The Patient Protection & Affordable Care Act of 2010 (ACA) Presented by: George Faulkner.
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Transcript of The Patient Protection & Affordable Care Act of 2010 (ACA) Presented by: George Faulkner.
The Patient Protection & Affordable Care Act of 2010 (ACA)
Presented by:
George Faulkner
2
Why We Needed Reform
Coverage (Access) - 50 million uninsured (2010)
- 14,000 Americans lose health insurance coverage everyday
- 29 million under-insured (2010)
- 45 states allow denial for pre-existing conditions
Quality
- 100,000 hospital infection deaths
- 100,000 medical error deaths
- WHO ranked US #37 among other industrial nations for outcomes
3
Why We Needed Reform
Cost− Approaching $3 trillion in 2012
− The cost for average American family: $16,771
− Half of all bankruptcies related to medical expenses
− 20-30% ($600 billion) on administration (not actual medical care)
− 1/3 or more of our costs are wasted
− Medicare: 3% administration.
− Medicare Advantage plans: get 14% more from the gov’t
− Projected Medicare bankruptcy by 2017 (delayed to 2029)
− Projected health care coverage cost 2020 is $25,000+
4
What the ACA Is and Isn’t
Some wanted: − “Improved Medicare” for all (single payer, like in Canada)
− a public plan option
− just individual policies purchased “across state lines”
− malpractice reform at the national level instead of state level
− no changes at all
The ACA keeps the current mixed system but adds:− regulations to control costs, guarantee access to good coverage,
and improve medical care delivery
− subsidies for individuals, small employers, and states
The bill is not perfect – changes will be made over time
5
Key Improvements for Individuals
Currently Uninsured
In MedicaidHave an
Individual Policy
Covered by Large
Employer
In Medicare
Work for Small
Employer
% of Non-Military Pop. 16% 14% 4% 52% 14%
Major Changes
Temporary state-run high risk pools
Subsidies for up to 400% of poverty level
Subsidies for small businesses to provide coverage
Common national Medicaid eligibility up to 125% of poverty level
Preventive care
Access to more primary care physicians and others
Subsidies for up to 400% of poverty level
State health exchanges to provide plan options, regulate insurance companies, and administer billing
Must provide wellness programs
Guaranteed access to other coverage when leave job
Subsidies for early retiree coverage
Phase-out of prescription drug “donut hole” over 10 years
Drug discounts
Free preventive care
Credits (subsidies) to help pay for coverage
State health exchanges to administer coverage
ACA SummaryFall 2010 2011 2012 2013 2014
Medicare $250 “donut hole” check
Free preventive care, 50% drug discount
Delivery system reform pilots
Start phase-out of Med. Adv. subsidies
Donut Hole Phase-out started
Additional payroll tax if income >$250K
Expanded prevention coverage
IPAB) to identify Medicare waste. Recommendations cannot ration care, raise taxes, or change Medicare benefits.
Uninsured Funds for community health clinics
High risk pools
Higher Medicaid pay to primary care doctors
Medicaid expansion to all w. income <133% poverty level
Employers Small employer tax credits
Must show value of covg.
Penalty for large employers with no coverage.
Other Individuals
Adult dependent covg. to age 26
Bans on child pre-X condition limits, lifetime dollar max., and rescissions
Free preventive care
Savings through review and regulation of insurance co. medical loss ratios
Simplified billing and claim filing
State, regional or federal health exchanges for indivs. & small ers.
Subsidies if income <400% of poverty
Covg. mandate Ban on pre-X
limits
Health Care Providers
Electronic health records funding
Malpractice reform and quality reporting pilot programs
Insurance co. & provider admin. simplification
7
For Individuals Without Other Sources of Coverage and Small Employers
State health insurance exchanges (2014)
-- A new regulated marketplace for health insurance− An “Orbitz” for health insurance plan comparison and
annual enrollment− Regulated and run by states. But states can go in together
on multi-state exchanges or fall back on a federal exchange
− Open to individuals without health insurance and to small businesses
− All plans offered must cover certain “essential benefits”− Competition on price and quality of plans
8
For Individuals Without Other Sources of Coverage and Small Employers (2014)
Subsidies for Most Individuals Using Exchanges− Eligibility up to 400% of Federal Poverty Level
($43,320 for individuals; $88,200 for family of four)
− Premiums can be no more than a certain percentage of income (roughly 2-10%, based on a sliding scale)
− Subsidies to reduce out-of-pocket spending on deductibles, co-pays, etc.
9
Medicaid Expansion (2014)
Will cover many working poor who fall just above federal poverty line
Eligibility expanded to 133% over the poverty level Childless adults covered Financed 100% by federal money for first two years,
then ~90% federal match for all states Higher payments to primary care doctors in order to
expand access (to match Medicare rates by 2013)
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Universal Participation(Shared Responsibility) Mandatory enrollment, starting in 2014
Annual tax if choose not to enroll2014 - $95 or 1% taxable income
2015 - $325 or 2% taxable income
2016 - $695 or 2.5% taxable income
Applies to U.S. citizens and legal immigrants− Exemptions for religious objection, American Indians, those
without coverage <3 months, undocumented immigrants, if lowest cost plan is >8% of income, or income is below tax filing threshold
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Universal Participation (Shared Responsibility)
Why the individual mandate?− Without it - difficult to incentivize young, healthy
people to buy insurance and help mitigate risk for all
− Reduces “free-rider” problem: when people can sign up to use the benefit and then drop out again – raising costs for others
− Can’t make insurance companies eliminate pre-existing conditions limits and other underwriting practices without it (premiums would soar)
12
Employer Responsibility (2014)
No employer mandate but… Employers with more than 50 full-time workers that do
not offer coverage and have at least one worker who receives the premium assistance tax credit will pay a fee of $2,000 per full-time employee/year.
Small Business with <25 employees who purchase health insurance for their workers get a tax break starting in 2010
13
Insurance Regulation
Requires all new plans starting in 2013 to cover pre-existing conditions (starts in 2010 for children)
At least 85% of premiums must pay for actual medical care – in small group and individual markets (starts in 2012, though regulation development in 2010)
Prohibits lifetime dollar limits benefits paid (2010) Prohibits dropping patients from coverage (“rescission”)
except in case of fraud (2010) Sets minimum benefit standards in the exchange (2014) Limits premium variation by age, gender, etc. (2012)
14
More Prevention and Wellness (2011-12)
Eliminates co-pays and deductibles for preventive services in Medicare and in all new insurance plans
Grants to employers for establishing wellness programs
Premium discounts for employees who participate in wellness programs
Requires chain restaurants to publish calorie and recommended daily allowance information for food products they sell
15
Medicare Changes
Medicare Advantage Changes− Phases out overpayments to insurance companies: due to 2003
Act, Medicare pays on average 14% more, with little evidence of improved quality of care.
Imagine the headline if the 2003 bill were enacted now: “Medicare system, already in deficit, will now pay insurance companies 14% more than those in regular Medicare.”
− New York Times: Contrary to fears, “…since the health care law was passed, ‘Medicare Advantage premiums have fallen by 10 percent, and enrollment has risen by 28 percent.’ ”
− Requires these plans to spend at least 85% of dollars on medical care or activities that improve the quality of care, rather than on administrative costs, profits, executive pay, etc.
16
Cost Containment and QualityImprovements Independent Payment Advisory Board (IPAB) to make cost
saving recommendations to Medicare
− Physician payments exempt from these recommendations until 2020
Creates a Center for Innovation to test payment/delivery system reforms
Pilot programs for “medical homes,” bundled payments, and accountable care organizations (ACOs)
Reduces hospital payments for preventable readmissions and infections
Requires reporting of quality indicators by physicians
Begins 2011
17
Cost Containment and QualityImprovements
Medical malpractice reform− $50 million in grants to states to encourage
alternatives to litigation
− More grants for those that focus on patient safety and reduction of medical errors
− Examples of innovative ideas: Medical review boards Prompt apology and compensation policies Protection for physicians adhering to evidence-based
practices
Begins 2014
18
Cost Containment and QualityImprovements
Comparative Effectiveness Research Establishes a non-profit Patient-Centered Outcomes
Research Institute. Will provide physicians with clinical effectiveness data
that industry-sponsored research often does not undertake. Example: directly comparing different drugs that do the same thing, or researching cheap drugs that are not profitable for industry to sell.
The findings will not lead to mandates (that will be left to specialty societies, as it is now).
Begins 2010-11
19
Administrative Simplification for Insurance Claims
National rules to standardize and streamline health insurance claims processing.
For doctors’ offices: easier to track claims, faster payments by insurance companies, and lower overhead costs.
For patients: appeal procedure for denied claims will now go to an external reviewer instead of another division of the insurance company.
Begins 2010
20
How Does Expanding Insurance Coverage Affect Physicians?
Less uncompensated care
− The AMA estimated that physicians provided $24 billion in charity care in 2008
Sustaining the Medicaid program with federal dollars and better reimbursement levels
Less use of emergency rooms for routine care More ability to do preventive care For those who are self-employed or own a small
business:− New regulated health exchanges to select coverage, provide
administration, and offer potential for subsidies and tax breaks
21
How Does Expanding Insurance Coverage Affect Physicians?
Medicare and Medicaid Payment reform− 10% bonus payment to all primary care physicians
− 10% bonus payments for general surgeons in rural areas
− 5% bonus for mental health providers
− Increase in Medicaid payment rates for primary care physicians to equal Medicare rates (2013-2014)
− Increased reimbursement in rural and low-cost areas
− Bonus payments for voluntary participation in Medicare’s Physician Quality Reporting Initiative (PQRI).
Begins 2011
22
How Does Expanding Insurance Coverage Affect Physicians?
Physician Workforce Investment − Residency programs will be required to redistribute 65% of
unfilled slots to primary care or general surgery− Expanded scholarships and loan repayment through the
National Health Service Corps− Tax relief for those health care workers paying state-issued
student loans for working in primary care or high need areas
− Additional low-interest student loans, scholarships, loan repayment programs for primary care and general surgery
− Increases funding for Community Health Centers
Begins 2010-11
23
How We Pay For This
Excise tax on high cost insurance plans, starting in 2018 Increased Medicare payroll tax for high income earners,
starting in 2013:− Additional 0.9% Medicare payroll tax on wages >$250,000
− 3.8% tax on unearned income (interest, dividends)
Reduced payments to Medicare Advantage plans Savings in Medicaid and Medicare prescription drug
costs Reduces Disproportionate Share Hospital (DSH)
payments because newly insured will be able to pay Fees on certain device manufacturers, insurers, tanning
salons, etc.
24
Do the Taxes, Etc. Affect You?
Do you make more than $250,000?− Medicare payroll tax (additional 0.9%)
− Get substantial income from dividends and interest
Is your insurance premium above $27,000?− Starting in 2018, just the portion above $27K taxed as
income.
Do you go to indoor tanning salons?
25
What the Nonpartisan Congressional Budget Office Says
Reduces federal deficit by $143 billion in the first 10 years and by another $1.2 trillion in the next 10 years. Repealing it does the opposite, only worse (CBO)!
Will have little initial impact on health plan premiums for the majority of Americans who get their insurance from their employers
Costs will go down for those who buy through exchanges and qualify for subsidies
Elmendorf, D. (2010, March 18) Preliminary Cost Estimate for Pending Health Care Legislation. Retrieved April 5, 2010 from Congressional Budget Office Website: http://cboblog.cbo.gov/?p=508
$(500)$(400)$(300)$(200)$(100) $- $100 $200 $300 $400 $500 $600
Expansion of Medicaid and CHIP
Subsidies and Exchange Operations
Small Employer Tax Credits
Penalty Payments From Uninsured Persons and Employers
Excise Tax on Ins. Cos. for High Cost Plans
Other Revenues
Ending of subsidies for Medicare Advantage Plans
Savings on Medicare and MA Plans
Taxes on Med. Devices, Higher Incomes, Etc.
ACA First Ten Year Net Savings: $143 Billion
Second 10-Year Savings: $1.5 Trillion
Other Savings from Health System Changes
Ten-Year Medicare Savings = $533.1 Billion
Source: Kaiser Family Foundation analysis of Congressional Budget Office (CBO) cost estimates as provided on March 20, 2010.Notes: *Savings include interactions with Medicare Advantage and TRICARE; spending includes implementation of Medicare changes, Part D interactions with Medicare Advantage provisions, Part B interactions with Part D provisions, and Medicaid interactions with Medicare Part D provisions.
Sources of Savings
• Provider payments, including DSH and home health - $219 billion
• Medicare Advantage – $136 billion
• Income-related premiums – $36 billion
• New Independent Payment Advisory Panel – $16 billion
• Delivery system reforms and hospital readmissions – $12 billion
Health Reform: Medicare Savings (Kaiser FF)
Medicare Advantage
Payment Reforms25%
Annual Provider Payment Updates
29%
Interactions* 14%
Other 5%
Part D Enrollment/ Consumer Protections 1%
Delivery System Pilots 1%
Reducing Hospital Readmissions 1%
Fraud, Waste, Abuse 1%
Part D Premiums 2%
Part B Premiums 5%Independent Payment Advisory Board 3%
Disproportionate Share Hospital (DSH) Payments 4%
Annual Provider Payment Updates 29%
Home Health Payments 7%
Medicare Advantage Payment Reforms 25%
Medicare Part A Trust Fund (Kaiser FF)
0%
50%
100%
150%
2004 2009 2014 2019 2024 2029
Pre-health reform: 2017 projected insolvency date
Assets as a share of annual spending:
Post-health reform: 2029 projected insolvency date
CBO Projection: Health reform legislation will extend the life of the Medicare Part A Trust Fund from 2017 to 2029
If Medicare Replaced… The “For-Profit” Health Coverage Penalty: 27% (Plus 5-10% Broker Commissions)?
73%
15%
3%0%8%
United Health Care (UNH) 2011 Operat-ing Statement
Claims & Loss ExpenseSelling, General, & AdminOther Oper. Exp.Interest Exp. & ChgsPretax Income
29
30
Questions You May Have Why not just allow purchase of coverage from
any insurance company in any state?− Many major insurance companies (Aetna, United,
CIGNA, Anthem/Wellpoint) are already in most states
− Any insurance company will be able to offer coverage as long as they meet minimum standards on coverage, fair practices, clear policies, etc.
− Currently, only states regulate insurance companies, and some do a very minimal job. If we allow insurance companies to all file in the least regulated state, then “let the buyer beware!”
− It doesn’t really increase competition, since smaller insurance cos. won’t secure strong networks/discounts.
30
31
Questions You May Have
Why have health exchanges, instead of just “voluntary” purchasing pools?
Voluntary pools are unstable:− The individuals or employers in the pool who have the
lowest claim costs always get offered a better deal from another insurance company and then drop out.
− As more drop out over time, costs rise even faster for those still in the pool.
− The pool eventually becomes unaffordable and empty− This idea has been tried off and on for decades.− The exchanges must administer subsidies and carrier
risk adjustments.31
32
Questions You May Have
Why no national malpractice reform?− The law funds pilot projects at the state level, where
malpractice is now regulated. Congress would have to expand its authority to take away state control.
− This is an area where state experimentation makes sense. Right now we don’t have clear evidence of what works best.
− Malpractice reform is a lot more than just capping “pain and suffering” awards. It involves new practices to prevent errors, prompt apologies to patients, possibly no-fault rules, new review and claim settlement processes, etc.
32
33
Questions You May Have
Is it “cutting” Medicare?− No Medicare benefits are being cut.
− For-profit insurance companies should no longer get an extra 14% (on average) from the government for Medicare Advantage plans, compared to traditional Medicare benefits. That makes all others pay more.
− Medicare now pays doctors and hospitals different rates around the country and for different health procedures. It generally pays “fee for service,” which drives up costs. Medicare will gradually change these payment rules to slow
the annual cost increases, primarily for “overpaid” services . So if costs go up by 3% per year, instead of 5%, that’s not
“cutting” Medicare.
33
34
Why “Regulation”?
Optional Goods and Services
Essential Goods and Services
Multiple Supplier Markets
Most consumer goods and services
Regulated Health Care Exchanges
One Supplier Markets
“First-to-market” temporary advantage
Regulated Utility
Totally free markets are unstable and devolve to monopolies or oligarchies.
Regulation is needed to:- Require full disclosure: pricing, contract provisions, ban
deceptive marketing practices- Allow easy comparison of products- Control or break up monopolies