Transcript Slide 1

Health Reform:
Law, policy, us & our children
Professor Sidney D. Watson, J.D.
Saint Louis University School of Law
Center for Health Law Studies
March 13, 2012
Health Reform at Year 2…
• 2.5 million young adults newly insured
• 3.6 million Medicare enrollees saved $2.1
million, an average of $604 per person
• Preventive services at no cost
• Missourians with individual insurance
– compare plans, premiums and coverage
– Healthcare.gov
• Review premium increases for individual and
small group insurance
Current health insurance
system
some real problems
...Cost
• Insurance Policies are too
expensive
– $15,000 for family coverage
– $5,400 individual
– Premiums more than
doubled in 10 years while
wages have been flat
• Aging population
– Health care costs are the
fastest growing part of the
federal budget
• Fewer Americans work
for large employers who
offer and generously
subsidize health
insurance
Employment
is changing…
• Small employers with
older or sick employees
are priced out
Health
insurance
industry has
changed…
• Individuals buying on
their own can be turned
down because of preexisting condition
• Policies do not cover
services people need
• Many policies have
annual or lifetime limits
on coverage
• Those who most need
insurance can’t get it or
afford it
Insurance is
full of Holes
…getting worse
• 1 in 6 Americans have no health insurance
– 34 million when debated
– Most recent U.S. Census reports 50 million
• 1 in 10 Americans have insurance that does
not protect them
– 25 million in 2010
– Medical debt is leading cause of personal
bankruptcy
Building Blocks for Reform
• Health Insurance
Reforms
– Private insurance
reforms
– Medicaid expansion
– Strengthening Medicare
• Delivery system
innovations
• Workforce initiatives
Guaranteed Access
to Insurance
• Insurance companies won’t be able to
– refuse to issue and renew policies
– Turn down people because of pre-existing conditions
– drop people when they get sick
• Effective now
– Young adults can stay on their parents policies up to age 26
– Children can’t be turned down because of pre-existing
conditions
– New High Risk Pools for adults until 2014
Premium Protections (2014)
• Plans won’t be able to charge higher premiums
because of
– pre-existing conditions, illness or injury
– gender
– occupation, etc.
• Premiums may only vary based upon
–
–
–
–
family size
age, but only up to 3:1
smoking
“rating area”, i.e. location
Premium Protections (now)
• Caps insurance companies’ overhead &
profits
– 80-85% of premiums must be spent for medical
care
• New oversight of premium rate increases
Comprehensive Coverage
• Policies must cover*
– Preventive services with no
deductibles or co-pays (now)
• well woman exams,
colonoscopies, immunizations…
• contraceptives….
– Standard benefit package of
“essential health benefits”
for individual and small group
plans (2014)
*grandfathered plans exempted
Financial protections
for people with insurance
• Prohibits annual and lifetime dollar limits
on coverage
• Sets annual out of pocket spending caps for
consumer
• All plans must meet minimum actuarial value
standards
– At a minimum, cover on average 60% of cost of care
– 70%, 80%, 90% coverage also available
• Modest income Americans will be eligible for tax
credits to help pay for premiums & out of pocket
costs
Health reform makes it
easier to buy
insurance.
• New Health Insurance Exchanges
– Creates a competitive market place
• Make comparison shopping easier
• Reduce marketing costs
• Allow individuals and small businesses to get better
rates because they are in a bigger pool
Premium help for
moderate-income
Americans (2014)
• Tax credits to help families earning between 133400% FPL pay premiums
– family of 4
– individual
$30,657 - $92,200
$14,856 - $44,680
• Tax credits set on a sliding scale so premium costs
range from 2%-9.5% of income.
– Those earning less will be eligible for Medicaid
Other Building Blocks for Health
Insurance Reform
• Private Insurance
• Medicaid expansion
• Strengthens Medicare
Reform expands
Medicaid for those
who need it
• Medicaid will cover all families and individuals
up to age 65 with incomes up to 133% FPL
– family of 3 - $25,390
– Currently
• MO family of 3 must make less than $6,873
• For the first time ever, childless adults without
a disability can qualify for Medicaid
• Covered benefits must include new “essential
health benefits”
Strengthens Medicaid
• Enhanced federal contribution
– Full cost for all those newly eligible, 2014-2016
– 95%, in 2017-2018
– 90%, thereafter
– NOW: fed share averages 57% nationally, 63% MO
• Increases reimbursement for primary care to
Medicare rates
– 2013-2014, feds pay the full cost
– NOW: nat’l average 66%, in MO 65%
Strengthens Medicare-now
• Closes the “donut hole” in drug coverage and
lowers cost of brand name drugs (now to 2020)
• Provides preventive services with no co-pays or
deductibles
• Reduces overpayments to private Medicare
Advantage Plans
• Enhanced payments for primary care physicians
and general surgeons
• Payment incentives for better coordinated care
– Reduces hospital payments based upon preventable
hospital readmissions
Yeah, but how do we
pay for it?
Cost of reform…cost savings*
• CBO sets federal cost at $938 billion
– Reduces federal deficit by $124 billion
– 2% of federal budget
– 2-3% of total overall health care spending
• Commonwealth Fund
– Reduces annual growth in spending by about 6%
– For families, $2,000 less in annual premiums
• Medicare Board of Trustees
– Extends Hospital Trust Fund solvency for 12 years
*Over 10 years
Shared responsibility
Costs and responsibilities are
shared among many
Federal & state governments
health care entities
businesses
Almost all Americans
Individual mandate
Individuals
• U.S. citizens and legal residents must have
health insurance or pay a tax penalty
– No penalty if “affordable” insurance is not available
• No more than 8% of income
– Exemptions granted for financial hardship, religious
objections, those without coverage
for less than 3 months, undocumented
workers, incarcerated individuals
Health Reform in the Courts
• Florida vs HHS
• United State Supreme Court briefing just finished
• Oral Arguments start March 26
• Individual Mandate Issues before the Supreme Court
– (1) Constitutional authority for the individual mandate
– (2) “Severability”
• If USSC strikes down the individual mandate does the rest of the
ACA remain?
– (3) Does the federal tax anti-injunction act bar this claim?
• Lower courts - 4 U.S. Courts of Appeals have ruled
– 1: dismissed base on tax anti-injunction act
– 2: mandate constitutional
– 1: mandate unconstitutional, but severable
Health Reform in the Courts
Constitutional Questions
• (1) Does Congress’s authority to regulate
industries, products, and activities in or
affecting interstate commerce include
authority to penalize the failure to buy health
insurance?
• (2) Does Congress’s authority “to make all laws
necessary and proper” to carry out
acknowledged power to regulate interstate
commerce in health insurance by imposing
restrictions to pre-existing conditions and premium
protections include the authority to also impose an
individual mandate which will make the other
provisions less costly.
Health Reform in the Courts
What if challengers win?
• What else falls if individual mandate falls?
(severability issue)
• A few of the private insurance reforms:
• maybe guaranteed issue & premium pricing
• Among Medicare changes:
• maybe reductions in hospital Medicare payments
(hospitals’ argument)
• What else could Congress do to
encourage/require all Americans to have
insurance to pay for medical care?
Alternatives to the
Individual Mandate
• Congress’ constitutional authority to tax and spend
– tax credit rather than a tax penalty
• child care, energy saving appliances
– payroll tax
• Social Security, Medicare
• Congress’ commerce clause authority to regulate
health insurance
– Higher premiums if delay enrolling
• Medicare
– Enrollment periods only once every five years
– Get people to sign waivers that if don’t buy health
insurance then won’t use medical care, prohibit bankruptcy
for medical debt.
Building Blocks for Health
Insurance Reform
• Private insurance
reforms
• Medicaid
expansion
• Strengthening
Medicare