Health Reform in America: An Overview of the Patient Protection and Affordable Care Act


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A lecture to the UC Davis School of Medicine community covering the basics of the health reform law passed in early 2010. Presented by Adam Dougherty, MPH, MS1

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Health Reform in America: An Overview of the Patient Protection and Affordable Care Act

  1. 1. Health Reform in America: An Overview of the Patient Protection and Affordable Care Act Adam Dougherty, MPH 9/28/2010
  2. 2. The Law <ul><li>Most sweeping reform since Medicare </li></ul><ul><li>Provisions effective immediately, but major pillars in 2014 </li></ul><ul><li>$938B over 10 years, costs fully offset by revenue and savings (2% of federal budget) </li></ul><ul><li>2,568 pages (less words than a Harry Potter novel!) </li></ul><ul><li>Nearly 60% of Americans don’t understand it (KFF poll) </li></ul>
  3. 3. Context
  4. 4. International Comparison of Spending on Health, 1980–2007 Note: $US PPP = purchasing power parity. Source: Organization for Economic Cooperation and Development, OECD Health Data, 2009 (Paris: OECD, Nov. 2009). $7,290 $2,454 16% 8% Average spending on health per capita ($US PPP) Total expenditures on health as percent of GDP
  5. 5. Overall Ranking Note: * Estimate. Expenditures shown in $US PPP (purchasing power parity). Source: Calculated by The Commonwealth Fund based on 2007 International Health Policy Survey; 2008 International Health Policy Survey of Sicker Adults; 2009 International Health Policy Survey of Primary Care Physicians; Commonwealth Fund Commission on a High Performance Health System National Scorecard; and Organization for Economic Cooperation and Development, OECD Health Data, 2009 (Paris: OECD, Nov. 2009).     AUS CAN GER NETH NZ UK US OVERALL RANKING (2010) 3 6 4 1 5 2 7 Quality Care 4 7 5 2 1 3 6 <ul><ul><li>Effective Care </li></ul></ul>2 7 6 3 5 1 4 <ul><ul><li>Safe Care </li></ul></ul>6 5 3 1 4 2 7 <ul><ul><li>Coordinated Care </li></ul></ul>4 5 7 2 1 3 6 <ul><ul><li>Patient-Centered Care </li></ul></ul>2 5 3 6 1 7 4 Access 6.5 5 3 1 4 2 6.5 <ul><ul><li>Cost-Related Problem </li></ul></ul>6 3.5 3.5 2 5 1 7 <ul><ul><li>Timeliness of Care </li></ul></ul>6 7 2 1 3 4 5 Efficiency 2 6 5 3 4 1 7 Equity 4 5 3 1 6 2 7 Long, Healthy, Productive Lives 1 2 3 4 5 6 7 Health Expenditures/Capita, 2007 $3,357 $3,895 $3,588 $3,837* $2,454 $2,992 $7,290 Country Rankings 1.00–2.33 2.34–4.66 4.67–7.00
  6. 6. Total Spending for Health Care (CBO) % of GDP % of GDP
  7. 7. Premiums Rising Faster Than Inflation and Wages * 2008 and 2009 NHE projections. Source: K. Davis, Why Health Reform Must Counter the Rising Costs of Health Insurance Premiums, (New York: The Commonwealth Fund, Aug. 2009). Projected Average Family Premium as a Percentage of Median Family Income, 2008–2020 Cumulative Changes in Components of U.S. National Health Expenditures and Workers’ Earnings, 2000–2009 Percent Percent 108% 32% 24% Projected
  8. 8. Uninsured Rising With Costs Gilmer and Kronick, Hard Times and Health Insurance, Health Affairs, May 2009
  9. 10. Insurance Underwriting <ul><li>Ability to deny/rescind coverage </li></ul><ul><li>Ability to ‘price out’ </li></ul><ul><li>individuals with pre </li></ul><ul><li>-existing conditions </li></ul><ul><li>2009 profit </li></ul><ul><li>increase: 56% </li></ul>Source: Families USA 2010
  10. 11. America’s Health Coverage Source: KFF, 2009
  11. 12. Overview of Reform <ul><ul><li>Expands coverage to 33 million individuals by 2019, covering nearly 95% of Americans </li></ul></ul><ul><ul><li>Bending the cost curve </li></ul></ul><ul><ul><ul><li>Extends solvency of Medicare Trust Fund by 10 years through 2-3% annual reduction in spending growth (e.g. 6% growth to 4% growth) </li></ul></ul></ul><ul><ul><ul><li>Slows private health care expenditure growth </li></ul></ul></ul><ul><ul><ul><li>annually by 1% (e.g. 6% growth to 5% growth) </li></ul></ul></ul><ul><ul><ul><li>Reduces federal deficit by $130B over 10 years, and over $1T in second decade </li></ul></ul></ul>Sources: CBO Score of Senate Bill, White House Council of Economic Advisors
  12. 13. Near Universal Coverage <ul><li>The Individual Mandate </li></ul><ul><ul><li>Every legal resident and US citizen will be required to obtain qualified health insurance by 2014, or be subject to a monetary penalty (0.5%-2.5% of income) </li></ul></ul><ul><ul><ul><li>Must take employer coverage, buy private coverage or enroll in public coverage </li></ul></ul></ul><ul><ul><ul><li>Exemptions for financial hardship (i.e. more than 8% of income) </li></ul></ul></ul><ul><ul><ul><li>Exemptions based on religious objection </li></ul></ul></ul><ul><li>Employer mandate for 200+ employees </li></ul><ul><li>Pay-or-play requirement for 50+ employees </li></ul>
  13. 14. Medi-Cal Expansion <ul><li>Medicaid eligibility expansion to 133% FPL for parents and MIAs; SCHIP eligibility expansion for kids to 250% FPL </li></ul><ul><li>CBO projects 15 million individuals newly eligible </li></ul><ul><li>UCLA estimates 1.7 million newly eligible in CA </li></ul>
  14. 15. Health Insurance Exchanges <ul><li>State exchanges with federal oversight - 2014 </li></ul><ul><ul><li>Regulated market for individuals and small businesses </li></ul></ul><ul><ul><li>Incomes between 133-400% FPL eligible for subsidies </li></ul></ul><ul><ul><li>Individuals pay sliding scale premiums capped at 3% - 9.8% of income </li></ul></ul><ul><ul><li>Up to 50% premium subsidy for small low wage employers <50 employees (available now) </li></ul></ul><ul><ul><li>Would cover 2.3 million uninsured in CA (UCLA) </li></ul></ul><ul><ul><li>Would subsidize 45% of individually purchased private insurance in CA (CHIS calculation) </li></ul></ul><ul><li>Initial focus -- small group and individual markets </li></ul><ul><ul><li>CBO projects 25 million would purchase through Exchanges </li></ul></ul><ul><ul><li>Expands past 2017 </li></ul></ul>
  15. 16. Sliding Scale Premiums and Out of Pocket – tied to Price
  16. 17. The Uninsured after Health Reform: California Source: Health Policy Fact Sheet , UCLA Center for Health Policy Research, Oct 2009
  17. 18. Insurance Transformation <ul><li>Exchange plans and new individual market plans </li></ul><ul><ul><li>Guaranteed issue and renewal </li></ul></ul><ul><ul><li>Risk-adjustment mechanisms to discourage insurer ‘gaming’ </li></ul></ul><ul><ul><li>Rating variation: age, geography, family size, and tobacco use </li></ul></ul><ul><ul><li>Mandatory data reporting </li></ul></ul><ul><ul><li>Compete on price and quality, not medical underwriting </li></ul></ul><ul><ul><li>‘ Essential community providers’ must be included in plan networks </li></ul></ul><ul><ul><li>New national non-profit insurer managed by OPM </li></ul></ul><ul><li>New protections across entire market </li></ul><ul><ul><li>Minimum benefits package (grandfathering exceptions) </li></ul></ul><ul><ul><li>Minimum medical loss ratio (80% in small group, 85% in large group </li></ul></ul><ul><ul><li>Transparency in claims, costs, enrollment, etc. </li></ul></ul><ul><ul><li>Standardized administrative processes </li></ul></ul><ul><ul><li>No copays for effective preventive services </li></ul></ul>
  18. 19. Insurance: Minimum Benefits <ul><li>Covered Benefits </li></ul><ul><ul><li>4 benefits categories ranging from 60 to 90% of the cost of the covered benefit packages (Bronze, Silver, Gold, Platinum), mandate tied to bronze </li></ul></ul><ul><ul><li>Grandfathers existing benefits (you like it, you keep it) </li></ul></ul><ul><ul><li>Young invincible coverage: </li></ul></ul><ul><ul><ul><li>Prevention and catastrophic coverage for those up to age 30 or individuals exempt from mandate due to financial hardship </li></ul></ul></ul>
  19. 20. September 23, 2010 <ul><li>Young adults up to age 26 guaranteed can stay on their parents’ insurance </li></ul><ul><li>Children can no longer be denied insurance coverage because they have a pre-existing condition (adults in 2014) </li></ul><ul><li>Ends the practice of rescissions, making it illegal for insurers to drop an individual who gets sick and 'unprofitable’ </li></ul><ul><li>Ends lifetime caps on insurance claims for all individuals, assuring individuals with a chronic disease or medical emergency the security to access vital services </li></ul><ul><li>Requires new plans to offer proven preventive care with NO cost sharing or co-pays, assuring access to these vital services even in economic hardship </li></ul><ul><li>Imposes a 10% sales tax on tanning services </li></ul>
  20. 21. Reform Financing: 1/2 savings and 1/2 taxes <ul><li>Savings in Medicare and Medicaid </li></ul><ul><ul><li>Provider payments: MA reductions and productivity increase adjustments </li></ul></ul><ul><li>Pay or play for employers with over 50 employees </li></ul><ul><li>Excise tax on Cadillac plans </li></ul><ul><li>Insurance industry, device and pharmaceutical manufacturer fees </li></ul><ul><li>0.9% Medicare payroll tax increase on individual/joint incomes over $200K/$250K </li></ul><ul><li>3.0% Medicare tax on unearned income of individual/joint incomes over $200K/$250K </li></ul><ul><li>CBO finds law will reduce deficit by $130B over 10 years, $1.2T over 20 years </li></ul>
  21. 22. System-wide Savings <ul><li>Independent Payment Advisory Board (IPAB): MedPAC with teeth </li></ul><ul><li>Care coordination and delivery integration pilots </li></ul><ul><ul><li>Pay for Performance incentives in Medicare </li></ul></ul><ul><ul><li>Accountable Care Organizations </li></ul></ul><ul><ul><li>HIT </li></ul></ul><ul><li>Patient Centered Outcome Research Institute </li></ul><ul><ul><li>Clearinghouse for national comparisons on the effectiveness of treatments </li></ul></ul><ul><li>Medicare fraud and abuse programs </li></ul><ul><li>Program Simplification: Breaking down the silos </li></ul><ul><ul><li>County programs, State programs, federal uncompensated care </li></ul></ul><ul><ul><li>Major relief to state and county budgets </li></ul></ul>
  22. 23. System-wide Savings <ul><li>Focus on primary care, prevention and wellness </li></ul><ul><ul><li>$11B for community clinic infrastructure </li></ul></ul><ul><ul><ul><li>Lynchpin of reform </li></ul></ul></ul><ul><ul><li>10% Medicare reimbursement increase for PCPs </li></ul></ul><ul><ul><li>Medicaid reimbursement increase to 100% Medicare levels for 2 years (2014) </li></ul></ul><ul><ul><li>Prevention and Public Health Fund ($500M) </li></ul></ul><ul><ul><li>Workplace wellness grant programs ($200M) </li></ul></ul><ul><ul><li>Health disparity monitoring programs and intervention grants </li></ul></ul><ul><ul><li>Community transformation grants </li></ul></ul><ul><ul><li>Nutrition labeling in chain restaurants </li></ul></ul>
  23. 24. Strengthening the Health Workforce <ul><li>National Health Care Workforce Commission </li></ul><ul><li>Primary Care training ($255 million), loan forgiveness ($125M annually) and expanded residency slot distribution </li></ul><ul><li>National Health Service Corps ($1B annually) </li></ul><ul><li>Public health fellowships </li></ul><ul><li>Nursing grants, nurse-managed clinics </li></ul><ul><li>Community health worker scholarships </li></ul>
  24. 25. Looking to the Future <ul><li>Today: State based high-risk insurance pool, closing the Medicare donut hole, strengthening consumer protections </li></ul><ul><li>Tomorrow?: Health Exchange bills in CA </li></ul><ul><li>Crystal ball: Massachusetts 2006 health reform </li></ul><ul><ul><li>Phase 1 complete: Near-universal coverage (98.5%) </li></ul></ul><ul><ul><li>Phase 2: Cost containment </li></ul></ul><ul><li> </li></ul>
  25. 26. Looking to the Future <ul><li>We have decided as a nation that basic access to health care is a nationwide responsibility </li></ul><ul><li>Implementation needs to be effective and sustainable in order to improve long-term population and economic health </li></ul><ul><li>95% of the legislation will be implemented by 2014: the next few years are crucial </li></ul><ul><li>Implementation is forever: No system is perfect </li></ul>
  26. 27. Thanks!