Making Health Care Reform Work for Us in New York State:

From National Legislationto Statewide Implementation

New York Association on Independent LivingOctober 5, 2010Heidi Siegfried, Coordinator

New Yorkers for Accessible Health Coverage646-442-4147 * hseigfried@cidny.org

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Basic Take-Aways• The new health care reform law is a major, historic step forward• The current status quo was NOT an option over the long-term.

• Approximately 2 million of New York’s 2.8 million uninsured will get health coverage.

• Even so, we still have more to do to get to true universal health care across America and here in New York, so there is continued work ahead.

• Goal: All residents of our state, regardless of their financial situation or immigration status, will have comprehensive insurance coverage that’s affordable-to-buy and affordable-to-use.

• Goal: All residents of our state, regardless of their financial situation or immigration status, will also have places to go receive the high-quality , affordable services from culturally-competent health care professionals.

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THE NEW LAW ITSELF:The Patient Protection and

Affordable Care Act(PPACA)

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PPACA Overview

Three broad areas of focus:• Insurance coverage reform• Delivery system reform• Financing-related provisions

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I. Insurance coverage reforms:

• Private insurance market• Employer-based plans• Public programs

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A. Private insurancemarket reforms:

• Overall insurance rules and regulations

• Individual/family coverage mandates

• New “Health Insurance Exchanges”

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Insurance rules and regulations:Coverage basics

• Elimination of pre-existing condition exclusions• Currently allowed in NY for first year

• Elimination of annual and lifetime coverage limits• Elimination of “rescissions” (retroactive

cancellations of coverage based on claims experience, for fraud only, Ian’s law)

• Young adult dependents – can remain on parents’ plan thru age 26; NY law already allows some to stay on through age 29

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Insurance rules and regulations:Policyholder benefits

• Standardized “essential benefit package” – comparable to “typical employer plan”(as determined by HHS – updated annually); minimum actuarial value of 60%

• No out-of-pocket costs for preventive care• Limits on annual deductibles for small group

plans ($2K indivs./$4K families)• State-based consumer counseling and ombuds

programs re: how to sign-up & how to use – to be offered to individuals/families and small groups

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Insurance rules and regulations:Cost Regulation

• Limits on premium variations – only allowed based on age (3:1) [NY law does not allow this], geography, family size, and tobacco use (1.5:1)

• Required “medical-loss ratios” (amount of premium income to be spent on claims – 85% (large groups); 80% (individuals/families, small groups) [the latter is 82% in NY]

• Premium rate increase review procedures established – encouraged at state level; federal govt. back-up process; plans with “excessive increases” can be removed from Exchanges

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Insurance rules and regulations:Business operations

• Regulation of marketing practices• Standardized eligibility and enrollment

procedures• Standardized claims forms and payment

processing• Standardization of appeals processes (both

internal and external) for denials of coverage for a particular service

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Individual/ family “mandates”

• Only if:not eligible for a public programnot offered employer coverage• Tax penalty for non-compliance:ramp up from 2014-16Top rates: $695/$2,085 (individuals/families),

or 2.5% income, whichever is greater

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Individual/family mandates

• Exemptions: If premium cost is >8% incomeNon-legal immigrantsNative-AmericansIncarceratedUninsured <3 mos.Non-tax filersReligious beliefs

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“Health Insurance Exchanges”

• Government-sponsored “marketplaces” to pool:

Individuals & FamiliesEmployer groups• Bulk-purchase bargaining with plans to:lower premium costslessen cost growth (over time)• State-based, with federal fall-back

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Exchanges: Who Qualifies• Individuals and families who are not eligible for

public programs or don’t have employer-sponsored coverage

• Initially available to smaller groups (<100 employees)

• Larger groups (>100 employees) eventually possible (at discretion of HHS secretary)

• Only open to citizens and legal residents• All Members of Congress and Senators and their

direct staff must use

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Exchanges: Benefit Packages

• Standard “essential benefits package” to be offered

• Cannot include abortion coverage (which must be purchased separately as a rider); states can ban abortion coverage altogether

• Differing “tiers” of plans based on “actuarial values”: bronze, silver, gold, platinum – 60%, 70%, 80%, 90%

• Lower-cost, limited-benefit “catastrophic plans” can be offered – available up to those up to age 30, and to those who are exempt from mandate

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Exchanges: Affordability Provisions

• Sliding-scale premium subsidies: For low- and moderate-income individuals and families

(up to 400% of the “Federal Poverty Level” (“FPL”) – e.g., $44K individuals/$88K family of 4)

People cannot be required to spend more than 9.5% of income on premiums

Subsidies cannot be used for abortion coverage riders• Annual sliding scale out-of-pocket limits (for

deductibles, co-pays, co-insurance) for low- and moderate-income individuals/families (up to 400% FPL)

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Exchanges: Other provisions

• Small group and individual exchanges can be merged by states• States can form regional,

geographically-contingent exchanges• Plans offered must meet standards

for provider capacity

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B. Employer-sponsored coverage reforms:

• Large groups (>50 employees)• Small groups (<50 employees)• Special program for age groups:

Young adultsEarly retirees

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Employer Coverage: Large Groups

• If >200 employees: mandate to provide coverage to all workers if providing coverage

• Penalties incurred if no coverage offered and if any employee(s) gets premium subsidies via new insurance Exchanges

• Employees may opt out of employer plan to new insurance Exchange in certain circumstances; vouchers available if <400% FPL

• Eventual access to Exchanges if/when allowed by HHS secretary

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Employer Coverage: Small Groups• Tax credits to assist purchasing coverage: start in 2010 ramps-up by 2014 in amount (initially <35%, then to

50%) eligibility and amount depends on employer size

(initially <10 employees), and average wage base (initially < $25K/yr., excluding principals/owners)

Overall, smaller and lower-wage businesses get better deals

Slightly lower tax credit rates for non-profits• Coverage offered via Exchanges starting in 2014

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Employer Coverage: Special Age Groups

• Targets: cohorts with high rates of uninsurance• Young adult dependent coverage

(age 19-26) can stay on parents’ plan• Early retirees (age 55-64) –

temporary re-insurance program for high-cost claims (up to 2014)

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C. Public Insurance Program Reforms

• Low(er) income individuals/families:MedicaidState Child Health Insurance Program (SCHIP)New state-based “basic health plan” option• Medicare – seniors and long-term disabled• Other options

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Medicaid: Individuals and Families

• Expanded eligibility (up to 133% FPL – ~$14K indivs. /~$29K family of 4) • Elimination of various differential categories

for eligibility based on age, family composition, pregnancy, etc.• Standardized, comprehensive benefits• Community Choice Option, 1915 (i) option,

and Balancing Incentive• No out-of-pocket costs for preventive care

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Medicaid: State Requirements

• Expansions possible as soon as 2011, but no later than 2014• Increase federal matching fund support

(“FMAP”) for states starting 2014• Streamline enrollment and re-certification

procedures• Increased reimbursement rates for primary

care to Medicare levels• “Maintenance of effort” requirement

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Child Health Insurance (SCHIP)

• mostly dealt with in Jan. 2009 via “Child Health Insurance Program Reauthorization Act”• Reauthorization extended via PPACA

from 2014 to 2019 (additional 5 yrs.)• Funded extended via PPACA from

2014 through 2015 (additional 2 yrs.)

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State-based “basic health plan” option

• Can be offered by states to individuals and families between 133%-200% FPL (~$14K-$22K indivs./~$29-$44K family of 4)

• An alternative to private coverage through Exchanges

• States get 95% of premium subsidies that would have otherwise gone to qualifying individuals and families

• Medicaid benefit package• No co-pays for preventive services

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Medicare: Improvements

• Eliminate Part D coverage gap (“donut hole”) over 10 years• $250 rebate in 2010 once Part D coverage gap is reached• 50% discount on brand-name drugs in Part D coverage

gap (starts in 2011); includes biologics• Lowering of “catastrophic coverage” eligibility level for

Part D (over 10 years)• Elimination out-of-pocket costs for preventive care and

annual physical• Freeze sliding-scale Part B premium levels

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Medicare: Program Improvements

• Expand and streamline eligibility for Medicare Savings Plans that help lower-income beneficiaries with their out-of-pocket costs and Part B premiums • Raise reimbursement rates for primary care• Eliminate over-payments to private

“Medicare Advantage” plans• Improve long-term financing of Part A Trust

Fund for an additional decade

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Other Public Program Options• Temporary high-risk pools – funding offered to states – fed govt. to

offer fall-back program• Two new national plans via Office of Personnel Management

offered through state exchanges; one must be non-profit• Creation of non-profit co-op plans incentivized – can be national,

multi-state, statewide, or regional• New, voluntary long-term care insurance program (“Community

Living Assistance Services and Supports” aka “CLASS”); financed via payroll deductions – employees must opt-out; provides $50-$75/day for personal care

• States allowed to apply for waivers from PPACA paradigm starting in 2017 to implement alternative schemes, if they meet set criteria

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II. Delivery System Reform• Goals – to improve:AccessQualityEfficiencyCost control

• Reforms leveraged via:Public programs: Medicare and Medicaid Insurance regulationsPooling via Exchanges

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Delivery System Reform: Areas of Focus

• Expanded access to services• Quality Improvement• Public health• Wellness• Workforce development• Reimbursement reforms

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Expanded Access: Where to get care

• Various expansions of primary, preventive, and home/community-based services

• Doubling of funding for community health centers and the National Health Service Corps

• Expanded funding for school-based health services

• New “patient-centered medical homes”, “accountable care organizations” and “community-based collaborative care networks”

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Expanded Access: Other Reforms

• Bonus payments to primary care providers to practice in medically-underserved areas

• Non-profit hospitals to offer expanded free/discounted care to uninsured and under-insured patients

• A whole variety of new initiatives to address various health care disparities

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Quality Improvement• Disease management and chronic care

coordination programs for patients with serious and multiple medical conditions

• New programs to expand and improve trauma and emergency care services

• Comparative effectiveness research• State-based pilot programs in medical

malpractice reform• New Federal Coordination of Health Care Office”

to focus on “dual-eligibles” (people on both Medicare and Medicaid)

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Wellness• Technical assistance to employers for wellness

programs• Grants to small employer groups to establish

wellness programs• Allow employers to offer premium discounts to

employees participating in wellness programs• State-based pilot wellness programs for

individual markets• Disclosure of nutritional information by fast-food

chains and vending machines

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III. Financing PPACA Reforms• Public program cost savings (over the long term)

via Medicare and Medicaid (see above) – as compared to current projections

• New taxes:Medicare payrollUnearned incomeExcise tax on comprehensive employer plans“Special interests” taxes• Tax deduction limitations• Penalties for coverage mandate non-compliance

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PPACA Tax Measures• Increased Medicare payroll taxes (0.9%) on upper-

income earners ($200K indivs./$250K joint-filers)• New 3.8% tax on unearned income for same • Excise tax on “top-of-the-line” employer plans (2018): $10,200 for individuals/$27,500 for families (annual

premiums) Higher thresholds for early retirees, high-risk

professions 40% tax only on value above these levels Dental and vision benefits excluded from threshold

calculations

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PPACA Tax Measures (cont’d)

• New taxes on pharmaceutical and medical device manufacturers, health insurance companies, and indoor tanning services

• Elimination of tax deduction for employers who receive Medicare Part D subsidies for their retiree drug benefit programs

• Limits on deductions for Health Savings Accounts, and higher penalties for unallowed withdrawls from them

• Tax penalties on employers and individuals/families who don’t comply with coverage mandates (subject to certain terms and conditions)

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Implementation: Goals

• Dual focus: national and state• GOAL: Max out and go beyond PPACA to

move to true universal health care• Monitor and weigh-in on proposed new

rules and regulations• Stakeholders to be monitored at every

step along the way (especially insurers)

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Implementation: New York

• Much of implementation will happen at the state level

• State and local lawmakers will need to be educated about PPACA requirements, options, and implications

• New laws will need to be passed at state level, and/or regulations written

• New programs will need to be created – with Gov., Legislature, Dept. of Health, State Insurance Dept., other state agencies

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Federal Implementation So Far• Denials of coverage for pre-existing conditions for children

banned• Small business tax cuts – begin in 2010; IRS has posted

materials online• Young adult dependent coverage – some insurance plans are

already offering voluntarily, and more will start as of Sept. 23, 2010, and ramp-up through start of new benefit year (Jan. 1)

• Medicare Part D prescription drug coverage gap (“donut hole”) – automatic rebate checks ($250)

• Temporary high-risk pools funding to states for uninsured people with “pre-existing conditions”

• Employer early retiree re-insurance program

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More Federal Implementation for 2010

• Consumer assistance program funding for states• Rate review funding for states• Appeals procedures• Prohibition of rescissions• “Patients’ Bill of Rights” consumer protections: Ends lifetime limits on essential benefits Limits unreasonable annual benefit caps Ends co-pays for preventive services Expands choice of primary care providers Expands access to emergency services

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Implementation: NAICNational Association of Insurance Commissioners• Charged with developing recommendations re: rate review consumer ombuds services grandfathering of current plans high-risk pools medical-loss ratios annual/lifetime limits preventive coverage pre-existing conditions adult dependent coverage Rescissions Appeals long-term care insurance• 21-member consumer advisory group established – released initial report of

recommendations in May

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New York: Implementation So Far

• Governor’s Health Care Reform Cabinet established (May 13)

• Governor appointed Health Care Reform Advisory Committee (Aug. 31) including: providers, consumers, employers, labor, local governments, insurers, policy experts

• Temporary “NY Bridge Plan” for pre-existing conditions – enrollment opened Aug. 20, and coverage begins Oct. 1st; applicants must be uninsured for 6 months prior

• Rate review funding to states – NY restored “prior approval” procedures in June

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Resources: Overall Analyses

• Kaiser Family Foundation: www.healthreform.kff.org

• Families USA: www.familiesusa.org/health-reform-central

• Community Catalyst: www.communitycatalyst.org

• Health Care for All New York: www.hcfany.org

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Resources: Constituency-Specific

• AARP: www.aarp.org/health• Consumers’ Union: www.consumersunion.org/health• Faithful Reform in Health Care:

www.faithfulreform.org • Medicare Rights Center: www.medicarerights.org • Raising Women’s Voices:

www.raisingwomensvoices.net • Small Business Majority:

www.smallbusinessmajority.org • Young Invincibles: www.younginvincibles.org

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Resources: Government

• White House: www.healthreform.gov• Congress:

http://energyandcommerce.house.govhttp://finance.senate.gov/issue

• National Association of Insurance Commissioners: www.naic.org/index_health_reform_section.htm

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Thanks for hanging in there!

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