Transcript Document

The Affordable Care Act*
45th Annual WMSHP
Spring Seminar
Richard Lichtenstein, PhD, MPH
S.J. Axelrod Collegiate Professor
of Health Management and Policy
University of Michigan
School of Public Health
*The Patient Protection and Affordable Care Act of 2010
The Affordable Care Act (ACA)
March 23,2010
This is historic legislation that ranks with
Social Security, Medicare and the Civil
Rights Act in terms of creating social
change
Health care “progressives” have been
advocating for a national health insurance
plan in the US since at least 1913.
They have been thwarted many, many
times, but this time they were successful!
The Affordable Care Act (ACA)
March 23,2010
The law is certainly not “perfect,” but it moves us forward
substantially. Originally estimated it would add up to 30-32
million more insured people (out of 45 million uninsured). Now,
estimates are lower (24 million) due to failure of some states to
undertake Medicaid Expansion.
Two major obstacles to the implementation of the ACA have been
overcome: the Supreme Court Case in June, 2012 on the Individual
Mandate; and the possibility that President Obama would lose the
Nov. 2012 election.
BUT, Medicaid Expansion and the
Employer Contribution (Mandate)
still loom as problem areas.
Major Features of The Affordable Care Act
Individual Mandate: Everyone must have insurance, or face a
“penalty” if they don’t purchase a plan
▫ Penalty is $95 in 2014 and increasing to $695 in 2016 - OR - 2.5% of
income by 2016
▫ Exemptions: financial hardship, those who don’t pay Social Security
for religious reasons, Indian tribes, unauthorized immigrants,
uninsured for period of less than 3 months, etc.
In June 2012, the Supreme Court said this is a TAX and is
constitutional
Cost-sharing subsidies to households below 250% of FPL
and premium tax credits for households below 400% FPL
Major Features of The Affordable Care Act
 Employer Contribution (mandate): Penalizes companies with
over 50 workers who don’t provide insurance ($2,000/worker),
but exempts paying penalty for first 30 workers.
 Provides tax credits for small employers (<25 workers, average
wage < $50K) to help pay for insurance.
 Issue of small employers reducing hours (under 30 per week) or
jobs (under 50 employees).
IMPLEMENTATION OF THIS SECTION OF THE ACA HAS BEEN DELAYED UNTIL:
• 2015 for companies with 100 or more workers*
• 2016 for companies with 50 – 99 workers
* Additionally, requirements for percent of full-time workers that are offered health
insurance in order to avoid a fine has been decreased from 95 to 70 percent
Major Features of The Affordable Care Act
Employer Contribution:
96%
 96% of firms in the United States have fewer than 50
employees and are therefore exempt from the employer
mandate
 96% of firms with 50 or more employees already offer health
insurance to their employees
Other changes to employer sponsored insurance:
 Covers dependents up to 26 years old (already in effect, est.
>3 million newly-insured)
 Cadillac Tax: Excise tax on high coverage plans (>$27,500
for family), beginning in 2018.
Major Features of The Affordable Care Act
Health Insurance Reforms:
 “Guaranteed issue”—cannot exclude people with pre-existing
conditions
 No rescission
 No annual or lifetime caps, etc. (Now in Effect)
 Covers dependents up to 26 years old
Essential Health Benefits Package
 Minimum coverage for non-grandfathered health plans (in and outside of
marketplaces)
 Mainly relevant to new, non-employer sponsored plans
 Not standardized across the US – Each state can decide how they will
meet the EHB requirement.
 States must select benchmark plans for benefit design
Limit on Annual Out-of-Pocket Spending (in 2014):
 Individual: $6,350; Family: $12,700
Most of these features are designed to end insurance company efforts to
avoid “adverse selection”
Essential Health Benefits Categories
and Benchmark Plans
Ten EHB categories:
1. Ambulatory patient services
2. Emergency services
3. Hospitalization
4. Maternity and newborn care
5. Mental health & substance abuse disorder services*
6. Prescription drugs*
7. Rehab and habilitative services and devices
8. Laboratory services
9. Preventive and wellness services and chronic disease management*
10.Pediatric services, incl. oral and vision care
States could select EHB benchmark plan from several options:
3 largest small group plans, 3 largest state employee health plans, 3 largest
FEHBP plans, or largest HMO in commercial market
Insurance Reform
 Federal Government can regulate
insurance company rate increases and
unfair practices.
 HI companies must spend 80-85% of
premiums on health care (medical loss
ratio, “MLR”).
 Insurance companies are already sending
rebates to consumers when they fail to meet
these standards.
Major Features of The Affordable Care Act
Insurance Marketplaces (Exchanges): In 2014, individuals and
employees of small employers can purchase private insurance plans
through state-based insurance marketplaces.
 States can be “active purchasers”
or take all comers
 All health insurance plans offered
through marketplaces must be
“qualified health plans” and meet
AV levels
 Health plans may fear adverse
selection with platinum plans
 Funding for “Navigators” to help
people choose plans
Status of State Action on Health Insurance
Marketplaces, as of April 2014
Source: Kaiser Family Foundation, State Health Factshttp://kff.org/health-reform/state-indicator/marketplace-enrollment-as-a-share-of-the-potentialmarketplace-population/#map
Major Features of The Affordable Care Act
Medicaid Expansion:
 Medicaid will cover everyone under 133% of FPL, including childless
adults (12-20 million people).
 Feds cover 100% of costs for newly eligible (2014-17), then 95%
(2018-19), then 90% of costs after 2020.
 Effective in 2014.
 Reauthorized CHIP until 2019.
 Temporarily raises Medicaid Rates to Medicare Rates for Primary
Care Providers.
 The Supreme Court said that the federal government could not
penalize states that failed to expand Medicaid by withdrawing all
Medicaid funds (per the ACA).
Implementation of the Medicaid expansion is still mandatory, but the remedies
available to the Feds are limited.
Federal Poverty Level (FPL) – 2014
Source: Families USA. http://www.familiesusa.org/resources/tools-for-advocates/guides/federal-poverty-guidelines.html
Affordability
Premium tax credit
 The lower your income, the higher your credit
Cost Sharing Reduction Plans
 All of them are silver plans (but usually around the cost of bronze
plans)
 Lowers coinsurance of ER, prescription drugs, etc.
You can be eligible for both premium tax credits and
cost sharing reduction plans
What Americans pay for a silver plan on the exchanges
40-year-old making $51,705 per year (450% of Poverty),
with no financial assistance
$154
At 450% FPL, an
enrollee would not
be eligible for
premium tax credits
$261
$311
$365
$481
Notes: Premiums indicate the amount a 40-year-old would need to spend on the second-lowest cost silver plan in a given county or region.
Source: Premiums for state-based exchanges were obtained through a Kaiser Family Foundation review of insurer rate filings to state regulators. Premiums for federally-facilitated and partnership exchanges were obtained
from data published by HealthCare.gov, as of January 22, 2014, available at https://www.healthcare.gov/health-plan-information/.
What Americans pay for a silver plan on the exchanges
40-year-old making $40,215 per year (350% of Poverty),
with moderate financial assistance
$154
At 350% FPL, eligible
enrollees would have
to pay a maximum of
9.5% of their income
on premiums for a
benchmark silver plan
$261
$311
$318
$47
$318
$163
Notes: Premiums indicate the amount a 40-year-old would need to spend on the second-lowest cost silver plan in a given county or region.
Source: Premiums for state-based exchanges were obtained through a Kaiser Family Foundation review of insurer rate filings to state regulators. Premiums for federally-facilitated and partnership exchanges were obtained
from data published by HealthCare.gov, as of January 22, 2014, available at https://www.healthcare.gov/health-plan-information/.
What Americans pay for a silver plan on the exchanges
40-year-old making $28,725 per year (250% of Poverty),
with significant financial assistance
$154
$193
$69
$193
$118
$193
$193
At 250% FPL, eligible
enrollees would have
to pay a maximum of
8.05% of their income
on premiums for a
benchmark silver plan
$173
$289
Notes: Premiums indicate the amount a 40-year-old would need to spend on the second-lowest cost silver plan in a given county or region.
Source: Premiums for state-based exchanges were obtained through a Kaiser Family Foundation review of insurer rate filings to state regulators. Premiums for federally-facilitated and partnership exchanges were obtained
from data published by HealthCare.gov, as of January 22, 2014, available at https://www.healthcare.gov/health-plan-information/.
Affordability
Source: Kaiser Family Foundation http://kff.org/interactive/uninsured-gap/
Who bought insurance?
Current breakdown:
 8 million signed up for private health insurance through April
2014
 Surpassed expectations
Medicaid Expansion:
 Between approximately 3 million people are estimated to have
enrolled in Medicaid and CHIP as a result of expanded eligibility
through
Source: Whitehosue.gov http://www.whitehouse.gov/the-press-office/2014/04/17/fact-sheet-affordable-care-act-numbers
Major Features of The Affordable Care Act
Medicare Changes:
 No Part D doughnut hole by 2020.
 Increases Medicare payroll tax to 2.35% from 1.45% for the affluent
(over $200k/year per individual ($250k couple). Additional 3.8% tax
on unearned income over $200k/year per individual ($250k couple).
 Creates Independent Payment Advisory Board (IPAB)
• Beginning in 2014, if Medicare per-capita spending > target
growth rate, IPAB submits cost-saving legislative proposals
• Restrictions on IPAB proposals. IPAB cannot propose:
Increasing revenues (through taxes, cost-sharing, etc.)
Changing benefits or eligibility
Hospitals and hospices excluded through 2019
• Missed deadlines for appointments to IPAB
Major Features of The Affordable Care Act
Other Financing:
 Excise tax on high coverage plans (>$27,500 for family), beginning
in 2018.
 Individual and employer penalties for not purchasing insurance.
 Medicare tax increases.
 Elimination of “excess payments” to Medicare Advantage Programs.
 Decrease in Medicare provider payment growth rates.
 Taxes on sectors of health care system (e.g. insurers, pharma,
device, etc.)
Major Features of The Affordable Care Act
Prevention and Public Health:
 Creates National Prevention, Health Promotion and Public Health
Council to coordinate federal wellness programming.
 Disseminate evidence-based preventive services and community
preventive services.
 Initial allocation of $15B to Fund ($6.5B cut in 2012 for “doc fix”).
Examples of programs funded in FY13:
• increase CDC-sponsored fellowships for public health workforce;
• state health departments to increase healthcare-associated
infection prevention efforts;
• Community Transformation Grants to reduce chronic diseases;
• health insurance enrollment support efforts
Major Features of The Affordable Care Act
Long-term Care:
“Community Living Assistance Services and Supports” (CLASS).
Voluntary payroll deductions for long-term care assistance. After 5year vesting period, all participants would be eligible for average of
$50/day for non-medical support services for people with
functional disabilities. Increase Medicaid support for home and
community-based services programs. Nursing homes required to
disclose more information to the public.
• (This Program has been suspended by the Obama
Administration. Funding method was unsustainable.)
Major Features of The Affordable Care Act
Workforce:
 Increased funding for Primary Care residencies and practitioners.
 Addresses nursing shortage by increasing capacity for education
programs, supporting training programs, etc.
 Funding for training that employs medical home and disease
management models.
 Also some funding for dental professions.
Community Health Centers:
 $11 billion additional funding over 5 years.
 School-based health centers, nurse clinics, etc. encouraged.
 (Some funding to be used by HHS for health insurance enrollment
outreach before 2014).
Major Features of The Affordable Care Act
Abortion:
 No federal financing for abortion
Undocumented Workers/Illegal immigrants:
 Cannot purchase HI from a marketplace.
Major Features of The Affordable Care Act
Waste, Fraud and Abuse:
 Efforts are expanded.
Malpractice Reform:
 Grants to states to experiment with
new approaches to malpractice
reform.
ACA—Issues for Pharmacists
1.
2.
3.
Can patients shop effectively on the exchanges for plans with
needed drugs?
What to do about restrictive formularies and two-drug policies in
health plan formularies?
Will disease-oriented lobbyists have an impact on on ACA
pharmacy policies in the future?
Thanks to James Lang, Pharm.D, MBA, Vice-President for Pharmacy
Services, BCBSM, for his help with the pharmacy provisions of the ACA.
1. Can patients shop effectively on the exchanges
for plans with needed drugs?
Use example of a patient with epilepsy who is stable on
current drug regimen:
• In the exchanges, usually difficult to see what drugs are on a plan’s
formulary.
• Patients can usually can click through to plan’s website to see
formulary
• May find that formularies for exchange plans are more restrictive
than those for employer-sponsored plans
2. What to do about restrictive formularies and
two-drug policies in health plan formularies?
• Formularies for plans in the ACA can follow the two-drug policy for
each class of drugs. Unlike Part D of Medicare, there are no
“protected classes” of drugs in the ACA.
• Protected classes in Part D:
▫ Anti-retrovirals
▫ Anti-convulsant agents
▫ Anti-neoplastics
▫ Anti-depressives
▫ Anti-psychotics
▫ Immunosuppressant drugs (for organ rejection)
2. What to do about restrictive formularies and
two-drug policies in health plan formularies?
• Appeals. Pharmacists can appeal any drug exclusions, co-pay and
deductible amounts. Pharmacists usually win these appeals because
the reviewing entities generally side with the patients.
• Urgent Review. Pharmacists can request an urgent review in cases
where switching medications could harm the patient. This can be
done even before the prescription is needed.
• Maximum out-of-pocket limits will also prevent patients who
have to pay substantial amounts for drugs from going bankrupt
3. Will disease-oriented lobbyists have an impact
on ACA pharmacy policies in the future?
• Knowledgeable people feel that the two-drug policy in the ACA may
become more like Medicare Part D policy in a few years by allowing
certain protected classes. Most likely to be protected:
▫ Anti-retrovirals
▫ Anti-convulsant agents
▫ Anti-neoplastics