Overview of Health Reform Community Memorial

FoundationJohn Bouman

Sargent Shriver National Center on Poverty Law May 6, 2010

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Health Reform Categories • Coverage -- additional 32 million people

• Public programs (Medicaid, SCHIP, clinics)• Private requirements/exchange/subsidies

• Retains/reforms private insurance system• Demonstrations and investments in quality, cost control, workforce, LTC re-balance, more

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Medicaid Expansion• Covers everyone under 65 up to 133% FPL

– 100% federal funding for newly eligible in 2014-16, phases down to 90% in 2020 and thereafter

– Early implementation option (existing FFP)

• Illinois: 600-700,000 newly eligible, many young adults

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Family Size Income

1 $14,403.90

2 $19,378.10

3 $24,352.30

4 $29,326.50

133% Federal Poverty Level:

Medicaid Expansion

Medicaid expansion• Increase Medicaid primary care rates to 100%

of Medicare levels in 2013-14 with full federal funds for increase

• SCHIP retained and fully funded through 2015; 23 pct. point increase in match rate in 2015

• Maintenance of effort for adults to 2015 and children to 2019

• No change in non-citizen rules: 5-year bar

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• Subsidies to families with incomes between 133-400%FPL to help purchase insurance

•Subsidies also available to families between 133-400% FPL to limit out-of-pocket expenses

•Available to legal noncitizens, not to undocumented who buy insurance

Private insurance affordability

Premium subsidies

Sliding scale:

Up to 133% FPL: 2% of income 133-150% FPL: 3 – 4% of income 150-200% FPL: 4 – 6.3% of income 200-250% FPL: 6.3 – 8.05% of income 250-300% FPL: 8.05 – 9.5% of income 300-400% FPL: 9.5% of income

400% Federal Poverty Level:

Family Size Income

1 43,320.00

2 58,280.00

3 73,240.00

4 88,200.00

Premium subsidies

The Exchange

• “Expedia” or “Travelocity” for insurance plans• User friendly format to understand terms,

compare benefits & services across plans• Four levels of coverage • standard set of comprehensive benefits

including medical, mental health, prescription drug & rehabilitative services

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Exchange• Minimum benefit package

• Bronze plan covering 60% of the cost of benefits• Silver plan covering 70% (basis for premium

subsidies)• Gold plan covering 80%• Platinum plan covering 90%• Catastrophic plan for individuals < age 30

• States can create “Basic Health Plan” for uninsured 133-200% FPL

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Individual Mandate• Requires all U.S. citizens and legal residents

to have coverage• Penalties take effect January 2014:

–$95 in 2014 (or 1% taxable income)–$695 in 2016 (2.5% taxable income)

• Hardship exceptions• Important to broaden the insurance pool

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Employer provisions• No mandate• Penalty: if above 50 employees and do not

offer coverage, and at least one employee receives a public subsidy (flat fee for each employee after the first 30)

• Smaller penalty: if above 50 employees and offer coverage, but at least one employee receives a public subsidy

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Small business• States create small business pools, or “SHOP

Exchanges” by 2014• Under 100 employees (state option: 50)• Until 2014, tax credit of 35% of health

insurance costs for businesses with under 10 employees with under $25K avg. salary

• partial credit for under 50 employees with under $50K avg. salary.

• 50% credit first two years of SHOP Exchange

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Dependent Coverage Expansion

• Under 26 years old and parent has a policy that provides “dependent” coverage, can be included

• Effective for policy renewals after September 2010

• Illinois law in effect now

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Insurance Market Reforms• Guaranteed issue/renewability• No exclusions for pre-existing conditions• Public review of premium increases• Age rating 3:1 ratio allowed• Prohibition against rescissions• Elimination of lifetime & annual dollar limits• Easier access to health care providers• Spend 80-85% of premium dollars on care

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Temporary High Risk Pool

Until 2014when ban on pre-existing condition is lifted & Exchangeoperational

Adults with pre-existing conditions & uninsured for the past 6 months eligible for the Pool

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Tax Exempt Hospitals

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Effective the first tax year after March 2012, each tax-exempt hospital must:•Complete a community health needs assessment at least every three years•Work with local public health officials in that assessment process•Make the assessment widely available to the public•Report annually, in its Form 990 tax return, how it is meeting the needs identified in the assessment, and where it is not meeting those needs, “the reasons why such needs are not being addressed”

“Donut Hole”

• Medicare Part D co-payment for prescription drugs

• Phased out by 2019• $250 downpayment in 2010

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Other Medicaid• Reduction of Disproportionate Share

payments to reflect phase-in of coverages after 2014

• Home and Community-Based state plan option– Allow financial eligibility to 300% SSI– Allow targeting of populations– Allow more than one– No need for waiver “cost neutrality”

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CLASS Act• “Community Living Assistance Services and Supports”

(CLASS) Act:– National, voluntary long term care insurance

program– Payroll deductions; requires opt-out– 5 year enrollment before vesting– If person becomes functionally impaired, cash

payment of not less than $50/day for non-medical services and supports to stay in the community

– Effective 2011

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Additional Provisions• Comparative effectiveness research• Medical malpractice reform demonstrations• Medicare/Medicaid bundled payment demos• Quality and care coordination demos• Prevention and wellness research and demos• No Medicare/Medicaid co-pays for prevention• Medicaid long term care re-balancing strategies

including Money Follows Person• Healthcare workforce initiatives• Funds for FQHC expansions

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Timeline2010• New high-risk pools and federal subsidy• Coverage for dependents up to age 26• Restrictions on annual and lifetime coverage limits and

pre-existing condition exclusions for children• No co-pays for preventive care; no rescissions• Small business tax credits• $250 donut hole payment• Optional early Medicaid expansion

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Timeline

• 2011• Mandatory minimum medical loss ratio• HHS develops standard documents and

definitions to help consumers understand insurance coverage

• 2012• State DSH allotment could be reduced

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Timeline2013• States evaluated for significant progress toward

having exchange operational by 2014

2014• Exchanges open• Medicaid expansion• Major insurance market changes

2015• States eligible for 23% point increase SCHIP FFP

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Timeline2016• Health care choice inter-state compacts may take

effect, allowing insurers to sell across state lines

2017• States begin to pay a share of Medicaid expansion

2018• Excise tax on high-cost plans takes effect

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Resources• Department of Insurance : http://insurance.illinoisqov• Consumer Health Insurance hotline (877-527-9431)• Kaiser Family Foundation:

http://www.kff.org/healthreform/upload/finalhcr.pdf • Department of Health and Human Services

http://www.healthreform.gov/ White House Reform Plan:

http://www.whitehouse.gov/health-care-meeting/proposal

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Questions?

Thank you!johnbouman@povertylaw.org

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