A STRONG FOUNDATION: How Health Reform Protects Consumers,

Expands Access & Reigns In Cost

The Need for Reform

Billy Koehler, died March 7, 2009

Pre-Existing Condition = Denied Life-Saving Care

Lost his jobLost his insuranceLost his life

The Need for Reform

Costs of a Broken System in Pennsylvania7500 premature deaths each

year due to lack of health insurance

76.5% of the uninsured were from working families

27.3% went without insurance for all or part of 2007-08

69.3% were uninsured for 6 months or more during 2007-08

Health insurance premiums increased 4 times faster

than wages since 2000

“Hidden” tax of uncompensated care;

$900/family, $320/individual

Average family policy cost $24,000—nearly half the

median household income

Insurance company abuses: pre-existing

conditions, rescissions, claim denials, price discrimination

The Need for Reform

Connie, Early Retiree (in Health Care Field)

The Uninsured & Underinsured—Who Are They?

Retired early to take care of husband

Depleted savings paying for COBRA

Denied for pre-existing condition by former insurer

of 30+ years

Uninsured, praying to make it to her 65th birthday (April

2011)

How Reform Helps

The Uninsured

Pre-Existing Condition Insurance Plans

(PA Fair Care)

Medicaid Expansion

Extension of Dependent Coverage to Age 26

State Health Insurance Exchange

--Individuals

--Small Businesses (<100 FTE)

--Families

--Up to 133% of FPL--Childless Adults

How Reform Helps

The Insured No more denials

for pre-existing conditions

No more rescissions

No more price discrimination based on health status or gender

No more co-pays for preventive care

Medical loss ratio

No more lifetime caps or annual limits

New external review process to fight claim

denials New consumer pricing

tools to compare insurance plans

Caps out-of-pocket costs

How Reform Helps

Seniors & Early RetireesCurrently 154,000 early

retirees (ages 55-64) in PA

$5 billion for participating employers to reimburse claims

of early retirees 80% of the costs from $15,000 to

$90,000

Over 192,000 uninsured Pennsylvanians ages 50-64 in

2008

$250 rebate for seniors in “donut hole” gap in drug

coverage

No more co-pays for preventive care under Medicare & Medicare

Advantage plansCrackdown on waste, fraud

& abuse in Medicare

Medicare’s solvency extended an extra 12 years

How Reform Helps

Small Business73.6% of PA businesses are

small businessesOnly 48.7% are currently able to offer insurance to

employees

Who’s Eligible?

How Much Does It Cover?Up to 162,245 small

businesses in PA will qualify for new tax credits

These small businesses employ over 654,000

workers

Businesses with < 25 FTEwith average wages <

$50,000where employers cover 50% or more of premium cost for

employees2010-2013:

Up to 35% of the cost of providing coverage to

employeesAdditional 25% credit for tax-

exempt businesses2014 & beyond:

Credits rise to 50% of the cost of coverage and 35% for tax-

exempt businesses

Timeline for Implementation

2010Consumer pricing, transparency

tools at Healthcare.govNew state-level consumer

assistance programsSmall business tax credits

Rebates for seniors in ‘donut hole’ coverage gap

Free preventive care

No more denials for kids (<19) with pre-existing conditions

No more rescissionsRegulates, restricts annual

limitsNew external review process to

appeal coverage/claim decisions

Pre-Existing Condition Insurance Plans

Extended coverage for young adults

Expanded coverage for early retirees

2010Consumer pricing, transparency

tools at Healthcare.govNew state-level consumer

assistance programsSmall business tax creditsNo more denials for kids (<19)

with pre-existing conditionsNo more rescissions

Regulates, restricts annual limits

New external review process to appeal coverage/claim

decisions

Timeline for Implementation

Community Care Transitions Program to improve quality

outcomes for Medicare patients

2011

Prescription drug discounts for seniors in ‘donut hole’

Rebates from insurers not adhering to medical loss

ratioEnds overpayments to

Medicare Advantage companies

Free preventive care for seniors under Medicare

New Center for Medicare & Medicaid Innovation to test

quality care methods

Community First Choice Option to allow seniors to get

necessary care at home

Timeline for Implementation

2012

Incentives to hospitals for quality health outcomes;

hospital performance data on quality measures to be public Federal health programs

begin collecting and reporting racial, ethnic and

language data to identify and fight health disparities

Accountable Care Organizations

Voluntary long-term care insurance program: CLASS Act

Standardized billing, forms and electronic records to simplify

administrative work and improve quality of care

Timeline for Implementation

2013

New funding for state Medicaid programs to cover preventive

care

States will receive extra 2 years of funding for CHIP

Launches national pilot program for hospitals and

providers to improve coordination and quality care;

“bundling”

Brings Medicaid reimbursement rates to 100%

of Medicare; fully funded by federal government

Timeline for Implementation

Members of Congress and staff must get insurance

through their state’s exchange

2014No more denials for pre-existing

conditionsFor individuals and small

businesses (<100 FTE)Exchange will offer choice of

health plans that meet quality and affordability standards

No more gender or health status-based price

discrimination

Increased small business tax credits

New State Insurance Exchange

Medicaid expansion to 133% FPL

Income-based credits for individuals and families between

133-400% FPL

Will benefit over 900,000 Pennsylvanians

Timeline for Implementation

Out-of-Pocket Costs Capped for Individuals in Insurance Exchange

How Reform Is Paid For

Medicare Payroll Tax for Wealthy AmericansStarts in 2013, will generate $210B over 10 years (CBO)

Crackdown on Waste, Fraud & Abuse in Medicare BillingStarts in 2013, will generate $1B over 10 years (CBO)

Fees on the Medical IndustryStarts in 2013, will generate $107B over 10 years (CBO)

Increased Penalties for Non-Health Related HSA WithdrawalsStarts in 2010, will generate $29B over 10 years (CBO)

How Reform Is Paid ForNo Free Riders: Fines for Not Having/Offering Health InsuranceStarts in 2014, will generate $70B over 10 years (CBO)

Everyone must have health insurance by 2014. Those who choose not to purchase insurance will pay a penalty of:

$95 or 1% of income (whichever is greater) in 2014$325 or 2% of income in 2015

$695 or 2.5% in 2016

Employers with > 50 employees that do not offer coverage and have employees who would qualify for federal subsidies in the insurance exchange will be fined $2,000 per employee.

--Individuals can make up to $42,000/year --The first 50 employees exempt

How Reform Is Paid For

Tanning TaxStarts in 2010, will generate $2.7B over 10 years (CBO)Excise Tax on High-Cost Insurance PlansStarts in 2018, will generate $200B over 10 years (CBO)

Paying for Health Reform, 2010-2019 (in billions of dollars)

Gross Cost of Expanding Health Coverage Subsidies to participants in health insurance exchanges 464

Medicaid expansion 434 Small-employer tax credits 40

Subtotal 938 Less: Medicare, Medicaid, and Other Program Savings Curb Medicare Advantage overpayments 136 Adjust payments to Medicare providers 196 Reduce Medicaid drug costs 38 Reduce subsidies for hospitals serving the uninsured 36

Increase Medicare premiums for the affluent 36 Other outlay changes (net) -1

Subtotal 441 Less: Additional Revenues Medicare tax on high-income people 210 Health industry fees 107 Penalty payments by employers and uninsured individuals 69

Excise tax on high-cost insurance plans 32 Other revenue changes 152

Subtotal 570 Net Deficit Effect (excluding CLASS Act) -73

Paying for Health Reform, 2010-2019Chart is in billions of dollars

Building on the Strong Foundation

Education

Coalition-Building

Advocacy

State ImplementationGovernor’s Health Reform Advisory Committee

Consumer Voices & Participation

Building support among key constituencies

Building a strong network to keep implementation moving forward with consumers and working families in mind

--Exchange Issues--Access Issues--Quality Issues

Protecting our historic victory and moving it forward in Pennsylvania

Erin GillPennsylvania Health Access Network

egill@pahealthaccess.org(412) 512-9225