The Affordable Care Act:
Success or Failure?
April 15, 2014
Edward H. Yelin, PhD
Professor
Janet Coffman, PhD
Associate Pr...
School of Medicine
Outline
• The logic of health insurance
• Major provisions of the
Affordable Care Act
• Implementation ...
School of Medicine
The Logic of Health Insurance
3
School of Medicine
4
Logic of Health Insurance: Beneficiaries
• Prevent economic calamity (stop big losses)
• Make expense...
School of Medicine
5
Logic of Health Insurance: Health Plans
• Stay in business (collect more in premiums than pay
out for...
School of Medicine
6
Logic of Health Insurance: Health Providers
• Stay in business (collect more than it costs to
provide...
School of Medicine
7
ACA Bargain
• Extend benefits of group plans to individual
insurance markets
– Create larger pools to...
School of Medicine
8
Benefit of Creating Larger Pools
School of Medicine
9
Benefit of Altering Mix within Pools:
Annual Medical Care Expenditures, by Age,
U.S., 2009
Source: An...
School of Medicine
Major Provisions of the
Affordable Care Act
10
School of Medicine
11
It Takes Three Branches . . .
School of Medicine
12
ACA in Brief
School of Medicine
Two Major Sets of Provisions
• Insurance reform
• Expand access
• Provide better coverage
• Control cos...
School of Medicine
Insurance Reform
14
School of Medicine
• Most citizens and legal immigrants must
have coverage
• Tax penalty if no coverage. In 2014 the
highe...
School of Medicine
Rules for All Insurance Markets
16
• Prohibitions on
• Lifetime limits on coverage
• Annual limits on c...
School of Medicine
Individual Insurance Market Rules
• Guaranteed issue
• Cannot deny coverage for preexisting
conditions
...
School of Medicine
Health Insurance Exchanges
• Available to
• Individuals and families
• Small business
• States chose wh...
School of Medicine
19
Health Insurance Exchanges
• State regulated “insurance
marketplaces”
• Can compare plans by quality...
School of Medicine
Health Insurance Exchanges:
Essential Health Benefits
• Hospitalization
• Emergency services
• Outpatie...
School of Medicine
Health Insurance Exchanges:
Metal Tiers
60%
70%
80%
90%
40%
30%
20%
10%
Bronze Silver Gold Platinum
Pla...
School of Medicine
Health Insurance Exchanges:
Subsidies
• Subsidies for persons & families with
incomes 133-400% federal ...
School of Medicine
23
Medicaid Expansion
• Historically, Medicaid eligibility varied
from state to state & generally exclu...
School of Medicine
Health System Reform
24
School of Medicine
Medicaid Reimbursement
• Concern about access to primary care
for new Medicaid enrollees
• Only 66% of ...
School of Medicine
Medicaid Reimbursement
• Increases Medicaid fee-for-service
reimbursement for primary care
physicians t...
School of Medicine
Medicare Reimbursement
• Bonus payments of 10% for
• Primary care providers
• General surgeons in healt...
School of Medicine
Medicare Reimbursement
• Bundled payment pilot projects
• Pay for episodes of care (3 days prior to
hos...
School of Medicine
Delivery System Reform
• Establishes new entities to assess the
impact of innovations in care delivery
...
School of Medicine
Health Workforce Development
• Health workforce planning
• Scholarship & loan repayment programs
• Gran...
School of Medicine
ACA Implementation to Date
31
School of Medicine
Medicaid
• 26 states and the District of Columbia
have expanded eligibility for Medicaid
• Under debate...
School of Medicine
Medicaid
• Do not have good data on new
enrollment yet. HHS data lumps three
groups
• Renewals for exis...
School of Medicine
Health Insurance Exchanges
• 16 states and the District of Columbia
established their own health insura...
School of Medicine
Health Insurance Exchanges
• Initial roll out was a flop
• Federal exchange website not reliable
for th...
School of Medicine
Health Insurance Exchanges
• An estimated 7.5 million Americans have
obtained health insurance through ...
School of Medicine
Health Insurance Exchanges
• Enrollment trends vary by age and
ethnicity
• Early enrollees were disprop...
School of Medicine
38
Health Insurance Exchanges
School of Medicine
Rate of Uninsurance May be Falling
15.4%
16.4%
16.6%
17.5%
16.3%
15.9%
14%
15%
16%
17%
18%
Q1 2009 Q1 2...
School of Medicine
Delivery System Reform
• The ACA has been an catalyst for efforts
to improve health care value
• Medica...
School of Medicine
Delivery System Reform
• Rate of increase in health care
expenditures has slowed
• Unclear whether the ...
School of Medicine
42
Average Annual Percent Change in National
Health Expenditures, 1960-2012
10.6%
13.1%
11.0%
6.7%
5.8%...
School of Medicine
What’s Next?
43
School of Medicine
Medicaid
• Big questions about access to providers
• Some states that did not expand
Medicaid in 2014 m...
School of Medicine
Health Insurance Exchanges
• Some insurers plan to seek double digit
premium increases but increases ma...
School of Medicine
Health Insurance Exchanges
• Churn between the exchanges and
Medicaid is a bigger concern
– UC-Berkeley...
School of Medicine
Employers
• Implementation of employer mandate
delayed
• 2015 for firms with > 100 full-time employees
...
School of Medicine
Conclusion
• The ACA is stimulating major reforms in
• Health insurance
• Health care delivery
• These ...
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The Affordable Care Act: Success or Failure?

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The Affordable Care Act: Success or Failure?
Janet Coffman, MPP, PhD
Edward Yelin, PhD

GME Grand Rounds 4/15/14
UCSF San Francisco
http://medschool2.ucsf.edu/gme/

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The Affordable Care Act: Success or Failure?

  1. 1. The Affordable Care Act: Success or Failure? April 15, 2014 Edward H. Yelin, PhD Professor Janet Coffman, PhD Associate Professor Philip R. Lee Institute for Health Policy Studies
  2. 2. School of Medicine Outline • The logic of health insurance • Major provisions of the Affordable Care Act • Implementation of the Affordable Care Act to date • What’s next? 2
  3. 3. School of Medicine The Logic of Health Insurance 3
  4. 4. School of Medicine 4 Logic of Health Insurance: Beneficiaries • Prevent economic calamity (stop big losses) • Make expenses predictable (small copays, deductibles, coinsurance, and charges for share of premium vs. periodic large payments when services needed) • Buy health care (don’t put off what should be done now) – Across continuum from preventive care at one end through chemotherapy at the other • Buy health (and ability to be able to do things that are valued) Whether having health insurance buys health is beside the point.
  5. 5. School of Medicine 5 Logic of Health Insurance: Health Plans • Stay in business (collect more in premiums than pay out for health care plus administrative overhead) – Make expenses predictable (premium costs and beneficiary cost sharing based on reliable estimates of usage) – Minimize costs • Achieve a good actuarial mix of beneficiaries – Old system: avoid people with pre-existing conditions – New system: entice more people who are young to offset older and sicker • Lower utilization – Old system: don’t provide all services, e.g. mental health, maternity – Old and new: use of cost sharing, utilization review, etc. • Pay providers less – Selective contracting with pharmacies, hospitals, doctors
  6. 6. School of Medicine 6 Logic of Health Insurance: Health Providers • Stay in business (collect more than it costs to provide services) – Collect more from health plans (negotiate higher rates) – Reduce uncompensated care – Provide a mix of services that is more profitable – Reduce costs of providing services (negotiate with suppliers, including employees) AMA and American Hospital Association were strong advocates for the ACA because it promised to reduce the amount of uncompensated care.
  7. 7. School of Medicine 7 ACA Bargain • Extend benefits of group plans to individual insurance markets – Create larger pools to increase predictability • Provide subsidies to encourage more people to obtain health insurance • Alter mix within pools – Create healthier pools to amortize cost of adding people with pre-existing condition clauses
  8. 8. School of Medicine 8 Benefit of Creating Larger Pools
  9. 9. School of Medicine 9 Benefit of Altering Mix within Pools: Annual Medical Care Expenditures, by Age, U.S., 2009 Source: Analysis of 2009 Medical Expenditures Panel Survey $0 $1,000 $2,000 $3,000 $4,000 $5,000 18-34 35-64 18-64
  10. 10. School of Medicine Major Provisions of the Affordable Care Act 10
  11. 11. School of Medicine 11 It Takes Three Branches . . .
  12. 12. School of Medicine 12 ACA in Brief
  13. 13. School of Medicine Two Major Sets of Provisions • Insurance reform • Expand access • Provide better coverage • Control costs • Health system reform • Improve quality and efficiency • Strengthen workforce and infrastructure • More emphasis on public health and prevention 13
  14. 14. School of Medicine Insurance Reform 14
  15. 15. School of Medicine • Most citizens and legal immigrants must have coverage • Tax penalty if no coverage. In 2014 the higher of • $95 per adult ($47.50 per child) • 1% of annual household income • Exceptions for • Gaps of less than 3 months • Financial hardship • Religious objection 15 The Individual Mandate
  16. 16. School of Medicine Rules for All Insurance Markets 16 • Prohibitions on • Lifetime limits on coverage • Annual limits on coverage • Cost sharing for recommended preventive services (new policies only)
  17. 17. School of Medicine Individual Insurance Market Rules • Guaranteed issue • Cannot deny coverage for preexisting conditions • Cannot cancel coverage without proving fraud • Premiums can vary only based on • Location • Age - 3 age bands • Tobacco use (not in California) 17
  18. 18. School of Medicine Health Insurance Exchanges • Available to • Individuals and families • Small business • States chose whether to • Establish their own exchange • Participate in the federal exchange 18
  19. 19. School of Medicine 19 Health Insurance Exchanges • State regulated “insurance marketplaces” • Can compare plans by quality and cost • All plans offer the same “essential benefits” • Four standardized benefit designs
  20. 20. School of Medicine Health Insurance Exchanges: Essential Health Benefits • Hospitalization • Emergency services • Outpatient care • Prescription drugs • Laboratory services • Maternity and newborn care • Preventive and wellness services • Rehabilitative and habilitative services and devices • Mental health and substance use disorder services • Pediatric vision and dental 20
  21. 21. School of Medicine Health Insurance Exchanges: Metal Tiers 60% 70% 80% 90% 40% 30% 20% 10% Bronze Silver Gold Platinum Plan Pays Consumer Pays 21
  22. 22. School of Medicine Health Insurance Exchanges: Subsidies • Subsidies for persons & families with incomes 133-400% federal poverty level ($31,322 to $94,200 for a family of four) • Premium tax credit toward purchase of insurance • Contributions capped at 2% to 9.5% of income • Tied to lowest cost silver plan • Cost-sharing tax credit (rebate on Out of Pocket costs) - incomes 133% to 250% federal poverty level 22
  23. 23. School of Medicine 23 Medicaid Expansion • Historically, Medicaid eligibility varied from state to state & generally excluded low-income adults without children. • Under the ACA, all citizens with incomes below 133% FPL ($31,322 for a family of four) eligible for Medicaid. • The Supreme Court ruled that the federal government cannot compel states to expand Medicaid.
  24. 24. School of Medicine Health System Reform 24
  25. 25. School of Medicine Medicaid Reimbursement • Concern about access to primary care for new Medicaid enrollees • Only 66% of primary care physicians in the USA accepted new Medicaid patients in 2011 • Medicaid reimbursement rates are lower than Medicare and private insurance rates • On average Medicaid fees are 66% of Medicare fees 25 Sources: KCMU/Urban Institute Medicaid Physician Fee Surveys, National Ambulatory Medical Care Survey
  26. 26. School of Medicine Medicaid Reimbursement • Increases Medicaid fee-for-service reimbursement for primary care physicians to Medicare rates • States receive 100% federal matching funds • Only authorized for 2013 and 2014 • Health Homes • Integrate and coordinate all primary, acute, behavioral health, and long-term services and supports for persons with chronic conditions • State Medicaid agencies receive a 90% match from the federal government 26
  27. 27. School of Medicine Medicare Reimbursement • Bonus payments of 10% for • Primary care providers • General surgeons in health professional shortage areas • Reduce payments to hospitals for readmissions within 30 days • Reduce payments for hospital acquired conditions 27
  28. 28. School of Medicine Medicare Reimbursement • Bundled payment pilot projects • Pay for episodes of care (3 days prior to hospitalization to 30 days post-discharge) • Single payment for inpatient, hospital outpatient, physician services, and post- acute care • Accountable care organizations • Groups of doctors, hospitals, and other health care providers, who come together voluntarily to give coordinated high quality care to their Medicare patients 28
  29. 29. School of Medicine Delivery System Reform • Establishes new entities to assess the impact of innovations in care delivery • Patient Centered Outcomes Research Institute • Center for Medicare and Medicaid Innovation 29
  30. 30. School of Medicine Health Workforce Development • Health workforce planning • Scholarship & loan repayment programs • Grants to health professions schools to • Increase supply in high priority professions • Improve racial/ethnic diversity • Enhance preparation for practice in underserved areas • Changes Medicare graduate medical education payments to expand training in • Primary care • Ambulatory settings 30
  31. 31. School of Medicine ACA Implementation to Date 31
  32. 32. School of Medicine Medicaid • 26 states and the District of Columbia have expanded eligibility for Medicaid • Under debate in IN, MO, PA, UT, VA • California and some other states transferred persons from other state programs into Medicaid 32
  33. 33. School of Medicine Medicaid • Do not have good data on new enrollment yet. HHS data lumps three groups • Renewals for existing enrollees • Newly enrolled but eligible under pre- ACA rules • Newly enrolled due to eligibility expansion 33
  34. 34. School of Medicine Health Insurance Exchanges • 16 states and the District of Columbia established their own health insurance exchanges • 34 states rely on the federal exchange • Number of states relying on the federal exchange exceeded projections 34
  35. 35. School of Medicine Health Insurance Exchanges • Initial roll out was a flop • Federal exchange website not reliable for the first two months • Covered California’s website worked better but not problem free • A few state exchanges’ websites still aren’t working 35
  36. 36. School of Medicine Health Insurance Exchanges • An estimated 7.5 million Americans have obtained health insurance through an exchange • California has enrolled > 1.2 million persons - more than any other state • No solid data yet on how many exchange enrollees were previously uninsured. – Some who previously had individual insurance may have switched to an exchange to obtain more affordable or more comprehensive coverage 36
  37. 37. School of Medicine Health Insurance Exchanges • Enrollment trends vary by age and ethnicity • Early enrollees were disproportionately over age 50 years but enrollment of young adults rose substantially as the deadline approached • Enrollment of Latinos grew over time but is still lower than among other ethnic groups 37
  38. 38. School of Medicine 38 Health Insurance Exchanges
  39. 39. School of Medicine Rate of Uninsurance May be Falling 15.4% 16.4% 16.6% 17.5% 16.3% 15.9% 14% 15% 16% 17% 18% Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q1 2014 % Uninsured 39 Source: Gallup Healthways Well-being Index
  40. 40. School of Medicine Delivery System Reform • The ACA has been an catalyst for efforts to improve health care value • Medicare payment policies compelling hospitals to focus on reducing readmissions and health care acquired infections • Center for Medicare and Medicaid Innovation is providing substantial funding for 7 categories of innovations • Early findings are encouraging but implementation is challenging 40
  41. 41. School of Medicine Delivery System Reform • Rate of increase in health care expenditures has slowed • Unclear whether the current slowdown will be permanent • Need to watch what happens as • The economy rebounds • The number of persons with health insurance increases 41
  42. 42. School of Medicine 42 Average Annual Percent Change in National Health Expenditures, 1960-2012 10.6% 13.1% 11.0% 6.7% 5.8% 6.4% 7.1% 8.4% 9.7% 8.6% 7.2% 6.8% 6.5% 6.3% 4.7% 3.8% 3.8% 3.6% 3.7% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 1960 1970 1980 1990 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 SOURCE: Kaiser Family Foundation calculations using NHE data from Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; National Health Expenditures by type of service and source of funds, CY 1960-2012; file nhe2012.zip).
  43. 43. School of Medicine What’s Next? 43
  44. 44. School of Medicine Medicaid • Big questions about access to providers • Some states that did not expand Medicaid in 2014 may do so in 2015 • Governors do not like to leave federal funds on the table • Elections may change the balance of power in some states • Obama administration may allow more states to purchase private coverage 44
  45. 45. School of Medicine Health Insurance Exchanges • Some insurers plan to seek double digit premium increases but increases may be attenuates due to • Competition with other health plans sold in exchanges may limit increases • Risk adjustment for health plans with sicker enrollees than average 45
  46. 46. School of Medicine Health Insurance Exchanges • Churn between the exchanges and Medicaid is a bigger concern – UC-Berkeley Labor Center estimates that 42.5% to 46.7% of Covered California enrollees will leave within 12 months – Most will leave because they become eligible for Medicaid or obtain job-based coverage – Unclear how seamless transitions between Medicaid and exchange coverage will be 46 Dietz, Graham-Squire, and Jacobs, 2014 http://laborcenter.berkeley.edu/healthcare/churn_enrollment.pdf
  47. 47. School of Medicine Employers • Implementation of employer mandate delayed • 2015 for firms with > 100 full-time employees • 2016 for firms with 50 – 99 full-time employees • Cadillac tax for high cost employer health plans • More employers may stop offering health insurance 47
  48. 48. School of Medicine Conclusion • The ACA is stimulating major reforms in • Health insurance • Health care delivery • These reforms have potential to improve • Access to care • Value (health outcomes per $ spent) • Substantial variation in implementation due to • State discretion re Medicaid expansion and health insurance exchanges • Use of demonstration projects to test new models 48

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