This document provides an overview of the Affordable Care Act (ACA) including key provisions, implementation challenges, and political aspects. It discusses major reforms such as prohibiting denial of coverage for pre-existing conditions, essential health benefits, subsidies for low-income individuals, health insurance exchanges, and penalties for large employers not providing coverage. Implementation has resulted in over 16 million more Americans with health insurance but ongoing issues include rising costs, inadequate provider networks, and legal challenges to the ACA.

1. The Affordable Care Act
An American Story
John J. Sarno, Esq.
Employers Association of New Jersey
www.eanj.org
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2. Patient Protection and Affordable
Care Act
March 23, 2010
A New Era for America
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3. U.S. Supreme court heard oral argument on the
constitutionality of the Affordable Care Act on
March 26-28, 2012
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4. NFIB v. Sebelius
U.S. Supreme Court (2012)
Personal Mandate exceeds Congress’ power to
regulate commerce but is a valid tax
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5. U.S. Health Care Spending
About 18% of the U.S. economy (in 1950, 5%)
Estimated $2.90 trillion in 2013
Most health care spending per capita in the world
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6. 6
Health Care Outcomes – U.S.
 33rd among developed nations in infant mortality
(6.3/1,000)
 50th in life-expectancy (78-years)

7. 7
 Estimated 46 million Americans lack health
care insurance (17% of U.S. population)
The Uninsured

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9. 9
Employer-Plan Crisis
 Premiums have grown 4-times faster than
wages since 1999.
 Average employee contribution has gone up
200% since 2000.
 Out-of-pocket and co-payments have gone
up 115% since 2000.

10. Five Pillars of Reform
Insurance Reform
Consumer Protections
Personal Mandate
Subsidized Coverage
Health Insurance Marketplace (Exchange)
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11. Insurance Reform
 High-risk pool created (2010)
 Dependent coverage to age 26 (2010)
 Children with pre-existing conditions cannot be denied coverage (2010)
 No denial for pre-existing conditions eliminated (2014)
 No Charge for annual wellness visit (2014)
 Guaranteed issue policy (2014)
 Modified community ratio (2014)
 80 – 85% medical loss ratio (2014)
 Long-term insurance program (2014)
 No pre-existing condition exclusions (2014)
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12. All Plans Must Provide
Essential Health Benefits
“Essential Health Benefits” requires minimum set of
benefits, with no lifetime of annual coverage limits
 Ambulatory patient services
 Emergency services
 Hospitalization
 Maternity and newborn care
 Mental health and substance abuse coverage
 Prescription drugs
 Rehab services and medical devices
 Preventative and wellness/chronic disease management
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13. “Free” Preventive Care
No Co-Pays
No Out-Of-Pockets
No Deductibles
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14. Health Delivery Reforms
 Research on best provider practices
 Research on comparative evidence outcomes
 Pilot program that pays for outcomes on flat fee
basis rather than fee for service for treatments
 Medical IT
 Standards for extended living arrangements
 Hospice, home-health reimbursement
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15. 15
Community Investment
 Health Care Clinics
 Primary Care Training
 Grants to States
 Diversity and Cultural Competency
 Education Curricula Development in Health Sciences
 Food Labeling

16. The Health Insurance Exchange
Healthcare.gov
Uninsured individuals not eligible for Medicare or
Medicaid will be permitted to purchase insurance
through state Exchanges (purchasing pools).
Individuals will be eligible for subsidies.
Employers with fewer than 100 employees will be
permitted to enroll.
Employer eligibility may be expanded in 2017.
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18. NJ Insurance Carriers
Horizon Blue Cross Blue Shield
AmeriHealth
United Healthcare
Health Republic of NJ
Oscar Insurance
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19. Exchange Enrollment – N.J.
March, 2015
254,316 enrolled
23% - 18 – 34
15% - 35 – 44
22% - 45 – 54
33% - 55 – 64
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20. 20
Subsidies – NJ
85% eligible for subsidies
$306 – average tax credit
$780 million in total subsidies

21. FamilyCare (Medicaid) – NJ
(2014)
396,000 enrollment
2.2 billion in Federal Funds
Only 40% of NJ doctors participate in the
program
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22. Types of Plans
Bronze 60% of costs
Silver 70% of costs
Gold 80% of costs
Platinum 90% of costs
Most popular in NJ – Silver, mid-level
80% of enrollees pay $100 or less per
month
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23. Problems
 Narrow or Inadequate Provider Networks
 Price (not eligible for subsidy)
 “Family Glitch”
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24. The Political Process:
Follow the Money
6 lobbyists for every member of
Congress
Insurance Industry - $100 million
Pharma - $110 million
Providers - $80 million
Hospitals - $90 million
Medical Device - $30 million
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25. The pharmaceutical industry alone spent
over $600,000 per day in lobbying (2.3
lobbyists per member of Congress)
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26. The process produced a 1,129 – page bill and
9,625 pages of regulations
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27. New Revenue for Business
and Industry
$200 billion – Pharma
$205 billion – Hospitals
$102 billion – Insurance companies
$38 billion – Insurance industry
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28. Taxes and Fees (10-years)
$240 billion insurance and medical
device industries
$280 billion Medicaid discounts given by
hospitals and pharma
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29. Tax on Investment Income
3.8% surtax on net investment income for
singles earning adjusted income over
$200,000; couples - $250,000
$23 billion Medicare tax increase of 0.990 -
$6.5 billion
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30. Early Results
17% - uninsured before ACA
13% - 2014
16.4 million more Americans insured
3.54 billion in subsidies
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31. Cost and Revenues
(estimated)
$4,600 – per person, per year in taxes,
subsidies
4,900 – new revenue for 4 major
industries
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32. 32

33. “Large” Employer Penalty
(2015)
Employers with 100 or more “full-time” employees will be
penalized for not offering coverage or coverage that does not
meet standards.
All employees counted in a calendar month (part-time,
temporary, seasonal).
“Full-time” employee is someone who is employed to perform
services on average of 30-hrs per week or 120 hrs/month.
Part-time employees are grouped together to create “full-time”
equivalents.
Aggregate number of hours worked by part-time workers in any
month and divide by 120 to determine number of full-time
equivalents.
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34. Penalty for not offering insurance or to
less than 70% of full-time employees and
at least one FTE receives a subsidy to pay
for insurance on the Exchange
 $2,000 per full-time employee after first 80 employees
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35. Affordability
Full-time employee cannot pay more than 9.5% of
household income for his/her share of premium for single
coverage. Lowest cost plan.
Safeharbor: Employer may use W-2 income for
employee. (Box 1)
Rate of Pay Safeharbor – Hourly rate multiplied by 130
hrs/month. Determine affordability using monthly
premium based on monthly wage. For salaried
employee, monthly wage can be used. Does not apply
where wages were reduced during the year.
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36. Auditing and Enforcement
 U.S. Department of Treasury (IRS)
 U.S. Department of HHS
 U.S. Department of Labor
Combined databases – Form W-2, Form
5500, Social Security Administration
database.
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37. Challenges – Escalating
Prices
 Fee for service
 Supply of doctors
 Hospital consolidations
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38. Potential Solution
Accountable Care Organization (ACO)
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39. The Wildcard
King v. Burwell
Argued March 3, 2015
Expected decision: June 30, 2015
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40. Questions?
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