The official name of the legislation is the Patient Protection and Affordable Care Act in the United States. The legislation was signed into law in the spring of 2010. Although it is often referred to as the Affordable Care Act (or ACA), many people simply call it “health reform” and I will use that short hand version today.
It is important to recognize some of the key terms used in the discussion about health reform. Federal Poverty Level (FPL) - The set minimum amount of income that a family needs for basic necessities (food, clothing, transportation, etc.). L varies according to family size and is adjusted for inflation. The guidelines are determined annually by the U.S. Department of Health and Human Services and public programs such as Medicaid use these guidelines to define eligibility. Currently, 100% of FPL is equivalent to an annual income of $14,570 for a family of two.High-Risk Pool - An insurance mechanism created for those previously unable to obtain insurance due to poor health. States were given the opportunity to create a high-risk pool in 2010. Residents of states that did not create a pool can participate in a federally-run program.Health Insurance Exchange - A way to pool risk and provide affordable insurance options for small businesses, individuals without access to public programs or employer-sponsored plans, and possibly others. An entity could set standards beyond those required by the federal government, accept bids, and negotiate contracts with insurers to participate in the exchange. This entity would also provide certain protections and assistance to those purchasing insurance.Insurance Subsidies - A way to provide individuals and employers with the necessary tax credits to offset costs in pursuit of providing affordable insurance to specific populations.Individual Mandate - The requirement that all individuals must obtain health care insurance or pay a penalty. The individual mandate will be in place by 2014, although some exceptions do apply (financial hardship, religious reasons). The penalty, in the form of a tax, will be $95 per individual or up to 1% taxable income in 2014. It increases to $325 or up to 2% taxable income in 2015 and $695 or up to 3% taxable income in 2016.Essential Benefits - Plans in the health insurance exchange are required to offer coverage for “essential benefits” that must include: emergency services, hospitalization, maternity and newborn care, mental health and substance use disorder services, prescription drugs, preventive and wellness services and chronic disease management, and pediatric services (including pediatric oral and vision care).
Explain that the first item for discussion in health reform is the sources of health insurance coverage
This slide represents estimated change in sources of coverage in the United States.Use the pie charts to highlight that when the new law is fully in effect, 2014, that the percentage of uninsured Americansdecreases from 17% now to 6%Note: This shows the non-elderly and is a preliminary estimate, subject to revision. “Other” is comprised of the following: Medicare (disabled or end-stage renal patients), Champus, CHAMPVA (coverage for armed forces and veterans families) and Indian Health Services. Estimates are based on 2008 numbers.
Share that one of the driving concepts of health reform was to provide more Georgians with health insurance coverage.Use the pie charts to highlight that when the new law is fully in effect, 2014, that the percentage of uninsured Georgians decreases from 19% now to 5%
Explain that this chart presents the same numbers as the pie charts, but also shows the difference in sources of coverage. Point out that the increase in coverage comes from two main sources – increase in those covered by Medicaid/PeachCare and those getting insurance from insurance exchanges overseen by each state.“Who remains uninsured?”, you might ask:• Undocumented – approximately ¼ to 1/3 of those without insurance will be undocumented• Medicaid eligible but not enrolled (likely healthy and do not see the need to enroll, but can – and likely will be - enrolled in Medicaid when they are admitted to a hospital) – this group makes up less than ¼ of those without insurance• Exchange eligible, but not participating (it is estimated that about ½ of those remaining uninsured after full implementation will have incomes between 133% and 300% of poverty. These individuals and families may experience volatile incomes that will result in transitions in and out of Medicaid and insurance subsidy categories. Some may determine that that insurance via the exchange, even with the subsidy, is not affordable to them).Those with incomes between 300 and 400 percent of poverty are most likely to enroll in the exchange because they will see decreases in premiums both from the stabilization of the market (community rating) and the premium subsidies.In general, those who will remain uninsured after full implementation are likely to be younger and healthier than those currently uninsured and those who become insured.
Share that another key item for discussion is the financial implications of health reform.
The second core concept: health reform at the federal level was intended to be deficit neutral.The Congressional Budget Office estimates that the law will result in approximately $1 trillion dollars in new federal spending to fund subsidies of private insurance and to pay for the Medicaid expansion.New sources of revenues:• Savings in Medicare: - Reductions to annual updates in payments (approximately $196 billion) - Changes in the calculations for Medicare Advantage plans (approximately$136 billion) - Reductions in Medicare DSH payments (approximately $36 billion) - Other (approximately $87 billion)• New taxes, penalties, and fees for those that do not have health insurance but qualify for coverage - Increase in Medicare (FICA) tax to 3.8% and expand base on high incomesfor individuals earning more than$200,000 and families earning more than$250,000 (approximately $210 billion) - Fees for medical devices and insurers (approximately $107 billion) - Fines/penalty payments from businesses and individuals (approximately$65 billion) - Excise tax on high premium (Cadillac) health plans (approximately $32 billion)Expenditures:• subsidize the cost of insurance premiums for those that qualify• additional number of those enrolled in Medicaid
The third item for discussion is to review the major change components as a result of the legislation. Remind the audience that this presentation is an overview and will not cover all the details of the 906 page law.
There are four major components of health reform:Changes in Public CoverageChanges in Private CoverageImproving Health Care QualityImproving Health
The first major change component is changes in public health care insurance coverage through Medicaid expansion:Will be expanded to include all Americans up to 133% Federal Poverty Level- Poverty level based on number in your family, i.e. $19,380 for a family of two- This expansion will increase the number eligible for Medicaid by approximately 16 million Americans with the largest increase being men who are not currently eligible100% of expansion costs paid by federal government in 2014- Phase in of state share starting in 2017 (up to 10% of expansion costs)- Federal government retains 90% of expansion costs beginning in 2020
The second major change component is changes to private health insurance coverage.Insurance RegulationSample Changes to Current Practices:Community rating rather than risk-adjusted premiumsNo pre-existing condition exclusionsNo lifetime and very limited annual benefit capsPrior approval of rate increasesMandatory medical loss ratio of 80 or 85% (by group size)High Risk Pool: Bridge to provide a way to obtain coverage until other insurance market reforms are fully implementedHealth Insurance ExchangeAn organized market for health insurancethat:Establishes common rules for benefits and pricingOffers consumers a choice of plansProvides consumers information about their choiceFacilitates plan enrollmentAdministers the subsidiesStates can determine structure and potential regional partners. Each state must determine structure of exchange by 2012.
Small employers (fewer than 25 FTEs) are potentially eligible for tax credits in 2010 to offset the cost of purchasing coverage, and those credits become more generous starting in 2014.Low and moderate income individuals who purchase coverage in an exchange will be eligible for sliding scale tax subsidies to offset the premiums and some of the cost sharing if their incomes are less than 400% of poverty ($88,000 for a family of four).
The third major change component includes efforts to improve the quality of health care.One strategy to improve quality is incorporating best practices and systematically collecting and analyzing health care data. A second strategy involves streamlining and coordinating care, as well as encouraging interdisciplinary treatments. One example of the integration of a health system is accountable care organizations (ACOs), which will encourage physician groups to join together to gain efficiencies, improve quality of care, and reduce spending. A third strategy involves a series of quality-driven incentives and penalties for providers. Additional quality-related elements of the new legislation include funding to study and implement evidence-based practices related to the financing and delivery of Medicare and other forms of health care finance.
The fourth major change component comes from efforts to improve health of Americans.Efforts to improve health and well-being will be coordinated by a national council, supported by research and innovation, and implemented through insurance coverage requirements and state and community programs. Wellness and prevention services and research will be expanded to focus on physical activity, nutrition, emotional wellness, smoking cessation and other chronic disease priorities. Public and private insurers will be required to provide preventive and wellness services in their qualified health plans, and employers will be permitted to incentivize employee participation in wellness programs. State and local agencies will be given opportunities to apply for federal funds to implement programs to create healthier communities.
Health reform isn’t going to happen all at once. Let’s take a moment to review the timeline of implementation.
Here are the changes that took effect in 2010:Insurance regulation changes:Federal support for creation of high-risk pools No cancellations, lifetime coverage limits, or pre-existing conditions for childrenFederal reinsurance for early retiree health insurance (age 55-64)Group health coverage up to age 26 on a parent’s planPremium reporting requirementsTax and Spending changes:Tax credits for small (fewer than 25 FTEs) businesses with average annual wages less than $50,000$250 rebate for the Medicare Part D “donut hole”10% tax on indoor tanning revenue
Changes coming in 2011:Improving Quality - Federal incentives for Medicaid to pursue medical homes for chronically illTax and Spending changes - National, voluntary long-term care insurance program via payroll deduction (active opt-out required)New fees on pharmaceutical manufacturersFSA /HSA changes- Limit use for over the counter products-Increase penalty for non-health care use to 20%
Changes coming in 2012:Tax and spending -Reduced payments for Medicare Advantage plansImproving quality - Medicare will provide incentives for hospitals/physicians to integrate servicesMedicaid “demonstration projects” for quality
Changes to take effect in 2013:Additional Tax and Spending ChangesMedical device manufacturers tax: 2.3% of gross salesIncrease Medicare (FICA) tax to 3.8% and expand base on high incomes- Individual earning more than $200,000 - Couples earning more than $250,000Limit FSA contributionsEliminate tax deduction for retiree drug subsidy payments to employers
2014 is a year when many of major health reforms take effect:Coverage Expansions -Medicaid to 133% FPL beginsExchanges operationalTax subsidies Small business tax credits increasedIndividual tax subsidies for those with family income <400% FPL ($58,280 – family of two)- Offset premiums- Offset cost sharingIndividual Mandate - Required to show proof of coverage with tax returnPenalty for non-compliance:$95 per individual or up to 1% taxable income (2014)Increases to 2% or $325 (2015) and 3% or $695 (2016)What counts as coverage?Bronze, Silver, Gold or Platinum benefit plans through a state-offered exchange or their equivalent Other Changes -Limit waiting periods to 90 daysLimit deductibles for small group market ($2,000/$4,000 unless offset by HSA contributions)Allow incentives for wellness program participationImpose fees on health insurers
There are additional changes to take effect in 2015 and beyond. A few notable changes include:Medicare payments to hospitals reduced based on hospital-acquired infectionsPhase out small business tax credit (2016)Excise tax on high-value group health plans (i.e. “Cadillac plans”) (2018)
Let’s take a moment to review the four items related to health reform covered. (Review the four items)
Strategic system changers are characterized by: An approach with a strategic mind set Building strong diverse coalitions Collaborative leadership Identifying needs, goals, and levers of greatest impact Using effective communication Ability to match community resources with the new tools and resources available in health reform to support people who were previously uninsured
Share suggestions for areas of actions to consider in the community.(Top left image) Influence decisions(Top middle image) Educate others(Top right image) Strategically plan under uncertainty(Bottom left image) Stay abreast of new information that emerges(Bottom middle image) Create new partnerships(Bottom right image) Build capacity: Workforce Build capacity: Information Technology Build Capacity: Care Coordination
Thank audienceTake questions
Leading Through Health Reform
Leading Through Health Reform <br />Karen Minyard, Ph.D. <br />
Health Reform<br />An overview of the impact of the Patient Protection and Affordable Care Act in the United States<br />