10/14/2013. Implementing the Affordable Care Act in NC: A 2013 Update. North Carolina Institute of Medicine. National Health Reform Legislation

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1 Implementing the Affordable Care Act in NC: A 2013 Update NC County Commissioners Assoc. Pam Silberman, JD, DrPH President & CEO October 15, 2013 North Carolina Institute of Medicine Quasi-state agency chartered in 1983 by the NC General Assembly to: Be concerned with the health of the people of North Carolina Monitor and study health matters Respond authoritatively when found advisable Respond to requests from outside sources for analysis and advice when this will aid in forming a basis for health policy decisions NCGS National Health Reform Legislation Patient Protection and Affordable Care Act (HR 3590) (signed into law March 23, 2010) Health Care and Education Affordability Act of 2010 (HR 4872) (also referred to as reconciliation ) The combined bills are often referred to as the Affordable Care Act (or ACA) 3 1

2 Agenda Challenges facing North Carolina Coverage and access barriers Overall population health Quality Costs National and state coverage estimates Conclusion 4 Agenda Challenges facing North Carolina Coverage and access barriers Overall population health Quality Costs National and state coverage estimates Conclusion 5 Problem #1 Insurance Coverage and Access to Care Approximately 1.5 million uninsured in North Carolina in 2012 (20% of the nonelderly population). Being uninsured has a profound impact on health and financial wellbeing. US Census. Current Population Survey (CPS) Annual Social and Economic Supplement. Health Historical Tables. Table HIA-6. NCIOM: County level estimates of uninsured ( ) 6 2

3 Coverage Provisions Pre-Supreme Court Decision Most people will be required to have health insurance coverage in The ACA builds on our current system of providing health insurance coverage. Public coverage: Many low income people with incomes <138% Federal Poverty Levels (FPL) would gain coverage through Medicaid. Employer-based coverage: Most other people would get health insurance through their employer. Individual (non-group) coverage: Some people would qualify for subsidies to purchase coverage on their own through the Health Insurance Marketplace. 7 Supreme Court Challenge to ACA Supreme Court, in National Federation of Independent Businesses vs. Sebelius: Upheld the constitutionality of the individual mandate (under Congress taxing authority). Struck down the government s enforcement mechanism for the Medicaid expansion, essentially creating a voluntary Medicaid expansion. Left the rest of the ACA intact. National Federation of Independent Businesses vs. Sebelius, 567 US (2012) 8 Existing NC Medicaid Income Eligibility (2013) (Percent of Federal Poverty Level) Currently, childless, non-disabled, nonelderly adults can not qualify for Medicaid Because of categorical restrictions, Medicaid only covers 30% of lowincome adults in North Carolina Kaiser Family Foundation. State Health Facts. Calculations for parents based on a family of three. Note: 100% of the federal poverty levels (FPL) (2013) = $11,490/yr. (1 person), $15,510 (2 people), $19,530 (3 people), $23,550 (4 people) 9 3

4 NC Medicaid Income Eligibility if Expanded (2014) 200% Medicaid expansion would provide coverage to approximately 500,000 new eligibles in 2014, if the state chose to expand Medicaid. Even without expansion to new eligibles, an additional 70,000-90,000 people likely to enroll (currently eligible but not enrolled). Note: 138% FPL (2013)= $15,856/yr (1 person), $21,404 (2 people), $26,951 (3 people), $32,499 (4 people). 10 Medicare Changes Enhances coverage of clinical preventive services (Sec , 10402, 10406) Phases out the gap in the Part D donut hole by 2020 (Sec. 3301, 3315, as amended by 1101 Reconciliation) Strengthens the financial solvency of the Medicare program by 9 years ( ) All savings from the legislation must be used to extend the solvency of Medicare trust funds, reduce Medicare premiums and other cost-sharing for beneficiaries, and improve or expand guaranteed Medicare benefits and protect access to Medicare providers. (Sec. 3601) 11 Employer Responsibilities Employers with 50 or more full-time employees required to offer insurance to the full-time employee and his/her dependents or pay penalty (Sec. 1201, 1513, amended Sec Reconciliation) Employers with less than 50 full-time employees exempt from penalties. (Sec. 1513(d)(2)) Employers with 25 or fewer employees and average annual wages of less than $50,000 can receive a tax credit. (Sec. 1421, Sec ) Note: the requirement that employers offer health insurance coverage to their employees was delayed until

5 Individual Mandate Most citizens and legal immigrants will be required to pay penalty if they do not have qualified health insurance, unless exempt. (Sec. 1312(d), 1501, amended Sec in Reconciliation) Penalties: Must pay the greater of: $95/person or 1% taxable income (2014); $325 or 2.0% (2015); or $695 or 2.5% (2016), increased by cost-of living adjustment* No individual or family will have to pay more in penalties than they would have paid for the national average bronze plan. 13 Individual Mandate and Exemptions Certain groups are exempt from the penalties, including: Those who would have to spend more than 8% of their income for the lowest cost premium. Individuals who would have been eligible for Medicaid (in states that choose not to expand Medicaid). People who do not have to pay taxes because their income is too low. Certain people with religious exemptions. Undocumented immigrants.* Prisoners, while incarcerated. *Undocumented immigrants are exempt from the coverage mandate because they are not allowed to purchase health insurance through the marketplace. 14 Federally Facilitated Marketplace In North Carolina, the federal government has created two marketplaces: for individuals, and small businesses (called the SHOP). (Sec. 1311, 1321) The marketplace will: Provide standardized information (including quality and costs) to help consumers and small businesses choose between qualified health plans. Links to provider directories. Determine eligibility for the subsidy. Facilitate enrollment for subsidized insurance, Medicaid and NC Health Choice through use of insurance navigators or certified application counselors. 15 5

6 Metal Levels Four levels of health insurance available in the marketplace. Bronze: The plan has a 60% actuarial value. That means that on average, the plan will pay for 60% of expenses for covered services, the individual will pay the remaining 40% in out of pocket expenses (deductibles, coinsurance, or copayments) Silver: The plan has a 70% actuarial value. Gold: The plan has a 80% actuarial value. Platinum: The plan has a 90% actuarial value. Catastrophic (high-deductible) plans will also be available to young adults (<age 30) or families for whom the lowest cost plan exceeds 8% of their income 16 Subsidies to Individuals Subsidies to help pay for health insurance premiums will be available to some individuals to purchase coverage through the Health Insurance Marketplace. Eligible individuals include those with incomes between % FPL on a sliding scale basis, if not eligible for government coverage or affordable employer-sponsored insurance (Sec. 1401) Family Size 1: $11,490/yr. (100% FPL) - $45,960/yr. (400% FPL)* Family Size 4: $23,550 - $94,200 If states do not expand Medicaid, most poor people (<100% FPL) not eligible for subsidies to purchase coverage in the Marketplace *2013 Federal Poverty Level 17 Sliding Scale Subsidies Individual or family income Maximum premiums (Percent of family income) % FPL 2% of income Out-ofpocket cost sharing:* Out-of-pocket cost sharing limits (2014)** 6% $2,250 (ind)/$4,500 (more than one person) % FPL 3-4% 6% $2,250 / $4, % FPL 4-6.3% 13% $2,250 / $4, % FPL % 27% $5,200 / $10, % FPL % 30% $6,350/ $12, % FPL 9.5% 30% $6,350/ $12, % + FPL No limit 30% $6,350 / $12,700 *Out-of-pocket cost sharing includes deductibles, coinsurance, and copays, but does not include premiums, noncovered services, or services obtained out of network. Subsidies tied to the second lowest cost silver plan in the market. 18 6

7 Subsidies: Smith Family Example How do premium subsidies work? Assume the Smith family has four people and a family income that equals $47,150/year (slightly in excess of 200% FPL in 2013). They want to purchase the second lowest cost silver plan, assuming a premium cost of $10,000/year. They would pay $2,970/year (or ~$248/month) for the second lowest cost silver plan in the marketplace for their four family members (6.3% of their income). The federal government would contribute $7,030/year for their insurance, and would make the payments directly to the insurer. Smith family can use the $7,030 subsidy to purchase any plan in any level (except catastrophic) 19 Subsidies: Smith Family Example How does the out-of-pocket cost sharing work? Instead of paying for 30% of the costs out of pocket, the Smiths would pay 27% of the costs of medical care out of pocket (in deductibles, co-insurance, or copayments). Once the Smiths pay $5,200 (per individual) or $10,400 (per family) in deductibles, co-insurance and co-payments, the insurance company would pay 100% of the costs of covered services for the rest of the insurance year. Cost sharing reductions tied to silver plans. 20 Essential Benefits Package Most insurance must cover: * Well-baby, well-child care for children under age 21 (Sec. 1001) Recommended preventive services and immunizations with no costsharing (Sec. 1001, 10406) Mental health and substance abuse parity law applies to qualified health plans (Sec. 1311(j)) Insurers offered in the nongroup or small group market must offer an essential health benefits package:* (Sec. 1302) Hospital services; professional services; prescription drugs; rehabilitation and habilitative services; mental health and substance use disorders; maternity care; oral health and vision services for children. * With some exceptions, existing grandfathered plans not required to meet new benefit standards or essential health benefits. 21 7

8 Other Insurance Consumer Protections Beginning in 2014, insurers may not deny coverage or charge people more because of their pre-existing health status. (Sec. 1201) Premiums can only vary based on age (3:1 difference for adults), geography, family composition, and tobacco use (1.5:1 difference) for individual and small group plans. Cannot impose annual or lifetime limits in health plans. (Sec. 1001, 10101) 22 NC Qualified Health Plans Blue Cross Blue Shield of North Carolina (BCBSNC) is offering 26 plans Three network plan designs (some networks have more limited choice of providers than others) Plans are available in all metal levels and catastrophic plans Health Savings Account-eligible plans are available Plans are available in every county Coventry is offering 25 plans Two network plan designs Plans are available in the Bronze, Silver, and Gold metal levels and catastrophic HSA-eligible plans are available Plans are available covering 39 counties No Wrong Door ACA creates a no wrong door enrollment system so people can enroll in Medicaid, NC Health Choice, or private coverage through the Marketplace. Same application used for all programs. Application will request information on: Family composition, age, income, citizenship/immigration status, SSN, preferred language, American Indian/Alaska Native status, employer information (including availability of insurance coverage) Other information will be required if a person is applying for Medicaid on the basis of age or disability (eg, resource test still applies) 24 8

9 Simplified Application and Enrollment Process Step 2: Verify identify, income, citizenship, and immigration status through online data from federal databases Federal Marketplace Step 1: Person can apply by phone, online, or with personal help Step 3: Screen to determine if potentially eligible for Medicaid/CHIP Step 4a: If yes, application sent to NC DHHS. Contact individual to reverify identity. Use federal and state administrative databases to determine eligibility. If eligible, enroll in Medicaid/ NC Health Choice Step 4 b: If no, determine eligibility for subsidies, and pick an insurance plan Same process can work in reverse if person first applies at DSS 25 Initial Enrollment Period Initial enrollment period will run from October 1, 2013 through March 31, If you fail to enroll during open enrollment period, you are not eligible until next open enrollment period. Certain exceptions: If you are eligible for Medicaid or NC Health Choice, you can apply at any time during the year. If you meet other qualifying event can apply for coverage in the Marketplace. Examples: birth of child, divorce, loss of job or change in hours that would make person eligible for subsidy (or change in subsidy level) 26 Enrollment Assisters Different types of people will be trained to help people enroll: Navigators. Federal government contracted with different organizations across state to provide education, outreach, and enrollment facilitation. Certified application counselors. Trained volunteers. Community health centers. Community health centers received federal grants to hire people to help with enrollment. Agents/brokers. All official enrollment assisters will need to be trained and certified by federal government. 27 9

10 Important Contact Information Federal website to apply: cuidadodesalud.gov (for Spanish) North Carolina website to apply Epass.nc.gov Paper applications can be accessed at: -and-articles/publications-and-articles.html To make appointment with NC navigator or Community Health Center for assistance (will begin taking appointments October 14) Federal website: localhelp.healthcare.gov 28 Other Provisions to Expand Access The ACA included funding to: Expand the number of community health centers. Expand support for school based health centers. Pay for loan forgiveness for health professionals willing to work in underserved areas. Some new funds available to increase health professional workforce. 29 Agenda Challenges facing North Carolina Coverage and access barriers Overall population health Quality Costs National and state coverage estimates Conclusion 30 10

11 Problem #2: Population Health North Carolina ranks 33 rd of the 50 states and DC in population health measures in (America s Health Rankings, 2012) North Carolina ranked 31 st in determinants of health (eg, smoking, binge drinking, obesity, poverty, preventable hospitalizations). North Carolina ranked 38 th in health outcomes (eg, diabetes, poor physical and mental health days, cancer and cardiovascular deaths, infant mortality rate, premature deaths). America s Health Rankings Affordable Care Act Prevention and Public Health Trust Fund to invest in prevention, wellness, and public health activities (Sec. 4002) ACA initially appropriated $500 million in FY 2010 increasing to $2 billion over time.* Creates a national prevention, health promotion, and public health council to establish public health and prevention priorities for the country (Sec. 4001) Priority areas include: tobacco free living, preventing drug abuse or excessive alcohol use, health eating, active living, injury and violence free living, reproductive and sexual health, and mental and emotional wellbeing. * Will reach $2 billion in ACA Prevention Grants North Carolina has received ACA funds to support greater investment in prevention and health promotion. For example: ~$7.5 million to support multi-faceted interventions for tobacco free living, active living and healthy eating, and use of evidence-based clinical and other preventive services. ~$1.8 million to assist pregnant and parenting teens and women in high needs counties. ~$5.5 million to implement evidence-based maternal, infant, and early childhood home visiting programs

12 Agenda Challenges facing North Carolina Coverage and access barriers Overall population health Quality Costs National and state coverage estimates Conclusion 34 Problem #3: Quality To Err is Human estimated that preventable medical errors in hospitals led to between 44,000-98,000 deaths in (Institute of Medicine, 1999) People only receive about half of all recommended ambulatory care treatments. (E. McGlynn, et. al. NEJM, 2003; Mangione-Smith, et. al. NEJM, 2007) 35 Affordable Care Act The ACA directs the HHS Secretary to establish national strategy to improve health care quality. (Sec. 3011, 3012) Funding to CMS to develop quality measures (i.e., health outcomes, functional status, transitions, consumer decision making, meaningful use of HIT, safety, efficiency, equity and health disparities, patient experience). (Authorizes $75M for each FY ; Sec ) Plan for the collection and public reporting of quality data. (Sec. 3015, 10305, 10331) Begins paying providers on the basis of quality of care provided, not just volume (called value-based purchasing )

13 Agenda Challenges facing North Carolina Coverage and access barriers Overall population health Quality Costs National and state coverage estimates Conclusion 37 Problem #4: Costs US spending on health care rising far more rapidly than other costs in our society. US spends more on health care than any other industrialized nation. Health care costs have historically risen at about 3 times the rate of inflation. OECD Health Data Book Total expenditures, Percent GDP, Total Expenditures, per capita, us $ PPP. KFF. State Health Facts. 38 Employer-Sponsored Premiums Rising Much Faster than Inflation (NC, ) Sources: ESI: Medical Expenditure Panel Survey, US Agency for Healthcare Quality and Research. Insurance Component. CPI: Bureau of Labor Statistics

14 Reducing Rate of Increase in Health Care Spending: ACA No magic bullets to reduce rising health care costs ACA includes new opportunities to test new models of care delivery and payment models in Medicare and Medicaid to improve quality, health, and reduce unnecessary health care expenditures Once new models are shown to work in different communities and with different delivery systems, Secretary of HHS has the authority to implement broadly in other communities. 40 Affordable Care Act New models of care will reward health professionals and health care systems for: 1) Improving population health 2) Improving health care quality and health outcomes 3) Reducing health care costs Some of the new models being tested in North Carolina (and nationally) include: patient centered medical homes, bundled payments, and accountable care organizations. 41 Agenda Challenges facing North Carolina Coverage and access barriers Overall population health Quality Costs National and state coverage estimates Conclusion 42 14

15 Changes in Coverage Pre- and Post- Reform (CBO estimates, 2022 after Supreme Court decision) -4 Congressional Budget Office. July North Carolina Expansion Estimates Medicaid likely to grow by 70,000-87,000 people (woodwork group) Initial state estimates were that ~660,000 people* would purchase individual (non-group) coverage in the Marketplace (2014). Of these: ~300,000 would have been previously uninsured and may qualify for subsidies ~300,000 would have previously had coverage they purchased in the non-group market. ~70,000 may switch from employer based coverage to the Marketplace. Another ~180,000 of the potential Medicaid expansion group may be income eligible for the Marketplace (incomes between % FPG) *Initially Milliman estimates assumed mandatory Medicaid expansion. 44 Agenda Challenges facing North Carolina Coverage and access barriers Overall population health Quality Costs National and state coverage estimates Conclusion 45 15

16 ACA: Outstanding Challenges The ACA presents many new challenges to the state. If state chooses not to expand Medicaid, the poorest people will lack insurance coverage and they will be ineligible for subsidies. May not be sufficient provider supply in 2014 to handle health care needs of newly insured, and will continue to be maldistribution issues. Some providers and higher income individuals will pay more in taxes. We do not yet have the magic bullet that will ensure better quality and reduced health care costs. 46 ACA: New Opportunities However, ACA offers many opportunities, including: Expanding coverage to more of the uninsured. Makes health insurance coverage more affordable to many (although some people may have to pay more for coverage). Helping improve overall population health and expands coverage of preventive services. Greater emphasis on quality of care. Potential to reduce longer term cost escalation. 47 Thanks The NCIOM would like to thank the following North Carolina foundations for their support of ACA educational sessions The Duke Endowment Kate R. Reynolds Charitable Trust Cone Health Foundation Reidsville Area Foundation 48 16

17 Questions 49 NCIOM Health Reform Resources Ushering in a New Era in Health Care. Implementation of the Affordable Care Act in North Carolina /03/HR-Interim-Report.pdf Implementation of the Affordable Care Act in North Carolina. NCMJ, May/June 2011;72(2): What Does Health Reform Mean for North Carolina? NCMJ, May/June 2010;71:3 NCIOM: North Carolina data on the uninsured 50 National Health Reform Resources Patient Protection and Affordable Care Act. Consolidated Bill Text US Health Reform website National Federation of Independent Business v. Sebelius Congressional Budget Office. Selected CBO Publications Related to Health Care Legislation, Kaiser Family Foundation SOPHE Issue Brief. Affordable Care Act : Opportunities and Challenges for Health Education Specialists. April FINAL.pdf 51 17

18 For More Information Pam Silberman, JD, DrPH President & CEO North Carolina Institute of Medicine Ext