The Affordable Care Act How we got here, how we re doing, and where we are heading.

Transcription

1 The Affordable Care Act How we got here, how we re doing, and where we are heading. May 16, 2014 Ross K. Airington, MPA

2 2

3 BACKGROUND 3

4 Why Is Health Reform Needed? In 2012, there were nearly 48 million uninsured Americans Since 2003, average health insurance premiums for family coverage have risen 80% Average annual cost of employer sponsored family coverage in 2013 = $16,351 Average employee contribution: $4,741 In 2013, only 57% of firms offered employer-sponsored coverage Source: The Kaiser Family Foundation and Health Research & Educational Trust, Employer Health Benefits: Summary of Findings. 4

5 Uninsured in DC/MD/VA DC: 62,900 (12%) MD: 758,500 (15%) VA: 1,073,200 (16%) Approximately 71.1% of uninsured Virginians live in families with a gross income at or below 200% FPL 200% FPL in 2013 = $47,100 for family of 4 Work Status of the Nonelderly Uninsured At Least One Full-Time Worker 47.4% No Working Adults 29.0% Only Part-Time Worker(s) 22.2% Child Not Living with Parents,1.3% Source: Macri, J. Lynch, V., Kenney, G., Profile of Virginia s Uninsured, 2010, The Urban Institute, Prepared for the Virginia Health Care Foundation, March

6 Health Insurance Matters! 25% less likely to have an unpaid medical bill 48.3% 40% less likely to borrow money or fail to pay other bills because of medical debt decrease in average health care costs per year 6.1% relative reduction in mortality rates Sources: Health Affairs, The New England Journal of Medicine, National Bureau of Economic Research 6

7 OVERVIEW OF THE AFFORDABLE CARE ACT 7

8 Patient Protection and Affordable Care Act (PPACA) Enacted in March, 2010 with the goals of: Ensuring access to quality health care Providing affordable health insurance to the uninsured Improving the quality and efficiency of care Improving public health Bolstering the health care workforce Increasing transparency Improving access to medical technology and much, much (much) more! 8

9 Patient Protection and Affordable Care Act (PPACA) Enacted in March, 2010 with the goals of: Ensuring access to quality health care Providing affordable health insurance to the uninsured By 2024 will expand coverage to 26 million currently uninsured Americans Net cost of coverage expansion is $1.383 trillion over 10 years ( ) Source: Congressional Budget Office, Updated Estimates of the Effects of the Insurance Coverage Provisions of the Affordable Care Act, April,

10 How is the law paid for? Individual & Business (> 50 employees) Tax Penalties for failure to purchase insurance Increased Taxes for High- Income Workers Annual Fee for Insurance Companies Tax on Cadillac Insurance Plans Provider Cuts Yearly payment updates to hospitals ( market basket updates ) are reduced Payment reductions if fail to meet certain quality criteria Medicaid and Medicare Disproportionate Share Hospital (DSH) payments Reduced by $14 billion and $22 billion respectively ( ) Tax on Medical Device & Drug Industries 10

11 How is the law paid for? Individual & Business (> 50 employees) Tax Penalties for failure to purchase insurance Increased Taxes for High- Income Workers Annual Fee for Insurance Companies Tax on Cadillac Insurance Plans Provider Cuts Yearly payment updates to hospitals ( market basket updates ) are reduced Payment reductions if fail to meet certain quality criteria Medicaid and Medicare Disproportionate Share Hospital (DSH) payments Reduced by $14 billion and $22 billion respectively ( ) Tax on Medical Device & Drug Industries 11

12 What Obamacare is NOT It s not socialized medicine or single-payer England has socialized medicine Most providers work for the government; most hospitals are owned by the government Canada has a single-payer plan Providers work in the private sector; hospitals are not owned by the government Bills go to the government (the single payer ) It s not a government takeover of the health care system. 12

13 COVERAGE EXPANSION 13

14 Coverage Expansion Enacts an Individual Mandate (Jan 1, 2014) Enacts an Employer Mandate (Jan 1, 2015 and Jan 1, 2016) Expands Medicaid to nonelderly population with incomes at or below 133% FPL (Jan 1, 2014) Creates a Health Insurance Marketplace (Jan 1, 2014) 14

15 INDIVIDUAL MANDATE 15

16 Individual Mandate Starting in 2014, everyone must either: 1. Have health insurance coverage 2. Have a coverage exemption 3. Pay a penalty 16

17 Individual Mandate: Penalties and beyond $95 Per adult $325 Per adult $695 Per adult OR 1% Of family income OR 2% Of family income Whichever is greater OR 2.5% Of family income Collected through tax returns Exempted: undocumented immigrants, Native Americans, and those who earn too little to file a tax return Source: The Kaiser Family Foundation 17

18 EMPLOYER MANDATE 18

19 Employer Mandate Beginning January 1, 2015, employers with 100 or more full-time or full-time equivalent employees must offer coverage that: Is affordable Costs no more than 9.5% of an employee s wages Provides minimum value Covers 60%+ of total covered costs to full-time employees and their dependent children 19

20 Incentives for Small Businesses Small business tax credit Fewer than 25 FTEs Annual wages between $25,000 and $50,000 Contribute at least 50% or more toward employees self-only health insurance premiums 2014: Eligible for up to 50% tax credit for the cost of the insurance (25% for non-profits) on a sliding scale Eligible for a total of two consecutive years 20

21 CONSUMER PROTECTIONS 21

22 Consumer Protections No one can be denied coverage due to a pre-existing condition No cancellation of coverage or lifetime benefit limits Free preventive care services Allows dependent children age 26 and under to stay on parent s plan Limited age/family rating and no gender rating 22

23 HEALTH INSURANCE MARKETPLACE 23

24 Health Insurance Marketplace The ACA requires the establishment of state-based or federally facilitated Health Insurance Exchanges (2014) Virginia defaults to a Federally Facilitated Marketplace (FFM) Health plans in the Exchange must provide coverage for 10 Categories of Essential Health Benefits 24

25 Healthcare.gov 25

26 Healthcare.gov 26

27 Healthcare.gov 27

28 So how did it go? 8 million people signed up for private insurance on the Marketplace 3 million more people enrolled in Medicaid and CHIP 5 million people enrolled in plans that meet ACA standards outside the Marketplace Source: The White House. FACT SHEET: Affordable Care Act by the Numbers. April 17,

29 HOW IT WORKS 29

30 Essential Health Benefits Ambulatory patient services Emergency services Hospitalization Maternity and newborn care Mental health and substance use disorder services, including behavioral health treatment Prescription drugs Rehabilitative and habilitative services and devices Laboratory services Preventive and wellness services and chronic disease management Pediatric services, including oral and vision care 30

31 Coverage Levels The ACA creates four benefit levels of coverage (Metal Levels) based on how much of the cost is covered The levels define the split between what the consumer pays and what the health plan pays Paid by Plan Paid by Consumer Platinum 90% 10% Gold 80% 20% Silver 70% 30% Bronze 60% 40% 31

32 Coverage Levels 32

33 INSURANCE AFFORDABILITY PROGRAMS 33

34 Insurance Affordability Programs Advance Premium Tax Credits (APTC) for individuals 100% to 400% FPL Individual: $11,490 to $45,960 Family of 4: $23,550 to $94,200 Cost-Sharing Reductions (CSR) for individuals below 250% FPL $28,725 individual; $58,875 family of 4 Silver plans only 34

35 Premium Tax Credits Determined by subtracting the applicant s expected contribution (based on % of income) from the annual premium for the Benchmark Plan 35

36 Premium Tax Credits Determined by subtracting the applicant s expected contribution (based on % of income) from the annual premium for the Benchmark Plan Benchmark Plan: Second-lowest Silver Plan available in the applicant s area 36

37 Premium Tax Credits Determined by subtracting the applicant s expected contribution (based on % of income) from the annual premium for the Benchmark Plan Benchmark Plan: Second-lowest Silver Plan available in the applicant s area $$$$ $$$ $$ $ 37

38 Premium Tax Credits Expected contribution is based on a sliding scale determined by the applicant s income FPL Income Premium as % of Income Income for Individual Expected Annual Individual Premium (Silver Plan) Maximum Out-of- Pocket Cap with Cost Sharing % 2% <$15,282 $305 $2, % 3-4% $15,282-$17,235 $458-$689 $2, % 4-6.3% $17,235-$22,980 $689-$1,448 $5, % % $22,980-$28,725 $1,448-$2,312 $6, % % $28,725-$34,470 $2,312-$3,275 $6, % 9.5% $34,470-$45,960 $3,275-$4,366 $6,350 Source: The Advisory Board, Navigating Health Insurance Exchanges, May

39 Premium Tax Credits Expected contribution is based on a sliding scale determined by the applicant s income FPL Income Premium as % of Income Income for Individual Expected Annual Individual Premium (Silver Plan) Maximum Out-of- Pocket Cap with Cost Sharing % 2% <$15,282 $305 $2, % 3-4% $15,282-$17,235 $458-$689 $2, % 4-6.3% $17,235-$22,980 $689-$1,448 $5, % 6.3% $22,980 $1,448 $6, % % $28,725-$34,470 $2,312-$3,275 $6, % 9.5% $34,470-$45,960 $3,275-$4,366 $6,350 Source: The Advisory Board, Navigating Health Insurance Exchanges, May

40 MEET JOHN 40

41 Premium Tax Credits FPL Income Premium as % of Income Income for Individual Expected Annual Individual Premium (Silver Plan) Maximum Out-of- Pocket Cap with Cost Sharing 200% 6.3% $22,980 $1,448 $5,200 41

42 Premium Tax Credits Expected contribution is based on a sliding scale determined by the applicant s income FPL Income Premium as % of Income Income for Individual Expected Annual Individual Premium (Silver Plan) Maximum Out-of- Pocket Cap with Cost Sharing % 2% <$15,282 $305 $2, % 3-4% $15,282-$17,235 $458-$689 $2, % 4-6.3% $17,235-$22,980 $689-$1,448 $5, % 6.3% $22,980 $1,448 $6, % % $28,725-$34,470 $2,312-$3,275 $6, % 9.5% $34,470-$45,960 $3,275-$4,366 $6,350 Source: The Advisory Board, Navigating Health Insurance Exchanges, May

43 Premium Tax Credits FPL Income Premium as % of Income Income for Individual Expected Annual Individual Premium (Silver Plan) Maximum Out-of- Pocket Cap with Cost Sharing 200% 6.3% $22,980 $1,448 $5,200 43

44 Premium Tax Credits FPL Income Premium as % of Income Income for Individual Expected Annual Individual Premium (Silver Plan) Maximum Out-of- Pocket Cap with Cost Sharing 200% 6.3% $22,980 $1,448 $5,200 44

45 Premium Tax Credits FPL Income Premium as % of Income Income for Individual Expected Annual Individual Premium (Silver Plan) Maximum Out-of- Pocket Cap with Cost Sharing 200% 6.3% $22,980 $1,448 $5,200 45

46 Premium Tax Credits FPL Income Premium as % of Income Income for Individual Expected Annual Individual Premium (Silver Plan) Maximum Out-of- Pocket Cap with Cost Sharing 200% 6.3% $22,980 $1,448 $5,200 46

47 Premium Tax Credits FPL Income Premium as % of Income Income for Individual Expected Annual Individual Premium (Silver Plan) Maximum Out-of- Pocket Cap with Cost Sharing 200% 6.3% $22,980 $1,448 $5,200 47

48 Premium Tax Credits FPL Income Premium as % of Income Income for Individual Expected Annual Individual Premium (Silver Plan) Maximum Out-of- Pocket Cap with Cost Sharing 200% 6.3% $22,980 $1,448 $5,200 48

49 Premium Tax Credits FPL Income Premium as % of Income Income for Individual Expected Annual Individual Premium (Silver Plan) Maximum Out-of- Pocket Cap with Cost Sharing 200% 6.3% $22,980 $1,448 $5,200 49

50 Premium Tax Credits FPL Income Premium as % of Income Income for Individual Expected Annual Individual Premium (Silver Plan) Maximum Out-of- Pocket Cap with Cost Sharing 200% 6.3% $22,980 $1,448 $5,200 50

51 Premium Tax Credits FPL Income Premium as % of Income Income for Individual Expected Annual Individual Premium (Silver Plan) Maximum Out-of- Pocket Cap with Cost Sharing 200% 6.3% $22,980 $1,448 $5,200 51

52 Premium Tax Credits FPL Income Premium as % of Income Income for Individual Expected Annual Individual Premium (Silver Plan) Maximum Out-of- Pocket Cap with Cost Sharing 200% 6.3% $22,980 $1,448 $5,200 52

53 Premium Tax Credits 53

54 Premium Tax Credits 54

55 Insurance Affordability Programs Premium Tax Credits for individuals 100% to 400% FPL Individual: $11,490 to $45,960 Family of 4: $23,550 to $94,200 Cost-Sharing Reductions (CSR) for individuals below 250% FPL ($28,725 individual; $58,875 family of 4) Silver plans only 3 CSR tiers based on income: 100%-150% FPL: 94% AV 150%-200% FPL: 87% AV 200%-250% FPL: 73% AV 55

56 Insurance Affordability Programs Premium Tax Credits for individuals 100% to 400% FPL Individual: $11,490 to $45,960 Family of 4: $23,550 to $94,200 Cost-Sharing Reductions (CSR) for individuals below 250% FPL ($28,725 individual; $58,875 family of 4) Silver plans only 3 CSR tiers based on income: 100%-150% FPL: 94% AV 150%-200% FPL: 87% AV 200%-250% FPL: 73% AV 56

57 PLANS IN VIRGINIA 57

58 Marketplace Plans in Virginia Virginia Federally Facilitated Marketplace 9 insurers offering 105 individual and family plans Richmond Aetna CoventryOne Anthem HealthKeepers Optima Health Outside Richmond Anthem BlueCross BlueShield Kaiser Permanente Innovation Health Insurance Co. CareFirst Bluechoice CareFirst BlueCross BlueShield Monthly Premiums Lowest Bronze: $139 Lowest Silver: $188 58

59 Open Enrollment Has Ended 59

60 Special Enrollment Period After Open Enrollment has ended, you may enroll in or change plans within 60 days of a qualifying event Qualifying events: Loss of coverage Gaining or becoming a dependent Gaining lawful presence Enrollment errors of the Marketplace Gaining or losing eligibility for premium tax credits Relocation Exceptional circumstances 60

61 INTERLUDE: QUALITY PROGRAMS 61

62 Reforming Care Delivery & Quality Improvement Goal is to promote payment for quality versus payment for volume Examples of ACA initiatives include: Accountable Care Organizations Bundling Pilots Primary Care Medical Home Models Penalties for Avoidable 30-day Readmissions Currently a 1% reduction; in Oct increases to 2% For the following conditions: pneumonia, heart failure, and heart attack Oct. 2014, 3 additional measures: total hip, total knee, and COPD Hospital Value-Based Purchasing Measures largely based on Inpatient Quality Reporting measures 62

63 MEDICAID EXPANSION 63

64 Restrictive Medicaid Eligibility in Virginia Example: Family of Three Pregnant women and children up to age 18 cannot have income higher than $25,975* Elderly and disabled people cannot have income higher than $15,624 Working parents cannot have income higher than $5,859 *Virginia s FAMIS program covers children and pregnant women up to 200 percent FPL or $39,060 for a family of three. 64

65 Medicaid Expansion 133% Year Match by SFY**(July to June) Federal State 100% % 0% Federal Poverty Level 50% % 0% % 0% % 5% % 6% 0% Pregnant Women * * Children 0-5 Children 6-18 * Elderly & Disabled Parents Childless Adults % 7% 2020 beyond 90% 10% Current Elig Federal Reform *Covers up to 200% FPL with FAMIS ** 65

66 Projected Medicaid Growth in Virginia Under the ACA, the increase in Medicaid enrollment could grow by more than 250,000 Number is lower than previous estimates, due to the application of expected uptake rate of 69% The expanded Medicaid enrollment is estimated to result in a savings of $604 million through 2022* *Medicaid DSH and Indigent Care, Presentation to the Senate Finance Committee, Health and Human Resources Subcommittee, Scott Crawford, Department of Medical Assistance Services, January 27, 2014, 66

67 Impact of Supreme Court s Decision Decision rendered June 28, 2012 Major components of decision: Individual Mandate is constitutional as a tax Medicaid Expansion itself is constitutional; but the allor-nothing approach is not Unconstitutionally coercive to tell states they must expand or risk losing all of their Medicaid funding Medicaid Expansion (from current levels up to 133% FPL) becomes optional for states 67

68 68

69 2012 Electoral College Map 69

70 Medicaid Expansion 133% Year Match by SFY**(July to June) Federal State 100% % 0% Federal Poverty Level 50% % 0% % 0% % 5% % 6% 0% Pregnant Women * * Children 0-5 Children 6-18 * Current Elig Elderly & Disabled Federal Reform Parents Childless Adults % 7% % 10% 2021 beyond 90% 10% *Covers up to 200% FPL with FAMIS ** 70

71 WHAT S AT STAKE? 71

72 Key Facts about the Uninsured Population, The Henry J. Kaiser Foundation, 72

73 What s at stake in Virginia if there is no expansion? The Coverage Gap 190,000 Adults in VA 5.2 Million Nationwide Source: Kaiser Family Foundation, The Coverage Gap: Uninsured Poor Adults in States that Do No Expand Medicaid, October

74 DSH Reductions Federal requirement that states provide Disproportionate Share Hospital (DSH) payments to hospitals that serve a disproportionate number of Medicaid patients Assumption that these facilities also serve large percentages of uninsured Each state receives an allotment of federal DSH funds States develop guidelines for distribution of DSH funds to hospitals Between Medicaid DSH allotments to states will be reduced Up to 50% in the latter years Source: Medicaid DSH and Indigent Care, Presentation to the Senate Finance Committee, Health and Human Resources Subcommittee, Scott Crawford, Department of Medical Assistance Services, January 27, 2014, 74

75 Virginia DSH Allotment How Virginia uses its DSH allotment: Partial financial relief to 33 private hospitals that have a high proportion of Medicaid patients Maximize use of federal funds to support indigent care at state teaching hospitals (UVA and VCU) VCUHS and UVA Medical Center receive the majority of the state s DSH allocation to support their Indigent Care programs Medicaid DSH and Indigent Care, Presentation to the Senate Finance Committee, Health and Human Resources Subcommittee, Scott Crawford, Department of Medical Assistance Services, January 27, 2014, 75

76 THE PATH TO EXPANSION IN VIRGINIA 76

77 Path to Medicaid Expansion in Virginia Budget adopted by the 2013 VA General Assembly included language allowing for Medicaid expansion up to 138% FPL, if and only if certain reforms are made to the existing Medicaid program 77

78 Oversight of Medicaid Expansion in Virginia Budget language created the Medicaid Innovation and Reform Commission (MIRC) Must determine if the appropriate phases of reform have been met If conditions have been met, then the Commission shall approve Medicaid coverage expansion up to 133% FPL by July 1, 2014, or as soon as feasible thereafter Sunset Clause: If federal commitment drops below levels stated in ACA, then DMAS will dis-enroll the newly covered individuals 78

79 Alternative Expansion Models Some states are now pursuing alternative approaches to cover more low-income residents Arkansas, Iowa, and Michigan have received approval to customize their expansions using a private option Pennsylvania has applied for a similar waiver New Hampshire has passed legislation authorizing a 2-1/2 year pilot program utilizing the private option 79

80 Private Option Uses Medicaid funds to pay premiums for Marketplace QHPs for newly eligible Medicaid beneficiaries Takes advantage of ACA-mandated enhanced FMAP May assess premiums and/or cost-sharing Premiums and cost-sharing may be reduced through healthy behavior (e.g., health assessments) Pennsylvania s plan includes premium reductions for participating in specified work search activities 80

81 Alternative Expansion Models Source: The Commonwealth Fund, The Affordable Care Act s Medicaid Expansion: Alternative State Approaches, March 28,

82 Marketplace Virginia Senate budget includes language that calls for a Private Option in lieu of traditional Medicaid Expansion Based on similar proposals in Arkansas, Iowa, Michigan, and Pennsylvania Provides premium assistance to the expansion population who buy private plans on the Marketplace Requires skin in the game contributions up to 5% of household income Requires incentives for job search and work activities Significantly reduces the authority of the MIRC 82

83 Will Marketplace Virginia Work? Federal regulations Must be cost effective (can t cost more than direct coverage under the Medicaid state plan) Must include wrap-around benefits to supplement private plan benefits packages so that all Medicaid state plan benefits are covered 83

84 What happens next? Unable to agree on Marketplace Virginia, the General Assembly adjourned on March 8 without passing a budget Governor McAuliffe called a special legislative session on March 24 Proposed two-year pilot program that included traditional Medicaid expansion The GOP-dominated House quickly rejected his proposal House and Senate remain deadlocked 84

85 CONCLUSION 85

86 Conclusion ACA attempts to extend health care coverage to the majority of the uninsured in the US Medicaid expansion Health Insurance Marketplace plans Individual Mandate Employer Mandate Virginia remains undecided on Medicaid expansion No budget until lawmakers agree on whether to expand A great deal is at stake for Virginia s poorest residents and the health care safety net DSH funding reductions Coverage Gap 86

87 PARTING THOUGHTS 87

88 QUESTIONS? 88

89 Additional Questions? Ross Airington Health Policy Analyst VCU Office of Health Innovation 89

90 RESOURCES 90

91 Need More Information? VCU Office of Health Innovation HealthCare.gov ENROLL Virginia! Health Reform GPS Kaiser Family Foundation Kaiser Health News America s Essential Hospitals American Hospital Association (AHA) 91