Transcript National Health Care Reform

National Health Care
Reform and Michigan
December 4, 2012
Peter Pratt
President
Generally, What ACA Does and
Doesn’t Do
 (Most) everyone will be required to have health insurance—public or
private—DONE
 People with public or private coverage can keep it—DONE
 Private insurers need more regulation (no denials for pre-existing
conditions, no annual or lifetime limits)—DONE
 Health care quality must improve, and the way we pay providers
must foster this improvement—MADE A START
 Health care costs are rising too rapidly and must be controlled—
NOT REALLY DONE
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Why Does the ACA Matter to
Michigan?
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Cover many of the now uninsured through private insurance/the exchange (MIHealth
Marketplace) and Medicaid expansion (PERHAPS)
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Address increased demand for care
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Individual tax—or penalty—with exemptions
Employer mandate—or penalty—with exemptions (for firms with 50 or more FTEs)
Tax credits/subsidies for premiums, copays and deductibles
Medicaid expansion to 133% FPL—perhaps
Determination of essential benefits (Michigan Essential Benefits Benchmark Plan—Priority Health HMO)
Many more insured—but who will care for them?
Increased Medicaid payment rates to PCPs to 100% of Medicare rates for 2013-14 only
Foster quality improvement
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Cover proven preventive services and eliminate cost-sharing for them (Medicare)
Offer incentive payments to providers for primary care and coordinated care
Lower payments for avoidable rehospitalizations, hospital-acquired infections
Bundle payments for acute and post-acute care
Foster accountable care organizations, PCMHs
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Covering Everyone?
 New 2011 data: 47.9 million uninsured, down by 1.3
million from 2010
 ACA covers 32M (95% of population excluding
unauthorized aliens), but may cover up to 40M if
everyone eligible signs up
 Michigan
• Estimated 1M people will be eligible for subsidies
through the exchanges; 640,000 will actually enroll
(includes insured and uninsured)
• Estimated 969,000 newly eligible for Medicaid;
400,000-600,000 will actually enroll
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Mandates for Individuals
 Must have coverage that meets minimum standards
 Penalties: Higher of
• $95 (2014), $325 (2015), and $695 (2016)/yr/family member
up to $2,085 or
• 2.5% of household income, if above filing threshold
($9,350/individual or $18,700/couple in 2009)
 Exemptions: financial hardship (income below filing threshold or
spend more than 8% of income on insurance), religion, American
Indians
 Individuals whose employers don’t offer health insurance are
NOT exempt
 Individuals who don’t take employer-offered coverage are NOT
exempt
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Subsidies for Individuals
 Two kinds: for premiums and for out-of-pocket costs
(copays and deductibles)
 Sliding scale premium tax credits up to 400% FPL
($88K for family of four)—if don’t get affordable
coverage from employer
 Subsidies set to limit premium contribution to 2% of
income if total income 133% FPL to 9.5% of income if
total income 300-400% FPL (133% FPL=$29,000 for
family of four; subsidy covers all but $600)
 Increases cost-sharing subsidies for <250% FPL
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Requirements for Employers
 No employer mandate for employers < 50 employees
 Penalty for employers > 50 NOT offering HI is $2K/year/worker
 If employer does offer HI and has one or more employees
receiving premium tax credit, pay lesser of $3,000 for each
employee receiving the credit or $2,000 for each FTE
 First 30 employees exempt from calculation of penalty
 Employers > 200 must enroll employees automatically into
employer’s lowest cost plan if they don’t opt out
 98% of businesses unaffected, either because already offer
coverage or they are exempt.
 This all takes effect in 2014
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Subsidies for Employers
 Credits for small businesses (<25 employees, avg.
annual wage of $25K): 35% from 2010-2013; 50%
starting 2014. Credits phase out as firm size & average
wage increase. As of 7/1/12, 7,000 Michigan businesses
have used the tax credits
 Credits may not be attractive enough to get smallest
businesses to offer health insurance (and no penalty if
they don’t)
 No mandate, no credits for employers 26-50 employees
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Cost of Covering More People
 Two kinds of costs are competing for public’s attention: cost to
government and cost to individuals, families, and businesses
 Every dollar that defrays cost of health insurance for businesses,
families, and individuals will add to the government’s cost—and who
pays for government?
 Individual and employer mandates—even with subsidies and limits, will
people decide to buy HI or pay penalties?
 Equity: How much should people and employers w/HI pay for those
without it? ($1,000 a year now)
 Firms with 3-9 employees offering HI (50%, down from 59% in 2010)
 Equity: How much should employer and employee pay for employersponsored HI? Family coverage in 2012: $15,745. Employer share: 72%
Employee share: 28% (largely unchanged since 2000)
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Expansion of Public Programs
 Expand Medicaid to all individuals (133% FPL)—Michigan covers
childless adults now up to 35% FPL
 Feds fund
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100% of expansion population from 2014-16
95% for 2017
94% for 2018
93% for 2019
90% after that
 State will save $1.3B over 10 years from expansion (mental health)
 Increase Medicaid payment rates to PCPs to 100% of Medicare
rates for 2013-14 only
 Increase payments to community health centers for new eligibles
 Why does this matter? For businesses, fewer uninsured. For
providers, better (but not great) payment; pent-up demand
www.pscinc.com
Health Insurance Exchanges
 State-based exchanges starting in 2014 called American Health
Benefits Exchange & Small Business Health Options Programs,
administered by government or non-profit organization.
 Goal: Sustainable, financially viable, and transparent options that
offer meaningful coverage
 Michigan submitted short declaration of intent on November 16,
2012 for state-federal partnership (HHS approval by 1/1/13)
 State-based exchange still a possibility, but blueprint must be
submitted by 12/14/12
 Applications to qualified health plans (early 2013)
 Certification of QHP rates (Summer 2013)
 Open enrollment on exchange begins (10/1/13)
 Exchange in full operation (1/1/14)
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Health Insurance Regulation
 Guaranteed issue and renewability
 No pre-existing condition exclusions—for children, went
into effect 9/23/10 for group, but not individual, plans
 No lifetime limits or rescissions
 Limit rating variation to family size, geography, age,
tobacco use (not allowed for health status, gender,
occupation); for example, rate for 63-year-old can’t be
more than 3x rate for 21-year-old.
 Tighter oversight of health plans:
• HHS secretary can require plans to lower rates
• More requirements for existing plans: med loss ratios,
cover <26 years old, preexisting condition exclusion
prohibition (2014), cover preventive services
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Cost Containment
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Encourage adoption and use of health IT
Reduce fraud, waste, and abuse
Simplify HI administration through standardization
Reduce payments to Medicare Advantage plans; after
2014, MA plans can earn 5% quality bonuses
Add $9.9B in reductions for IP hospitals, SNF, home
health, and others from expected productivity gains
Reduce Medicaid and Medicare DSH allotments
Increase Medicaid drug rebates
Create Independent Payment Advisory Board—to
rationalize and de-politicize cost control efforts
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Paying for Reform
 HC reform can’t add to deficit, so must tax and/or cut spending
 Net cost is $940B, cuts deficit by $138B over 10 years
 Higher taxes for high-income individuals/households (2013):
 Medicare Part A payroll tax rate rises from 1.45% to 2.35% for highincome taxpayers
 3.8% assessment on unearned income for high-income taxpayers
 Taxes on policies with benefits over a certain threshold
 40% tax on plan >$10.2K indiv/$27.5K family (2018)
 Vision and dental plans excluded from calculation
 Penalties for individuals & large employers who don’t get/offer HI
 Cuts in plan and provider payments
 Insurers, medical device makers, Rx mfgers pay fees of more than
$100B over 10 years, but with later start dates
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The Fiscal Cliff/Budget Deficit
 Budget sequester has 2% cut to Medicare (plus 27% cut
to physicians)
 Medicare and Medicaid on the block if we’re to address
deficit ($769B in 2011, 21% of federal budget)
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Simpson-Bowles: Cut hospitals before 2020
Raise eligibility age to 67
Raise Medicare Part B premiums
Give seniors vouchers (Ryan), but tie amount to HC cost inflation
not GDP
 Limit Medicaid expansion?
 Limit subsidies to less than 400% FPL?
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