Strategic Solutions for Health Care Reform

National Association of Health and Educational Facilities Finance AuthoritiesMarch 23, 2010

Health Care Reform: Where We Are, Where We’re Headed

• What’s all The Fuss?

• What Remains in the Legislative Process?

• After Legislation Comes Implementation.

• What’s In the Bill Anyway?

Health Care Reform: What’s All the Fuss?

Health Care Reform Legislation is the Single Largest Piece Domestic Policy Legislation Since the Depression

Will Have Implications for Every Person, Health Care Provider, Business, and Level of Government

Will Impact 1/6th of the Economy For Decades

Will Result in Billions of New Spending, Billions of Deficit Reduction, New Taxes, New Penalties and New Structures

And, Millions of Newly Insured Persons

Health Care Reform: What’s All the Fuss?

• Cost - $938 billion over 10 years, or $9.4 billion per year, or 3.8% increase in additional spending annually.

• Deficit Reduction - $143 billion over 10 years and an approximate $1.2 trillion reduction over 20 years

• Coverage – Extends health care coverage to 95% of the current population and 32 million currently uninsured.

Health Care Reform: What Happened? What Comes Next?

• On Sunday, March 21, The House Passed the Senate Health Care Reform Bill and the Reconciliation Bill

• The Senate Bill Goes to the President for Signature

• The Reconciliation Bill (making amendments to the Senate bill) Goes to the Senate for Consideration and Voting

• Senate Will Begin Debate, Consider Amendments, and Vote, Probably by Saturday, March 27, and Pass It

• Health Care Reform Will be Law

Health Care Reform: After Legislation Comes Implementation

Many New Policies and Programs Will Require Regulations to be Developed

Existing Policies Being Modified Will Also Require Regulatory Action

Entirely New Agencies and Bureaucracies Will Be Required

The Process Will Be Demanding For All

Health Care Reform: What’s In the Bill Anyway

Expanded Coverage

Medicaid to 133% of PovertIndividual Mandates – Subsidies and PenaltiesEmployer Mandates – Subsidies and Penalties

Insurance Reforms

No Pre-existing Condition ExclusionsNo Lifetime CapsRate Bands

Medicare

Close the Part D Donut HoleReduce Payments to MA PlansReduce Payments to Providers

Revenues

Excise Taxes on Insurers, Medical Device Manufacturers, PharmaAdded Payroll Tax for Highly Paid IndividualsNew Medicare Tax on Unearned Income

Health Care Reform: What’s In the Bill Anyway

• SMALL BUSINESS TAX CREDITS—Offers tax credits to small businesses to make employee coverage more affordable.  Tax credits of up to 35 percent of premiums will be immediately available to firms that choose to offer coverage.  Effective beginning for calendar year 2010.  (Beginning in 2014, the small business tax credits will cover 50 percent of premiums.)

• BEGINS TO CLOSE THE MEDICARE PART D DONUT HOLE—Provides a $250 rebate to Medicare beneficiaries who hit the donut hole in 2010.  Effective for calendar year 2010.  (Beginning in 2011, institutes a 50% discount on brand‐name drugs in the donut hole; also completely closes the donut hole by 2020.)

• FREE PREVENTIVE CARE UNDER MEDICARE—Eliminates co‐payments for preventive services and exempts preventive services from deductibles under the Medicare program.  Effective beginning January 1, 2011.

• ENDS RESCISSIONS—Bans insurance companies from dropping people from coverage when they get sick.  Effective 6 months after enactment.

• NO DISCRIMINATION AGAINST CHILDREN WITH PRE‐EXISTING CONDITIONS—Prohibits new health plans in all markets plus grandfathered group health plans from denying coverage to children with pre‐existing conditions.  Effective 6 months after enactment.  (Beginning in 2014, this prohibition would apply to all persons.)

Health Care Reform: What’s In the Bill Anyway

• BANS LIFETIME LIMITS ON COVERAGE—Prohibits health insurance companies from placing lifetime caps on coverage.  Effective 6 months after enactment.

• BANS RESTRICTIVE ANNUAL LIMITS ON COVERAGE—Tightly restricts the use of annual limits to ensure access to needed care in all new plans and grandfathered group health plans.  These tight restrictions will be defined by HHS.  Effective 6 months after enactment.  (Beginning in 2014, the use of any annual limits would be prohibited for all new plans and grandfathered group health plans.)

• FREE PREVENTIVE CARE UNDER NEW PRIVATE PLANS—Requires new private plans to cover preventive services with no co‐payments and with preventive services being exempt from deductibles.  Effective 6 months after enactment.

• NEW, INDEPENDENT APPEALS PROCESS—Ensures consumers in new plans have access to an effective internal and external appeals process to appeal decisions by their health insurance plan.  Effective 6 months after enactment.

• ENSURING VALUE FOR PREMIUM PAYMENTS—Requires plans in the individual and small group market to spend 80 percent of premium dollars on medical services, and plans in the large group market to spend 85 percent.  Insurers that do not meet these thresholds must provide rebates to policyholders.  Effective on January 1, 2011.

Health Care Reform: What’s In the Bill Anyway

• IMMEDIATE HELP FOR THE UNINSURED UNTIL EXCHANGE IS AVAILABLE (INTERIM HIGH‐RISK POOL)—Provides immediate access to affordable insurance for Americans who are uninsured because of a pre‐existing condition ‐ through a temporary subsidized high‐risk pool.  Effective 90 days after enactment.

• EXTENDS COVERAGE FOR YOUNG PEOPLE UP TO 26TH BIRTHDAY THROUGH PARENTS’ INSURANCE – Requires new health plans and certain grandfathered plans to allow young people up to their 26th birthday to remain on their parents’ insurance policy, at the parents’ choice.  Effective 6 months after enactment.

• COMMUNITY HEALTH CENTERS—Increases funding for Community Health Centers to allow for nearly a doubling of the number of patients seen by the centers over the next 5 years.  Effective beginning in fiscal year 2010.

• INCREASING NUMBER OF PRIMARY CARE DOCTORS—Provides new investment in training programs to increase the number of primary care doctors, nurses, and public health professionals.  Effective beginning in fiscal year 2010.

• PROHIBITING DISCRIMINATION BASED ON SALARY—Prohibits group health plans from establishing any eligibility rules for health care coverage that have the effect of discriminating in favor of higher wage employees.  Effective 6 months after enactment.

Health Care Reform: What’s In the Bill Anyway

• HELP FOR EARLY RETIREES—Creates a temporary re‐insurance program (until the Exchanges are available) to help offset the costs of expensive premiums for employers and retirees for health benefits for retirees age 55‐64.  Effective 90 days after enactment.

• HEALTH INSURANCE CONSUMER INFORMATION—Provides aid to states in establishing offices of health insurance consumer assistance in order to help individuals with the filing of complaints and appeals.  Effective beginning in FY 2010.

• CREATES NEW, VOLUNTARY, PUBLIC LONG‐TERM CARE INSURANCE PROGRAM—Creates a long‐term care insurance program to be financed by voluntary payroll deductions to provide home and community-based services  to adults who become functionally disabled.  Effective on January 1, 2011.

Health Care Reform and ARRA

Bruce Merlin Fried, Esq.

Sonnenschein Nath & Rosenthal LLP

202-408-9159

bfried@sonnenschein.com

1301 K Street, N.W.

Washington, DC 20005