Health care reform for idla 11 18-13

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  • Notes: Health Coverage: CHIP and individuals eligible for both Medicare and Medicaid (dual eligibles) are included in Medicaid.Other Public (Federal) includes individuals covered through the military or Veterans Administration in federally-funded programs such as TRICARE (formerly CHAMPUS) as well as some non-elderly Medicare enrollees.Updated 2/14/2013 (KY)
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  • Health care reform for idla 11 18-13

    1. 1. How does Health Care Reform Affect You? Scott Smith, CPA/PFS, CFP®
    2. 2. Agenda • Why health care reform? • Timeline for implementation • Focus on insurance changes – – – – – – Eligibility Coverage Subsidy Penalty Marketplaces/Exchanges Effect on employees/organizations • Questions?
    3. 3. Why Health Care Reform? • Our medical costs per capita are the highest in the world – Almost double that of other developed nations – Many issues drive higher costs • Overall health nothing to brag about – Can’t argue we pay the most because we get the best results
    4. 4. Why Health Care Reform? • Cost drivers of high medical costs – We pay providers in ways that reward performing more procedures, tests, etc. rather than being efficient – As a country we’re growing older, sicker, and fatter – We want new drugs, technologies, services and procedures – Administrative complexity adds costs
    5. 5. Per Capita Total Current Health Care Expenditures, U.S. and Selected Countries, 2010 ^ 2009 data Notes: Amounts in U.S.$ Purchasing Power Parity, see www.oecd.org/std/ppp; includes only countries over $2,500. OECD defines Total Current Expenditures on Health as the sum of expenditures on personal health care, preventive and public health services, and health administration and health insurance; it excludes investment. Source: Organisation for Economic Co-operation and Development. “OECD Health Data: Health Expenditures and Financing”, OECD Health Statistics Data from internet subscription database. http://www.oecd-library.org, data accessed on 08/23/12.
    6. 6. Why Health Care Reform? • Health care costs are rising faster than our economy – Not only do we pay a lot, but costs are rising • More and more of a burden for households
    7. 7. National Health Expenditures per Capita, 1960-2010 NHE as a Share of GDP 5.2% 7.2% 9.2% 12.5% 13.8% 14.5% 15.4% 15.9% 16.0% 16.1% 16.2% 16.4% 16.8% 17.9% 17.9% Notes: According to CMS, population is the U.S. Bureau of the Census resident-based population, less armed forces overseas and population of outlying areas, plus the net undercount. Source: Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; NHE summary including share of GDP, CY 1960-2010; file nhegdp10.zip).
    8. 8. One Quarter Of Public Reports Having Problems Paying Medical Bills, Majority Have Delayed Care Due To Cost In the past 12 months, did you or another family member in your household have any problems paying medical bills, or not? Percent who say they or another family member living in their household have done each of the following in the past 12 months because of the cost: Relied on home remedies or over-the-counter drugs instead of going to see a doctor 38% Skipped dental care or checkups No, did not have problems paying medical bills 73% Yes, had problems paying medical bills 26% 35% Put off or postponed getting health care you needed 29% Skipped a recommended medical test or treatment Not filled a prescription for a medicine Dk/Ref. 1% 25% 24% Cut pills in half or skipped doses of medicine Had problems getting mental health care Yes to any of the above SOURCE: Kaiser Family Foundation Health Tracking Poll (conducted May 8-14, 2012) 16% 8% 58%
    9. 9. Why Health Care Reform? • Majority of the costs are found with half of the population – Primarily based on age and/or those with chronic conditions • Older, sicker, fatter problem – Uninsured that seek emergency treatment after procrastinating care also contribute
    10. 10. Percent of Total Health Care Spending Concentration of Health Care Spending in the U.S. Population, 2009 (≥$51,951) (≥$17,402) (≥$9,570) (≥$6,343) (≥$4,586) (≥$851) (<$851) Note: Dollar amounts in parentheses are the annual expenses per person in each percentile. Population is the civilian noninstitutionalized population, including those without any health care spending. Health care spending is total payments from all sources (including direct payments from individuals and families, private insurance, Medicare, Medicaid, and miscellaneous other sources) to hospitals, physicians, other providers (including dental care), and pharmacies; health insurance premiums are not included. Source: Kaiser Family Foundation calculations using data from U.S. Department of Health and Human Services, Agency for Healthcare Research and Quality, Medical Expenditure Panel Survey (MEPS), Household Component, 2009.
    11. 11. Distribution of Average Spending Per Person, 2009 Average Spending Per Person Age (in years) <5 $2,468 5-17 1,695 18-24 1,834 25-44 2,739 45-64 5,511 65 or Older 9,744 Sex Male $3,559 Female 4,635 Note: Population is the civilian noninstitutionalized population, including those without any health care spending. Health care spending is total payments from all sources (including direct payments from individuals and families, private insurance, Medicare, Medicaid, and miscellaneous other sources) to hospitals, physicians, other providers (including dental care), and pharmacies; health insurance premiums are not included. Source: Kaiser Family Foundation calculations using data from U.S. Department of Health and Human Services, Agency for Healthcare Research and Quality, Medical Expenditure Panel Survey (MEPS), 2009.
    12. 12. Health Care Coverage and Personal Health Care Expenditures in the U.S., 2011 Health Spending Health Coverage Consumer Out-ofPocket 13% Uninsured 16% Medicaid 16% Medicaid 16% EmployerSponsored Insurance 49% Private Health Insurance 35% Medicare 13% Medicare 24% Other Public 1% Private Non-Group 5% Total = 307.9 million Other Private Funds 8% Other Governme nt Programs 4% Total = $2.3 trillion NOTE: Health spending total does not include administrative spending. SOURCE: Health insurance coverage: KCMU/Urban Institute analysis of 2011 data from 2012 ASEC Supplement to the CPS. Health expenditures: KFF calculations using 2011 NHE data from CMS, Office of the Actuary
    13. 13. Why Health Care Reform? • Purpose of the Affordable Care Act was to address primarily: – Uninsured – Preventative care – Small changes to the fee-for-service model that encourages volume of procedures/services over the quality of care • Primarily through Medicare
    14. 14. Timeline • Passed in March of 2010 after extremely contentious debate Vote by Senate Vote by House
    15. 15. Timeline • Supreme Court upheld most of the law in June 2012 as a type of tax – Did away with requirement for states to accept Medicaid expansion or forfeit all Medicaid funds • Timeline for implementation very gradual – Some pieces of the law are not fully functional until 2020 – Components most obvious in everyday lives of most Americans happen in 2014
    16. 16. Focus on Insurance Changes • In 2012, 47.3 million people were uninsured (roughly 16% of the population) – Various reasons Disability Unemployment Pre-existing conditions Self-employed or work for small businesses • Young adults • • • •
    17. 17. Focus on Insurance Changes • Almost half of Americans have insurance through work • 30% have coverage through Medicare, Medicaid or other public programs • Only 5% have private insurance not through an employer
    18. 18. Affordable Care Act Solution • Make large organizations cover health insurance • Expand Medicaid to help lowincome households • Provide assistance for middleclass households through tax credits (subsidies)
    19. 19. Affordable Care Act Solution • Define low-income and middle class using the federal poverty level • Poverty level is the minimum amount of income that a family needs for food, clothing, transportation, she lter and other necessities.
    20. 20. Poverty Level Percent Of The National Poverty Level Household Size 1 2 3 4 5 6 7 8 100% 133% 150% 200% 250% 300% 400% $11,490 15,510 19,530 23,550 27,570 31,590 35,610 39,630 15,282 20,628 25,975 31,322 36,668 42,015 47,361 52,708 17,235 23,265 29,295 35,325 41,355 47,385 53,415 59,445 22,980 31,020 39,060 47,100 55,140 63,180 71,200 79,260 28,725 38,775 48,825 58,875 68,925 78,975 89,025 99,075 34,470 46,530 58,590 70,650 82,710 94,770 106,830 118,890 45,960 62,040 78,120 94,200 110,280 126,360 142,440 158,520 For each additional person, add 4,020 5,347 6,030 8,040 10,050 12,060 16,080 Maximum Premium as a percent of income 2.0% 3.0% 4.0% 6.3% 8.1% 9.5% 9.5%
    21. 21. Focus on Insurance Changes • How will the government help directly with health insurance costs? Without Medicaid Expansion 0-27% of poverty Medicaid 28-99% of poverty Unsubsidized 100-400% of poverty Exchange >400% of poverty Unsubsidized
    22. 22. Focus on Insurance Exchanges • Idaho did not expand Medicaid – One of 25 states – Idaho Medicaid eligibility as low as 27% of poverty level (roughly $3K) • For adults, not kids or pregnant women • Coverage gap estimated at 77,000 people in Idaho (5 million nationwide)
    23. 23. Eligibility • Insurance companies cannot vary premiums or deny coverage based on health status • No denial for preexisting conditions • The only factors affecting cost will be: – – – – – Age Policy type Geographic location Tobacco Use Income
    24. 24. Coverage • “Essential Health Benefits” – Typically expanded coverage vs. existing plans (i.e. Maternity, Mental Health will be standard) – If plans don’t meet these minimums, they’re cancelled – notices already sent • Focus on preventative care – $0 or reduced copays for preventive services • No lifetime maximums • Still wide variation in benefits, READ THE PLAN DETAILS
    25. 25. Coverage • Plans will be grouped into “precious metal” categories to help make comparison shopping easier. – Based on the percentage of healthcare expenses each plan will cover: • • • • Bronze, 60% Silver, 70% Gold, 80% Platinum, 90% – 146 plans in Idaho
    26. 26. Subsidy • Eligibility – Not eligible if you’re covered by an employer plan (60% of actuarial cost “Bronze” equivalent, AND your responsibility is less than 9.5% of your income) – Not eligible if you’re covered by public plans (Medicaid, Medicare) • Even though Idaho didn’t elect to pick up the addition Medicare coverage – Income has to be between 100% and 400% the Federal poverty level for your family size
    27. 27. Subsidy, contd. Percent Of The National Poverty Level Household Size 1 2 3 4 5 6 7 8 100% 133% 150% 200% 250% 300% 400% $11,490 15,510 19,530 23,550 27,570 31,590 35,610 39,630 15,282 20,628 25,975 31,322 36,668 42,015 47,361 52,708 17,235 23,265 29,295 35,325 41,355 47,385 53,415 59,445 22,980 31,020 39,060 47,100 55,140 63,180 71,200 79,260 28,725 38,775 48,825 58,875 68,925 78,975 89,025 99,075 34,470 46,530 58,590 70,650 82,710 94,770 106,830 118,890 45,960 62,040 78,120 94,200 110,280 126,360 142,440 158,520 For each additional person, add 4,020 5,347 6,030 8,040 10,050 12,060 16,080 Maximum Premium as a percent of income 2.0% 3.0% 4.0% 6.3% 8.1% 9.5% 9.5%
    28. 28. Subsidy, contd. • How much? – Based on the premium for the second lowest cost silver plan (70% actuarial value) in the exchange – The amount of the tax credit varies with income - the premium a person would have to pay for the second lowest cost silver plan would not exceed a specified percentage of their income.
    29. 29. Subsidy Example 1 • Household income = $80,000 (290% of Federal Poverty Level) – Family Size = 5 (2 parents, 3 kids) – Estimated silver plan cost = $9,875.04/year or $822.92/month – Estimated family responsibility = $7,368/year or $614/month – Subsidy = $2,507.04/year or $208.92/month
    30. 30. Subsidy Example 2 • Household income = $55,000 (199% of Federal Poverty Line) – Family Size = 5 (2 parents, 3 kids) – Estimated silver plan cost = $9,875.04/year or $822.92/month – Estimated family responsibility = $3,454/year or $287.83/month – Subsidy = $6,421.04/year or $535.09/month
    31. 31. Subsidy Example Review • Both families had the same plan with the same base cost • The government subsidy for the family making $80,000 was $2,507/year, $208/month – The family’s responsibility was $614/month • The government subsidy for the family making $55,000 was $6,421/year, $535/month – The family’s responsibility was $287/month
    32. 32. Subsidy, contd. • Tax credit can be taken as you apply for insurance on the exchange – Subsidy is paid directly to the insurance company – Based on estimated income for 2014 – On your 2014 return you make up the difference • OR the credit is refundable when you file your 2014 tax return
    33. 33. Penalties • For individuals without coverage – 2014 it will be the higher of: • 1% of your income • OR, $95 per adult and $47.50 per child – Up to a total of $285 per family – 2015 jumps to higher of: • 2% of your income • OR $325 – 2016 jumps to higher of: • 2.5% of your income • OR $695
    34. 34. Health Insurance Marketplaces/Exchanges • Healthcare.gov, website where you can: – Estimate your subsidy (tax credits) – See available insurance plans and enroll • Open enrollment began October 1 • In Idaho, plans are offered by: – – – – Blue Cross BridgeSpan PacificSource SelectHealth • Plan offerings are not uniform throughout the state – Plans and coverage available depend on zip code
    35. 35. States Health Insurance Marketplace Decisions, May 10, 2013 VT WA ND MT NH MN OR WY CA AZ CO MI PA IA NE UT* NY WI SD ID NV IL KS OK NM TX IN OH WV MO KY DC SC AR AL VA CT NJ DE MD NC TN MS AK ME GA LA FL HI State-based Marketplace (16 states and DC) Partnership Marketplace (7 states) Federally-facilitated Marketplace (27 states) * In Utah, the federal government will run the marketplace for individuals while the state will run the small business, or SHOP, marketplace. MA RI
    36. 36. Health Insurance Marketplaces • Marketplaces still having problems – Idaho’s exchange not up and running yet, opted for Federal government-run site Healthcare.gov • For the entire month of October – 106,185 signed up nationwide • Roughly 27,000 through healthcare.gov (35 states) • Rest through state-run exchanges – Only 338 in Idaho • Goal is to have the website running November 30 and 800,000 enrolled • CBO projected 7 million would enroll by March 31
    37. 37. Health Insurance Marketplaces • Alternatives • For information: – YourHealthIdaho.org • Can find plans and estimated rates without filling out an application • But you can’t apply here • Paper or telephone applications possible – But you can’t comparison shop
    38. 38. Health Insurance Marketplaces/Exchanges • Not forced to buy health insurance through a marketplace • BUT – Individuals are only eligible for the subsidy (tax credits) if they buy through the marketplace – Businesses are only eligible for the tax credit (under 25 employees) if they buy through the marketplace
    39. 39. Effect of ACA on Organizations • Roughly Half of Americans have insurance through work • Average family premium cost in 2013 = $16,351 – $11,786 born by the employer (72%) – $4,565 paid by the employee (28%) • Comparison with 10 years ago – Overall cost jumped 80% – Employee burden jumped 89% – Coverage decreased • Deductible went up by nearly 50% • Soup of co-pays, additional deductibles
    40. 40. Average Annual Worker and Employer Contributions to Premiums and Total Premiums for Family Coverage Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2002-2012.
    41. 41. Distribution of Annual Premiums for Covered Workers with Family Coverage, 2012 Percentage of Covered Workers: 50% 40% Average: $15,745 30% 21% 19% 20% 19% 13% 9% 10% 6% 6% $20,000$21,999 $22,000 or More 4% 2% 0% Less Than $8,000 $8,000 $9,999 $10,000$11,999 $12,000$13,999 $14,000$15,999 SOURCE: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2012. $16,000$17,999 $18,000$19,999
    42. 42. Effect on Organizations • Costs projected for 2014? – Insurance companies aren’t broadcasting group rates – Anecdotal data support significant increases in premiums • Society of Actuaries projected the jump in claims costs for 2014 – Cost of claims in Idaho projected to jump 62% (uninsured enter the insurance pool) • Insurance companies will not eat those costs and stay in business
    43. 43. Effect on Organizations • Insurance costs will become unaffordable for some organizations
    44. 44. Small Organizations • If under 50 full-time employees don’t have to offer insurance – NO penalties • Disincentive to offer insurance to employees – Employees could have the same insurance for less with the subsidies – Employees on their own have greater choice of providers, rather than 1 selected by employer. – Management will question if their competitors are pushing insurance costs to the government, and investing the difference in other initiatives. – There is a tax credit available for those businesses with under 25 employees • up to 50% of the costs of insurance • Only 4% of eligible businesses take the credit because it costs more to calculate than the credit returns (per the GAO).
    45. 45. Small Organizations, contd. • Incentives to offer insurance to employees – Keep quality employees – Large credit if the business is eligible, willing to calculate • Possible trends – Cut health insurance and offer loads of other before-tax benefits to compliment the subsidized health insurance they get on the exchange – Gives them a full suite of benefits to compete with larger employers
    46. 46. Big Organizations • If you have more than 50 “full-time equivalent” employees – Penalties if any of your employees get a subsidy • Exception: if you offer affordable qualifying health insurance to full-time employees • Don’t have to offer insurance to part-time employees • Full-time = 30 hours • No tax credits available for larger employers • Can’t simply divide businesses to get under 50 employees • Can’t lease your employees from a PEO
    47. 47. Big Organizations, contd. • Possible trends – Reduction in hours to get employees under 30 hours • Especially in fast-food, hospitality industries – Reduction in workforce to a lean management team • Outsource the rest to other companies – Reduction of other non-health benefits to pay for insurance
    48. 48. Effect on Individuals • Insurance cost is no longer dependent on health, but on income – Winners • Those with pre-existing/chronic conditions that made insurance impossible in the past • Those that were approaching lifetime limits (think cancer patients with huge lifetime treatment costs) • Lower income households can receive large subsidies to make insurance very attractive – Losers • Young and the healthy now have to get insurance and pay higher rates for the previously uninsurable • Higher income households receive no subsidies and pay higher tax rates to fund coverage for everyone else
    49. 49. Effect on Individuals, contd. • Medicaid largely unaffected • Those in the Medicaid coverage gap lose big – Because Idaho and other states chose not to expand coverage – Those in the gap receive no subsidy and could still be subject to a penalty if they don’t obtain insurance • Medicare largely unaffected – Most benefits are found in preventative care
    50. 50. Effect on Individuals, contd. • Employees of large organizations will typically keep health insurance – Some may see reduced hours to make them part-time – Others could see a reduction in non-insurance benefits to pay for increased insurance costs • Employees of small organizations could lose health insurance in the long-term – May be a better deal for them to get insurance on the exchange with subsidy help – Could see benefits they never had as employers cut insurance but try to keep talent by offering other perks
    51. 51. Recent Developments • November 14 – Due to political pressure, Pres. Obama says that insurance companies are allowed to extend policies customers have now • These include cancelled policies that do not meet the minimum essential benefits rules • Policy extensions depend on insurance commissioners in every state ignoring the law’s minimum standards and allowing insurance companies to offer the plans – Some states have already said they won’t allow the nonqualifying policies to be sold – Insurance companies call the reversal unworkable • This comes a few weeks before the new year when the law has been in effect for over 3 years • They believe healthy people will simply renew their cheaper existing policies while the previously uninsured will sign up for the exchange plans, driving exchange plan costs up
    52. 52. QUESTIONS? Thank you.
    53. 53. More Information • • • • • • • Health costs in the U.S. – http://www.pbs.org/newshour/rundown/2012/10/health-costs-howthe-us-compares-with-other-countries.html Overview of health reform – http://kff.org/health-reform/ Federal exchange – https://www.healthcare.gov/ Idaho exchange (eventually) and other Idaho-specific health reform FAQs – http://www.yourhealthidaho.org/ Idaho exchange plans and rates – http://www.yourhealthidaho.org/wp-content/uploads/2013/10/YHIPlan-Information-10_29_2013e.pdf Idaho calculator for subsidy – http://www.yourhealthidaho.org/additional-resources/premiumassistance-estimator/#subsidy_results Society of Actuaries study: Cost of the Future Newly Insured under the Affordable Care Act (ACA) – http://cdn-files.soa.org/web/research-cost-aca-report.pdf

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