State and Federal Health Care Reform Update. Universal Health Care Foundation of Connecticut

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1 State and Federal Health Care Reform Update Universal Health Care Foundation of Connecticut Linda Dahlmeyer, CPA Vice President for Finance and Administration Jill Zorn, MBA Senior Program Officer

2 Overview Universal Health Care Foundation of Connecticut Federal Reform: Affordable Care Act (ACA) Through 2013 Major coverage expansions: 2014 Individual Mandate Impact of ACA on Employers State Reform Challenges and Opportunities Resources

3 Universal Health Care Foundation of Connecticut Mission: to achieve access to quality, affordable health care for every resident of the state Conversion foundation Advocacy Policy research and development Strategic communications Public education on health reform

4 Federal Reform: The Affordable Care Act What has already happened Early coverage Insurance reforms Improvements to public programs Improving the quality and efficiency of health care Prevention of chronic disease and improving public health Health care workforce

5 Coverage that has occurred since law passed Extending dependent coverage to children up to age 26 Pre-existing condition plans Prohibiting the use of pre-existing condition exclusions for children under age 19 No cost-sharing for preventive health coverage

6 New Insurance Protections and Market Reforms Prohibiting rescissions (retroactive cancellation of coverage) Prohibiting lifetime coverage limits Phasing out of annual benefit limits More rights to appeal coverage denials Medical loss ratio standards assure that 80-85% of premiums are spent on health care New rules on disclosure and review of unreasonable premium increases

7 Improvements to Public Programs: Medicare and Medicaid Closing the Medicare Part D donut hole by 2020 No more overpayments to Medicare Advantage plans Reduced or no payment for certain hospital readmissions (fall 2012), focus on care transitions Piloting new payment approaches: Accountable Care Organizations Medicaid payment to primary care physicians increases to Medicare rates (2013 and 2014)

8 Quality and Cost, Prevention of Chronic Disease, Improving Public Health Demonstration programs on new payment approaches improving primary care promoting health equity Patient Centered Outcomes Research Institute (PCORI): Comparative Effectiveness Research Center for Medicare and Medicaid Innovation Medicare Independent Payment Advisory Board Prevention and Public Health Fund

9 Health Care Workforce Community health centers School-based health centers Expansion of primary care workforce for physicians, nurse practitioners and physician assistants Health professions demonstration projects to address workforce shortages National Health Service Corps Loan Repayment Program Funding to train community health workers

10 Major coverage expansions: 2014 Medicaid eligibility rises to 133% FPL (around $15,000/yr. annual income) Expected growth from 578,000 to over 700,000 Health Insurance Exchange marketplace offers insurance to individuals and small businesses, with federal subsidies available for individuals up to 400% FPL 250,000 enrolled by 2016 No Wrong Door enrollment through web, 800 number, in person. Community outreach will be essential to get hard-toreach populations enrolled.

11 Major coverage expansions: 2014 Change in insurance market rules No more rating differences based on gender Age rating - 3:1 ratio No more denials or higher prices due to health status/preexisting conditions Subsidies to make insurance affordable Premium subsidies for 100%-400% FPL Cost sharing subsidies for 100%-250% FPL In return, individual mandate imposed to assure that healthy people enroll

12 Individual Mandate Effective 2014 Minimum essential coverage Penalty will be greater of: % of applicable income or $95 for each taxpayer/dependent % of applicable income or $325 for each taxpayer/dependent Thereafter 2.5% of applicable income or $695 for each taxpayer/dependent (capped at $2,085 (3X))

13 Individual Mandate (continued) Premium tax credit For health insurance purchased thru Exchanges Aid for individuals between 100% to 400% FPL Premium tax credit not offered when: ER provides minimum coverage at least 60% of actuarial value (sliding scale determined by HHS & IRS) Affordable if EE pays 9.5% or less of household MAGI Safe Harbor rules

14 Impact on Employers: 2012 Summary of Benefits Types of Plans required Each group health plan Some HRA s EAP Types of Plans not required FSA s, HSA s, insured vision & dental Women s Preventive Health Care W-2 reporting Group Health Plans

15 Impact on Employers: Changes for 2013 FSA Limits New limits - $2,500 OASDI Taxes FICA limit 2013 back to 6.2% for EE s Medicare increased.9% for high income EE s PCORI Patient-Centered Research Fee Year 1 - $1 / average number of lives Year 2 forward - $2 / average number of lives

16 Employer Mandate: Pay or Play Effective 2014 Large employer not offering coverage $2,000 per EE (minus first 30 EE s) for example: ER with 55 EE s cost would be (55-30) x $2,000 = $50,000 Large employer offering coverage, but unaffordable Penalty triggered if at least one FTE received Premium Tax Credit (PTC) assessed at the lessor of: # of EE s receiving PTC multiplied by $3,000 for example: 2 EE s are receiving PTC the penalty will be $6,000 OR ER with 55 EE s cost would be (55-30) x $2,000 = $50,000

17 Other Changes Coverage waiting period for new hires can not exceed 90 days Wellness program incentives 2015: Automatic enrollment of eligible EE s 2018: Cadillac Tax

18 State Reform Overview Health Care Cabinet and Office of Health Reform and Innovation Health Insurance Exchange Medicaid State employee health plan HealthyCT CO-OP

19 State Reform: Cabinet, Office of Health Reform and Innovation Health Care Cabinet to coordinate and integrate all health reform efforts in the state Business Plan Work Group recommending More non-profit options Options that promote VALUE quality/better outcomes per dollar spent Delivery System Innovation Health Technology Office of Health Reform and Innovation Consumer Advisory Board

20 State Reform 2012: Health Insurance Exchange CT is one of only 19 State-based Exchanges A quasi-public agency Appointed board Funded by federal grants: Advisory Committees Consumer Experience and Outreach Health Plan Benefits and Qualifications Brokers, Agents and Navigators Small Business Health Options Challenges: tight timelines, complexity, balancing interests of consumers, providers, insurers

21 State Reform 2012: Medicaid Major expansion of coverage One non-profit insurer (Community Health Network) administering the plan Payment incentives to promote quality, PCMH Concerns Provider network, both primary care and specialty Provider reimbursement Churning between Exchange and Medicaid Outreach and enrollment systems

22 State Reform 2012: State Employee Plan Health Enhancement Program plan promotes prevention and chronic disease management Patient-Centered Medical Home (PCMH) 2 large groups receiving extra payment for office visits of state employees; more groups to be added CT Partnership Plan municipalities large non-profits who do business with the state (ERISA challenges)

23 HealthyCT CO-OP Consumer Operated and Oriented Plan ACA provision to allow new non-profit health plans that are consumer governed and aim to improve quality to be established Low interest loans to fund start up and reserves; aim is to fund one in each state CSMS and CSMS IPA applied and were approved. Goal is to be offered in time for the Exchange HealthyCT is offering PCMH payment incentives Another non-profit, Harvard-Pilgrim, expected to enter market

24 Health Reform Challenges Deficit reduction: Medicare, Medicaid, ACA Affordability There will still be uninsured Implementation complexity: fair, competitive, sustainable insurance market, ease of enrollment Need for widespread, consistent payment and delivery system reforms Workforce to meet the needs of newly insured Deadlines faced by Exchange Political polarization: how to make needed changes

25 Health Reform Opportunities Strong consumer protections No more job lock: Can obtain individual insurance regardless of pre-existing conditions Fewer uninsured Health care delivery IS moving in the right direction: patient-centered care, emphasis on quality and cost (value), prevention and chronic disease management, wellness Embracing much-needed change

26 Health Reform Web Resources State Reform Office of Health Reform and Innovation -cabinet -working groups (exchange) CT Department of Insurance Health Care Reform Consumer Resource Page (Small Business for a Healthy CT) Federal Reform and Employers (Kaiser Family Foundation) (Department of Labor) Act-Tax-Provisions (IRS) (Based in California, but useful to all)