Upload
radwan
View
26
Download
0
Embed Size (px)
DESCRIPTION
International Association of Black Actuaries | August 2010. Health Care Reform Happened …Now What?. Aspects of Health Care Reform. Paying for Expanded Coverage. Expanding/Improving Coverage. Administrative Simplification. Medicare/Medicaid Payment Changes. - PowerPoint PPT Presentation
Citation preview
To protect the confidential and proprietary information included in this material, it may not be disclosed or provided to any third parties without the approval of Hewitt Associates LLC.
Health Care Reform Happened…Now What?
International Association of Black Actuaries | August 2010
207517DG02.ppt/331-J8-84250 04/2010
Aspects of Health Care Reform
Health InsuranceExchanges with Reformed Rules
Expanding/Improving Coverage Paying for Expanded Coverage
Medicaid and Affordability
Credits
EmployerResponsibility
IndividualResponsibility
Medicare/MedicaidPayment Changes
AdministrativeSimplification
High-Cost EmployerCoverage Taxation
IncreaseOther Taxes
= direct impact to employers
= indirect impact to employers
= direct and indirect impact to employers
307517DG02.ppt/331-J8-84250 04/2010
Timing of Key Reform Provisions
2012 2013 2014 and beyond2011
Early Retiree Reinsurance (2010)
Lifetime Limits Prohibited
Extension of Dependent Coverage to Age 26
Preexisting Conditions Exclusions Prohibited for Children under 19
Only Reasonable Annual Limits Permitted
Effective Appeals Process
Over-the-Counter Medicines Not Reimbursable Under FSA
HSA Excise Tax Increase
Employer Reporting of Health Coverage on Form W-2
Phase-out of Part D Donut Hole
Medicare Advantage payments lower
Coverage for Preventive Health Services*
105(h) Non-discrimination rules apply to insured plans*
Employer Distribution of Uniform Summary of Benefits to Participants
Quality of Care Report
Limit of Health Care FSA Contributions
Notice to Inform Employees of Coverage Options in Exchange
Automatic Enrollment for 2014**
Medicare Tax on High-Income Individuals
Medicare Part D Subsidy No Longer Tax-Free
Employer Responsibility to Provide Minimum Health Coverage
Free Choice Vouchers
Individual Responsibility to Purchase Insurance or Pay Penalty
State Insurance Exchanges
Preexisting Condition Exclusions Prohibited
Annual Limits Prohibited
Automatic Enrollment**
Limit of 90-Day Waiting Period for Coverage in Plan
Increased Rewards Cap for in Wellness Participation
Employer Reporting of Health Insurance Information to Participants and the Government
Excise Tax on High-Cost Coverage (2018)
*Grandfathered**Effective date unclear
407517DG02.ppt/331-J8-84250 04/2010
The Price Tag
CBO Estimate of Combined H.R. 3590 and H.R. 4872, 2010–2019
MedicareAdvantage Cuts
Reduction in Medicare Growth Rate
Excise Taxes
System Savings
$517 billion
New Revenue
$564 billion
$32 billion
Other Net Savings
Total Cost of Expanded Coverage: $938 BillionNet Budget Impact: $143 billion reduction to the deficit (without “doc fix”)
Total Cost of Expanded Coverage: $938 BillionNet Budget Impact: $143 billion reduction to the deficit (without “doc fix”)
$65billion
PenaltyPaymentsCLASS
Act
$136 billion $196 billion $115billion
$70billion
$107billion
Industry Fees
$210 billion
Medicare Taxes
$150billion
Other Net Revenues
507517DG02.ppt/331-J8-84250 04/2010
Potential Impact on Employers
Design Must create design structure that meets minimum coverage criteria
Must change design to meet expanded coverage requirements
Short-Term/ImmediateShort-Term/Immediate Long-TermLong-Term
Administration/Communication
Need to develop appropriate communication, reporting, and administrative infrastructure
Will continue to increase given absence of true delivery system reforms
Likely to increase depending on organization’s characteristics Active Plan Costs
FAS Liability Immediate and long-term cost impact
Strategy Should address broader health and productivity as well as benefit philosophy May be more compliance focused
607517DG02.ppt/331-J8-84250 04/2010
Compliance – What am I required to change?
707517DG02.ppt/331-J8-84250 04/2010
Plan Design Requirements
Increased Benefits for Participants
Lifetime limits must be removed
“Unreasonable” annual limits not permitted
– Annual limits will be phased out by 2014
Preventive benefits must be covered at 100%
Children must remain eligible for the plan until they turn age 26
Financial barriers to out-of-network emergency care are limited
Barriers to PCPs, pediatricians and OB/GYNs are not permitted
Deductibles and out of pocket maximums will be limited beginning in 2014
Plans must meet 60% minimum actuarial value beginning in 2014
807517DG02.ppt/331-J8-84250 04/2010
Other Requirements
Increased Protection for Individuals
Minimum loss ratios for insured plans
Prohibition of rescissions in most cases
Guaranteed issue and renewal rules
Waiting periods limited to 90 days
No discrimination based on health status
Limited age and tobacco rating
Expanded communication and documentation requirements
Expanded appeals policies and procedures
Affordability and nondiscrimination rules for employer-sponsored plans
Excise tax on high cost employer-sponsored insurance
907517DG02.ppt/331-J8-84250 04/2010
Compliance Strategy
Compliance will increase the cost of health insurance
– …but does it have to?
Employers and insurance companies will be searching for ways to mitigate cost increases and limit new risks
– Grandfathering delays some new costs, but limits flexibility
– Losing grandfathering forces bigger strategic decisions…and vice versa
Step out of the silo
– Long term strategic thinking must guide all decisions
– Opportunities abound and can influence strategy as much as risks
> New retiree programs and funding
> Changing market dynamics
1007517DG02.ppt/331-J8-84250 04/2010
Something about opportunities?
Overview
ERRP
New Medicare Part D funding
New competitive landscape
Changing market dynamics
Changing employer perceptions
Changing public expectations
1107517DG02.ppt/331-J8-84250 04/2010
Looking Ahead – What really needs to change?
1207517DG02.ppt/331-J8-84250 04/2010
Health Care Reform’s Impact
New 2020 Realities
Exchanges
Federal Subsidies
Insurance Reform
Employer Responsibility
Individual Mandate
Delivery ReformEmployers
Refine and redefine commitments
Regulation and taxationGovernment
Insurance Industry
Competition based on volume and innovation
IndividualsIncreased
responsibility with the power of knowledge
The employer-sponsored system will endure…the federal budget depends on it
1307517DG02.ppt/331-J8-84250 04/2010
Five Employer Realities by 2015
1. Employer health care cost will rise over 60% on a “stand still” basis; employer actions will mitigate this increase to 40%
2. Very few, if any, large employers will exit health care benefits, but the market trend to move from DB to DC will have begun
3. Plan designs will be leaner and meaner
4. The explosion of technology-enabled information will (finally) trickle down to our world, but will not lower employer cost
5. Employer-sponsored retiree medical benefits will cease to exist, except for collectively bargained and some grandfathered plans
1407517DG02.ppt/331-J8-84250 04/2010
Employer costs will rise 60% on a “stand still” basis
Downward Pressures
↓ Plan design value
↓ Discretionary purchasing
↓ Uncompensated care
↓ Brand drug patent expirations
↓ Focused care management programs
Annual gross trend of 10% per year; net trend of 7% per year
Upward Pressures
Demographics
Obesity-related chronic illness—including children
New therapies
Cost shift from Medicare
Industry fee pass-throughs
New coverage provisions
Individual mandate
These rates of increase are unsustainable; there needs to be a “new normal”
1507517DG02.ppt/331-J8-84250 04/2010
Consumers
Government Providers
Employers
What Needs to Change
Reset and Prioritize
Liability, Payment, and
Delivery System
Reform (via Medicare)
Embrace IT and P4P
Pay Attention and Take Action