Implementation of the Patient Protection and Affordable

Care Act in Delaware

January 2011

Rita LandgrafSecretary, DHSS

Bettina Tweardy RiverosChair, Delaware Health Care Commission

Public Law 111-148 – Historic Legislation

Patient Protection and Affordable Health Care Act (H.R. 3590) was signed into law on March 23, 2010

Health Care & Education Affordability Reconciliation Act (H.R. 4782) was signed on March 25, 2010

Expand Coverage and Increase Access to Care– 32 million uninsured will be covered– Estimated 17,000 - 25,000 additional Delawareans– Expansion of Medicaid Eligibility and Increased Funding

• Significant Insurance Market Reforms• New Insurance Exchange with Premium Sharing Subsidies, and Cost

Sharing Caps

• Emphasis on Prevention• Bending the Cost Curve over time

Key Provisions of PPACA

Expanding Access to Affordable CareImproving Quality

Focus on PreventionHolding Insurance Companies Accountable

Controlling Costs

Provisions of the Affordable Care Act, By YearHealthcare.gov

http://www.healthcare.gov/law/about/order/byyear.html

Health Care Costs in Delaware

Health Care Costs - $6.5 billion was spent on personal health care in Delaware in

2008 – highest point in 10 years. - $7,485 per person in Delaware- Average rate of increase is 5% per year.– Largest share of spending is on:

• Hospital care at 39%• Physicians at 25.4%• Prescription drugs at 14.8%

- U.S. average- $7,538/person (2007); $8,160 (2009 projection)- Projected Health Spending in 2009 – 17.9% GDP; $2.5 trillion- Per capita health care costs range from $3,129 - $4,079 for

Australia, Canada, France, Germany, Sweden, and UK (2007)

Where is Delaware Now?

Medicaid Population in Delaware– May 2010

• 179,963 Delawareans enrolled in Medicaid

– September 2010• 185,000 Delawareans enrolled in Medicaid• 6,100 children enrolled in the Delaware Healthy Children Program

(CHIP)

– December 2010• 194,249 Medicaid recipients enrolled in Medicaid, Delaware's health

insurance program for the poor, disabled and aging.

State CostsMajority of Medicaid costs are paid by federal government – and that percentage is increasing; however, the program is expected to cost Delaware taxpayers more than $534.4 million this year, consuming 16 percent of the State’s $3.3 billion operating budget.

Uninsured in Delaware

Delaware’s Uninsured Population

• Over the past few years uninsured in Delaware has risen from 9.9% to 11.2%

• Approximately 101,000 are without insurance at any given time- (this is a 2008 estimate)

• Approximately 28% - or 28,000 - uninsured Delawareans are eligible for public benefit through Medicaid (21,000 or CHIP 7,000)

• Another 20% are eligible for Community Health Access Program• CHAP - Incomes below 200% of FPL ($44,000 for family of 4).

Who Are the Uninsured

• 23% - under the age of 19

• 54% - male

• 69% - white

• 59% - own or are buying their home

• 21%- live alone

• 80% - are above the poverty line

• 34%- with household income over $50,000

• 59% - are working adults

• 9% - are self-employed

• 21% - are non citizens

Uncompensated Care – Who Pays

• Cost Shift – providers attempt to recover unpaid or underpaid costs of care delivered to one patient by increasing costs and passing it on to another patient population

• 1999 – 28% cost shift in DE Hospitals due to uncompensated care to the uninsured.

• For every $100 of hospital costs, the total commercial insurance market paid an extra $28.

Expanding Coverage:Expanding Coverage:

Expanding CoverageExpanding Coverage

• Coverage for Dependents (IRS Definition) (6 months – September 23, 2010):

– Must provide coverage to a beneficiary’s dependent child until the child turns 26

– Child does not have to live at home

• Temporary High Risk Pool (90 days - July 2010 - to 2014)

– Citizens with pre-existing conditions who were uninsured 6 months prior to applying for coverage in the pool

– $5 billion provided– Pool operated by HHS or states– Delaware participates in HHS Pool – Premiums

• Health Benefits Advisory Committee led by Surgeon General will recommend essential benefits package

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Expand CoverageExpand Coverage

• Expands Medicaid eligibility to 133 % of Federal Poverty Level (2014) • Approximately $14,600/ individual; $29,400/family of 4 • Includes childless adults• Provides national base of seamless coverage

• Federal Share (FMAP):• 100% for newly eligible first 3 years (2014 – 2016)• Phases down to 90% for 2020 and subsequent years• Provides full funding for CHIP through 2015 and

continues authority through 2019. Children on CHIP would be transitioned to Medicaid or into Exchange.

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Delaware Focus

• Medicaid Expansion to Newly Eligible

States are required to extend Medicaid eligibility to everyone younger then 65 with incomes up to 133% of FPL($29,327 family of 4).

2014 – 2016 - Federal government pays 100%

2017 – Delaware will pick up 5% of cost

2020 - Federal government pays 90% of cost• Increase FMAP for Delaware’s Already Expanded Population

Delaware currently provides expanded coverage to 27,000 Delawareans up to 100% FPL

• Currently - Federal government pays 53% of the cost (after ARRA funds expire)

• 2014 – the federal match will increase to 75% and by 2020 will cover up to 90% of cost

Market Reforms: Employers

Employer Sponsored Plans & Increasing Choice for Small Business

• Sixty-one percent of working age individuals and their families receive employer-sponsored insurance coverage, and this coverage is increasingly in jeopardy.

• The primary source of instability in the employer-sponsored insurance market is the decrease in employers offering health insurance coverage to workers and their families. – Between 2000 and 2008, the percentage of firms offering health

insurance coverage to their employees declined from 69 to 63. – For firms employing fewer than 10 workers, the decline was even

greater – from 57 to 49 percent. – Coverage outside the employer-sponsored market is unaffordable or

does not provide adequate coverage for most Americans.– Only five percent of non-elderly Americans receive coverage on the

individual market, where coverage is more expensive and limited than in employer-sponsored plans.

Small Business Issues

Health Care and Small Business• Health care costs are a huge cost driver for businesses. Small

business owners, in particular, have a hard time negotiating and paying for healthcare coverage for their workforce.

• Over the past decade, average annual family premiums for workers at small firms increased by 123 percent, from $5,700 in 1999 to $12,700 in 2009, while the percentage of small firms offering coverage fell from 65 to 59 percent.

• National studies indicate that small businesses on average pay 18% more for their healthcare coverage compared to larger businesses.

• ACA addresses these issues through small business tax credits and an improved insurance marketplace for small business.

Tax Credits for Small Business

Tax Credits for Small Business• Under ACA, small employers with fewer than 25 full-time equivalent

employees and average annual wages of less than $50,000 that purchase health insurance for employees are eligible for a tax credit.

• For 2010 through 2013, that small business tax credit is up to 35 percent of their contribution toward the employee’s health insurance premium.

• Starting in 2014, small businesses will have access to state-based Small Business Health Options Program (SHOP) Exchanges, which will expand their purchasing power, reduce costs and increase competitive pressure on insurers, with the goal of driving down premiums for small businesses.

• For 2014 and beyond, small employers who purchase coverage through the new Health Insurance Exchanges can receive a tax credit for two years of up to 50 percent of their contribution.

• Tax exempt organizations eligible for similar credits.

Expanding Coverage: Expanding Coverage: Small Business Tax Credits (2010)Small Business Tax Credits (2010)

• Eligibility: Employers with fewer than 25 full time employees (or a firm with fewer than 50 half time workers) who – pay average annual wages of less than $50,000 – who provide health insurance to their employees

• Value– Worth up to 35% of employer’s premium costs in 2010. – January 1, 2014 worth up to 50%

• Non-Profits – eligible for payroll tax deduction if they fit above criteria– worth up to 25% of employer’s premium costs – 2014 – 35% credit

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Market Reforms & Employers

• Small Business Health Options Program Exchange – Non-profits eligible (2014)

• Small group plans must accept every employer and individual who applies (2014)

• Small Employer/Non-Profit: 100 employees or state can define as 50 or less (2014)

•  Large Employers: Can participate in Exchange, at each state's discretion (2017) 

Employer Responsibility (2014)Employer Responsibility (2014)

• In 2014, the Affordable Care Act requires large employers to pay a shared responsibility fee only if they do not provide affordable coverage

• Employers with 50 or more full time employees (FTEs) who do NOT offer coverage must pay penalty:– for every full-time employee that receives a premium

credit for the Exchange• FTE= 30 or more hours per week • Part-time employees: Less than 30 hours per week

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Pressing TimelinePressing TimelineHealth Benefit Exchanges (2014)Health Benefit Exchanges (2014)

• Creates state-based “Health Benefit Exchanges”, or marketplace to increase choice, provide competition, transparency on services and cost

• Private insurance plans that meet minimum standards on benefits and cost-sharing set forth in regulations

• Multi-state Exchanges run by HHS for states that choose not to operate their own Exchange

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Increases Quality, Affordable Options

Health Benefits Exchange• These Exchanges would include web portals that provide standardized, easy-to-

understand information that make comparing and purchasing health care coverage easier for small business employees, and reduce the administrative hassle that small businesses currently face in offering plans.

• Starting in 2017, the Affordable Care Act also provides states flexibility to allow businesses with more than 100 employees to purchase coverage in the SHOP Exchange.

• If businesses don’t offer coverage, workers at small firms and their families would be eligible for their own tax credits to purchase coverage through the Exchange.

• The Affordable Care Act streamlines health plans to keep premiums lower by instituting a premium rate review process and setting standards for how much insurance companies can spend on administrative costs, also known as the medical loss ratio.

Delaware’s Role in Health Benefit Exchange

• Exchange Requirements

• Certify qualified health plans

• Establish toll free telephone access

• Web portal development with standardized, comparative information on health plan options

• Choice of plan options

• Electronic calculator to determine cost of plan and premium tax credit

• Seamless with Medicaid enrollment/eligibility

Essential Benefits Package for Exchange Essential Benefits Package for Exchange Plans Plans

• Hospitalization, emergency services, ambulatory (i.e. outpatient) services

• Prescription drugs and laboratory services

• Rehabilitative and habilitative services and devices – pre-health care reform

insurance policies did not cover them or severely limited the number of treatments

• Mental health and substance use disorder services including behavioral health treatment

• Preventative and wellness services and chronic disease management

• Pediatric services including dental and vision care

• Maternity and newborn care

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Health Insurance Exchanges

Insurance Marketplace - Health Insurance Exchange• The Affordable Care Act provides Delaware with resources to plan for the best

implementation for Delawareans of a competitive, private health insurance marketplace for consumers that provides lower costs, one-stop insurance shopping, and greater benefits and protections.

State Flexibility around Health Exchanges• States have substantial flexibility to dictate the design and operation of new

competitive marketplaces – Health Insurance Exchanges – that will provide affordable private insurance to individuals and businesses beginning in 2014. Under the Act we can work to implement provisions of the Act in a manner that can be very helpful to small businesses in our state, so that they can provide affordable healthcare coverage to their employees.

• Delaware’s DHSS was awarded a $1 million planning grant to engage key stakeholders across the state in a planning process to determine the best implementation of an Exchange in Delaware.

• Stakeholder outreach process – to consumers, small business, agent/broker community and others - is already beginning, in collaboration with the Delaware Health Care Commission. Additional federal funds will be available for implementation.

Defining Exchange’s Essential BenefitsDefining Exchange’s Essential Benefits

• HHS Secretary must ensure that scope of benefits are equal to scope of benefits provided by typical employer sponsored plan

• Establish that benefits are not denied based on:

– Individual’s “present or predicted disability, degree of medical dependency, quality of life, age or expected length of life”

• Department of Labor to conduct survey of employer sponsored plans, provide report to inform HHS Secretary’s determination

• Will be a chance for public comment

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Security and Stability that Promotes Entrepreneurship

• In 2014, the Affordable Care Act ends the discriminatory insurance industry practices of jacking up premiums by up to 200 percent because an employee got sick or older.

• It will also reduce “job lock” – the fear of switching jobs or starting a small business due to concerns over losing health coverage – by guaranteeing access to coverage for all Americans. This will encourage more people to launch their own small businesses, or join existing small employers.

• Reviews the Impact of Reform on Small Businesses

– The Affordable Care Act requires the Government Accountability Office (GAO) to specifically review the impact of Exchanges on increasing access to affordable health care for small businesses to ensure that Exchanges are indeed making a difference for small business owners.

Insurance Market ReformsInsurance Market Reforms

• Bars pre-existing condition exclusions for everyone (2014)

– Bars pre-existing condition exclusions for children under 19 (6 months after enactment – September 23, 2010)

– No coverage exclusions for specific conditions

– No higher premiums or fees for such conditions

• Prohibits coverage rescissions (6 months – September 23, 2010)

– Insurers drop individual when s/he gets sick or apparent pre-existing condition is discovered

• Prohibits annual limits (2014)

– Prior to 2014: “Restricted” annual limits, to be defined by HHS Secretary are permitted

• Prohibits lifetime limits on coverage (6 months/September 23)

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Insurance Market ReformsInsurance Market Reforms

• Bans discrimination based on health status, medical condition (mental or physical illness), disability (2014)

• Guaranteed issue and renewability

– Small group and Individual plans must accept every employer and individual who applies.

• Increased Rates for Primary Care Providers

– The ACA requires Medicaid programs to reimburse PCP at 100% of Medicare rates, with additional 2% funded by federal government. Delaware Medicaid currently reimburses at 98% of Medicare rates.

• Requires 80-85% of premiums to be spent on health care services and health care quality improvements.

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Insurance Rates

Improved Transparency around Health Insurance Rates

• Initiatives by Insurance Commissioner

• Delaware access to federal funds to help improve the review of proposed health insurance premium increases, take action against insurers seeking unreasonable rate hikes, and ensure consumers receive value for their premium dollars.

• Delaware to address the Health Insurance Premium Review Process by developing new premium filing requirements, improve its ability to review rates; post premium filings on its website; employ a new rate comparison feature, and host public meetings and hearings on proposed rate increases. 

Individual Responsibility (2014)Individual Responsibility (2014)

• Those who are  uninsured add over one thousand dollars to the average premium of families with insurance. 

• Everyone will be asked to share responsibility for lowering costs and covering more people

• Tax penalties for no coverage - IRS:• 2014: $95• 2015: $325• 2016: $695 OR

• Percent of household income: 1% in 2014, 2% in 2015, 2.5% - 2016 and after

• Exempts individuals with incomes too low to pay taxes ($9,350) or if premiums exceed 8% of income

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Making Coverage AffordableMaking Coverage Affordable

• Tax credits provided for individuals/families between 133% - 400% Federal Poverty to buy coverage in Exchange (2014)

– approximately $11,000/individual; $88,000 family of four

• Paid by government directly to insurer

• Limits on cost sharing: deductibles, coinsurance, co-payments

– 100-200% FPL: $1,983/individual; $3,967/family

– 200-300% FPL: $2,975/individual; $5,950/family

– 300-400% FPL: $3,987/individual; $7,973/family

• Small group market plans are prohibited from deductibles greater than $2,000 for individuals and $4,000 for families

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State Preparation and Planning

Challenge for Delaware:

Maximize benefits for Delaware citizens and businesses to support the goals of: – widespread access to affordable health

insurance and health care– improving quality and reducing costs– supporting people in community-based settings– promoting healthy lifestyles and prevention– supporting economic development and job

growth.

State Preparation and Planning

• State leadership team – Led by DHSS

– OMB – State Employee Benefit and Budget preparation

– Department of Revenue – income exemption determinations

– DMMA – Medicaid

– DSS – process applications

– DOI – oversight and certification of plans and regulate rate bands

– DPH – prevention measures and services

– DTI and DHIN – health information network

– Health Care Commission

State Preparation and Planning

• DHSS and Health Care Commission

● Public Discussions

● Coordination with Private Sector:

Small Business

Brokers/Agents

Doctors

Hospitals

Other Providers

Community Based Health Centers

Insurance Companies

Employer Network

Consumer Groups

Educators

Responsibilities

• Overseeing planning, development and implementation

• Identifying ways to build on existing infrastructures and programs, or to create a new entity within state government to house governance and oversight

• Ensuring appropriate coordination and collaboration across state agencies

• Engaging with relevant stakeholders to get insights and collaboration on reform implementation

– PPACA in general – broader issues

– Health Benefit Exchange

Health Promotion and Prevention

• Prevention and Public Health Fund

– Administered by HHS Secretary

– Expand investment in public health program

– Support programs authorized by Public Health Service Act

• Including prevention research, health screenings and education and awareness

• Graduated increases in annual funding availability from FY10 $500 million to FY2015 and beyond $2 Billion

• Position Delaware to be an incubator for innovation in this arena

Health Promotion

• Coverage without imposing cost sharing

• Certain immunizations

• Infants, children and adolescents – evidence informed preventative care and screenings

• Incentives for business to provide wellness programs

• Establishes National Prevention, Health Promotion & Public Council

– Coordination and leadership at the Federal level, among departments and agencies - Cabinet level Secretaries - Surgeon General (Chair)

Promotion of Healthier OutcomesPromotion of Healthier Outcomes

• Medicaid/Chronic Disease PreventionMedicaid/Chronic Disease Prevention

• 5 Year Grants to states (2011 or when HHS Sec. develops program) for incentives for beneficiaries for:

– Tobacco cessation, weight reduction and control, cholesterol reduction, blood pressure reduction, diabetes onset reduction or improved management of diabetes

– States can provide sub-grants/contracts to Medicaid providers, community based or faith-based organizations

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Medicaid and Medicare Wellness

• Annual wellness visits and personalized prevention plans for Medicare beneficiaries (Jan. 2011)

• No co-pays or deductibles for preventive services for Medicare patients (2011)

• 1% FMAP increase for States if Medicaid program covers clinical preventive services recommended by the Preventive Services Task Force (2013)

• Grants to provide incentives to Medicaid beneficiaries who successfully participate in a wellness program and healthy lifestyle program Must demonstrate changes in health risk and outcomes

Health Promotion and Prevention

• Community Health Centers and National Health Service Corp• Education and Outreach Campaign – national public-private partnership• School Based Health Centers – access in hard to reach communities• Oral Health – Demonstration grants for preventative care• Community Transformation – Competitive grants – evidence based

activities to reduce– Chronic disease rates, prevent secondary conditions, address health

disparities, create a stronger evidence base of effective programming– Examples – healthier schools, worksite wellness healthy food venues,

special populations

Health Promotion and Prevention

• Nutritional Labeling of Standard Menu Items at Chain Restaurants

• Demonstration of Individualized Wellness Plan – to those utilizing community health centers

• Optimizing the delivery of Public Health Services – organize finance or delivering public health services in real world community settings

• Funding for Childhood Obesity Demonstration Project

• Better Diabetes Care – National report card – study impact on medical practice – medical education requirements prior to license- Grants through National Diabetes Prevention Program

• Centers of Excellence for Depression

• National Congenital Heart Disease Surveillance System

Workforce Impact

• National Workforce Commission

• State Workforce Development Grants

• Workforce Program Assessment – Identify trends, gaps, issues

• Public Health Workforce Recruitment and Retention – loan repayment

• Training for Mid-Career Public and Allied Health Professionals

• Grants to Promote Community Health Workforce

• Preventative Medicine Training Grant Program – training to graduate medical residents in preventive medicine specialties

• Additional primary care residency slots

• Funding to support physician assistant training in primary care

Workforce Initiatives

• Funding to encourage students pursue full time nursing careers

• Establishes new nurse practitioner led clinics

• Encourages states to plan for and address health professional workforce needs

• Expanding tax benefits to health professionals working in underserved areas

Grant Awards To Date

• Health Benefit Exchange Planning Grant - $1 million

• Premium Review Grant - $1 million

• Aging and Disability Resource Center - $400,000

• Maternal, Infant and Child Visitation Program - $1.280 Million

• Personal Responsibility Education - $250,000

• Public Health Infrastructure Grant - #1 - $100,000

• Supplemental Funding – Behavioral Risk Factor Survey - $37,860

• Strengthen Epidemiology, Lab and health information system capacity - $435,942

• Healthy Communities – Tobacco Cessation - $54,554

• HIV Surveillance Enhanced Lab Reporting - $51,218

Grant Awards To Date

• Primary Care Workforce Nursing Training _

– DSU - $20,480

– Wesley - $44,521

– Wilmington University - $55,062

– U. D. - $36,608

Important Websites to Watch

• www.HealthCare.gov

• www.dhcc.delaware.gov

Contacts for more information and participation opportunities

Rita.Landgraf@state.de.us and Bettina.Riveros@state.de.us