John Sweeney, Case study on e-Marketplaces and the US Affordable Care Act

© 2014 IBM Corporation

| 04/11/23 | Confidential

e-Marketplaces and the US Affordable Care Act

John J. Sweeney

© 2014 IBM Corporation2 | 04/11/23 | Confidential Page 2

So What Does the Affordable Care Act Do?

– The Patient Protection and Affordable Care Act (PPACA), was signed into law on March 23, 2010

– Complex legislation that attempts to reform America’s healthcare insurance industry and health care system as a whole

– The law gives Americans more rights and protections and expands access to affordable, quality health care

– The law also expands Medicaid and introduces subsidies for insurance purchase

– The law requires all Americans to have health insurance by Jan. 1, 2014 (or pay a per month fee based on a % of their taxable income for each month without coverage, or get an exemption)

– PPACA is intended to improve the health care industry including the minimum standards of what health insurance must cover - - 10 Essential Benefits


So What Does the Affordable Care Act Do?

– The Patient Protection and Affordable Care Act (PPACA), was signed into law on March 23, 2010

– Complex legislation that attempts to reform America’s healthcare insurance industry and health care system as a whole

– The law gives Americans more rights and protections and expands access to affordable, quality health care

– The law also expands Medicaid and introduces subsidies for insurance purchase

– The law requires all Americans to have health insurance by Jan. 1, 2014 (or pay a per month fee based on a % of their taxable income for each month without coverage, or get an exemption)

– PPACA is intended to improve the health care industry including the minimum standards of what health insurance must cover - - 10 Essential Benefits


The Ten Essential Benefits (Defines Insurance)

1. Ambulatory patient services (Outpatient care)

2. Emergency Services (Trips to the emergency room)

3. Hospitalization (Treatment in the hospital for inpatient care)

4. Maternity and newborn care

5. Mental health services and addiction treatment

6. Prescription drugs

7. Rehabilitative services and devices

8. Laboratory services

9. Preventive services, wellness services, and chronic disease treatment

10. Pediatric services

© 2014 IBM Corporation5

Health Care Reform Puzzle

Programs

Platforms

Organization

Health Insurance Exchange

• Online access & one stop shopping• Decision Support & Plan Comparison • Interoperability w/ Medicaid

Eligibility & Enrollment•NWD - Universal Access & Universal Response •Electronic Verifications•Interoperability – Medicaid, Exchange, SNAP, etc•Medicaid can determine eligibility for HIE subsidy plans

Existing Systems Income Support – Family Services – Health - MMIS

DepartmentOf Health &

HumanServices

NewExisting Extend

Department Of

Insurance“Health Authority”?

Manage Health Insurance Coverage/Exchange

MedicaidExpansion

(133% FPL)

Social Programs

(TANF, SNAP, Medicaid Eligibility)

Basic Health Plans

(to 200% FPL)

Small Employer

Plans (SHOP)

Individual Qualified Plans

Subsidized•Cost Sharing (to 250%)•Tax Credits (to 400% )

No Subsidy (> 400% )


What are Health Insurance Exchanges/Marketplaces?

• Many low to middle-income Americans will purchase insurance through online health insurance exchanges

• The Exchanges are state or federally run online marketplaces where customers can shop for health insurance

• Starting in Nov. 2014, small businesses (<100 full-time employees) can also use the Exchanges to purchase insurance for their employees

• The Exchanges show side-by-side price and benefit comparisons

• The Exchanges decrease the cost of insurance by “pooling” together buying power – marketplace competition brings down prices for everyone

• Americans making <400% of the Federal Poverty Level will be eligible for reduced premiums and lower out-of-pocket costs through cost assistance

• Over time the health insurance exchanges are to tie into ‘health information exchanges’ to provide better cost and quality information across providers and hospital networks.


Quick Facts about Health Insurance Exchanges/Marketplaces• Everyone can use the marketplace - If you have work-based coverage you can apply,

but you won’t get a subsidy

• The Exchanges opened for enrollment on Oct. 1, 2013 and Insurance purchased on the Exchange does not kick in until 2014

• There are 4 ways to enroll: (i) find your state’s marketplace(ii) Get in person help(iii) Call the 24/7 marketplace helpline(iv) mail in a paper application

• 14 States (including DC) have implemented a State-based Exchange and 37 States are using the Federal Health Insurance Exchange

• The Official Website of the Federal Health Insurance Marketplace is healthcare.gov

As of April. 7 million Americans have enrolled in a marketplace plan.


The Federal Exchange and State Exchange Examples

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Health Insurance Exchange Comparison Example

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Pros – Extending coverage to a cohort missing out

Greater access to affordable, quality healthcare

>1/2 of uninsured Americans are now eligible for free or low cost health insurance

Medicaid is expanded to cover almost 16M additional citizens

CHIP is extended to cover up to 9M children

Coverage cannot be dropped, or coverage denied, because you are sick

Small businesses can get tax credits up to 50% of their employee insurance premium costs

Children may remain on parents’ plans until 26

Medicare is improved for Seniors

All coverage must include essential health benefits

Help curb growth in healthcare spending – the Health Homes Initiative


Cons – Costs borne by all

New taxes, mostly on high-earners

Individual mandate requires you to obtain insurance by Jan. 1, 2014, get an

exemption, or pay a fee

Insurance companies must insure sick people and this increases everyone’s insurance

Employer mandate has resulted in some businesses cutting employee hours

Some Medicare payments to doctors and hospitals have been limited

Insurance premiums have increased due to insurer’s having to provide covered

services

Out of Pocket costs have increased

The law focuses more on ensuring people are covered than in does in addressing the

cost of care in the first place


Lessons Learned of Relevance

Exchanges have provided consumers with the information they need to exercise informed choice in a diverse, large and complex marketplace

While the Federal Law was passed in March 2010, complementary state laws were delayed - Federal Policy (the business requirements) delivered in drips and drabs

“We are building a car while it is driving down the road”

IT business application issues – do we build ourselves or buy off the shelf? No single solution available to deliver the full end-to-end experience covering Rules - Eligibility – Verification (FDH) - Shopping – Enrollment – Call Center – Case Worker

The early adopter states struggled leading to more taking a wait and see approach - and then a rush at the end as the deadline loomed

The focus on meeting the initial start date for registration resulted in service quality issues • Some requirements moved• Non-essential functionality pushed off beyond 1/1/2014


Healthcare

John Sweeney, Case study on e-Marketplaces and the US Affordable Care Act