High-Level Overview of the Affordable Care Act Coverage Continuum

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1 High-Level Overview of the Affordable Care Act Coverage Continuum The Supreme Court decision affirming the Affordable Care Act (ACA) settles the law for now except in one significant way: the newly-optional status of the Medicaid expansion. Under the law s original assumptions, the primary interlocking parts of Medicaid, CHIP, Basic Health Plan, Individual Exchange, and SHOP Exchange create a coverage continuum for all Floridians, regardless of employment or economic situation. By giving states the option of turning down the Medicaid expansion, uncertainty is introduced into this continuum in ways that will remain unclear until HHS issues new guidance or amends its existing rules. This document outlines the coverage continuum under both scenarios. Its goal is to illustrate the government-sponsored health insurance choices Florida families will have as their incomes and employment status evolve. Secondarily, this overview illustrates how the programs will be tied together operationally at the time of initial application, annual eligibility review, and in response to changes in a family s economic circumstances. The information in this document is relevant regardless of whether the Exchange is operated by the state, HHS, or a partnership between the two entities. While the primary focus of this document is how ACA expands the government-sponsored coverage continuum, there is one additional impact worth noting. The ACA individual coverage mandate, combined with the outreach and publicity likely to accompany the rollout of coverage in 2014, will result in the enrollment of hundreds of thousands of children in existing CHIP and Medicaid programs. Coverage Continuum Components On January 1, 2014, the following new government-sponsored programs will be added to the existing ones, most of which are targeted to children, pregnant women, the elderly, and persons with disabilities: Medicaid expansion for all non-disabled, non-elderly citizens and legal immigrants not subject to the five-year waiting period with incomes up to 133 percent FPL (state option) Small Business Health Options (SHOP) Exchange for employees who work for a small business (defined as business with up to 50 or 100 employees, depending on a state s policy) American Health Benefit Exchange () for individuals who lack access to affordable employer-sponsored coverage, the self-employed, and the unemployed Basic Health Plan (state option) Except for legal immigrants subject to the five-year bar, families in the percent FPL range who receive coverage in the are eligible for sliding scale premium and cost-sharing subsidies. These are usually called premium tax credits and reduced cost-sharing and the federal assistance is proportionally much greater at the lower income ranges (with 250 percent FPL being the break-point where the subsidy values drop significantly). 1 P a g e

2 Immigrants subject to the five-year bar are eligible for subsidies for incomes ranging from percent FPL. Four Illustrative Florida Families That Will be Affected by ACA A helpful way to outline the coverage continuum from a family and operational perspective is to describe some hypothetical Florida families that will straddle multiple coverage options when the programs become available on New Year s Day of These blended families are far from unusual or idiosyncratic and they provide the greatest insights into the programmatic and operational relationship the various programs will have with one another at the primary stages of application, renewal, initial and open enrollment. They also illustrate how the programs are likely to intersect with traditional employer-sponsored coverage. Johnson Family: Richard Johnson works at six-person real estate firm in Tampa where sales have been poor. His annual income is at 160 percent of the Federal Poverty Level (FPL). His wife Cynthia is seven months pregnant and the couple has two sons, Billy who is four years old and Jimmy who is 10. To increase his earnings and job security, Richard is looking for a job as an agent at a larger firm. Ortega Family: Maria is a single parent in Miami who works at a local retailer while also taking evening classes to become a paralegal. She is a first generation immigrant who has been in America legally for 4 ½ years. She has a three-year-old son, Marco, and her income is at 95 percent FPL. Blevins Family: Yolanda is a self-employed accountant and her husband, Roland, is an unemployed web designer. This Jacksonville couple s current income is 180 percent FPL, a three-fold decrease from several years ago when Roland had steady free-lance work. They are trying to conceive a child and have decided that if Yolanda becomes pregnant, Roland will need to get an IT job at a medium-sized or large local business. Richardson Family: Benny is a self-employed carpenter in a small Panhandle community. His wife, Amy, has a long-term disability that makes it difficult for her to work, although she periodically does free-lance telemarketing from home. While Benny s income fluctuates considerably, it currently is at 220 percent FPL. Family Impacts if the Medicaid Expansion Proceeds Each of the families goes through economic and employment changes in 2014 that affect their eligibility for different kinds of health care assistance within a policy model in which the Medicaid expansion is implemented in Florida as envisioned in ACA. 2 P a g e

3 These examples assume that Florida implements the Basic Health Plan (BHP) for adult coverage in the percent FPL range. While the individual program components are indicated, some or all of these could be grouped together under a single program name, such as Florida FamilyCare, to minimize confusion and promote continuity of care. Johnson Family: Richard is eligible for the BHP, Cynthia is eligible for Medicaid until she has her baby, Billy qualifies for MediKids and Jimmy qualifies for FHKC. When Cynthia has her baby, she switches to BHP and the infant is eligible for Medicaid. When Billy has his fifth birthday in April, his eligibility switches to FHKC. In September, Richard lands a new job that pushes his income to 240 percent at a 40-person real estate firm participating in the SHOP. Because of the higher income and the availability of SHOP coverage, each member of the family switches to the SHOP without any government subsidy except the pre-tax treatment of the health insurance benefit. Ortega Family: Because of her immigration status, Maria begins subsidized coverage in the while Marco qualifies for Medicaid. In July, when Maria is no longer subject to the five-year bar, she joins Marco on Medicaid. In December, she lands her first job as a paralegal and her income reaches 150 percent FPL. This pushes her into the BHP and Marco switches to MediKids. Blevins Family: Yolanda and Roland begin coverage in the BHP. When Yolanda becomes pregnant in May, she switches to Medicaid and Roland starts his search for a steady IT job. In November, Roland is hired at a large company that offers traditional employer-sponsored coverage and their family income rises to 425 percent FPL. Both adults switch to the employer-sponsored plan, which will also provide coverage to the baby when he is born. Richardson Family: Benny and Amy qualify for subsidized coverage in the. Disaster strikes in September, when Benny hurts himself on the job and has to stop working indefinitely. Their income drops to 80 percent FPL from Amy s intermittent work. They switch to Medicaid. Medicaid Expansion Is Declined These examples assume that Florida turns down the Medicaid expansion and declines the BHP option as well. Johnson Family: Richard is eligible for subsidized coverage in the, Cynthia is eligible for Medicaid while she is pregnant, Billy qualifies for MediKids and Jimmy qualifies for FHKC. When Cynthia has her baby, she joins her husband in the and the newborn is eligible for Medicaid. When Billy has his fifth birthday in April, his eligibility switches to FHKC. In September, Richard lands a new job that pushes his income to 240 percent at a 40- person real estate firm participating in the SHOP. Because of the higher income and the 3 P a g e

4 availability of SHOP coverage, each member of the family switches to the SHOP without any government subsidy except the pre-tax treatment of the health insurance benefit. Ortega Family: Because of her immigration status, Maria begins subsidized coverage in the while Marco qualifies for Medicaid. In July, when Maria is no longer subject to the five-year bar, she loses her eligibility for subsidized coverage in the because her income is below 100 percent FPL. She is forced to drop coverage entirely. In December, she lands her first job as a paralegal and her income rises to 150 percent FPL. This pushes her back into the subsidized range and Marco switches to MediKids. Blevins Family: Yolanda and Roland begin coverage in the. When Yolanda becomes pregnant in May, she switches to Medicaid and Roland starts his search for a steady IT job. In November, Roland is hired at a large company that offers traditional employer-sponsored coverage and their family income rises to 425 percent FPL. Both adults switch to the employer-sponsored plan, which will also provide coverage to the baby when she is born. Richardson Family: Benny and Amy qualify for subsidized coverage in the. Disaster strikes in September, when Benny hurts himself on the job and has to stop working indefinitely. Their income drops to 80 percent FPL from Amy s intermittent work. They lose their eligibility for subsidized coverage in the because their income is below 100 percent FPL. They must go back to being uninsured. Operational Implications As these four families show, the programs will functionally intersect with one another in some important ways. The following are some of the most important operational linkages that must be strategically considered: Application and renewal: ACA s requirement that families provide application information only once means that the data contained in the Medicaid, CHIP, and Exchange eligibility systems must be tightly integrated along with the federal data hub. Customer service: Multiple call centers, online chat, addresses, and social media sites are possible not just for each program but for the health plans associated with them. Without a coherent and strategic approach to customer service across all programs, widespread customer confusion and alienation is almost a certainty. Continuity of care: It is axiomatic that coverage within a family will be more cost-effective and appropriate if all family-members have access to the same doctors, specialists, hospitals, and clinics. This goal is further promoted when these providers continue to be available when family-members switch to a different program because of a change in age, income, or employment status. With so many health plans potentially available across the coverage continuum, it will be beneficial to have a core set of plans across all of the programs. 4 P a g e

5 Marketing and branding: As many as three million Floridians may be affected by the new ACA coverage options. Educating them about their new coverage responsibilities, the health plans and subsidies available through the Exchange, and the way in which the existing programs relate to the new ones will require a significant public education effort. This will be made easier through marketing and branding that ties together the coverage mechanisms available to families at varying income levels. Unanswered Medicaid Expansion Questions While the Medicaid opt in or opt out decision seems binary, there are some interesting variations that make this decision less straightforward and simple and policymakers and elected officials begin to analyze it. The legality of these variations will remain unclear until HHS publishes guidance. The most notable are: Partial expansion: Medicaid is expanded only up to 100 percent FPL with the percent increment added to the Exchange population. Temporary opt-in : Medicaid is expanded during the period in which the federal match is 100 percent but canceled when the matching rate drops to 95 or 90 percent. This is a strategic decision that is made up-front with full public disclosure. Change of mind: Medicaid is expanded in good faith and later canceled when financial pressures preclude the ongoing 90 percent state match. Bait-and-switch: A state accepts the expansion with a behind-the-scenes strategy that it will cancel the expansion when the state matching rates kick in. Ping Pong: An initial decision is made by one administration and it is reversed by a subsequent one that is, in turn, reversed again by the next one. This on/off response continues as the political winds surrounding the issue continue to swirl. Disposition of certain CHIP children: If a state expands Medicaid, children in the percent range who are currently eligible for CHIP will be switched to Medicaid to join their parents and younger siblings. But what if the expansion is declined? Do the children still switch? Medicaid eligibility standard: If a state declines the Medicaid expansion, must it still implement the new income standard based on Modified Adjusted Gross Income (MAGI) for CHIP and the existing Medicaid population? 5 P a g e

6 HEALTH INSURANCE COVERAGE IN 2014 BY AGE AND INCOME GROUP This chart summarizes under which programs particular demographic groups will receive their coverage when ACA is fully implemented. It does not apply to people over 64 years of age or undocumented immigrants. Several clarifying notes: Where coverage is applicable to a particular demographic group with a certain income range, the nature of the primary coverage mode(s) is noted Shaded boxes mean no coverage option is applicable to a particular combination of income and demographics BHP or means that one or the other applies, depending on whether the state chooses or declines the BHP option Medicaid, if applicable means Medicaid applies if the expansion is implemented ESI means traditional group coverage offered by an employer as a benefit For families above 400 percent FPL, the only modes of coverage are the Exchange and ESI Demographic group Infants (0-1 st birthday) Young children (1-5 years) 0-100% FPL % FPL % % FPL % FPL FPL Medicaid Medicaid Medicaid CHIP Subsidized ( %) Medicaid Medicaid CHIP Subsidized Children (6-18) Medicaid Medicaid CHIP Subsidized Pregnant women Medicaid Medicaid Medicaid BHP or ( %) Subsidized Legal immigrants subject to fiveyear bar Non-disabled, non-pregnant adults ages BHP or Subsidized Medicaid, if applicable; otherwise, no subsidized coverage Medicaid, if applicable; otherwise BHP or Subsidized The chart assumes that families will maximize their financial self-interest and seek the highest level of assistance for which they are eligible. It does not account for outlier situations like a family that qualifies for Medicaid or CHIP and chooses unsubsidized Exchange coverage or a 6 P a g e

7 family with access to unaffordable employer-sponsored coverage who signs up for that rather than subsidized coverage. 7 P a g e