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2011 Financing Healthcare 02 - Patient Protection and Affordable Care Act (Wisniewski, Hurley Medical Center)
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2011 Financing Healthcare 02 - Patient Protection and Affordable Care Act (Wisniewski, Hurley Medical Center)



Part 2, presented 05-Dec-2011 at Hurley Medical Center Combined Graduate Medical Education lecture.

Part 2, presented 05-Dec-2011 at Hurley Medical Center Combined Graduate Medical Education lecture.



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2011 Financing Healthcare 02 - Patient Protection and Affordable Care Act (Wisniewski, Hurley Medical Center) 2011 Financing Healthcare 02 - Patient Protection and Affordable Care Act (Wisniewski, Hurley Medical Center) Presentation Transcript

  • Healthcare Reform in the US: The Patient Protection and Affordable Care Act Timothy Balice, Renee Gubert, Jay Jarodiya, Kathryn Lowerre, and Tyson Luoma
  • What’s Involved in Healthcare Reform?
  • Patient Protection and Affordable Care Act (P.L. 111-148) Three Main Goals: Expanding coverage Controlling health care costs Improving the health care delivery system
  • Timeline of PPACA• The Patient Protection and Affordable Care Act became law on March 23, 2010• Implementation of the law is in a rollout process that will take four years
  • 2010• September 23, 2010 – Prohibits denying coverage to children (0-19 years) based on pre-existing conditions – Prohibits rescinding coverage by insurance companies for technical errors and honest mistakes – Eliminates lifetime dollar limits on insurance coverage – Regulates annual dollar limits on insurance coverage – Right to appeal insurance company decisions – Free preventive care without charging a deductible, co-pay or coinsurance – Coverage for Young Adults on parents’ health plan until 26 years of age (not if young adult is offered insurance at work) – Insurance companies accountable for rate hikes of 10% or greater
  • 2011• January 1, 2011 • October 1, 2011 – Offers seniors 50% – Increases access to Prescription Drug services at home and in Discounts when reach the community rather coverage gap in than nursing homes Medicare – Free preventive care for seniors on Medicare – 85% of all premiums required to be spent on healthcare and quality improvement for large employer plans (80% for small and individual)
  • 2012 & 2013• 2012 • 2013 – Incentives to physicians – January 1, 2013 for Integrated Health • Pilot program to bundle Systems payments – Requires Electronic • Medicaid payments Health Records First increase for primary care doctors to equal 100% of regulation effective Medicare payments October 1, 2012 – October 1, 2013 – Requires demographic • Provides 2 more years of data on those who funding for the Children’s participate in federal Health Insurance Program health programs Effective (CHIP) March, 2012
  • 2014• January 1, 2014 – Prohibits Discrimination Due to Pre-Existing Conditions or Gender – Eliminates annual limits on insurance coverage – Tax credits for middle class to purchase insurance and small business to offer insurance – Establishes Insurance Exchanges – 133% of poverty level can be covered through Medicaid – Requires individuals to obtain health coverage (Individual Mandate) – Requires employers to offer health insurance (of companies with > 50 employees) – Free Choice to purchase through Insurance Exchange (workers meeting certain requirements)
  • Show Me The Money
  • Cost of the ACA• The actual cost of the program is one of the most highly contested points in the entire health care debate• Many different analysts at many different firms and universities have projected vastly different cost predictions• This has been a big factor in the public debates, as both sides correctly cite different projections
  • The CBO• The Congressional Budget Office mandate is to provide: – Objective, nonpartisan, and timely analyses to aid in economic and budgetary decisions on the wide array of programs covered by the federal budget – Information and estimates required for the Congressional budget process• The CBO is a reputable, non-partisan authority for projections that influence policy – Arguably the best source to evaluate the financial implications of the ACA
  • CBO Findings for Fiscal Years 2010-2019• Total change in spending = • Total change in revenue = $355 Billion $473 Billion – Change due to – Change due to Small Employer Medicare/Medicaid/CHIP Tax Credit = -$37 Billion provisions = -$430 Billion – Change due to Additional – Change due to Health Hospital Insurance Tax = $87 Insurance Exchanges Premium Billion and Cost Sharing Subsidies = – Change due to Fees on Certain $344 Billion Manufacturers and Insurers = – Changes due to Coverage $101 Billion Provisions on Medicaid and – Change due to Penalty CHIP = $386 Billion Payments by Employers and – Other Spending= $55 Billion Uninsured Individuals = $39 Billion – Other Revenue = $283 Billion Net Budget Deficit Change = -$118 Billion
  • But What Does It All Mean?• Government spending on health care is going to increase, but savings and revenue will increase more, yielding a net savings by enacting the ACA• Medicare/Medicaid will be streamlined and spending will decrease, but will be coupled with increased spending for coverage• The largest sources of revenue don’t come from small businesses or penalties, but rather from health care providers, insurance companies, and medical manufacturers• The year-to-year spending/revenue analysis is key – Spending changes are negative until 2013, when it begins to increase to stabilize around $85 Billion in 2016 – Revenue changes continue to increase to $97 Billion in 2019 – Only years net deficit does not decrease are 2010, 2016, and 2017• Net deficit change for fiscal years 2010-2014 is -$104 Billion, showing an immediate impact from the ACA
  • So Why The Debate?• Financial Projections are an imperfect science, and it is not yet known how the ACA will look in 10 years – Repealed? Partially repealed? Fully Intact?• General consensus that government spending under ACA will increase significantly, revenue increases is more contested – How much revenue will be generated? Where will it come from? Will it hamper economic recovery?• Many different projections exist, but only time will tell what the financial impact of the ACA is
  • Funding for the PPACA• The PPACA will receive much of its funding through $409.2 billion in tax increases – Increases are incremental: • $8.5 billion by end of 2011 • Additional $97.7 billion from 2012-2014 • $331.6 billion from 2015-2019
  • Where does it come from? Starting in 2010-2011:• 10% excise tax on indoor tanning services – $200 million in 2011 – $2.7 billion by 2019• Branded pharmaceutical import tax (annual) – $2.5 billion in 2011 – $27 billion by 2019• No more biofuel producer credit for unprocessed fuels – $6.6 billion in 2011 – $23.6 billion by 2016 (tax ends)
  • Where does it come from? Starting in 2012:• 0.9% earned income tax AND 3.8% investment income tax on individuals making >$200,000 and married couples making > $250,000 – $210 billion by 2019 – Single greatest source (51.3%) of funding
  • Where does it come from? Starting in 2013:• 2.3% excise tax on manufacturers of certain medical devices – $1.8 billion in 2012 – $20 billion from 2012-2019
  • Where does it come from? Starting in 2014:• Annual fee for health insurance providers – $6.1 billion in 2014 – $60.1 billion by 2019 – Second greatest source (14.7%) of funding
  • Where does it come from? Starting in 2018:•40% excise tax on high-premium healthinsurance policies ($10,200/$27,500) – Known as “Cadillac” policies, due to their very high premiums – $32 billion by 2019 – Third greatest source (7.8%) of funding
  • Where does it come from? Other sources of funding, by 2019:• Require information reporting on payments to corporations ($17.1 billion)• Raise 7.5% adjusted gross income floor on medical expenses to 10% [not applicable to ages 65+] ($15.2 billion)• Limit health flexible spending arrangements in cafeteria plans to $2500 ($13 billion)• Elimination of deduction for expenses allocable to Medicare Part D subsidy ($4.5 billion)
  • PPACA’s Effect on Employers, Employees, Providers & the UninsuredEmployers will be required to offer coverage or payfines, but should see a reduction in their costs, sincethey will benefit from paperwork reductions and required review of insurance premium increases over 10% can benefit from the Early Retiree Reinsurance Program, offsetting costs of coverage for employeesSmall businesses will be able to use HealthInsurance Exchanges to compare plans and costs– Businesses with <25 employees (FTE) will qualify for a tax credit to support the cost of insurance (up to 35% in 2012, 50% in 2014)
  • Employees• Employees are more likely to be offered insurance and have more options, with a focus on preventive care – Patient’s Bill of Rights requires recommended preventive services (basic screenings and ‘wellness’) be offered without cost sharing• However, they may still face higher copayments & deductibles for other services
  • Healthcare Providers• Healthcare providers will see changes in the way Medicare reimbursements & other payments are made – Reduction in the Medicaid Physician Payment rate in 2012 and lower Medicare hospital rate increases in 2014 • may see additional bundling of payments across a single episode of care • will be encouraged to coordinate patient care through Accountable Care Organizations (ACOs) • cost savings from coordination and HIT updates will be shared between Medicare and the ACO• Projections suggest an increase in the demand for physician & clinical services and for prescription drugs with a corresponding drop in hospital services (Keehan et al., 2011)
  • Uninsured• The number of uninsured will continue to decrease due to – Pre-Existing Condition Insurance Plan Program (‘bridge’ coverage 2011-2014) – Expansion of dependent coverage up to age 26 (from 2011) – Expansion of Medicaid coverage and creation of Health Insurance Exchanges• However, the newly-insured may experience difficulty establishing a patient home and accessing services due to high demand and a shortage of primary care physicians – Access projections differ (Gruber, 2011)
  • Individual Coverage in the Balance • Note that the individual mandate would require all adults to have health insurance or pay a fine, but this provision of ACA faces continued challenges in state and federal courts
  • Some Pertinent Perspectives on the PPACA• A Spartan’s Interest in • http://www.whitehouse.gov/ PPACA (click the main healthreform/healthcare- video)  overview#healthcare-menu• Someone you know will • http://www.youtube.com/wat benefit from the PPACA  ch?v=8HiMKgaT_3I• Why repealing the PPACA • http://www.whitehouse.gov/ may not be such a good videos/2011/January/01191 idea, according to the White 1_WhiteBoardCutter.mp4 House 
  • Magical Indeed
  • References• http://www.healthcare.gov/law/ • Gruber, J. (2011). The timeline/index.html Impacts of the Affordable Care• http://ppaca.com/index.php?p Act: How Reasonable Are the age=hcr-timeline Projections? National Tax• Congressional Budget Office Journal 64(3), 893–908. and Joint Committee on • Keehan, S., Sisko, A.M., Truff Taxation. (2010, Mar. 11). er, C.J., Poisal, J.A., Cuckler, Letter to Majority Leader Harry G.A., et al. (2011). National Reid [estimating direct Health Spending Projections spending and revenue effects Through 2020: Economic of H.R. 3590, the Patient Recovery and Reform Drive Protection and Affordable Faster Spending Growth. Care Act, author: Health Affairs 30(8), 1594- Elmendorf, D.W. ] 1605. Washington, DC: CBO.