Nandan KenkeremathPresident

Leading Edge Policy & Strategy, LLC

Patient Protection and Affordable Care Act Public Law No: 111-148 Signed March 23, 2010Health Care and Education Reconciliation Act Cleared for President March 25, 2010

Bills reduce the number of uninsured (about 32 million) in 2019Guarantees accessCertain employers could allow all of their workers to choose among the plans available in the exchanges

• Too Complex – an Unstable Collection of Massive Government, Trillions in Spending, Taxes, and Confusion

• over 2,700 pages of complex and confusing provisions. Substantial new authorities are handed to bureaucracies that will launch more complexity and confusion. No one can follow or predict the disruptions, distortions, unintended consequences that flow from the proposals.

• Financial Help is Not Generally Available to Employees of Companies that Provide Qualified Health Insurance

• Trillions of dollars of subsidies and entitlements are generally not available to help workers who get qualified insurance from their employers. This means rising health care cost continue to keep wages down.

• In response to the incentives of the bill, large employers may reduce certain lower come, in-house positions in favor of outsourcing or contracting out.

• The Bill is Inconsistent with the President’s Promise that Employees can Keep Health Plans They Have Due to Government Micromanagement

• The Federal government would take a more substantial role in the design of health insurance through dozens of new requirements.

• The Bill is Inconsistent with the President’s Promise that Employees can Keep Health Plans They Have Due to Punitive Taxes

• Starting in 2018, the bill imposes a 40% tax on certain high cost plans which employees would ultimately pay for in either fewer increases in salary changing plans.

• The tax will force many employers to change their current plans in favor of cheaper plans –plans that may carry fewer benefits and, possibly, higher cost-sharing.

• The Bill will add to the Instability for Our Economic Future

• Over an operating ten year window they are $2. 5 trillion dollars (2014-2023) in new spending. And that is based on estimates that may or may not be reliable over time.

• The Congressional Budget Office, the Medicare Actuaries, and many others do not appear skeptical over the political sustainability of hundreds of billions of dollars of cuts to Medicare.

• Mandates, Penalties and Liabilities will Harm Employers Who have Been Doing Their Part to Provide Health Insurance

• The bill contains dozens of confusing, conflicting, and burdensome provisions with new bureaucrats and new penalties. These provisions will create conflicting interpretation and pose substantial new threats and liabilities for employers. Employers may get out of the role of providing health insurance.

• The employer mandates are punitive, create needless bureaucracy, and may threaten jobs.

Self-Funded Employer

Plan

Department of Labor

Small Group Market

State Regulators

State Insurance Regulators Licensure, Accreditation

EXISTING REQUIREMENTS

•Guaranteed renewal•Rating •Preexisting conditions•Non‐discrimination•Quality improvement and reporting•Benefit mandates•Solvency and financial requirements•Market conduct

•Prompt pay•Appeals and grievances•Privacy/Confidentiality•Licensure/Accreditation•Antitrust•Benefit plan material/information•Consumer protection•Fraud and abuse

Department of Labor

EXISTING PROGRAMS

•ERISA 

•COBRA

•Health care portability

•Privacy, Mental Health Parity, Genetic Non Discrimination

•Benefit Requirements

•Claims Processing Requirements

•Enforcement Authorities

EXISTING AUTHORITIES 

•Enforcement for HIPAA, Mental Health Parity, Genetic nondiscrimination•Tax provisions

Internal Revenue Service

Health and Human ServicesEXISTING REQUIREMENTS/PROVISIONS

•HIPAA Benefit Mandates

•HIPAA Privacy/ARRA Privacy

•Mental Health Parity

•Genetic Information Nondiscrimination Act

•Medicaid/CHIP

•Medicare 

• Large Employers (Above 50)• Auto Enroll (1511)• Inform about coverage option (1512)• Minimum essential coverage (1513)• Eligible employer-sponsored plan• Full time employees (and their dependents)• Penalty if fails to provide opportunity and on

full time employee enrolls in a QHP involving premium tax credit or cost-sharing reduction. $2000 per employee cap.

Maintain Essential Coverage after 2013 for individual and dependentsPenalty of $695 in 2016 with phase in$2,250 for entire family

States to establish Exchanges by 2014Certify Qualified Health Benefit PlansEssential Health Benefit RequirementsRefundable tax credit for coverage under a qualified health planReduced cost-sharing for individuals enrolling in qualified health plans

In 2010 through 2013, eligible employers can receive a small business tax credit for up to 35 percent of their contribution toward the employee’s health insurance premium. Tax-exempt small businesses meeting the above requirements are eligible for tax credits of up to 25 percent of their contribution. In 2014 and beyond, eligible employers who purchase coverage through the State Exchange can receive a tax credit for two years of up to 50 percent of their contribution. Tax-exempt small businesses meeting the above requirements are eligible for tax credits of up to 35 percent of their contribution.

Excise Tax on High Cost Employer Plans in 2018 (9001)Annual Fee on Health Insurance Providers 9010Elimination of Deduction of Expenses allocable to Medicare Part D Subsidy 9012

• No Lifetime or Annual Limit (PHSA 2711)• Prohibiting rescissions (PHSA 2712)• Coverage of preventive services (PHSA 2713)• Extension of dependent coverage (PHSA

2714)• Development and utilization of uniform

explanation of coverage documents and standardized definitions (PHSA 2715)

• Prohibition of discrimination based on salary (exception self-insured) (PHSA 2716)

• Ensuring quality of care (PHSA 2717)• Accounting for Costs value (PHSA 2718)• Appeals process (PHSA 2719)• Administrative simplification (1104)• Prohibition of preexisting condition (PHSA

2704)• Guaranteed availability of coverage (2702)• Non-discrimination in health care (2706)• Comprehensive health insurance coverage

(2707)

• Guaranteed availability 2702• Guaranteed renewability 2703• Prohibiting discrimination based on health

status 2705• Wellness program 2705• Provider participation 2706• Prohibition on excessive waiting periods• Development of coverage documents and

standardized definitions (2715)

Between 6 million and 7 million people would be covered by an employment-based plan under the bill who would not be covered by one under current law (largely because the mandate for individuals to be insured would increase workers’ demand for coverage through their employers).

Between 8 million and 9 million other people who would be covered by an employment-based plan under current law would not have an offer of such coverage under the proposal. Firms that would choose not to offer coverage as a result of the proposal would tend to be smaller employers and employers that predominantly employ lower wage workers.

Under the legislation, workers with an offer of employment-based coverage would generally be ineligible for exchange subsidies, but that “firewall” would be enforced imperfectly and an explicit exception to it would be made for workers whose offer was deemed unaffordable.

Current Employer Providing Insurance

Smaller Companies not Providing Insurance but

Employees Receive Subsidy

Bigger Companies Willing to Pay Penalty

But Employees Receive Subsidy

Small Business Tax CreditEliminating Pre-Existing Condition Exclusions for ChildrenProhibiting RescissionsEliminating Lifetime LimitsRegulating Use of Annual LimitsCovering Preventive Health Services Extending Coverage for Young Adults

Standardizing the Definition of Qualified Medical Expenses Increased Additional Tax for Withdrawals from Health Savings Accounts and Archer Medical Savings Account Funds for Non-Qualified Medical ExpensesPharmaceutical Manufacturers Fee

Administrative SimplificationLimiting Health Flexible Savings Account ContributionsEliminating Deduction for Employer Part D SubsidyIncreased Threshold for Claiming Itemized Deduction for Medical ExpensesAdditional Hospital Insurance Tax for High Wage WorkersMedical Device Excise Tax

Reforming Health Insurance Regulations Eliminating Annual LimitsEnsuring Coverage for Individuals Participating in Clinical TrialsEstablishing Health Insurance Exchanges for Individual and Small Group MarketProviding Health Care Tax Credits Individual MandateEmployer MandateHealth Insurance Provider Fee

High Cost Plan Excise Tax

Increasing the subsidies for premiums and cost sharing that would be offered through the new insurance exchanges;Increasing the penalties for employers that do not offer health insurance and modifying the penalties for individuals who do not obtain insurance;Increasing the federal share of spending for certain Medicaid beneficiaries;

Changing eligibility for Medicaid in a way that effectively increases the income threshold from 133 percent of the federal poverty level to 138 percent for certain individuals;Reducing overall payments to insurance plans under the Medicare Advantage program;Expanding Medicare’s drug benefit by phasing out the “doughnut hole” in that benefit;

Modifying the design and delaying the implementation of the excise tax on insurance plans with relatively high premiums; andIncreasing the rate and expanding the scope of a tax that would be charged to higher-income households.

• Adding Problems and Instability for Our Economic Future

• Relies on Cuts in Medicare that Are Not Politically Sustainable Over Time

• Breaking the Promise to Allow Employees to Keep Current Plans

• Failing to Address the Rising Cost of Health Care

• Government Regulation of the Health Care Quality of Hospitals and Doctors

Extensive Requirements to Provide Information to the GovernmentUnfairly treating low and moderate income workersPressure for outsourcing

Nandan KenkeremathPresidentLeading Edge Policy & Strategy, LLCnandank@comcast.net703-407-9407