THE AFFORDABLE CARE ACT

Health care that’s better, safer, less costly

Kit WagarACA Specialist, Region 7U.S. Department of Health and Human Services

(Missouri, Kansas, Iowa & Nebraska)

Reasons for changeThe status quo was unsustainable: Health insurance premiums for family coverage at large

companies rose 114 percent from 2000 to 2010 At small businesses, premiums increased 85 percent

17.9 percent of the nation’s entire economic output is tied up in health care

The share of Americans under 65 covered by job-based health insurance had fallen for nine years in a row, falling to 59 percent in 2009

62 percent of all personal bankruptcies are at least partly the result of medical expenses

Medical costs outstrip our ability to pay

Few people can afford significant medical services on their own:

A study released in May 2011 by the U.S. Department of Health and Human Services found:Uninsured patients walk away from all or part of their hospital

bills 95 percent of the time

The average uninsured family can afford to pay only 12 percent of a typical hospital bill

Even patients with assets in the top 10 percent among the uninsured can pay the full bill only half of the time 

Everyone pays to treat the uninsured

Nationwide, uninsured patients receive as much as $73 billion a year worth of uncompensated care

(Health Affairs, September 2008)

Uninsured patients add more than $1,000 to the typical health insurance policy as hospitals shift cost to customers with the ability to pay

Eventually, everyone uses the health care system because of illness or injury

Affordable Care Act at a glance Health reform seeks to:

improve the quality of health care lower the cost of medical care and, in turn, health insurance increase access to that care expand the base of people contributing to the system reduce fraud

Virtually everyone plays a role Large employers are required to contribute Workers are required to contribute 32 million newly insured lower the average cost Doctors and hospitals are required to improve care New programs control rising costs and improve delivery of care

Improving access to insurance

Help for small employers Tax credits for small business, including farmers

These credits cover up to 35 percent of the cost of employee health insurance, beginning in 2010

For nonprofit employers, the maximum credit is 25 percent

The tax credit rises to a maximum of 50 percent in 2014 Rises to 35 percent for nonprofits

In 2011, more than 360,000 employers nationwide used this credit

Eligibility for the credit: An employer must pay at least half the cost of health coverage for

workers based on the individual rate

Maximum credit is available to employers with fewer than the equivalent of 10 full-time workers and average wages of less than $25,000 a year

The credit phases out as the number of employees rises beyond 10 and average wages rise beyond $25,000 a year

Credit ends at 25 employees or average annual wages of $50,000

Improving access for young adults Young adults can now stay covered under a parent’s

health plan until age 26, if the plan covers dependents

Coverage available even if the child is not in school, is married or is living apart from the parent This is especially important for recent graduates, young

adults in entry-level jobs and graduate students

Until 2014, a narrow exception exists for adult children who have an offer of employer-sponsored insurance

55,000 young adults in Missouri gained coverage in 2011

25,000 young Kansans gained coverage

Filling gaps in coverage

For Children:

Children under age 19 can no longer be denied insurance coverage because of pre-existing conditions

Funding for the Children’s Health Insurance Program is increased and extended through 2015

Covers children from homes modestly above the poverty level

Beginning in 2014, Medicaid will cover foster children who have aged out of the foster care system until age 26

Making insurance more valuable

Improving health insurance The Patients’ Bill of Rights

For most individual and group health plans that begin or renew after Sept. 23, 2010:

Lifetime limits on benefits are eliminated

Annual dollar limits on insurance coverage are phased out and end in 2014

No more dropping coverage based on an unintentional mistake on an application

You now have the right to see how insurers plan to spend any rate increase larger than 10%

Making insurance more affordable More bang for your buck:

Beginning this year, insurers serving individuals and small employers must spend at least 80 percent of premiums on health care services or improving the quality of care

Insurers serving large employers must spend at least 85 percent of premiums on health care or quality improvement

Insurance companies that fail to meet these standards must pay rebates to customers

Insurance rebates for 2011 First rebates went out in July 2012

Rebates totaled more than $1.1 billion nationwide

12.76 million consumers received an average rebate of $151 per family

In Kansas, rebates totaled:

$4,139,508 $3.5 million in the individual market $603,559 in the small group market

In Missouri, rebates totaled: $60,664,562

$16.3 million in individual market $38.4 million in small group market $5.9 million in large group market

Keeping people healthier

Lowering costs by improving health Preventive care with no cost sharing All new health plans must cover many preventive services

without charging a deductible, co-pay or co-insurance

No-fee preventive services benefit patients, insurers and employers through lower future medical costs

These services include:

colonoscopies

vaccinations for flu, tetanus, measles, hepatitis A&B

help quitting tobacco

aspirin therapy

screenings for diabetes, obesity, high blood pressure, depression and alcohol abuse

Preventive care specifically for women

Mammograms for women over 40

Cervical cancer screening

Breast cancer chemoprevention counseling for at-risk women

STI screening for women at higher risk

Folic acid supplements

Genetic screenings for pregnant women

Osteoporosis screening for women over 60

No-cost prevention services for women include:

Keeping women healthy Insurers must now provide 8 new preventive services

specifically for women These services carry no out-of-pocket cost and include:

human papillomavirus (HPV) DNA testing every three years, regardless of pap smear results, for women over 30

breastfeeding support and counseling, including breast pumps and nursing-related supplies

gestational diabetes screening well-woman visit to the doctor once a year domestic violence counseling contraception, including:

all FDA-approved methods sterilization procedures patient education and counseling

Available under policies that begin or renew after Aug. 1, 2012

Strengthening Medicare New Medicare benefits began in 2011:

a free annual wellness visit no-cost preventive care lower cost for prescription drugs

In 2013, Medicare participants who hit the doughnut hole coverage gap receive:

a 52.5% discount on brand-name drugs a 21% discount on generic drugs

In 2011, 3.5 million seniors saved $2.1 billion, an average of $605 each In 2012, 3.5 million seniors saved $2.5 billion, an average of $706

In Missouri: 78,585 seniors saved a total of $46.76 million in 201175,201 seniors saved $48.8 million in 2012

In Kansas: 38,692 seniors saved $23.44 million in 201136,383 seniors saved $24.05 million in 2012

The discount rises every year until the coverage gap is gone in 2020

Improving access to health care

The Affordable Care Act provides $11 Billion to expand community health centers over the next 5 years

$9.5 billion is designated for new health centers or expanding primary care services at existing health centers

An additional $1.5 billion will support major construction and renovation projects at health centers nationwide

These changes are designed to double the 19 million patients who receive treatment each year at community health centers

Expanding access to care

Expanding the health care workforce Rebuilding the Primary Care Workforce

$1.5 billion for National Health Service Corps to place providers in underserved areas

Since 2008, the number of primary care providers has grown: by 353 in Missouri, the third most in the entire nation by 94 in Kansas, 25th most in the nation

The goal is to train and place 16,000 new primary care professionals throughout the nation by 2016

New scholarships and loan repayment incentives to provide underserved areas with more:

primary care doctors nurse-practitioners physician assistants mental health counselors

More resources for primary care The law set aside $250 million to expand primary care

$168 million to train primary care physicians; more than 500 by 2015 $32 million to train new physician’s assistants; more than 600 by 2015 $30 million to train new nurse practitioners; more than 600 by 2015

At least 75 percent of new residency slots for 5 years must be in primary care

From 2011 to 2015, Medicare fees to primary care providers and general surgeons are increased by 10 percent

In 2013-14, Medicaid fees to primary care physicians increase to the Medicare rate

Includes nurse-practitioners working under a doctor’s supervision

Federal government picks up entire cost

Lowering costs, improving quality

Reducing costs by improving care

Linking Medicare payments to quality care: New payment models will pay for keeping people healthy,

not just for doing procedures Hospital payments will be based in part on improving care, reducing infection rates and reducing hospital re-

admissions within 30 days Effective October 2012

First year readmission penalties:Missouri Kansas 0.348% on average 0.206% on average 22 hospitals no penalty 17 hospitals no penalty 5 hospitals maximum 1% 2 hospitals max penalty

Doctors’ fees will be based partly on keeping patients healthy and how well their patients recover from illness or injury

Effective January 2015

Incentives to improve care Hospitals will be evaluated on 13 measures of care quality:

Heart attack care Pneumonia treatments Surgery and post-op care Patient satisfaction

Hospitals will be scored two ways: Performance relative to other hospitals Performance improvement over time

The higher of those scores on each measure will be used in determining incentive payment

This policy gives hospitals the financial incentive to make continuous improvement in the way they deliver care

Continuous quality improvement Measures that reach high compliance scores will eventually be

replaced

Accountable Care Organizations Accountable Care Organizations are providers and suppliers

working together to manage and coordinate health care ACOs are expected to save at least $960 million over 3 years by:

providing better care preventing illness reducing redundant tests and

unnecessary hospital admissions

As of January 2013, 259 ACOs serve more than 4 million Medicare patients

Iowa has 6 Missouri has 4* Nebraska has 2 Kansas has 0*

*Several ACOs in this region serve more than one state. Missouri ACOs based in Kansas City and St. Joseph also serve patients in Kansas

(St. Louis, St. Joseph, Kansas City, Springfield)

Fighting fraud The law boosts spending on investigations by $350 million

The new emphasis is already paying off:

In fiscal year 2009, anti-fraud efforts recovered: $2.51 billion for Medicare, up 29 percent from 2008 $441 million for Medicaid, up 28 percent

In 2010 and again in 2011, total recoveries for Medicare and Medicaid rose to more than $4 billion

In 2012, recoveries hit a record $4.2 million

Whistle-blower lawsuits recovered record amounts two years in a row: $2.8 billion in 2011 $2.5 billion in 2010

What’s ahead

Health Insurance MarketplacesBeginning in 2014, insurance marketplaces will allow you to look for the plan that is best for you

You might think of these as a Turbotax for health insurance

Insurance options available at your fingertips

States can design their own Marketplaces or the federal government will run the marketplace

These will be the same marketplaces where members of Congress will buy their health insurance plans

Health Insurance Marketplaces Insurance Marketplaces allow small businesses with

fewer than 100 employees to pool their risk

By buying as a group, small employers will get the kinds of discounts that large employers already receive

The larger number of people in the plan will lower administrative costs

The larger pool will reduce the impact on rates of one worker with high medical costs

Marketplaces – A fairer system In 2014, private insurers will no longer deny coverage or

charge a higher price based on a person’s medical history

Prices for individuals will vary based only on four criteria: Age – a maximum of 3 times the price of younger

applicants

Tobacco use – a maximum of 50 percent higher than non-smokers

Location – states can establish rating areas

Family sizeEnding gender discrimination

Women will no longer be charged more than men the same age

Currently, 22-year-old women are often charged 50 percent more than men their age simply because women bear children

A fairer market – Essential Health Benefits

Ambulatory patient services Emergency Services Hospitalization Maternity and newborn care Mental health and substance abuse

services, including behavioral health treatment

In 2014, all health insurance plans must cover the following services:

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

Currently, many plans offered in the individual market leave out major categories of coverage

Consumers often don’t realize the omission until they need the coverage 62 percent don’t have maternity benefits 34 percent don’t cover substance abuse 18 percent don’t provide mental health coverage 9 percent don’t cover prescription medication

Expanding mental health parity

The Affordable Care Act extends full coverage of mental health and substance abuse services to more than 62 million Americans beginning in 2014

The law extends parity requirements to individual and small group plans beginning in 2014

30.4 million who now have insurance will obtain mental health and substance abuse coverage on par with general medical services

5.1 million people whose insurance now excludes mental health or substance abuse services will gain access to those services

27 million people who currently lack health insurance will obtain insurance, including mental health coverage

25 percent of people without health insurance have a mental health condition, a substance abuse problem, or both

Making insurance affordable

Help for the middle classBeginning in 2014:

Workers without health benefits receive tax credits to help buy insurance through the marketplaces

Credits will be available up to 400 percent of the poverty level Maximum income of:

$45,960 for 1 person $94,200 for family of 4

The IRS estimates the average credit will be more than $5,000

These tax credits allow family farmers, the self-employed and small business owners to compete for employees with large companies that provide generous benefits

Expected contribution to insurance premiums

For an individual: Reduction in Consumer’s Expected Approximate Out-of-Pocket Portion

ofAnnual Income % of FPL Contribution Monthly Premium Maximum Total costs

$13,788 120* 2% of income $23 2/3 6% $16,200 141 3.5% $47 2/3 6% $20,107 175 5.15% $86 2/3 13% $25,852 225 7.18% $155 1/2 27% $31,597 275 8.78% $231 0 30% $40,215 350 9.5% $318 0 30%

Incomes below 250% of the poverty level qualify for lower co-pays and deductibles

* This level of income would be eligible for Medicaid in states that expand their programs in accordance with the Affordable Care Act

Affordable Health Plans

Expected contribution to insurance premiums

For a family of 4: Reduction in Consumer’s Expected Approximate Out-of-Pocket Portion

ofAnnual Income % of FPL Contribution Monthly Premium Maximum Total costs

$28,260 120* 2% of income $47 2/3 6% $33,205 141 3.5% $97 2/3 6% $41,212 175 5.15% $177 2/3 13% $52,987 225 7.18% $317 1/2 27% $64,762 275 8.78% $474 0 30% $82,425 350 9.5% $653 0 30%

Incomes below 250% of the poverty level qualify for lower co-pays and deductibles

* This level of income would be eligible for Medicaid in states that expand their programs in accordance with the Affordable Care Act

Affordable Health Plans

Key requirements of a Marketplace Marketing of policies

These functions include: Toll-free phone number

Website

Presenting benefits in a standardized format

Providing electronic calculator to determine actual cost of policy Includes premium subsidies for less than 400% of poverty level Cost-sharing reductions for households at less than 250% of poverty

Determining eligibility for Medicaid and CHIP

Certifying people too poor to make personal responsibility payments

Certifying the plans that qualify to be sold on the marketplace

Active vs. passive marketplace

Marketplace operations Enrollment:

Coverage through the Marketplaces will begin on Jan. 1, 2014 The first enrollment period will begin on Oct. 1, 2013, and end on

March 31, 2014 In subsequent years, consumers can enroll between October 15

and December 7

Operations:

One section serves individuals; another is for small business

Small employers can choose an employee plan Or they can offer employee choice

(Employee choice is not available in federally run exchanges until 2015)

Employee choice means employers choose a level of coverage and a standard contribution per employee

Employees choose a plan and apply the employer contribution to any health plan within that level of coverage

Enrollment Assistance

NavigatorsConsumer Assistance Programs

Public Eligibility Workers

Insurance Agents and

Brokers

Unions

Community-Based

Organizations

Health Care

Providers

Community Health Centers

Chambers of Commerce

County MH and SA Depts.

No wrong door to enrollment

Simply Awesome Consumer Site: www.Healthcare.gov

New one-stop consumer site for information on insurance options

Details about the new consumer protections under the Affordable Care Act

Information at your finger tips allows you to shop for insurance based on benefits, prices, insurer ratings

Designed to evolve throughout the year as we near Open Enrollment Scheduled to go live in June

Links to key questions consumers have about health insurance, eligibility & enrollment

Drive people to personally connect so the marketplace can reach them later

Direct users to appropriate destination to the state they live in

Footer contains links for non-consumer users to access information important to them

Re-designed Healthcare.gov

Interactive insurance application

Directs applicant to private insurance, Medicaid, Children’s Health Insurance Program, Tri-Care

Determines eligibility for insurance affordability programs

Pings data hub to confirm job status, income from previous years The applicant has an opportunity to

note changes in circumstances

Dynamic – the questions change depending on the applicant’s answers

The paper applications are available at: http://cciio.cms.gov/resources/other/index.html#hie (Look under “forms”)

Video demonstrations of the online application are available here: http://www.enrollamerica.org/blog/the-single-streamlined-application-is-here

Video demonstrations show the process for: a family of 3 in Missouri a single man in Arizona

Finding the right health plan

Once an application is filed, the website offers: A comparison tool to evaluate policies

A calculator to estimate each plan’s: premiums co-payments deductibles maximum out-of-pocket costs

Filtering options let the user narrow the choices based on specific criteria

The most relevant plans are presented first, based on the applicant’s answers

Key data listed with links to plan details

Corporate responsibilityIn 2014: Almost everyone will be required to contribute to the

health care system Large employers – 50 or more full-time workers – can

choose either to: provide health insurance benefits to their employees, or make shared responsibility payments to cover the cost of the

tax credits that help employees buy private insurance $2,000 per employee (excluding the first 30 employees)

More than 96 percent of firms with more than 50 workers already offer health insurance to their employees

Small employers – those with fewer than 50 full-time workers – are exempt from any shared responsibility payments

Individual responsibilityIn 2014:

Individuals can choose to: carry health insurance, or pay a fee to offset the cost of treating the uninsured

The fee is the greater of: $95 per person in the household or 1% of income in 2014 $325 per person or 2 percent of income in 2015 $695 per person or 2.5% of income in 2016 and thereafter

Maximum per household is the income percentage or 3 times the flat fee The flat fee for each child is half the adult amount

What about people too poor to buy insurance?

Expanding access to insurance

For people with incomes too low to buy health insurance: Medicaid expands to cover families with income up to

133 percent of the poverty level

Single adults will be eligible as well as families with children

Hospitals will no longer shift the cost of this care to people with insurance

Maximum annual income of:

$15,282 for 1 person $31,322 for a family of 4

The Supreme Court wrinkle

States have a choice

States have the option: They can choose to expand

Medicaid coverage and receive generous federal funding

Or states can refuse the expansion and continue receiving the funding they receive for their current Medicaid programs

The Medicaid expansionBeginning in 2014, federal aid to states rises dramatically For new enrollees, the federal government picks up:

100 percent in 2014-2016; 95 percent in 2017; 94 percent in 2018; 93 percent in 2019; and 90 percent in 2020 and each year thereafter

From 2012-21: CMS Actuary estimates federal spending will cover about 94

percent of new Medicaid expenditures; states pay 6 percent This estimate did not consider states’ savings from:

less uncompensated care less need for State-financed health programs greater efficiencies in the delivery of care

The choice in Missouri In May 2010, the Kaiser Family Foundation did the

most widely quoted study on the Medicaid expansion The study projected two scenarios:

57 percent standard enrollment (current national average) 75 percent enhanced enrollment (because of increased emphasis)

From 2014 to 2019:Standard Enhanced

New enrollees: 307,872 437,735 Reduction in uninsured: 46% 71% New state spending: $431 million $773 million

Spending per person: $11.95 per year $21.43 per year

New federal spending: $8.4 billion $10.2 billion Match Ratio: 19.5 to 1; (95.1%) 13 to 1; (93%) State spending beyond

current law : 1.7% 3.1%

The choice in Kansas In May 2010, the Kaiser Family Foundation did the

most widely quoted study on the Medicaid expansion The study projected two scenarios:

57 percent standard enrollment (current national average) 75 percent enhanced enrollment (because of increased emphasis)

From 2014 to 2019:Standard Enhanced

New enrollees: 143,445 192,006 Reduction in uninsured: 51% 75% New state spending: $166 million $260 million

Spending per person: $9.64 per year $15.09 per year

New federal spending: $3.48 billion $4.03 billion Match Ratio: 21 to 1; (95.4%) 15.5 to 1; (93.9%) State spending beyond

current law : 1.7% 2.6%

Questions?