health Reform Resource Project

34. The ACA: Who Gets Covered? • Private coverage through new Marketplaces • Approx 16 million non-elderly uninsured • Most are employed • Expanded Medicaid • Approx 16 million non-elderly uninsured • Half have income below 50% FPL • One-third diagnosed with chronic condition Health Reform Resource Project

35. Health Reform Resource Project

36. Health Reform Resource Project

37. Who Gets Covered in Kansas? • 365,000 Kansans currently uninsured (13% of population) • Under ACA: • About two-thirds will receive insurance coverage • ~60% through expansion of Medicaid • ~40% through expansion of private insurance • About one-third remain uninsured Health Reform Resource Project

38. Small Business (< 50 employees) • No insurance requirements • Tax incentives for employers that provide insurance • < 25 employees • Avg annual wages < $50,000/year • Employer pays at least 50% of premium cost • Tax credit up to 35% of premium expenses (25% for nonprofits) • 2014: Tax credit up to 50% of premiums for policies purchased in Marketplace (35% for nonprofits) Health Reform Resource Project

39. Employer Shared Responsibility Provisions • Large employers are not required to provide insurance coverage BUT . . . • They may be subject to penalty if: Health Reform Resource Project

40. Employer Shared Responsibility Provisions • Large employer may be subject to penalty if: • Does not offer coverage to full-time employees and their dependents OR • Offers coverage that does not meet affordability or minimum value standards AND • At least one full-time employee receives a tax credit to purchase insurance in the Marketplace Health Reform Resource Project

41. Employer Shared Responsibility Provisions • Who does it apply to? • Employers with 50 or more full-time and full-time equivalent employees • How do we measure full-time employees and FTE-equivalents? • Full-time employee = Average of 30+ hours/week over course of a month • Part-time FTEs: Add hours worked per month, divide by 120 • Safe harbors for seasonal and variable hour employees Health Reform Resource Project

42. Employer Shared Responsibility Provisions • What is affordable coverage? • Does not exceed 9.5% of employee’s household income for the tax year • What is minimum value? • Covers at least 60% of costs Health Reform Resource Project

43. Employer Shared Responsibility Provisions - Penalties • If employer does not offer coverage, penalty is $2,000 per full-time employee (minus the first 30 full-time employees) • Example: • Employer with 75 full-time employees: • 75-30 = 45 • 45 x $2,000 = $90,000 ($7,500 per month) Health Reform Resource Project

44. Employer Shared Responsibility Provisions - Penalties • If employer offers coverage, but it is unaffordable or does not meet minimum value standards, penalty is $3,000 for each affected full-time employee • Example: • Coverage is unaffordable for 10 employees • 10 x $3,000 = $30,000 ($2,500 per month) Health Reform Resource Project

45. Employer Shared Responsibility Provisions - Penalties • Multiple businesses with same ownership covered as a single entity • Penalties are not deductible • Penalties are indexed to inflation after 2014 Health Reform Resource Project

46. Other Employer Requirements • Employers with 200+ employees must automatically enroll new employees in health insurance plan • Provide new employees with notice of opportunity to opt out • Report value of health insurance on W-2 • Informational only • Delayed for employers who file <250 W-2s Health Reform Resource Project

47. Other Employer Requirements • Provide reasonable time for lactation breaks for nursing mothers up to one year after childbirth • Opt-out for employers with <50 employees for “undue hardship” • 40% excise tax on high-cost health plans (Cadillac tax) • Effective 2018 Health Reform Resource Project

48. Employer Requirements: Additional Information • Federal government • www.healthcare.gov • www.irs.gov/uac/Affordable-Care-Act-Tax-Provisions • Small Business Majority • www.smallbusinessmajority.org • U.S. Chamber of Commerce • www.uschamber.com/health-reform Health Reform Resource Project

49. Medicaid Expansion • ACA requires states to expand Medicaid to cover all eligible individuals with income up to 138% FPL • If state does not expand, HHS may withhold all federal Medicaid funding • This provision was challenged in the Supreme Court Health Reform Resource Project

50. The Medicaid Question • Is the Medicaid expansion unconstitutionally coercive? • Yes – The federal government may not make all Medicaid funding contingent on expanding the program • So, the federal government has no enforcement authority over the expansion • Therefore, expansion of Medicaid is optional for states Health Reform Resource Project