Health Care Reform Overview of The Patient Protection and Affordable Care Act

1. Health Care ReformOverview of The Patient Protection and Affordable Care Act June 5, 2010 Chris Barley, Staff Attorney Ohio Poverty Law Center

2. Presentation Overview • Limited to major provisions • Details to be determined later • Effect of reform will be different across states • Many interpretations exist

3. Structure of Reform 3

4. Key Insurance Provisions • Health insurance market reforms • Ombudsman program • High risk pool • Reinsurance program • Health Insurance Exchange • Required Purchase of insurance • Subsidies

5. Pre-Reform Blueprint:What It Looks Like NOW. Chart prepared by PICO National Network, Washington D.C. 2010 5

6. Post-Reform Blueprint2014 Chart prepared by PICO National Network, Washington D.C. 2010 6

7. Early Insurance Market Reforms • No lifetime limits • Restrictions on allowable annual benefit limits • Coverage of dependents up to age 26 • Pre-existing condition exclusions prohibited for children up to age 19 • Appeals processes for enrollees • May not discriminate based on salary • Benefits for preventive services required • Coverage for emergency services at in-network level

8. Early Insurance Market Reforms Review of Premium Rates • Federal HHS will develop a process for the annual review of premium rate increases • Federal HHS will distribute $250 million in grants over 5 years to cover state costs

9. Early Insurance Market Reforms Health Plan Loss Ratio Requirements • Loss ratios reported to HHS • Report must breakdown on how premiums are spent • Reporting requirements to be developed by HHS & NAIC • In January 2011, rebates provided when plans do not meet loss ratio targets. • Loss ratio expenses based on clinical services and activities that improve health care quality

10. Early Insurance Market Reforms Health Plan Disclosure Requirements • Payment policies and practices • Financial disclosures • Enrollment and disenrollment data • Claims denial information • Data on rating practices • Information on cost-sharing and payments with respect to out-of-network coverage

11. Insurance Market Reforms • Must provide: • uniform summary of benefits • explanation of coverage documents. • Must use standardized definitions • HHS to publish standards in 12 months

12. Insurance Market Reforms • Guaranteed issuance • Elimination of: • Preexisting condition • Annual limits on coverage • Waiting periods • Limitation on deductibles • Rating restrictions for group and individual market: • Small employer redefined (1-100 employees)

13. Consumer Ombudsman Program • Provides grants to create health ombudsman program • Serves as an advocate for consumers • Assists with insurance-related complaints and appeals • Assists consumers with enrollment • In 2014, Resolves problems with subsidies • Collects, tracks and quantifies consumer problems and insurance inquiries

14. Temporary High Risk Pool • For individuals with pre-existing conditions • For uninsured for 6 months or longer • May contract with states or non-profit entities to provide coverage

15. Temporary High Risk Pool(continued) • Federal funding of $5 billion allocated to fund eligible enrollees until 2014. • Federal HHS working with states to develop program guidelines

16. Temporary Reinsurance Program for Early Retirees • For employers providing insurance to retirees age 55+ • Including state government programs like PERS, STRS • Program pays 80% of claims costs between $15,000 and $90,000 annually • Payments under the program must be used to lower costs of the plan • Must submit application to HHS to participate • Funding of $5 billion

17. Electronic Health Care Transactions • Requires compliance with standard electronic health care transactions • Imposes new, earlier deadlines for federal HHS rules and implementation

18. Health Insurance Exchange • Directs states to establish American Health Benefit Exchanges • Small Business Health Options Program (SHOP). • Exchanges must be operational by January 2014 • Must be administered by governmental agency or non-profit organization • HHS will establish exchanges in those States where they fail to create one.

19. What is a Health Care Exchange? • “Virtual Marketplace” • Run by the state or the federal government (at the state’s choice) • Insurance companies that want to sell insurance in the Exchange must sell plans that meet certain standards • The Exchange will allow consumers to comparison shop • The Exchange will also determine appropriate levels of subsidies for consumers to help them afford coverage, up to 400% FPL.

20. Health Insurance Exchange Program Features • One-stop insurance shopping • Provide a selection of “Exchange qualified” plans • Standardizes presentation of insurance options for plan comparability • Provides a “rating” system for plans • Redefines small businesses as 1-100 employees • Must contract with “navigators” • Four levels of plans: • Catastrophic plans available to individuals under age 30 • Insurers must offer children-only plans • Exchange must provide a seamless application • Federal funding: implementation grants to states

21. Other Provisions • Co-Op program • Merging of individual and small group markets • Employer rewards • Health Care Choice Compacts • Nationwide plans

22. Individual Requirement to Purchase Insurance • Individuals required to obtain coverage • Can be an individual or group plan • Exemptions • religious objections, • financial hardship, • undocumented immigrants, • American Indians, • people earning under the tax filing threshold, and • short gaps in coverage. • Subsidies • up to 400% of federal poverty level

23. Individual Requirement to Purchase Insurance(continued) • Penalties for non-compliance • $95 per person in 2014 • $325 per person in 2015 • $695 per person in 2016 • Enforcement through IRS.

24. Small Employer Requirements and Tax Credits • Small employers exempt • Part - time workers • How are the counted? • Not required to offer coverage • Tax Credits for small employers • < 25 employees • <$50,000 in average annual salary • 35% of premium, 50% in 2014 • Credits phased out gradually

25. Large Employer Requirements to Purchase Insurance • >50 full time employees • Must offer insurance • If employees receive public subsidies employer pays $2,000 per year • Large employers whose employees who receive premium assistance pay the lesser of • 1) $3,000 per year • 2) $2000 per year • Penalties calculated monthly based on number of applicable employees • >200 employees must automatically enroll new employees

26. Impact on Market and Consumers • Premium rates will change • Minimum loss ratio requirements may mitigate some increased premiums • Uninsured individuals with preexisting conditions to be able to obtain coverage through the temporary insurance risk pool • Rating requirements and guarantee issue will impact small and individual markets

27. Impact on Market and Consumerscontinued • All plans issued going forward must meet federal requirements • Employers with existing group plans can continue to enroll new employees • All private plans sold after March 23rd must comply with new benefit provisions

28. Additional Information Ohio Consumers for Health Coverage • www.OhioConsumersForHealthCoverage.org • www.aarp.org • www.CommunityCatalyst.org • www.FamiliesUSA.org • www.HealthReformGPS.org – tracking news and developments • www.HDAdvocates.org – experts on people with disabilities • www.kff.org – Kaiser Family Foundation • www.NationalPartnership.org– working on delivery reforms

29. Cathy Levine, Executive Director UHCAN OHIO OCHC, Co-Chair (614) 456-0060 x 222 clevine@uhcanohio.org Col Owens, Senior Attorney, Legal Aid of Southwest Ohio OCHC Co-Chair 215 E. Ninth Street Cincinnati, Ohio 45202 (513) 300-3042 cowens@lascinti.org Kathleen Gmeiner, UHCAN Ohio OCHC Project Director (614) 456-0060 x 223 kgmeiner@uhcanohio.org Gene King, Director Ohio Poverty Law Center 555 Buttles Ave. Columbus, Ohio 43215 (614) 221-7201 gking@OhioPovertyLaw.org For More Information