understanding the affordable care act dylan h. roby, phd assistant professor of health policy and...
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Understanding the Affordable Care Act
Dylan H. Roby, PhDAssistant Professor of Health Policy and Management
UCLA Fielding School of Public HealthDirector of Health Economics and Evaluation Research
UCLA Center for Health Policy Research
September 18, 2013Midday at the Oasis Webinar
Three foci of the law Improve Access
Incentives to purchase insurance Expand Medicaid to include childless adults and make income
eligibility more straightforward Increased regulation of insurance products Added funding and training for primary care
Reduce Costs Potential for payment reform Sustain existing programs (including Medicare)
Improve Quality Research and Coordination Patient Safety and Reducing Readmissions
Enactment vs. Implementation The law was signed on March 23, 2010 as the
Patient Protection and Affordable Care Act “Fixes” were made to the law via a reconciliation bill,
the Health Care and Education Reconciliation Act, signed on March 30, 2010 Public Law 111-148 (PPACA) and 111-152 (HCERA)
Implementation ongoing, changes made in each budget cycle & decisions codified in federal regulations (www.regulations.gov) States use enabling legislation and their own rulemaking
processes to implement changes to state law.
Insurance Status in the U.S., 2009
Note: Percentages exceed 100% because type of coverage is not mutually exclusive; individuals can have more than one category of coverage.Source: U.S. Census Bureau Analysis of March 2010 Current Population SurveyDoes not include military-based insurance
Insurance Status in the U.S., 2012
Note: Percentages exceed 100% because type of coverage is not mutually exclusive; individuals can have more than one category of coverage.Source: U.S. Census Bureau Analysis of March 2013 Current Population SurveyDoes not include military-based insurance
Changes already in effect… Children cannot be excluded from the individual market
due to pre-existing conditions No cost sharing for preventive services Adult children up to age 26 can be added to parent’s
plan Ban on rescissions State high-risk pools Medical Loss Ratio enforcement Reporting on Premium Increases to Federal Government Reduction in Medicare Part D “donut hole”
Biggest Changes in 2014
Core of the ACA’s Access Provisions Expand Medicaid eligibility and income criteria
Childless Adults Modified Adjusted Gross Income w/o Asset Test Up to 138% of Federal Poverty Level (~$15,500)
Requirement for large employers to offer affordable coverage
Creation of Health Insurance Marketplaces Small Business Health Options Program (SHOP) Individual Insurance Marketplace
Current Medi-Cal Eligibility Table
Medicaid expansion is now voluntary, due to Supreme Court Decision. Some states have further to go…
Source: Rosenbaum, NEJM, 10/14/09
The Health Insurance Marketplaces State-based marketplaces for individuals and small group
(SHOP) purchasers No public option, but health insurers can compete in each state or
regional market If state does not create the marketplace, DHHS will Essential Health Benefits package in all individual and small group
coverage (even outside of the Marketplace) Tax Subsidies available to individuals not offered affordable
coverage by employers Income-based Sliding scale cap on out-of-pocket premiums from 2% to 9.5% of
income Out-of-pocket spending caps based on income Out-of-pocket maximum for everyone
Minimum Essential Coverage Requirement - “Individual Mandate” With guaranteed issue coverage comes a risk of
adverse selection Concerns about “free-riders” who would sit on the
sidelines until they were sick, then buy coverage In order to avoid adverse selection, there are
penalties for not carrying qualified coverage Penalties phased in from 2014 to 2016 $95 (or 1%) to $695 (or 2.5% of income) per person
Exceptions for religions, members of Indian tribes, being uninsured less than 3 months, financial hardship, and low-income (below tax filing threshold)
Protections for Consumers The State or Federally-Facilitated Marketplace:
Sells Guaranteed Issue Coverage to individuals, families, and small businesses (50-100 employees, depending on state) By 2016, all states must expand their SHOP to include firms
with 100 or fewer employees Price premiums based on age, location, & policy size Essential Health Benefits based on employer-plans in
the state Set actuarial value and out-of-pocket spending caps
Buying Insurance with SubsidiesIncome for Family of Four
Premium Subsidy Cap: % of Household Income
Original Monthly Premium for Anthem HMO Silver Plan
Advance Premium Tax Credit (fixed)
Final Monthly Premium
$31,809 0% (Medi-Cal) $793 $0 $793 or Medi-Cal
$34,575* 4% $533 $423 $110
$46,100* 6.3% $533 $298 $235
$57,625* 8.05% $533 $155 $378
$69,150 9.5% $793 $256 $537
$92,200 9.5% $793 $63 $730
Prices for Family of Four: Father (42), Mother (40), Son, Daughter* Due to income level, family qualifies for additional cost-sharing subsidies that reduce or remove out-of-pocket deductibles and co-payments; Children are covered by Medi-Cal rather than family plan up to 250% of FPL.Check out your coverage options at http://www.coveredca.com/fieldcalc
Effect on Employers Requires that employers with 50+ Full-Time
Equivalents offer “minimum value” coverage Penalties for not offering coverage to some or all
employees triggered by use of tax credits<50 FTE 50+ FTE
“Offer”50+ FTE
“Don’t Offer”
Number of Full-Time Workers (Full-Time = 30+ hours)
49 49 49
Number of Workers using premium tax credit in Marketplace
20 20 20
Penalty (first 30 full-time employees exempt in non-offering firms)
20 x $0 20 x $3,000 (49 – 30) x $2,000
Total $0 $60,000 $38,000
Reducing Costs and Improving Quality
Reductions in Cost: Reduced cost shifting through insurance mandate
Uncompensated care will be reduced, Disproportionate Share Hospital Subsidies reduced by 75%
Mandated Medical Loss Ratio (80-85% of premiums spent on medical care)
Rate Review Capacity in States and DHHS “Cadillac” Tax on employee plans with rich benefits Reduce waste, fraud and abuse via federal and state
data sharing State insurance compacts to permit purchasing
coverage across state lines
Medicare and Medicaid:Pilots and Demonstrations
Innovation Center within CMS created to test new payment methods
Independent Payment Advisory Board Threshold based intervention in Medicare payment growth
Accountable Care Organizations incentives for integrated delivery (2012) Interim Criteria for participation already released Allow for groups of providers to develop their own budget and
payment mechanisms Encourage state programs for bundled payments and global
capitation to safety net hospitals.
Payment Reform Pay-for-Performance in Medicare Advantage
Plans will receive 5 to 10% bonuses for reaching quality benchmarks Passing on responsibility to providers
Demonstrations of bundled payment, global capitation Medical Errors
No Reimbursement for Healthcare Acquired Infections Hospital Readmissions
Bans states from reimbursing for 30 day readmissions under Medicaid
Medicare reimbursement penalties for high readmission hospitals (1% in 2012-2013; 2% in 2013-2014, and 3% after)
Coordination Team-Based Care
Training the Workforce: MD, NP, PA, Nurses, etc. Best Practices and the Medical Home Community Health Workers
Medical Homes for the Chronically Ill Medicaid “health home” demonstration
Coordinated Care Initiative for Dually Eligible Cal Medi-Connect for people with both Medi-Cal and
Medicare in certain California counties
What to Expect: Access 30 million should gain insurance by 2019 29 states are moving toward expansion, including
Arkansas, Arizona, and Oklahoma. Cost for first three years (2014-2016) are 100%
covered by federal funds, reduced to 90% by 2020 17 states developing their own Marketplace,
others are operating “partnership” or “federally-facilitated” Exchange Tax subsidies start at 100% of FPL, so low-income will
not be eligible if Medicaid not expanded in state
What to Expect: Cost and Quality The Centers for Medicare and Medicaid Services
will continue incentivizing integration and quality Pay-for-Performance Shared Savings and Demonstrations Penalties for Safety Deficiencies
We have seen recent reductions in health care spending growth, is it sustainable?
Pressure to reduce premiums could result in narrow networks and focus on integration in private market as well.
Closing Thoughts Implementation by state
Beyond Medicaid and Marketplace, participation in Accountable Care Organizations and State Innovation Models will vary
In 2017 and beyond, single payer waivers or other innovations allowed.
Other Important Issues: Workforce Expansion Cultural Competency and Outreach Medicaid payment rates Reductions in safety net funding due to expected increase in insured
population Rate Regulation and increased state oversight of premiums
Additional Questions? [email protected] , 310-794-3953
healthpolicy.ucla.edu/calsim
For information and updates on ACA:http://healthreform.kff.org/www.healthreformgps.comwww.healthreform.govwww.kaiserhealthnews.orgDeloitte Health Solution’s Health Care Reform Memo