What s on the Horizon for Health Care and Public Benefits. May 8, 2013 1
Overview Individual Mandate Federal Exchange Changes to Badgercare Changes to MAPP Future of HIRSP Changes to employer group health plans 2
The Individual Mandate Starting January 1, 2014, most people required to have health insurance or pay penalty. 3
Purpose of Individual Mandate Conceived in 1990s by conservative economists as alternative to Hillarycare. 4
Purpose of Individual Mandate In 1990s conservative think tanks like Heritage Foundation and American Enterprise Institute supported mandate. 5
Purpose of Individual Mandate "[N]either the federal government nor any state requires all households to protect themselves from the potentially catastrophic costs of a serious accident or illness. Under the Heritage plan, there would be such a requirement... Society does feel a moral obligation to insure that its citizens do not suffer from the unavailability of health care. But on the other hand, each household has the obligation, to the extent it is able, to avoid placing demands on society by protecting itself... A mandate on households certainly would force those with adequate means to obtain insurance protection." 6
Purpose of Individual Mandate Which makes it odd that conservatives challenged Individual Mandate in court. Upheld as Constitutional in June 2012 by United States Supreme Court. 7
Purpose of Individual Mandate Goal of insurance is to have healthy people subsidize unhealthy people. Make sure people don t wait until they are sick to buy health insurance. Especially since insurance companies will no longer be able to discriminate on basis of person s health or pre-existing conditions. 8
Purpose of Individual Mandate Without mandate: People may wait until sick to obtain. Thus, only sick will have insurance. Claims will be higher. Will drive up cost of insurance. 9
Acceptable insurance under Individual Mandate Most required to have health insurance. Types of insurance that are acceptable: Medicare Medicaid Employer Group Health Insurance Individual health insurance COBRA Etc. As with every rule, there are exceptions. 10
Exceptions to Individual Mandate Undocumented immigrants (illegal aliens); Incarcerated persons Members of an Indian Tribe Income below requirement to file tax return $9,350 for individual Out-of-pocket cost for health insurance more than 8% of income Religion grounds 11
Exceptions to Individual Mandate Also get a three month slide. Can go for as long as three months, one time, without health insurance before the payment kicks in. After that, people assessed 1/12th of the annual payment for each month with no coverage. 12
Penalty for no insurance Called a shared responsibility payment 2014: Greater of $95 or 1% of family income 2015: Greater of $325 or 2% of family income 2016: Greater of $695 or 2.5% of income After 2016: Penalty amount increases with cost of living 13
Penalty for no insurance Max penalty per family capped at no more than 300% of the minimum penalty. For example, in 2016, max penalty would be $695 x 300% = $2,085. 14
Payment of penalty Penalty due when taxes are otherwise due. Assessed and collected like any other tax. Persons who fail to pay not subject to criminal penalties or liens and levies. After application of exceptions, estimated only 2% of Americans will have to pay the penalty. 15
Employer Responsibility Penalty between $2,000 to $3,000 if: Employer has equivalent of 50 or more full-time workers; Employer does not offer affordable health insurance; Employee purchases health insurance in Exchange; and Employer receives subsidy in Exchange. 16
Health Insurance Exchange November 2012, Governor Walker decided against having State run health insurance exchange. Thus, Federal Government will run Exchange in Wisconsin. 17
Health Insurance Exchanges Open enrollment begins October 1, 2013. Insurance starts January 1, 2014. 18
Health Insurance Exchanges Two types of exchanges in Wisconsin: SHOP Exchange for small businesses. Exchange for individuals. 19
SHOP Exchange Small Business Health Options Program. Businesses with up to 100 employees can buy insurance in exchange. Some aspects of SHOP Exchange delayed until 2015. 20
Individual exchange Individuals can buy individual and family health insurance on exchange if: Not undocumented immigrant (illegal alien); Not incarcerated; and Meet state residency requirements. Individuals may be eligible for subsidies if: Cannot obtain affordable employer insurance. Not eligible for Medicaid or Medicare. Income between 100 & 400% of FPL. 21
No more underwriting Anyone will be able to purchase health insurance on exchange regardless: Pre-existing conditions Health status History of claims Premium cannot be higher because of health condition. Cannot charge higher price for women. 22
No more underwriting Price only varies on following conditions: Age but limited. Cannot charge more than 3 times for older person compared to younger person. Currently, averages about 5 times more for older person but can be as high as 10 times more. Where person lives. Tobacco use. Plan tier. 23
Plan tiers Different tiers based on actuarial coverage: Platinum - 90% Gold - 80% Silver - 70% Bronze - 60% Catastrophic Must be under 30 years old 24
Plan Tiers Bronze plan: insurance covers 60% health care costs for average person. Enrollees, on average, responsible for paying 40% costs. Platinum plan: average individual would pay 10% out-of-pocket for covered benefits. insurer would pay 90%. 25
Plan Tiers However, individuals with high-cost health conditions could pay significantly more than average. Premiums higher for Platinum plan, lower for Bronze plan. 26
Plan coverage All plans include Essential Health Benefits. This includes coverage for: 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 27
Plan coverage All plans will also include state mandates such as: Autism Cochlear implants coverage. 28
Subsidies Subsidies available if: Not eligible for Medicare or Medicaid; Cannot obtain affordable employer insurance. Income between 100 & 400% of FPL. 29
Affordable employer health insurance Employer-sponsored insurance affordable if worker s share of premium less than 9.5 percent of worker s household income. Calculation based solely on cost of individual coverage, what worker would pay for selfonly coverage and not family coverage. Insurance must provide minimum value. Covers at least 60% of costs. 30
Subsidies Premium subsidies if income between 100 & 400% of FPL. Cost-sharing subsidies if income between 100 & 250% of FPL. Subsidy calculator at UC Berkeley Labor Center: http://laborcenter.berkeley.edu/healthpolicy/calcul ator/index.shtml 31
Premium & cost-sharing estimates: 32
Premium & cost-sharing estimates: 33
Applying thru the Exchange Applications accepted October 1 for January 1 start date. Can apply online or with paper application. Exchange should know last year s income thru tax return automatically. Supposedly will be able to apply for Medicaid thru Exchange but uncertain of process. Navigators to assist people with applications. 34
Navigators Navigators will assist individuals with enrolling in insurance thru Exchange. Federal government offering around $800,000 in grants for Wisconsin Navigator program. Bids are due June 7, 2013. Grants to be awarded in August 2013. 35
Checklist to get ready for Exchange http://www.healthcare.gov/marketplace/get-ready/consumer-checklist/ 36
Exchange flow chart 37
Background on potential Medicaid expansion Under Affordable Care Act, states were required to expand Medicaid to all adults with incomes less than 133% FPL or lose all Federal funding for Medicaid. Supreme Court held states could decide not to expand Medicaid without losing Federal funding for all Medicaid. 38
Costs of potential Medicaid Expansion Currently, Wisconsin pays approximately 40% cost of Medicaid, and Federal government pays 60%. For expanded Medicaid population, Federal government would pay 100% costs for 2014, 2015, and 2016. After 2014, Federal government share would be reduced to 90% by 2020. 39
Costs of potential Medicaid Expansion Would save counties money currently spent on mental health. Could lower insurance premiums for everyone because hospitals would not pass uncompensated care on. 40
Governor Walker s Badgercare Plus Plan Governor s proposed 2013 2015 budget rejects Medicaid expansion. Instead, Governor proposes alternative plan. 41
Governor Walker s Badgercare Plus Plan Currently, parents with children eligible for Badgercare Plus if income below 200% of FPL. Governor s plan would lower eligibility for Badgercare Plus to 100% of FPL on January 1, 2014. 42
Governor Walker s Badgercare Plus Plan Currently, some childless adults receive Badgercare Plus Core if income below 200% of FPL. However, enrollment closed in Core. Governor s plan would terminate anyone above 100% of FPL from Core. Childless adults below 100% would be eligible for new Badgercare Plus plan. 43
Governor Walker s Badgercare Plus Plan Uncertain what new Badgercare Plus plan will cover. But probably similar to current Badgercare Plus plan for parents. Thus, should be better coverage for childless adults than current Core plan. 44
Governor Walker s Badgercare Plus Plan Under Governor s plan, approximately 90,000 people will lose Badgercare Plus and Core on January 1, 2014. They will have to purchase health insurance through the Exchange. Only affects Badgercare Plus & Core; does not affect Elderly, Blind, & Disabled Medicaid. However, separate changes to MAPP discussed later. 45
Governor Walker s Badgercare Plus Plan Legislative Fiscal Bureau estimates Governor s plan will cost State $100 million more than Medicaid expansion. Because workers between 100 & 133% will receive subsidies in Exchange instead of Medicaid: National study by Jackson Hewitt Tax Service Inc. estimates Governor s decision could cost Wisconsin employers ACA penalties up to $36.1 million a year. 46
Governor s proposed changes to MAPP Current requirements for MAPP: 1) A disability determination; 2) Income 250% of FPL and countable assets below $15,000; and 3) A work requirement. MAPP is premium free if the person has gross income below 150% of FPL. 47
Governor s proposed changes to MAPP Two significant changes to MAPP: One beneficial to MAPP recipients with larger Social Security Disability Insurance payments. One bad for MAPP recipients who meet work requirement thru in-kind jobs. 48
Change in counting unearned income Change in way unearned income counted. Currently, for premium purposes, earned income is counted more favorably than unearned income such as Social Security Disability Insurance. Thus, people with larger SSDI checks may have large MAPP premiums. 49
Change in counting unearned income Governor s budget proposes that unearned income receive same favorable treatment that earned income receives for premium calculation. Could dramatically lower premiums for people with larger SSDI checks. 50
Change in work requirement rules Currently, people can meet work requirement for MAPP by performing one hour a month of in-kind work. Governor s budget would require person to be working at job that withholds Social Security and Medicare taxes. Department of Health Services estimates that approximately 9,000 people with lose MAPP because of this change. 51
Governor s proposed MAPP changes. Both changes would take effect on January 1, 2014. People currently meeting work requirement thru in-kind work would have until July 1, 2014 to meet new work requirement. 52
Future of HIRSP Because people with pre-existing conditions will be able to obtain insurance in Exchange, HIRSP proposing to end January 1, 2014. HIRSP non-medicare members would: Below 100% FPL, eligible for new Badgercare Plus benefit. Above 100% FPL, obtain insurance in Exchange. HIRSP Medicare members would have guaranteed issue into traditional Medicare Supplement. 53
Changes to employer group health insurance Beginning January 1, 2014 maximum 90 day waiting period. 54
Changes to employer group health insurance Currently, employer plans may exclude coverage for preexisting conditions for 12 months. Exclusion period reduced by 1 day for every day of previous creditable coverage. On January 1, 2014, preexisting condition exclusions prohibited for all employer plans. Thus, HIPAA provisions re creditable coverage obsolete after January 1, 2014. 55