Introduction to Health Care Reform Revised

8/7/2019 Introduction to Health Care Reform Revised

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Introduction to Health CareIntroduction to Health CareReformReform

With help from Cynthia Tsang,With help from Cynthia Tsang,Pharm.D.Pharm.D.

October, 2010October, 2010


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http://www.healthreform.gov/reports/inahttp://www.healthreform.gov/reports/inaction/ction/ 22

Need for Health Care ReformNeed for Health Care Reform

Escalating health care costsEscalating health care costs The United States spent approximately $2.2 trillion onThe United States spent approximately $2.2 trillion on

health care in 2007, or $7,421 per personhealth care in 2007, or $7,421 per person --nearlynearlytwice the average of other developed nations (16.2%twice the average of other developed nations (16.2%of GDP).of GDP).

Health insurance premiums have more than doubledHealth insurance premiums have more than doubledin the last 9 years, a rate 3 times faster thanin the last 9 years, a rate 3 times faster thancumulative wage increases.cumulative wage increases.

Families, businesses, and the state and federalFamilies, businesses, and the state and federalgovernments are struggling to pay for healthgovernments are struggling to pay for healthcare as costs continue to rise and the economycare as costs continue to rise and the economycontinues to lag.continues to lag.


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Diminishing access to careDiminishing access to care Millions do not have health coverage, or haveMillions do not have health coverage, or have

inadequate coverage.inadequate coverage.

More than 80% of the uninsured are in workingMore than 80% of the uninsured are in workingfamilies.families.

An estimated 87 million people (1 in 3 Americans)An estimated 87 million people (1 in 3 Americans)under the age of 65 were uninsured at some point inunder the age of 65 were uninsured at some point in2007 and 2008.2007 and 2008.

Even people with insurance are forgoing neededEven people with insurance are forgoing neededmedical care, including prescription medicationsmedical care, including prescription medicationsand doctor visits due to inability to pay forand doctor visits due to inability to pay forcopayments/coinsurance and deductibles.copayments/coinsurance and deductibles.


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Persistent gaps in quality of carePersistent gaps in quality of care Failure to:Failure to:

Follow treatment guidelinesFollow treatment guidelines

Modify patient behaviorsModify patient behaviorsImprove patient safety/ reduce medication errorsImprove patient safety/ reduce medication errors

Reduce disparities in care among differentReduce disparities in care among differentsubpopulationssubpopulations

Despite vast amounts of resources invested, theDespite vast amounts of resources invested, theU.S. health care system has not reached theU.S. health care system has not reached thegoal of highgoal of high--quality care.quality care.


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New Health Care Reform LawNew Health Care Reform Law

Patient Protection and Affordable Care ActPatient Protection and Affordable Care Act

President Obama signed the comprehensivePresident Obama signed the comprehensivehealth reform bill into law on March 23, 2010.health reform bill into law on March 23, 2010.

GoalGoal

Expand coverageExpand coverage

Control health care costsControl health care costs

Improve health care delivery systemImprove health care delivery system


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Kaiser ResourcesKaiser Resources

TheThe FAQsFAQs (Frequently Asked Questions) section of Kaisers new(Frequently Asked Questions) section of Kaisers newHealth Reform SourceHealth Reform Source provides concise answers to commonprovides concise answers to commonquestions about the health reform law. You can search for yourquestions about the health reform law. You can search for yourquestion or submit a new question if yours is not addressed.question or submit a new question if yours is not addressed.

Additional questions addressing the affordability of health insurance,Additional questions addressing the affordability of health insurance,

how programs like Medicare and Medicaid will be financed underhow programs like Medicare and Medicaid will be financed underhealth reform and others are addressed in a series ofhealth reform and others are addressed in a series ofVideoVideoExplainerExplainerclips featuring Foundation experts answering specificclips featuring Foundation experts answering specificquestions about the law on a variety of health policy topics.questions about the law on a variety of health policy topics.KaisersKaisers Health Reform SourceHealth Reform Source, an online gateway providing easy, an online gateway providing easyaccess to new and comprehensive resources on the health reformaccess to new and comprehensive resources on the health reformlaw, provides these and other new features and tools including anlaw, provides these and other new features and tools including an

interactive timeline showing when health reform provisions takeinteractive timeline showing when health reform provisions takeeffect, all the latest polling data, links to other information resources,effect, all the latest polling data, links to other information resources,and the latest health reform headlines from Kaiser Health News. Weand the latest health reform headlines from Kaiser Health News. Weencourage organizations and individuals to link to these resources.encourage organizations and individuals to link to these resources.


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20102010--20142014

Insurance companies pay rebates if theirInsurance companies pay rebates if theiradministrative costs or profits are too highadministrative costs or profits are too high

Some services must be provided for freeSome services must be provided for freeby private insurance and Medicareby private insurance and Medicare

Improvement in Part D coverageImprovement in Part D coverage

Children can stay on parents policy untilChildren can stay on parents policy until

age 26age 26Small businesses will get tax breaks toSmall businesses will get tax breaks tohelp buy insurance for workershelp buy insurance for workers


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20102010--2014 (cont.)2014 (cont.)

Lifetime limits not allowedLifetime limits not allowed

Cant turn kids down for preCant turn kids down for pre--existingexisting

conditionsconditionsHighHigh--risk pool subsidized by governmentrisk pool subsidized by governmentfor the unfor the un--insurableinsurable


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2014 Onward2014 Onward

Medicaid expanded to cover more poorMedicaid expanded to cover more poor

Health insurance tax credit if you lose jobHealth insurance tax credit if you lose job

or your employer doesnt offer coverageor your employer doesnt offer coverageIf you cant get coverage at work, you canIf you cant get coverage at work, you cango to an exchangego to an exchange

Insurers cant turn you down or charge youInsurers cant turn you down or charge youmore if youre sickmore if youre sick

You, therefore, must buy insuranceYou, therefore, must buy insurance


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20102010--2014: Some Details2014: Some Details

Medical loss ratioMedical loss ratio

Health plans must report where dollars areHealth plans must report where dollars arespent: clinical services, administrativespent: clinical services, administrativeservices, quality, and other costsservices, quality, and other costs

Provide rebates to consumersProvide rebates to consumers


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Improve coverage of prevention benefitsImprove coverage of prevention benefits Beginning 2011, Medicare will cover a freeBeginning 2011, Medicare will cover a free

annual comprehensive wellness visit andannual comprehensive wellness visit and

personalized prevention plan.personalized prevention plan. No coinsurance or deductibles will be chargedNo coinsurance or deductibles will be charged

in traditional Medicare for preventive servicesin traditional Medicare for preventive servicesrated A or B by the U.S. Preventive Servicesrated A or B by the U.S. Preventive Services

Task Force.Task Force.Medicare to reduce payments to hospitalsMedicare to reduce payments to hospitalsfor preventable readmissions and hospitalfor preventable readmissions and hospital--acquired conditionsacquired conditions


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The catastrophic coverage threshold will be reducedThe catastrophic coverage threshold will be reducedbetween 2014 and 2019.between 2014 and 2019.

20102010 Part D enrollees in the coverage gap will receive a $250 rebatePart D enrollees in the coverage gap will receive a $250 rebate

20112011 Enrollees in the gap will receive a 50% discount on brandEnrollees in the gap will receive a 50% discount on brand--

name drugs, provided by the pharmaceutical industry.name drugs, provided by the pharmaceutical industry.PhasePhase--in Medicare coverage of generics in the coverage gapin Medicare coverage of generics in the coverage gap

201201 PhasePhase--in Medicare coverage of brandin Medicare coverage of brand--name drugsname drugs

20202020 Enrollees will be responsible for 25% of the cost of both brandEnrollees will be responsible for 25% of the cost of both brandand generic drugs in the gap.and generic drugs in the gap.

Closing the Part D Donut Hole or Coverage GapClosing the Part D Donut Hole or Coverage Gap


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Temporary national highTemporary national high--risk poolrisk pool

Provides coverage (subsidized premiums) toProvides coverage (subsidized premiums) toindividuals with preindividuals with pre--existing medicalexisting medicalconditionsconditions

Eligibility: U.S. citizens/legal immigrants, preEligibility: U.S. citizens/legal immigrants, pre--existing condition, uninsured for 6 monthsexisting condition, uninsured for 6 months


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2014 Onward: Some Details2014 Onward: Some Details

Expansion of Medicaid coverageExpansion of Medicaid coverage Expand toExpand to 133% of federal poverty level133% of federal poverty level

Include nonInclude non--Medicare eligible adults under 65Medicare eligible adults under 65

years of age without dependent childrenyears of age without dependent children Reduce stateReduce state--byby--state variation in eligibilitystate variation in eligibility

Eligibles are guaranteed coverage that meetsEligibles are guaranteed coverage that meetsthe essential health benefits available throughthe essential health benefits available throughthe Exchanges.the Exchanges.

FinancingFinancing States will receive 100% federal funding for 2014States will receive 100% federal funding for 2014

through 2016through 2016


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Premium credits to help individuals and familiesPremium credits to help individuals and familiespurchase insurance through Exchangespurchase insurance through Exchanges

Available for U.S. citizens and legal immigrantsAvailable for U.S. citizens and legal immigrants

Income between 133% and 400% of the federalIncome between 133% and 400% of the federalpoverty levelpoverty level

Employees who are offered coverage by anEmployees who are offered coverage by an

employer are not eligible.employer are not eligible. Exceptions: If the employer plan does not have anExceptions: If the employer plan does not have an

actuarial value of at least 60% or if the employeeactuarial value of at least 60% or if the employeeshare of the premium exceeds 9.5% of incomeshare of the premium exceeds 9.5% of income


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Employers Must offer health coverageEmployers Must offer health coverage

Effective January 1Effective January 1stst 2014, employers with2014, employers with

50 employees that do not offer coverage 50 employees that do not offer coverageand have at least 1 fulland have at least 1 full--time employee whotime employee whoreceives a premium tax credit will pay areceives a premium tax credit will pay afee of $2,000 per fullfee of $2,000 per full--time employee,time employee,

excluding the first 30 employees.excluding the first 30 employees.

Employers with < 50 employees areEmployers with < 50 employees areexempt from this penalty.exempt from this penalty.


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Employers that offer coverage to theirEmployers that offer coverage to theiremployees must offer aemployees must offer a free choicefree choicevouchervoucherfor certain employees.for certain employees.

Free choice voucherFree choice voucher Income less than 400% federal poverty levelIncome less than 400% federal poverty level

(FPL) whose share of premium exceeds 8%(FPL) whose share of premium exceeds 8%but less than 9.8% of their income and whobut less than 9.8% of their income and whochooses to enroll in a plan in the Exchange.chooses to enroll in a plan in the Exchange.

Valid for the same amount the employer wouldValid for the same amount the employer wouldhave provided for coverage to the employeehave provided for coverage to the employeeunder the employers plan.under the employers plan.


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What are What are ExchangesExchanges ? ?

AA marketplacemarketplace where people withoutwhere people withoutcoverage through their employer (orcoverage through their employer (oremployees who qualify for a free choiceemployees who qualify for a free choicevoucher) and small businesses can shopvoucher) and small businesses can shopforforhealth insurancehealth insurance atat competitive ratescompetitive rates..


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ExchangesExchanges

State run; administered by a governmentState run; administered by a governmentagency or nonagency or non--profit organizationprofit organization

Eligibility is limited to U.S. citizens andEligibility is limited to U.S. citizens andlegal immigrants who are not incarcerated.legal immigrants who are not incarcerated.


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Exchanges: RequirementsExchanges: Requirements

Must maintain a call center for customerMust maintain a call center for customerserviceservice

Establish enrollment procedures and eligibilityEstablish enrollment procedures and eligibilitydetermination for tax creditsdetermination for tax credits

Must develop a single form for applyingMust develop a single form for applyingonline, in person, by mail, or by phone.online, in person, by mail, or by phone.

Must submit financial reports to theMust submit financial reports to theSecretary of Health and Human ServicesSecretary of Health and Human Servicesand comply with oversightand comply with oversight


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Plans Participating in the ExchangePlans Participating in the Exchange

Must meet marketing requirements, haveMust meet marketing requirements, haveadequate provider networks, use qualityadequate provider networks, use qualitymeasures, be accreditedmeasures, be accredited

Must comply with reporting requirementsMust comply with reporting requirements

Must comply with rating rules:Must comply with rating rules:

Based on ageBased on age (3 age groups),(3 age groups), premium ratingpremium ratingarea, family composition, and tobacco usearea, family composition, and tobacco use


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ExchangesExchanges

Public Plan OptionPublic Plan Option Office of Personnel Management mustOffice of Personnel Management must

contract with insurers to offer at least 2 multicontract with insurers to offer at least 2 multi--

state plans in each Exchangestate plans in each Exchange1 must be offered by a non1 must be offered by a non--profit entityprofit entity

1 must1 must notnot provide coverage for abortions beyondprovide coverage for abortions beyondthose permitted by federal lawthose permitted by federal law

Basic Health PlanBasic Health Plan States are allowed to create a Basic HealthStates are allowed to create a Basic Health

Plan for uninsured individuals with incomesPlan for uninsured individuals with incomesbetween 133% and 200% FPL.between 133% and 200% FPL.


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ExchangesExchanges

Consumer Operated and Oriented PlanConsumer Operated and Oriented Plan(CO(CO--OP)OP)

Support creation of nonSupport creation of non--profit, memberprofit, member--runrunhealth insurance companies in all 50 stateshealth insurance companies in all 50 statesand DCand DC

Must be consumer focused and profits mustMust be consumer focused and profits must

be used toward lowering premiums and/orbe used toward lowering premiums and/orimprovement of benefits or quality of healthimprovement of benefits or quality of healthcare delivered to memberscare delivered to members

$6 billion budgeted for this program$6 billion budgeted for this program


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Essential Benefits PackageEssential Benefits Package

Minimum benchmark of comprehensive set ofMinimum benchmark of comprehensive set ofhealth care serviceshealth care servicesCovers at least 60% of the actuarial value of theCovers at least 60% of the actuarial value of thecovered benefitscovered benefitsLimits annual cost sharing to the current lawLimits annual cost sharing to the current lawHSA limits ($5,950/individual andHSA limits ($5,950/individual and$11,900/family)$11,900/family)Not more extensive than the typical employerNot more extensive than the typical employer

planplanAll plans offered through the Exchanges mustAll plans offered through the Exchanges mustoffer at least the essential benefits package.offer at least the essential benefits package.

Abortion coverage is prohibited from being aAbortion coverage is prohibited from being a

part of the essential benefits package.part of the essential benefits package.


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Exchanges: Other ProvisionsExchanges: Other Provisions

AbortionAbortion

States may prohibit plans in the ExchangeStates may prohibit plans in the Exchangefrom providing abortion coveragefrom providing abortion coverage

Plans that allow abortion must createPlans that allow abortion must createallocation accounts for segregating premiumallocation accounts for segregating premiumpayments so that no federal premium or costpayments so that no federal premium or cost--

sharing are used to pay for abortion coverage.sharing are used to pay for abortion coverage.


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Cost Sharing SubsidiesCost Sharing Subsidies

Reduce the costReduce the cost--sharing amounts and annualsharing amounts and annualcostcost--sharing limitssharing limits

Available for U.S. citizens and legal immigrantsAvailable for U.S. citizens and legal immigrants

Income between 100% and 400% of the federalIncome between 100% and 400% of the federalpoverty levelpoverty level

Premium credits and cost sharing subsidiesPremium credits and cost sharing subsidiescannot be used toward the purchase of abortioncannot be used toward the purchase of abortioncoverage.coverage.


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Private Insurance ChangesPrivate Insurance Changes

Premium rate reviewPremium rate review

Federal grant supportedFederal grant supported

States to review plan premium increasesStates to review plan premium increases States can exclude plans from the ExchangeStates can exclude plans from the Exchangefor unjustified increasesfor unjustified increases

Health plans must justify premium increasesHealth plans must justify premium increases


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Medication Therapy ManagementMedication Therapy Management(MTM) Services(MTM) Services

Federal grants to promote pharmacistFederal grants to promote pharmacist--administered MTM services to nonadministered MTM services to non--

Medicare Part D populationMedicare Part D populationPromote new delivery care modelsPromote new delivery care modelsthat will improve patient outcomesthat will improve patient outcomes

through teamthrough team--based collaborationbased collaboration


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Medication Therapy ManagementMedication Therapy Management(MTM) Services(MTM) Services

MTM services shall include:MTM services shall include: Performing or obtaining assessments of healthPerforming or obtaining assessments of health

statusstatus

Formulating a medication treatment planFormulating a medication treatment plan Selecting, initiating, modifying, recommendingSelecting, initiating, modifying, recommending

change to, or administering medicationchange to, or administering medication

Monitoring or ordering labsMonitoring or ordering labs

Performing a comprehensive medication reviewPerforming a comprehensive medication review Coordinating and integrating MTM within theCoordinating and integrating MTM within the

broader health care servicesbroader health care services


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Insurance RequirementInsurance Requirement

U.S. citizens and legal residents must haveU.S. citizens and legal residents must havehealth coveragehealth coverage

Tax penalty will apply for those without coverageTax penalty will apply for those without coverage

PhasedPhased--in; starting 2014in; starting 2014

For 2016, $695 per year and up to 3x this amount perFor 2016, $695 per year and up to 3x this amount perfamily or 2.5% of household income (less)family or 2.5% of household income (less)

Exemptions: financial hardship, religious objections,Exemptions: financial hardship, religious objections,

Native Americans, those without coverage for < 3Native Americans, those without coverage for < 3months, undocumented immigrants, incarceratedmonths, undocumented immigrants, incarceratedindividuals, those for whom the lowest cost planindividuals, those for whom the lowest cost planexceeds 8% of the individuals income, and those withexceeds 8% of the individuals income, and those with

incomes below the tax filing threshold.incomes below the tax filing threshold.


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FinancingFinancing

Limits on Medicare reimbursement toLimits on Medicare reimbursement tohospitalshospitals

Limits on Medicare premiums paid toLimits on Medicare premiums paid toAdvantage plansAdvantage plansQuality and efficiency experimentsQuality and efficiency experiments

Higher income people will pay higherHigher income people will pay higher

Medicare payroll taxesMedicare payroll taxesNew taxes on insurers and employers thatNew taxes on insurers and employers thatoffer highoffer high--end plansend plans


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More on FinancingMore on Financing

Taxes and feesTaxes and fees New annual fees on the pharmaceuticalNew annual fees on the pharmaceutical

manufacturing and health insurance sectorsmanufacturing and health insurance sectors

(e.g., high(e.g., high--cost insurance)cost insurance) Tax on individuals without qualifying coverageTax on individuals without qualifying coverage

Increase threshold for the itemized deductionIncrease threshold for the itemized deductionfor unreimbursed medical expenses fromfor unreimbursed medical expenses from

7.5% to 10% of adjusted gross income7.5% to 10% of adjusted gross income Increase Medicare Part A payroll tax for thoseIncrease Medicare Part A payroll tax for those

with earnings > $200,000/individual or >with earnings > $200,000/individual or >$250,000/married couples$250,000/married couples


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More on FinancingMore on Financing

Establish Patient Centered OutcomesEstablish Patient Centered OutcomesResearch InstituteResearch Institute

A permanent national program providingA permanent national program providingexpertise and funding for evaluating clinicalexpertise and funding for evaluating clinicaltreatmentstreatments

Findings may not be construed as mandates,Findings may not be construed as mandates,

guidelines, or recommendations for payment,guidelines, or recommendations for payment,coverage, or treatment or used to denycoverage, or treatment or used to denycoverage.coverage.


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By 2019By 2019

Full implementationFull implementation

Added 32 million covered livesAdded 32 million covered lives

Cost $938 billion over ten yearsCost $938 billion over ten years

Documents

Introduction to Health Care Reform Revised