The Affordable Care Act Part II October 17, 2014 Ross K. Airington, MPA VCU Office of Health Innovation.

The Affordable Care ActPart II

October 17, 2014Ross K. Airington, MPA

VCU Office of Health Innovation

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BACKGROUND

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Why Is Health Reform Needed?

In 2012, there were nearly 48 million uninsured Americans

Since 2003, average health insurance premiums for family coverage have risen 80%

Average annual cost of employer‐sponsored family coverage in 2013 = $16,351 Average employee contribution: $4,741

In 2013, only 57% of firms offered employer-sponsored coverage

Source: The Kaiser Family Foundation and Health Research & Educational Trust, “Employer Health Benefits: 2013 - Summary of Findings.”

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Uninsured in DC/MD/VA

DC: 62,900 (12%) MD: 758,500 (15%) VA: 1,073,200 (16%)

Approximately 71.1% of uninsured Virginians live in families with a gross income at or below 200% FPL 200% FPL in 2013 = $47,100 for family of 4

Source: Macri, J. Lynch, V., Kenney, G., Profile of Virginia’s Uninsured, 2010, The Urban Institute, Prepared for the Virginia Health Care Foundation, March 2012.

Work Status of the Nonelderly Uninsured

No Working Adults 29.0%

Child Not Living with Parents,1.3%Only Part-Time

Worker(s) 22.2%

At Least One Full-Time

Worker 47.4%

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Health Insurance Matters!

25% less likely to have an unpaid medical bill 48.3%

decrease in average health care costs per year

6.1% relative reduction in

mortality rates40% less likely to borrow money or fail to pay

other bills because of medical debt

Sources: Health Affairs, The New England Journal of Medicine, National Bureau of Economic Research

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OVERVIEW OF THE AFFORDABLE CARE ACT

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Patient Protection and Affordable Care Act (PPACA)

Enacted in March, 2010 with the goals of: Ensuring access to quality health care Providing affordable health insurance to the

uninsured

By 2024 will expand coverage to ≈ 26 million currently uninsured Americans

Net cost of coverage expansion is $1.383 trillion over 10 years (2015-2024)

Source: Congressional Budget Office, Updated Estimates of the Effects of the Insurance Coverage Provisions of the Affordable Care Act, April, 2014

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How is the law paid for? Individual & Business (> 50

employees) Tax Penalties for failure to purchase insurance

Increased Taxes for High-Income Workers

Annual Fee for Insurance Companies

Tax on “Cadillac” Insurance Plans

Tax on Medical Device & Drug Industries

Provider Cuts Yearly payment updates to

hospitals (“market basket updates”) are reduced

Payment reductions if fail to meet certain quality criteria

Medicaid and Medicare Disproportionate Share Hospital (DSH) payments Reduced by $14 billion and

$22 billion respectively (2014-2019)

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CONSUMER PROTECTIONS

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Consumer Protections

No one can be denied coverage

due to a pre-existing condition

No cancellation of coverage or

lifetime benefit limits

Free preventive care services

Allows dependent children age 26 and under to stay on parent’s plan

Limited age/family rating and no gender rating

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COVERAGE EXPANSION

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Coverage Expansion

Enacts an Individual Mandate (Jan 1, 2014)

Enacts an Employer Mandate (Jan 1, 2015 and Jan 1, 2016)

Expands Medicaid to non-elderly population with incomes at or below 133% FPL (Jan 1, 2014)

Creates a Health Insurance Marketplace (Jan 1, 2014)

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MANDATES

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Individual and Employer Mandates

Starting in 2014, everyone must either:1. Have health insurance coverage

2. Have a coverage exemption

3. Pay a penalty

Beginning January 1, 2015, employers with 100 or more full-time or full-time equivalent employees must offer affordable coverage

…to full-time employees and their dependent children

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Individual Mandate: Penalties

■ Collected through tax returns

■ Exempted: undocumented immigrants, Native Americans, and those who earn too little to file a tax return

2014 2015 2016 and beyond

$95 Per adult

$325 Per adult

$695 Per adult

OR OR OR

1% Of family income

2% Of family income

2.5% Of family income

Whichever is greater

Source: The Kaiser Family Foundation

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HEALTH INSURANCE MARKETPLACE

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Health Insurance Marketplace

The ACA requires the establishment of state-based or federally facilitated “Health Insurance Exchanges” (2014)

Virginia defaults to a Federally Facilitated Marketplace (FFM)

Health plans in the Exchange must provide coverage for 10 Categories of “Essential Health Benefits”

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Essential Health Benefits

Ambulatory patient services

Emergency services

Hospitalization

Maternity and newborn care

Mental health and substance use disorder services, including behavioral health treatment

Prescription drugs

Rehabilitative and habilitative services and devices

Laboratory services

Preventive and wellness services and chronic disease management

Pediatric services, including oral and vision care

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Coverage Levels

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Insurance Affordability Programs

Premium Tax Credits for individuals 100% to 400% FPL Individual: $11,490 to $45,960 Family of 4: $23,550 to $94,200

Cost-Sharing Reductions (CSR) for individuals between 100% and 250% FPL ($28,725 individual; $58,875 family of 4) Silver plans only 3 CSR tiers based on income:

100%-150% FPL: 94% AV 150%-200% FPL: 87% AV 200%-250% FPL: 73% AV

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Marketplace Plans in Virginia (2014) Virginia – Federally Facilitated Marketplace

9 insurers offering 105 individual and family plans

Monthly Premiums Lowest Bronze: $139 Lowest Silver: $188

Richmond Aetna CoventryOne Anthem HealthKeepers Optima Health

Outside Richmond

Anthem BlueCross BlueShield Kaiser Permanente Innovation Health Insurance Co. CareFirst Bluechoice CareFirst BlueCross BlueShield

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So how did it go?

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So how did it go?

Over 8 million people signed up for private insurance on the Marketplace 2.2 million (28 percent) were young adults (18-34) 85 percent were eligible for financial assistance

3 million more people enrolled in Medicaid and CHIP

5 million people enrolled in plans that meet ACA standards outside the Marketplace

Sources: The White House. FACT SHEET: Affordable Care Act by the Numbers. April 17, 2014.HHS. Health Insurance Marketplace: Summary Enrollment Report for the Initial Annual Open Enrollment Period. May 1, 2014

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Open Enrollment Has Ended

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MEDICAID EXPANSION

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Restrictive Medicaid Eligibility in Virginia Spending

11th largest state in terms of population 7th in per capita personal income 22nd in Total Medicaid Spending 25th in Spending per Enrollee

Access 44th in access to benefits for working parents (30% FPL) 38th in access to benefits for jobless parents (25% FPL) Tied for last in benefits for childless adults (no benefits)

Source: Kaiser Family Foundation, State Health Facts: Medicaid & CHIP

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0%

50%

100%

PregnantWomen

Children 0-5 Children 6-18

Elderly &Disabled

Parents ChildlessAdults

Current Elig Federal Reform

133%

Medicaid Expansion

Year

Match by SFY**(July to

June)

Federal State

2014 100% 0%

2015 100% 0%

2016 100% 0%

2017 95% 5%

2018 94% 6%

2019 93% 7%

2020 – beyond 90% 10%

Fed

eral

Pov

erty

Lev

el

*Covers up to 200% FPL with FAMIS **http://cciio.cms.gov/resources/files/exchanges-faqs-12-10-2012.pdf. 

**

*

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Projected Medicaid Growth in Virginia

• Number is lower than previous estimates, due to the application of expected uptake rate of 69%

The expanded Medicaid enrollment is estimated to result in a savings of $604 million through 2022*

• Under the ACA, the increase in Medicaid enrollment could grow by more than 250,000

*Medicaid DSH and Indigent Care, Presentation to the Senate Finance Committee, Health and Human Resources Subcommittee, Scott Crawford, Department of Medical Assistance Services, January 27, 2014,

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Impact of Supreme Court’s Decision Decision rendered June 28, 2012

Major components of decision: Individual Mandate is constitutional as a tax

Medicaid Expansion itself is constitutional; but the “all-or-nothing” approach is not Unconstitutionally coercive to tell states they must expand or risk

losing all of their Medicaid funding Medicaid Expansion (from current levels up to 133% FPL)

becomes optional for states

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2012 Electoral College Map

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Will the Feds reduce the match?

The FMAP formula has remained basically unchanged since the enactment of Medicaid in 1965, and temporary adjustments to the formula have resulted in FMAP increases, not decreases.

2001 Recession April 2003 through June 2004: Every state’s FMAP was

increased by 2.95 percentage points

Great Recession of 2007-2009 Across the board increase of 6.2%. Increase in FMAP ranging from 1.88 to 5.39 %, based on the

increase in a state’s unemployment rate.

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Medicaid Pays for Itself

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WHAT’S AT STAKE?

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DSH Reductions Federal requirement that states provide “Disproportionate

Share Hospital” (DSH) payments to hospitals that serve a “disproportionate” number of Medicaid patients Assumption that these facilities also serve large percentages of

uninsured

Each state receives an “allotment” of federal DSH funds

States develop guidelines for distribution of DSH funds to hospitals

Between 2017 – 2024 Medicaid DSH allotments to states will be reduced Up to 50% in the latter years

Source: “Medicaid DSH and Indigent Care”, Presentation to the Senate Finance Committee, Health and Human Resources Subcommittee, Scott Crawford, Department of Medical Assistance Services, January 27, 2014,

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Disproportionate Share Hospital Programs

How Virginia uses its DSH allotment: Partial financial relief to 33 private

hospitals that have a high proportion of Medicaid patients

Maximize use of federal funds to support indigent care at state teaching hospitals (UVA and VCU)

VCUHS and UVA Medical Center receive the majority of the state’s DSH allocation to support their Indigent Care programs

Medicaid DSH and Indigent Care, Presentation to the Senate Finance Committee, Health and Human Resources Subcommittee, Scott Crawford, Department of Medical Assistance Services, January 27, 2014,

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“The growth in Medicaid expansion states starkly contrasts the experience in the 24 states that did not expand the joint federal-state health program. In those states, hospitals continued to see flat or sagging admission rates and little reduction in the number of uninsured, largely non-paying patients.”

“While these trends were expected, the gap in Medicaid enrollment between expansion and non-expansion states is greater than most industry analysts predicted. After a strong start to the year, health systems have recalculated their previous estimates to adjust for higher than expected enrollment and revenues. Many have projected a strong finish to the year.”

In Medicaid expansion states, the shifts between Medicaid and self-pay admissions were dramatic through

the first half of 2014

Source: PwC Health Research Institute. Medicaid 2.0: Health systems have and have nots of ACA expansion. September 2014. http://pwchealth.com/cgi-local/hregister.cgi/reg/pwc-hri-aca-medicaid-expansion.pdf

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Key Facts about the Uninsured Population, The Henry J. Kaiser Foundation, http://kff.org/uninsured/fact-sheet/key-facts-about-the-uninsured-population/

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What’s at stake in Virginia if there is no expansion?

The Coverage Gap

190,000 Adults in VA5.2 Million Nationwide

Source: Kaiser Family Foundation, The Coverage Gap: Uninsured Poor Adults in States that Do No Expand Medicaid, October 2013

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On the flip side…

Federal deficit cannot be ignored Many doubt the feds’ ability to continue funding at the levels outlined in the ACA Fear that state may get “stuck” with the bill

Medicaid already consumes a large portion of the state budget

Goals of expansion may not be fully achieved if there isn’t sufficient access

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THE PATH TO EXPANSION IN VIRGINIA

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Path to Medicaid Expansion in Virginia

Budget adopted by the

2013 VA General

Assembly included

language allowing for

Medicaid expansion up

to 138% FPL, if and only

if certain reforms are

made to the existing

Medicaid program

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Oversight of Medicaid Expansion in Virginia Budget language created the Medicaid

Innovation and Reform Commission (MIRC) Must determine if the appropriate phases of reform

have been met If conditions have been met, then the Commission shall

approve Medicaid coverage expansion up to 133% FPL “…by July 1, 2014, or as soon as feasible thereafter”

Sunset Clause: If federal commitment drops below levels stated in

ACA, then DMAS will dis-enroll the newly covered individuals

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Marketplace Virginia Senate budget included language that called for a

“Private Option” in lieu of traditional Medicaid Expansion Based on similar proposals in Arkansas, Iowa, Michigan, and

Pennsylvania

Provides premium assistance to the expansion population who buy private plans on the Marketplace

Requires “skin in the game” contributions up to 5% of household income

Requires incentives for job search and work activities

Significantly reduces the authority of the MIRC

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2014 Virginia General Assembly Session January 8, 2014 to March 8, 2014

March 8: Unable to agree on Medicaid Expansion, the General Assembly adjourns without passing a budget

March 7: Governor McAuliffe announces that he will call a special session – to begin March 24 – to complete the budget and appoint judges

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2014 Virginia General Assembly Session June 9: GOP retakes the majority in the

Senate when Sen. Phillip P. Puckett (D-Russell) unexpectedly announced his immediate resignation Within four days the House and Senate passed a

budget without Medicaid expansion

Also included new language (the “Stanley Amendment”) meant to prevent the Governor from expanding via executive action

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2014 Virginia General Assembly Session Sept. 8: Governor McAuliffe announces a

comparatively modest plan to help close the coverage gap in Virginia Includes:

Expanded coverage for those with severe mental illnesses

Increased outreach and enrollment efforts for the Marketplace

FAMIS eligibility for the children of state employees Dental benefits for pregnant women in Medicaid Pursuing federal innovation grants

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2014 Virginia General Assembly Session September 18: General Assembly goes

BACK into session to debate…

…wait for it…

…that’s right…

Medicaid Expansion!

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2014 Virginia General Assembly Session How did that go?

House of Delegates voted 64 to 33 (largely along party lines) to kill a modified expansion proposal

Cost for one-day special session: $40,000 in per diems and mileage reimbursement

Source: House of Delegates Clerk’s Office

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ACCESS

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Health Care Workforce in Virginia

Current Workforce Physicians: 17,168

40% Primary Care

Registered Nurses: 78,711

By 2028 there will be a shortage of: 1,500 physicians 22,600 full-time RNs

Source: Virginia Department of Health Professions, Forecasting Nurse Supply and Demand in Virginia 2000-2028, January 2010Governor’s Health Reform Commission, Roadmap for Virginia’s Health, September 2007Joint Commission on Health Care, Update: Virginia Physician Workforce Shortage, September 17, 2013

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The Problem

The population is getting:

Older

Bigger

Sicker

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New Patients will have Complex Medical Needs Of the 26 million Americans who will likely gain

health insurance through the Health Insurance Marketplace by 2019: 37% will have gone more than two years without a

check-up 29% will have had no interaction with the healthcare

system in the year prior to obtaining coverage 13% report their health as poor or fair

(compared with only six percent of those currently privately insured)

Source: Trish, E, Damico, A., Claxton, G., Levitt, L., & Garfield, R. (2011). A profile of health insurance exchange enrollees. Retrieved from www.kff.org/healthreform/upload/8147.pdf

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Rising Demand is for Services

While some services can only be provided by physicians, some can be provided as effectively – or more effectively – by other clinicians and health professionals

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Rising Demand is for (Primary Care) Services 30% of U.S. physicians practice in primary care1

25% of current medical school graduates plan careers in primary care2

52% of all NPs were providing primary care in 20103

1. Goodson, J.D. (2010). Patient protection and affordable care act: Promise and peril for primary care. Annals of Internal Medicine, 152(11), 742-744.2. Schwartz, M.D. (2012). The US primary care workforce and graduate medical education policy. Journal of American Medical Association, 308, 2252-3.

3. Inglehart, J.K. (2012). Expanding the role of advanced nurse practitioners-risks and rewards. New England Journal of Medicine, 368 (20), 1935-1941 .

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Scope of Practice Laws

Only 17 states and DC provide full scope of practice for APRNs

The remaining 33 states

have a reduced or restricted scope of practice With the mandate of some

degree of physician involvement

Source: American Association of Nurse Practioners. Retrieved at http://www.aanp.org/images/documents/state-leg-reg/stateregulatorymap.pdf

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Scope of Practice in Virginia

The 2012 Virginia General Assembly session brought with it landmark legislation broadening the scope of practice for nurse practitioners

The law also expands from four to six the number of nurse practitioners that can partner with a physician

Collaborating physicians no longer have to be on site

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CONCLUSION

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Conclusion■ ACA attempts to extend health care coverage to the

majority of the uninsured in the US Medicaid expansion Health Insurance Marketplace plans Individual Mandate Employer Mandate

■ Virginia remains “undecided” on Medicaid expansion

■ A great deal is at stake for Virginia’s poorest residents and the health care safety net■ DSH funding reductions■ Coverage Gap

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QUESTIONS?

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Ross K. AiringtonHealth Policy Analyst

VCU Office of Health Innovation

[email protected]

Additional Questions?

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RESOURCES

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Need More Information? VCU Office of Health Innovation

http://medschool.vcu.edu/ohi HealthCare.gov

www.healthcare.gov ■ ENROLL Virginia!

■ www.enroll-virginia.com ■ Health Reform GPS

www.healthreformgps.org Kaiser Family Foundation

http://healthreform.kff.org Kaiser Health News

www.kaiserhealthnews.org America’s Essential Hospitals

www.naph.org American Hospital Association (AHA)

www.aha.org