2010 Patient Protection and Affordable Health Care Act

How this new health care reform law benefits the American people.

Table of Contents

Why Health Care Reform was Necessary

Benefits of New Law – 7 Key Reforms Financing and Savings Timeline of Implementation Other Important Provisions Health Care Reform Myths Conclusion

Why Health Care Reform Was Necessary

Health care costs are rising dramatically. People and business can no longer afford it. 47 million Americans do not have health

insurance with 1.1 million in Michigan. Insurance companies were denying coverage

to people with a pre-existing condition. The ability of the economy to expand and

create jobs is compromised by the dysfunctional health care system. e.g. health care cost for GM or Ford is $1500/car.

Benefits of New Law 7 Key Reforms

1. No More Discrimination Against People With Pre-Existing Health Conditions

•Cannot deny coverage if you have a pre-existing condition; children 2010, adults 2014

•Insurance companies cannot drop your coverage when you get sick.

•Insurance companies cannot charge you significantly higher premiums based on health status or gender.

Benefits of New Law 7 Key Reforms

2. Coverage For Young Adults •Allow coverage through parents’ plan for young adults 18 to 26.

•Applies to both high school and college graduates.

•Offer stable coverage for young adults.

•Provides peace of mind to parents.

•Expands job opportunities; health insurance not a factor in seeking 1st job.

Benefits of New Law7 Key Reforms

3. Help for Seniors Improvements to Medicare•Complete elimination of the “doughnut hole” by phasing down rate from 100% to 25% by 2020.

•1st step in 2010, is one-time $250 rebate to those that reached the “hole”.

• 2nd step in 2011, is 50% discount on brand name drugs for those that reached the “hole”.

•Saves Medicare costs by providing free preventive care.

•Saves tax money by vigorously going after Medicare fraud & abuse.

Benefits of New Law7 Key Reforms

4. Expanded Coverage for Working Families

•Expands Medicaid to cover millions of lower income Americans.

•Individuals will now be covered up to $14,404 and families up to $29,327 (up to 133% of FPL - federal poverty level).

• Fed Gov pays 100% of costs from 2014 – 2016 and then phase down to 90% by 2020.

Benefits of New Law7 Key Reforms

5. Helping Middle-Income Families Afford Health Insurance•New law provides financial support to middle-income families to buy insurance.

•Fed Gov provides premium subsidies for individuals and families between $29,327 to $88,200 for a family of four (or 133% - 400% of FPL).

•Money is provided “up front” to help with cash flow concerns.

Benefits of New Law7 Key Reforms

6. A Consumer Friendly Market Insurance Marketplace Reforms

•Each state will create an “Exchange” where people & small business can go to shop for insurance.

•The Exchange will offer 4 categories of benefit plans - Bronze, Silver, Gold, Platinum (basic to best)

•All plans offered in same format in normal English so people can understand and compare competing policies. Creates competitive market. •All plans reduce out-of-pocket limits (from current allowable limits) up to 400% of FPL or $88,200 for family of 4.

Benefits of New Law7 Key Reforms

7. Help Small Business Afford Coverage•Create new “exchange” to drive more competitive market and t/f lower cost.

•Provides financial support – tax credits, to businesses with 25 employees or less.

•Tax credits of 35% of premiums for purchasing insurance beginning in 2010. Rises to 50% by 2014.

•Business with 50 or more employees not required to provide insurance.

Financing and Savings

New law is paid for by a combination of savings, taxes and new fees. annual fees on insurance and drug companies, paid to fed gov. an increase on Medicare hospital insurance tax on earned income (wages)

by 0.9% (from 1.45% to 2.35%) and 3.8% on unearned income (stocks & bonds) on people earning $200,000 for individuals or $250,000 for families. (2013)

tax on high cost health plan ($10,200 individual, $27,500 for family), paid by the insurance company. (2018)

New law enacts tax cut to middle class by providing tax credits to help pay for health insurance.

Congressional Budget Office: New law is projected to cost $938 billion over 10 years and reduce national debt by $124 billion by 2020; will cut $1.2 trillion from national deficit between 2020 - 2030.

With more people receiving medical care and new emphasis on prevention programs, costs should be reduced even more.

Timeline of Implementation

No denial of coverage for children with a pre-existing condition (2010).

Insurance company can’t drop coverage except in case of fraud (2010)

Young adults 18 - 26 can stay on parents’ policies (2010).

High risk pool established for people with pre-existing conditions (2010).

No insurance plans can charge for preventive services (2010).

Close Medicare prescription drug “donut hole” (2010 – 2020).

Medicare preventive care provided at no charge (2011).

HHS define 4 benefit packages – Bronze, Silver, Gold, Platinum (basic to best). Reduce out–of-pocket costs to low & middle income, up to $88,200 (2014).

Health insurance “exchanges” open for buying insurance; compare prices (2014).

Adults can’t be denied coverage due to health or pre-existing conditions (2014).

State expanded Medicaid for uninsured (2014).

Other Important Provisions

“Medical Loss Ratio” - insurance policies must spend 80% of premiums on medical care in individual or small group markets, and 85% in large group market. Goal is to reduce admin costs and high salaries. (2010)

All persons (but the lowest income, religious objections) are required to buy health insurance or pay penalties, beginning in 2014. Creates “pool” of people that drives down the cost for everybody.

“Everybody In, Nobody Out”

All employers with 50+ employees, will contribute to the health care system; either provide decent insurance or pay fee to government (who then helps that ee to get insurance). (2014)

Medicaid reimbursement rate increased to that of Medicare, provide incentive for primary care doctors to provide care to Medicaid patients.

Continued adherence to Hyde amendment – no Federal funding of abortion.

Health Care Reform Myths Source: FactCheck.org

Myth 1: Congress passed “government run health care”. Fact: New system builds on current health insurance system.

Myth 2: Americans premiums will go up. Americans premiums will go down. Fact: CBO indicates most people’s premiums won’t change significantly,

but people will receive more benefits and have more peace of mind.

Myth 3: The bill cuts Medicare by $500 billion. Fact: No benefit reductions and over time “doughnut hole” is eliminated.

Law does cut Medicare Advantage overpayments.

Myth 4: We didn’t need health care reform, people can just get care at emergency room.Fact: Emergency room care is 4 times more expensive and all people with insurance were paying an extra $1000/year to pay for care for the uninsured.

Myth 5: Medical Malpractice is the biggest driver of health care spending.Fact: CBO reported that total spending could be cut by only about 0.5%. MI has had “tort reform” and no decrease in health care costs.

Conclusion

The 2010 Patient Protection and Affordable Care Act has provisions that make health care: more comprehensive, affordable, universal, cost-effective, of higher quality and creates more competition that gives consumers more choice.

The law is projected to expand coverage to 32 million people.

This new law is not perfect, but neither were Social Security or Medicare when they were first enacted. Both were improved over the years to become two of the best programs the American people rely on.

Opponents of reform will try to undo new law or influence the implementation of the bill to undercut its provisions.

Health reform advocates need to be informed, vigilant and engaged to ensure that reform is properly implemented at both federal and state levels.