The Patient Protection and Affordable Care Act: impact on the Louisiana Health Insurance Market A Product of Marketing Development Presented by: Michael Bertaut Senior Healthcare Intelligence Analyst June 24, 2010
How Your Carrier Spends Premiums. BCBSLA Audited Financial Results FY 2008 National Averages Adapted from Centers for Medicare and Medicaid Services (2008) 33 ¢ Hospital 30¢ Physician and Clinical Services 10¢ Admin Cost Including Taxes, Commissions 13 ¢ Prescription Drugs 6 ¢ Dental Services 2¢ Other Professional Services 1 ¢ Nursing Home 2¢ Home Health Care $783M; 37% $656M; 31% $338M; 16% In 2008, BCBSLA collected $2.115B in risk premiums, broken out like this: $338M; 16% 3¢ Future Claims Reserves/Profits NATIONAL AVERAGES 84+% of Premiums Went to Medical in 2008-09 7% Salaries/Admin 5% Commissions 2% Reserves 2% Taxes Current Reform Data
How Government Insured Squeeze Medicine Note: Payment-to-cost ratios indicate the degree to which payments from each payer covers the costs of treating that provider’s patients. Data are for community hospitals and cover all hospital services. Imputed values were used for missing data (about 35% of observations). Most Medicaid managed care patients are included in the private payers’ category. Source: Adapted from the American Hospital Association and Avalere Health TrendWatch Chartbook 2007: Trends Affecting Hospitals and Health Systems Hospital Payment-to-cost Ratios for Medicare, Medicaid and Private Payers 1995-2007 Break Even (Payment = Cost) “ Medicaid is already under-reimbursed, with Louisiana hospitals only receiving 83 cents for every dollar they use for Medicaid” John Matessino-President, LHA Current Reform Data SGR Limits Enacted
PPACA/HCERA contain provisions which penalize hospitals of a number of measures. They can lose lots of Medicare money on:
1. Lack of Value-Based Purchasing (1-2%)
2. No Q measures to CMS (Physicians too) (2%)
3. Lowest Qtile of Hosp. Acq. Infections (1%)
4. Lowest Qtile of “Preventable” readmissions (1 – 3%)
5. Claims deadline to 12 months.
6. Much tougher guidelines to remain tax-exempt. (Community health needs assessments, qualified financial assistance policy, publish limitations on charges to low income, avoidance of certain collections/billing activities)
Current Reform Data
The Uninsured: Who are They? Current Reform Data “ 46.3M Uninsured @ the end of 2008, Census 9/10/09” 10 September 2009 Census Bureau Conference Call: 2008 Update on Poverty and the Uninsured
Make-Up of the Cabinet—Obama Administration Current Reform Data 432 Members of the Executive Cabinet and less than 8% (32) have ANY private sector experience. American Enterprise Institute: Help Wanted, No Private Sector Experience Required (Nick Shultz 11/25/2009)
Office of Consumer Information and Insurance Oversight Director Jay Angoff: Former Missouri Insurance Commissioner, Attorney specializing in representing clients against health insurance carriers and employers in health insurance cases. Steve Larsen, Insurance Commissioner of Maryland. Strong critic of individual insurance market and blocking carrier consolidation. Current Reform Data Karen Pollitz, Georgetown University Professor, strong advocate of government-run, non employer based insurance system.
Administration’s Stated Goals for Healthcare Reform
3. Reduce the Federal Deficit/Bend the healthcare cost curve downward.
Current Reform Data
2010 Product “To Do” List Current Reform Data “ Existing” = Grandfathered; “New” = Non-Grandfathered ITEM Individual Group ASO No Lifetime Limits on Coverage/MLR Restrictions Existing, New E, N E, N No Annual Limits on “essential benefits” (if doesn’t raise premiums) New E,N E,N Dependants to Age 26 (married is ok) E, N E,N E,N Rescission (intentional fraud, fact) E,N E,N E,N Guarantee issue For <19 year olds. New E, N E, N Schedule A & B, immunizations at 1 st Dollar New New New Emergency Room Equal Payment New New New No discrimination based on salary N/A New New
Any change in coinsurance that increases employee share of medical payments (like going from 80/20 to 70/30).
Any increase in a fixed payment amount (except co-payments) of more than medical inflation (as expressed by the Medical CPI from 3/23/2010) plus 15%. This applies to deductible, max out of pocket, etc.
Any increase in a co-payment that exceeds the greater of medical inflation since 3/23/2010 plus 15%, OR $5 plus medical inflation.
Decrease employer contribution to premiums by more than 5% below the level on March 23, 2010. (Ex. If employer lowers contribution on family coverage from 80% to 70% this violates grandfathering)
Eliminating any benefit for diagnosis or treatment or any part of treatment for any particular condition that was covered by the plan on 3/23/2010.
Failure to create and have ready for inspection a plan document fully delineating the group plan’s coverage on 3/23/2010. This document must be available for inspection by federal, state, or local officials and must be viewable by insured employees as well.
The lapse of a collective bargaining agreement that was in force on 3/23/2010.
Failure to disclose and assert to the IRS, HHS, and covered individuals through their benefit documents that the plan sponsor maintains a grandfathered plan. Grandfathering must be declared.
Absorbing Insurance Industry Fixed Fees ($8B in 2014, rising to $14.3B by 2017, $2 per insured head for PCORI Trust Fund in 2013) without raising rates dramatically.
Providing affordable coverage in an environment where all the products have to be Guarantee Issue, Community Rated, 3:1 age, include vision and dental for kids, subject to a weak individual mandate, and with no gender differentials.
Will enrollment periods be tight enough (30 days, 60)?
Will rate increases become political football?
What if “essential benefits” means adding high cost procedures?
Current Reform Data
The Core of Reform: Expand Coverage Current Reform Data www.census.gov : 2008 Inflation Adjusted Dollars, 2009/2010 FPL guidelines 0% to 133% of Federal Poverty Level = 23.3% of Population or about 71 million Americans… Will Be Given Access to Medicaid (Free Coverage) Current Medicaid Population ~ 45 million people 134% to 400% of Federal Poverty Level = 66.9% of Population or about 204 million Americans… Will Be Able to Purchase Health Insurance with Federal Subsidies on State Exchanges (if employer does not offer FQHBP-level coverage)
The Core of Reform: Subsidies Current Reform Data Average Family of 4 Premium Upon Implementation estimated to be $13,500/year. A Family making $55,000 cannot pay more than 8.1% of income for health insurance. Thus they will receive $13,500 - $4,455 = $9,045 in Federal Aid to purchase Health Policy, 67% Subsidy.
Insurance Regulation Timeline Jan 1, 2010 Small Biz Tax Credit Donut Hole Rebate Exec Comp Limits March 23,2010 Grandfather Date of Record Rate Review Effective By 9/23/2010 Dependants to 26 No pre-x <19 USPTF A/B, Immuniz. Plan design restrictions kick in. Hi Risk Pool (6/23) Current Reform Data
Insurance Regulation Timeline Jan 1, 2011 Part D Discounts MLR Regulation of 2010 M.A. Frozen Jan 1, 2012 Quality Reporting M.A. Cuts start Uniform EOC, Docs required Jan 1, 2013 Higher Medicare Taxes kick in Medical Device Tax starts FSA limits @ $2,500 RDS Changes M.A. at 100% FFS Current Reform Data
Insurance Regulation Timeline Jan 1, 2014 Medicaid Expands Exchanges Open for Business Remaining Insurance Reforms Employer mandates >50 FTE’s Individual Mandate Insurance Company Fees ($8B) FQHBP only in all phases (new). 3 Year Rolling MLR’s Wellness to 30% Waiting periods to 90 days Jan 1, 2018 DiSH reduced by 50% Cadillac Tax Begins Jan 1, 2020 End of Donut Hole Current Reform Data
Build information about appropriate use of technology
Optimize Healthcare workforce
Public/Private partnerships to address chronic diseases
Paying for value, not volume
Transparency from medical system to consumer
Integrated (Medical Home Model) delivery of care
Examine motives of provider consolidation
Properly Fund Government programs and pay fairly for services
Current Reform Data
What about Brokers? Requires the Secretary (of HHS) to establish procedures to allow agents and brokers to enroll individuals in any qualified health benefits plan in the individual or small group markets as soon as the plan is offered through an Exchange and to assist individuals in applying for premium credits and cost-sharing subsidies for plans sold through an Exchange. (Exchange Section) Qualified Health Benefit Plans: Requires FQBHP to be offered by a health insurance issuer that: … agrees to charge the same premium rate without regard to whether the plan is offered through an exchange or directly through an Agent. (Exchange Section) Current Reform Data