Building the Future of Health Care
Roberta Rifkin, VP of Government Affairs
December 14, 2012
Health Care in America
Not available to everyone
2
Expensive Inefficient
The Need for Reform
• 50 million uninsured• Costly
– Highest expenditures per person
• $7960 USA--$5352 Norway (next highest)
• Paying for quantity, not quality
• Unsustainable– 2012 $21,000– 2021 $42,000
3
Under Construction
• The Patient Protection and Affordable Care Act (ACA) was signed into law on March 23, 2010
• ACA is a starting point to achieve health reform
A Better Patient Experience
Improved Community Health
Lower Costs
4
5
Three Core Areas of Construction
Coverage– Exchanges– Medicaid expansion– Market reforms
Affordability– Individuals: premium subsidy, cost
sharing– States: Medicaid expansion
reimbursement– Small Businesses: tax credit
Quality– Community-driven solutions
Construction Timeline
• Implementing since 2010– Market reforms– Funding innovation– Transition to new
marketplace
• 2014 - Pivotal Year– New Marketplace– Individual Mandate– Employer responsibility
6
The Construction Team
Federal
State
Community
7
Federal Construction Team
• Leads planning and implementation; issues regulations and guidance
• Monitors state and community activities
• Keeps construction moving forward
8
The Blueprint
Key Federal Plans
• Market Reforms
• Essential Health Benefits
• Coverage Responsibility
• Exchanges
• Taxes and Penalties
• Reporting Requirements
9
Federal: Market Reforms
Already Implemented•Dependent Coverage to Age 26•No Rescissions•Phasing Out Annual Limits•$0 Copay for Prevention•Closing the “Donut Hole”•No Pre-Existing Condition Exclusion 18 and under
Effective in 2014•No Pre-Existing Condition Exclusion for 19 and older
•Cap Raised on Wellness Program Rewards to 30%
Federal: Responsibilities for Coverage after 1/1/14
Individuals
• Penalty for none or not having minimum value coverage (60% AV)
• Some exemptions apply
Large Employers (>50)
• Penalty for no coverage offered
• Penalty if coverage is unaffordable or inadequate
Small Employers (<50)
•No penalty for not offering coverage
Federal: Health Insurance Exchange
12
• Web-based marketplace to buy health coverage beginning in 2014 for: Individuals Small employers (<50)
• States have flexibility to establish their own exchange or participate in the federally facilitated exchange.
• The Exchange will be the only means for individuals to access federal subsidies that will lower consumer premiums and provide cost sharing.
• Small Employers who purchase coverage in the Exchange may be eligible for tax credits
Federal: Essential Health Benefits (EHBs)
• EHBs define the scope of coverage for small group and individual plans beginning in 2014.
• States can select a benchmark plan as the standard for EHBs or default to most populated small group plan
– New York has chosen the Oxford EPO plan
13
14
Federal: Products in the Exchange
• Plans can be offered by Qualified Health Plans (QHPs), Multi-state Plans, and CO-OPs.
• Products sold in the Exchange must meet the following:
Bronze = 60% Actuarial Value
Silver = 70% Actuarial Value
Gold = 80% Actuarial Value
Platinum = 90% Actuarial Value
A catastrophic plan will also be available
Federal: Exchange for Small Employers (SHOP)
• Small Business Health Options Program (SHOP) will have rolling enrollment
• State decides if employers will choose plan or precious metal level
• Premiums aggregated for SHOP
15
Federal: Exchange for Individuals
• Initial Open Enrollment:
– Begins October 1, 2013
– Ends March 31, 2014
16
Federal: Premium Subsidies and Cost Sharing
Premium Subsidies
• Subsidy is advance payment of premium
Cost Sharing
• Will reduce out of pocket expenses (deductibles, co-pays, etc)
FPL Income: Family of 4 Income: IndividualMax Premium as
% of IncomeCost Share Reduction
Maximum Actuarial Value*
100% $23,050.00 $11,170.00 2%
133% $30,656.50 $14,856.10 4% 66% 94%
150% $34,575.00 $16,755.00 6.30% 66% 87%
200% $46,100.00 $22,340.00 8.05% 50% 73%
250% $57,625.00 $27,925.00 9.50% 0 70%
300% $69,150.00 $33,510.00 9.50% 0 70%
400% $92,200.00 $44,680.00 9.50% 0 70%
* Maximum Actuarial Value reflects a Silver Plan
Enrollment Scenario: Brian
Age: 35
Single
Job: Waiter
Income: $12,500
Access: Navigator
EligibilityDetermination: Medicaid
Choices: Medicaid Plans
Brian
Enrollment Scenario: Maria and Steve
Ages: 27, 28
Married
Jobs:
Steve- Writer
Maria-
Day Care (PT)
Income: $31,000
Access: Web Portal
Eligibility: Subsidy: Premium tax credit/cost sharing
Choices:•QHP – bronze, silver gold, platinum•Multi-state plan option•CO-OP
Maria and Steve
Enrollment Scenario: Carol
Age: 55
Divorced
Job:
Consultant for Energy Companies
Income: $100,000
Access: Toll-free Telephone Line
Eligibility: No subsidy
Choices:•QHPs •Plans outside the Exchange
Carol
Enrollment Scenario: Audrey
Age: 42
Married, 1 child
Job:
Manages a shoe store with 20 employees
Income: $36,000
Access: Web Portal
Eligibility: Employer Contribution
Choices:•Employer selects a metal level of coverage•Audrey can buy up or down
Audrey
Federal: Employer Options for 2014
Small Group Options in 2014Purchase coverage as done todayUse the New York State SHOPDrop coverage: employees can use the state ExchangeUse a private exchange or IH website
Large Group Options in 2014Provide coverage as done todayDrop coverage: employees can use the state ExchangeUse a private exchange or IH websiteGo self-funded
Federal: Taxes and Penalties Summary
2013•Medicare tax income adjustment•Eliminates employer tax deduction for Medicare Part D• Increased threshold
for medical expense deduction
•FSA Cap•Medical Device and Pharmaceutical Taxes
2014• Employer
Responsibility• Individual Mandate• Health Insurer Tax
2018• Cadillac Tax
Federal: Taxes and Penalties
• Effective in 2013– Medicare taxes for earners
making more than $200,000 single or $250,000 joint
– Eliminates employer tax deduction for Medicare Part D drug subsidy payments
– Increased threshold for medical expense deduction
• 10% of AGI for unreimbursed expenses, waived for 65 and older
Federal: Taxes and Penalties
• FSA Cap
– $2500
• Medical Device Tax
• Pharmaceutical Tax
• Health Insurer Tax
• Cadillac Tax
– Insurers taxed for employer-sponsored health plans aggregate expenses that exceed $10,200 for individual coverage and $27,500 for family coverage
Federal: Reporting Requirements
• Employer Premium Contribution on W2 forms– Reporting only, non-taxable– For employers with >250 forms
• Summary of Benefits and Coverage (SBC)– Insurers use Federal template for
benefit summary– Employers will distribute
• Employers Report on Coverage Offered– Reporting to HHS/Treasury on
coverage offered– Informing employees about
Exchange options
Possible Delays: The Future of ACA
• Implement– Obama Administration issuing regulations
and distributing funding
• Repeal– House has voted to repeal over 30 times– Could repeal specific provisions
• Defund– Provisions relying on funding from
appropriations process may be underfunded or not funded at all
• could include IRS appropriations to implement tax credits in Exchange
Possible Delays: The Fiscal Cliff
• The “Fiscal Cliff”
– Expiring December 31st
• Bush Tax Cuts
– Tax breaks for high earners
– Payroll tax reductions
• Doc Fix (Sustainable Growth Rate Formula adjustments)
– Could reduce Medicare provider payments by ~27% on January 1
• Avoiding sequestration from Budget Control Act of 2011
– If “fiscal cliff” is not averted, CBO predicts a 4% drop in GDP and almost certain recession
Possible Delays: Sequestration
• Congress directed to cut $1.2 trillion over 10 years, or sequestration is automatic– $109 billion in cuts for 2013
• Defense budget cut 50%
• 50% cut to nondefense funds– Health cuts: Will impact some
appropriations for ACA implementation
– Medicare cuts: Capped at 2%– Medicaid and CHIP exempt
State Construction Team
30
Use Federal Blueprint•Flexible•Floor or ceiling
New York’s Construction Plan
• Medicaid Redesign
• Exchange Establishment
31
New York: Medicaid Redesign Team
• Medicaid Redesign Team created by Governor in 2010
• Some changes to Medicaid include:
– Moving all beneficiaries to managed care by 2016
– Centralizing administration
– Addressing benefits, housing, cultural issues
32
New York State: Exchange Blueprint
• New York has applied to be a state-run Exchange
• Active participation in plan selection for the Exchange
• Reduce total plan offerings in the state
• Offer a mix of standardized & insurer designed products
33
Community – Spheres of Influence
• You can make a difference
• Recognize your role• Small changes matter• Engage in your spheres
of influence– Home– Work– Physician’s Office– Neighborhood
34
Find Your Place at the Table
Reducing the Mortgage on our Future
35
• The ACA is a starting point to help us reduce our “mortgage”
• If we focus on quality, lower costs will follow
How Do We Get There?
1.Revitalize & grow primary care
2.Payment reform
3.Enhance health information
4.Culture of health
5.Greater alignment of health system
36
5 Key Actions
Buffalo: Our Healthy Future
Our community can achieve this!