Building the Future of Health Care

Roberta Rifkin, VP of Government Affairs

December 14, 2012

Health Care in America

Not available to everyone

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Expensive Inefficient

The Need for Reform

• 50 million uninsured• Costly

– Highest expenditures per person

• $7960 USA--$5352 Norway (next highest)

• Paying for quantity, not quality

• Unsustainable– 2012 $21,000– 2021 $42,000

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Under Construction

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

• ACA is a starting point to achieve health reform

A Better Patient Experience

Improved Community Health

Lower Costs

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Three Core Areas of Construction

Coverage– Exchanges– Medicaid expansion– Market reforms

Affordability– Individuals: premium subsidy, cost

sharing– States: Medicaid expansion

reimbursement– Small Businesses: tax credit

Quality– Community-driven solutions

Construction Timeline

• Implementing since 2010– Market reforms– Funding innovation– Transition to new

marketplace

• 2014 - Pivotal Year– New Marketplace– Individual Mandate– Employer responsibility

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The Construction Team

Federal

State

Community

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Federal Construction Team

• Leads planning and implementation; issues regulations and guidance

• Monitors state and community activities

• Keeps construction moving forward

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The Blueprint

Key Federal Plans

• Market Reforms

• Essential Health Benefits

• Coverage Responsibility

• Exchanges

• Taxes and Penalties

• Reporting Requirements

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Federal: Market Reforms

Already Implemented•Dependent Coverage to Age 26•No Rescissions•Phasing Out Annual Limits•$0 Copay for Prevention•Closing the “Donut Hole”•No Pre-Existing Condition Exclusion 18 and under

Effective in 2014•No Pre-Existing Condition Exclusion for 19 and older

•Cap Raised on Wellness Program Rewards to 30%

Federal: Responsibilities for Coverage after 1/1/14

Individuals

• Penalty for none or not having minimum value coverage (60% AV)

• Some exemptions apply

Large Employers (>50)

• Penalty for no coverage offered

• Penalty if coverage is unaffordable or inadequate

Small Employers (<50)

•No penalty for not offering coverage

Federal: Health Insurance Exchange

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• Web-based marketplace to buy health coverage beginning in 2014 for: Individuals Small employers (<50)

• States have flexibility to establish their own exchange or participate in the federally facilitated exchange.

• The Exchange will be the only means for individuals to access federal subsidies that will lower consumer premiums and provide cost sharing.

• Small Employers who purchase coverage in the Exchange may be eligible for tax credits

Federal: Essential Health Benefits (EHBs)

• EHBs define the scope of coverage for small group and individual plans beginning in 2014.

• States can select a benchmark plan as the standard for EHBs or default to most populated small group plan

– New York has chosen the Oxford EPO plan

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Federal: Products in the Exchange

• Plans can be offered by Qualified Health Plans (QHPs), Multi-state Plans, and CO-OPs.

• Products sold in the Exchange must meet the following:

Bronze = 60% Actuarial Value

Silver = 70% Actuarial Value

Gold = 80% Actuarial Value

Platinum = 90% Actuarial Value

A catastrophic plan will also be available

Federal: Exchange for Small Employers (SHOP)

• Small Business Health Options Program (SHOP) will have rolling enrollment

• State decides if employers will choose plan or precious metal level

• Premiums aggregated for SHOP

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Federal: Exchange for Individuals

• Initial Open Enrollment:

– Begins October 1, 2013

– Ends March 31, 2014

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Federal: Premium Subsidies and Cost Sharing

Premium Subsidies

• Subsidy is advance payment of premium

Cost Sharing

• Will reduce out of pocket expenses (deductibles, co-pays, etc)

FPL Income: Family of 4 Income: IndividualMax Premium as

% of IncomeCost Share Reduction

Maximum Actuarial Value*

100% $23,050.00 $11,170.00 2%   

133% $30,656.50 $14,856.10 4% 66% 94%

150% $34,575.00 $16,755.00 6.30% 66% 87%

200% $46,100.00 $22,340.00 8.05% 50% 73%

250% $57,625.00 $27,925.00 9.50% 0 70%

300% $69,150.00 $33,510.00 9.50% 0 70%

400% $92,200.00 $44,680.00 9.50% 0 70%

* Maximum Actuarial Value reflects a Silver Plan

Enrollment Scenario: Brian

Age: 35

Single

Job: Waiter

Income: $12,500

Access: Navigator

EligibilityDetermination: Medicaid

Choices: Medicaid Plans

Brian

Enrollment Scenario: Maria and Steve

Ages: 27, 28

Married

Jobs:

Steve- Writer

Maria-

Day Care (PT)

Income: $31,000

Access: Web Portal

Eligibility: Subsidy: Premium tax credit/cost sharing

Choices:•QHP – bronze, silver gold, platinum•Multi-state plan option•CO-OP

Maria and Steve

Enrollment Scenario: Carol

Age: 55

Divorced

Job:

Consultant for Energy Companies

Income: $100,000

Access: Toll-free Telephone Line

Eligibility: No subsidy

Choices:•QHPs •Plans outside the Exchange

Carol

Enrollment Scenario: Audrey

Age: 42

Married, 1 child

Job:

Manages a shoe store with 20 employees

Income: $36,000

Access: Web Portal

Eligibility: Employer Contribution

Choices:•Employer selects a metal level of coverage•Audrey can buy up or down

Audrey

Federal: Employer Options for 2014

Small Group Options in 2014Purchase coverage as done todayUse the New York State SHOPDrop coverage: employees can use the state ExchangeUse a private exchange or IH website

Large Group Options in 2014Provide coverage as done todayDrop coverage: employees can use the state ExchangeUse a private exchange or IH websiteGo self-funded

Federal: Taxes and Penalties Summary

2013•Medicare tax income adjustment•Eliminates employer tax deduction for Medicare Part D• Increased threshold

for medical expense deduction

•FSA Cap•Medical Device and Pharmaceutical Taxes

2014• Employer

Responsibility• Individual Mandate• Health Insurer Tax

2018• Cadillac Tax

Federal: Taxes and Penalties

• Effective in 2013– Medicare taxes for earners

making more than $200,000 single or $250,000 joint

– Eliminates employer tax deduction for Medicare Part D drug subsidy payments

– Increased threshold for medical expense deduction

• 10% of AGI for unreimbursed expenses, waived for 65 and older

Federal: Taxes and Penalties

• FSA Cap

– $2500

• Medical Device Tax

• Pharmaceutical Tax

• Health Insurer Tax

• Cadillac Tax

– Insurers taxed for employer-sponsored health plans aggregate expenses that exceed $10,200 for individual coverage and $27,500 for family coverage

Federal: Reporting Requirements

• Employer Premium Contribution on W2 forms– Reporting only, non-taxable– For employers with >250 forms

• Summary of Benefits and Coverage (SBC)– Insurers use Federal template for

benefit summary– Employers will distribute

• Employers Report on Coverage Offered– Reporting to HHS/Treasury on

coverage offered– Informing employees about

Exchange options

Possible Delays: The Future of ACA

• Implement– Obama Administration issuing regulations

and distributing funding

• Repeal– House has voted to repeal over 30 times– Could repeal specific provisions

• Defund– Provisions relying on funding from

appropriations process may be underfunded or not funded at all

• could include IRS appropriations to implement tax credits in Exchange

Possible Delays: The Fiscal Cliff

• The “Fiscal Cliff”

– Expiring December 31st

• Bush Tax Cuts

– Tax breaks for high earners

– Payroll tax reductions

• Doc Fix (Sustainable Growth Rate Formula adjustments)

– Could reduce Medicare provider payments by ~27% on January 1

• Avoiding sequestration from Budget Control Act of 2011

– If “fiscal cliff” is not averted, CBO predicts a 4% drop in GDP and almost certain recession

Possible Delays: Sequestration

• Congress directed to cut $1.2 trillion over 10 years, or sequestration is automatic– $109 billion in cuts for 2013

• Defense budget cut 50%

• 50% cut to nondefense funds– Health cuts: Will impact some

appropriations for ACA implementation

– Medicare cuts: Capped at 2%– Medicaid and CHIP exempt

State Construction Team

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Use Federal Blueprint•Flexible•Floor or ceiling

New York’s Construction Plan

• Medicaid Redesign

• Exchange Establishment

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New York: Medicaid Redesign Team

• Medicaid Redesign Team created by Governor in 2010

• Some changes to Medicaid include:

– Moving all beneficiaries to managed care by 2016

– Centralizing administration

– Addressing benefits, housing, cultural issues

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New York State: Exchange Blueprint

• New York has applied to be a state-run Exchange

• Active participation in plan selection for the Exchange

• Reduce total plan offerings in the state

• Offer a mix of standardized & insurer designed products

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Community – Spheres of Influence

• You can make a difference

• Recognize your role• Small changes matter• Engage in your spheres

of influence– Home– Work– Physician’s Office– Neighborhood

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Find Your Place at the Table

Reducing the Mortgage on our Future

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• The ACA is a starting point to help us reduce our “mortgage”

• If we focus on quality, lower costs will follow

How Do We Get There?

1.Revitalize & grow primary care

2.Payment reform

3.Enhance health information

4.Culture of health

5.Greater alignment of health system

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5 Key Actions

Buffalo: Our Healthy Future

Our community can achieve this!