Bringing the Affordable Care Act to Utah What’s at Stake for All of Us

1. Bringing the Affordable Care Act to Utah What’s at Stake for All of Us Pete Suazo Business Center April 9, 2013

2. Who is UHPP? The Utah Health Policy Project (UHPP) is a nonpartisan, nonprofit organization dedicated to building lasting solutions to the challenges of the uninsured and rising health care costs. www.healthpolicyproject.org @UHPP www.facebook.com/utahhealthpolicyproject

3. Where Utah stands… • The ACA and health exchanges (marketplaces) • Utah’s current status: Partnership Exchange* • Small business focus • Where we go from here Warning: Status could change at any moment *

4. The Affordable Care Act (ACA) • Also called “Obamacare” • Signed: March 23, 2010: • Upheld: June 28, 2012 • Enrollment: October 1, 2013 • Implementation: January 1, 2014

5. Where did the ACA come from? • Heritage Foundation — January 19891 • Heritage included an individual mandate using private-sector insurance • Same model used in Massachusetts [1] “Heritage Rewrites History,” Wall Street Journal, February 12, 2012

6. Where Utah was going before the ACA? 442,000 411,926 2011 2022 # of uninsured Utahns1 [1] U.S. Census Data; Kaiser Commission on Medicaid and the Uninsured, December 2012

7. Who are Utah’s uninsured? • 411,926 Utahns lack health insurance1 • 76% earn less than 200% of the federal poverty level ($46,000 for a family of 4) • 57% would be eligible for Medicaid expansion • 56% of adults are employed [1] U.S. Census Bureau's division of Housing and Household Economic Statistics, 2012

8. How do the uninsured receive care? Bad debt Charity care1 $1,017 Amount added to an average family’s yearly insurance premiums to care for the uninsured2 [1] “Utah hospitals absorb $698 million in unpaid bills,” Salt Lake Tribune, February 6, 2013 [2] “Hidden Health Tax: Americans Pay a Premium,” Families USA, 2009.

9. Where Utah will be afterthe ACA • 1 • By 2019… 77% of Utahns will be covered by the private insurance market [1] Kaiser Commission on Medicaid and the Uninsured, December 2012

10. Where are Utahns going to find insurance? • After 2014, there will be a mandate to purchase insurance or pay a penalty • The ACA sets up exchanges (marketplaces) for individuals and small businesses

11. What is an “Exchange”? • A new, transparent, and competitive insurance marketplace • A place to review and buy affordable and qualified health plans • Choices of plans that meet minimum benefits and affordability standards

12. Whoops… HHS calls ‘em Marketplaces Exchange mercado rynek அங்காடி marché pazar سوق mache बाजार

13. What the ACA does for people… Adults under age 26 can stay on parents plan No lifetime caps on insurance payments Insurance offers free preventative care like blood pressure checks, flu shots, and screenings Men and women pay the same for coverage No one can be denied or priced out of coverage for a pre-existing condition

14. How will coverage be more affordable? (in billions) • Advancable premium subsidies will help cover the cost for purchasing insurance • Subsidies will be available for people earning up to 400% of the federal poverty level ($92,200 for a family of four) • No one will pay more than 9.5% of their income for coverage.

15. Who is eligible for premium subsidies? (in billions)

16. Utah’s Current Status

17. Utah’s Choice: Partnership Model Utah’s current choice • Utah operates small business (SHOP*) marketplace (Avenue H) • Federal government runs individual marketplace • Details (Medicaid screening, consumer assistance, navigators) are TBD *SHOP = Small Business Health Options Program

18. First, Gov. Herbert wanted a state-run plan “I intend to move forward with Utah’s version of an exchange [Avenue H].” - Gov. Gary Herbert to HHS Secretary Kathleen Sebelius December 14, 2012

19. And HHS was open to the idea “I am pleased to inform you that Utah has received conditional approval to operate a State-based Exchange.” - HHS Secretary Kathleen Sibelius to Gov. Gary Herbert January 3, 2013

20. And finally, a partnership exchange “[A partnership exchange] allows Utah to stay true to its principles and objectives and the feds to...pick up the slack.” - Gov. Gary Herbert February 5, 2013

21. When will we know the final decision? Soon… (we hope) …but time is running out…

22. ACA across the nation State Decisions1 18: State-run 7: Partnership 26: Federal ? [1] www.statehealthfacts.org 3/7/13)

23. ACA in the West ? [1] www.statehealthfacts.org 3/7/13)

24. Utah health reform since 2008 • Utah began health reform in 2008 under Gov. Huntsman • Attempted a comprehensive Massachusetts-style system, but abandoned it • In 2008/2009, Utah set up Avenue H—a pilot exchange for small businesses

25. What is Avenue H? • Utah’s state-run health exchange for small businesses • Established in 2009 as a “web-based” insurance marketplace based on free-market principles • Operates as a defined contribution market and offers hundreds of coverage plans

26. Does Avenue H work? • Serves 313 employers—0.46% of Utah’s small businesses—as of November 2012 • 1/3 of businesses who start the enrollment process join the exchange • Criticized as complicated, slow, and expensive UHPP: Avenue H needs more reformsand investment to become an effectivetool for Utah small businesses [1] Avenue H Dashboard (November 2012); accessed March 9, 2013, http://goo.gl/VfLdh

27. Avenue H in 2014 and beyond • Utah goal to maintain a “defined contribution” marketplace • Will adopt ACA “community rating” and the state’s essential health benefits • Unclear on how Avenue H will interface with federally-run individual marketplace—and Medicaid screening

28. Small Business Focus for Utah

29. Which Utah firms offer insurance? # Employees: % Offer insurance <10 employees 31.2% 10-24 employees 56.5% >50 employees 92.9% 42% of Utah’s 67,000 small businesses are in SL County Agency for Healthcare Research and Quality, Center for Financing Access, and Cost Trends. 2008

30. What worries small businesses? Cost is the #1 reason they don’t offer coverage UHPP/SBM Utah Small Business Healthcare Survey, 2009

31. What ACA does for small businesses • Tax credits • Shared risk allows more stable premiums and lower costs • More level playing field (hiring, cost, entrepreneurship) with large businesses • Employees at firms <50 FTE can get coverage on the individual marketplace—or Medicaid

32. How does the ACA affect me? More than 50 employees (FTEs) Less than 50 employees (FTEs) No mandate or penalties Eligible for tax credits Mandate or penalties if firm offers no insurance or inadequate insurance 76% of Utah firms employ 50 or fewer employees Agency for Healthcare Research and Quality, Center for Financing Access, and Cost Trends. 2008

33. How do I calculate 50 FTE? • FTEs are calculated by summing the hours of full, part-time, and seasonal workers. For example, two PT employees are equivalent to one FT employee • Example: • A full-time employee is defined as working an average of at least 30 hours a week or 130 hours in a month. 40 full-time employees (30h/week = 40 FTE 20 half-time employees (15h/week = 10 FTE Total = 50 FTE

34. What timeframe do I use? • Employers have a choice of calculating FTE by averaging the full twelve (12) months of the year, or by looking at a six (6) consecutive month periodduring the year (starting in 2013) • To calculate FTE in a given month, employers must add all the hours worked (up to 120 hours per employee) and divide the total by 120 • If an employer has at least 50 FTEs for 2013, it will be considered a large employer for 2014

35. What are the employer penalties? $2,000 Businesses with 51 or more FTE employees who do not offer coverage to full-time workers (penalty excludes first 30 employees) Example Afirm with 61 workers that does not offer coverage would pay an amount equal to 61 minus 30, or 31, times the applicable per-employee payment amount

36. What are the employer penalties? $3,000 Businesses with 51 or more FTE employees who offer coveragebut have at least one FTE get a subsidy in the individual exchange (penalty excludes first 30 employees) Note For an employee to receive a subsidy on the individual exchange, the employee’s contribution to the lowest-cost single plan must be more than 9.5 percent of family income or the actuarial value of the plan must be below 60 percent

37. Big decisions ahead… • Will Utah meet HHS requirements for a partnership exchange, or revert to a Federally-facilitated exchange? • How much flexibility will HHS give Utah? • Will Utah expand Medicaid (like OH, NM, AZ, MT, NV, and CO)?

38. If Utah reverts to federal exchange… • Feds build ACA-compliant individual and small business exchanges for Utah • Future of Avenue H uncertain • Utah’s homegrown advantages (demographics, integrated healthcare systems, existing reforms) are diminished…

39. Learn more about health reform Health Care Reform: What It Is, Why It's Necessary, How It Works By Jonathan Gruber and Nathan Schreiber (Illustrator) $13.95 (Hill and Wang) Health Reform Hits Main Street Produced by the Kaiser Family Foundation. http://healthreform.kff.org/the-animation.aspx

40. Questions? HEALTH REFORM

41. Additional Slides

42. Medicaid in Utah

43. What Medicaid Expansion does for Utah • Medicaid Expansion eliminates all eligibility categoriesfor people living below 133% of the Federal Poverty Line (FPL) • 133% of FPL is $25,000 for a family of three.

44. Medicaid gap Full Medicaid coverage is not provided to childless adults at any income levels Chart Source: Utah Dept. of Health

45. Expansion covers the gap Expanding Medicaid will give over 150,000 Utahns access to quality healthcare coverage Chart Source: Utah Dept. of Health

46. Medicaid Expansion: Top 5 Reasons Will bring over $5 billion in federal funding to Utah over 10 years State pays only admin. first 3 years, 100% federal match for 3 years, phasing down to 90% in year 10—only 4% more than without Medicaid best option  delivers more efficient and lower cost health care It closes that coverage gap No other realistic, cost-effective option

47. Expansion brings new funding to Utah… [Chart] The Cost and Coverage Implications of the ACA Medicaid Expansion: National and State-by-State Analysis; Kaiser/Urban Institute

48. …and offsets local and state spending [1] Salt Lake Tribune editorial (3/4/13); Fiscal note for HB157, “Medicaid Amendments”

49. The national picture... 15 3 5 25 2 Utah is one of 5 states still undecided… Source: The Advisory Board Daily Briefing (2/13/13)

50. …and in the neighborhood Yes Yes Yes Yes ? Yes Yes Yes Yes Governors of MT, NM, CO, ND, NV, and AZ are all supporting Medicaid Expansion Source: The Advisory Board Daily Briefing (2/13/13)