Obama Care
(ACA) – Affordable Care Act or
Patient Protection and Affordable Care Act
(PPACA)
Obamacare =
The Patient Protection and Affordable
Care
Act 42 USC 18001, Public Law 111-148
(905 pages)
and
Health Care and Education
Reconciliation Act,
Public Law 111-152 (54 pages)
WHY? Census reports:
Over 48 million people in US without health
insurance – 15%;
Over 197 million people have private insurance –
63%;
Medicare covers 44 million – 14%;
Medicaid covers 50 million – 16%
Health Insurance USA
14%
13%
15%
Medicare
Medicaid
Private
Uninsured
58%
To understand US healthcare must know at least
five bodies of law:
Medicare
Medicaid
Affordable Care Act
Private Insurance
Uninsured Health Care
US Healthcare
Exhibit 1. International Comparison of Spending on Health, 1980–2007
Total expenditures on health
as percent of GDP
Average spending on health
per capita ($US PPP)
7000
6000
5000
16%
16
8000
United States
Canada
$7,290
14
Netherlands
Germany
Australia
United Kingdom
12
10
New Zealand
4000
8
3000
6
$2,454
2000
4
1000
2
0
0
1980 1984 1988 1992 1996 2000 2004
8%
United States
Germany
Canada
Netherlands
New Zealand
Australia
United Kingdom
1980 1984 1988 1992 1996 2000 2004
THE COMMONWEALTH
FUND
Note: $US PPP = purchasing power parity.
Source: Organization for Economic Cooperation and Development, OECD Health Data, 2009 (Paris: OECD, Nov. 2009).
What is Medicare?
Medicare
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What is it?
What kind of law is it?
How is a person eligible?
What is the benefit conferred?
Who administers it?
Who pays for it?
What is its constituency?
What is its history?
Who are collateral beneficiaries?
What size is it?
What is Medicare?
• Federal Law
• Medicare is a nationwide federal health insurance program for
the aged and certain disabled persons. It has several parts.
• Medicare covers 40 million people aged 65 and older AND
another 8 million disabled.
• Total expenditures in 2011 were $549 billion
• Total income in 2011 was $530 billion
• Assets in “trust” were $324 billion
Medicare has four parts
What are Medicare Parts?
• Hospital Insurance (HI) known as Medicare Part A helps pay for
hospital, skilled nursing and hospice care for aged and
disabled.
• Supplementary Medical Insurance (SMI) is Part B and Part D.
• Part B pays for outpatient costs like doctor visits.
• Part D provides subsidized access to drug insurance coverage
on voluntary basis.
• Part C is an alternative to Parts A and B, eg Medicare
Advantage plans which contract with Medicare.
Eligibility for Medicare – A & B
• Part A is premium free for people over 65 who have paid
Medicare taxes for 10 years
• Part A has a premium for people over 65 who have not paid
Medicare taxes for 10 years - $451 monthly
• Part A is also available for people who have been on SSD for 24
months
• Everyone over 65 who wants Part B must pay for it - $99
(higher for 5% of people with incomes over $80,000)
Medicare Benefits? Part A
• Inpatient hospital coverage – semi-private room,
meals, nursing care, drugs and supplies, but not
all doctor services in the hospital (Part B helps
cover some of those)
• Skilled nursing facility (up to 100 days a year) NOT
CUSTODIAL CARE; patient pays copayment of up
to $120 a day from day 21 to 100;
• Hospice care if you are certified terminally ill and
have less than 6 months to live
• There are copayments eg $1000+ per hospital
stay
Medicare Part B Benefits
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Medically necessary doctor visits, lab tests, surgeries
Supplies – like walkers or wheelchairs
Preventive services
Ambulance, mental health services
Annual deductible, monthly premium, usually pay 20% of
Medicare approved cost of services as copayment – combined
usually total about 25% of overall cost of services
Not Covered by Parts A or B
• Custodial long term care
• Dental or eye care
• Hearing aids
Medicare Part C
• Medicare Advantage Plans
• Allow people to receive all their health care through one
provider and usually extra services offered for additional fees
Medicare Part D
Medicare Part D
• Begun in 2004
• Provides subsidized access to prescription drug insurance
coverage
• Voluntary
• Pay premiums
• Either through Medicare Prescription Drug Plans or through
Medicare Advantage Plans
Medicare Supplemental
Insurance – Private Medigap
Policies
• Coverage for costs Medicare does not pay
• Co-insurance, copayments, deductibles
• Not available for Part C Medicare Advantage
Plan participants
• Cannot turn you down if you apply as soon as
you are 65, otherwise can.
Administration of Medicare?
Who Pays for Medicare?
• Part A is financed by FICA HI.
• Part B is financed by premiums (25%) and US general funds
(75%)
• Part D is financed by beneficiary premiums and general
revenues
• The Medicare tax has gone up for people earning more than
$200,000 by 0.9%, with no maximum income cap - there is no
employer match on the new tax.
2007 Medicare Changes for
Higher Income Recips
• The Part B premium is linked to income for the first time, starting in
2007.
• People with incomes over $80,000 ($160,000 for couples) pay more on
a sliding scale
• Indivs up to $107k – extra $40/month
• Over $214k – extra $219/month
• Will impact 1-2 m recips (of 40+)
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Robert Pear, “Medicare Premiums to Rise,” NYT 2006
Medicare History
• Enacted in 1965, the Medicare program immediately covered 19.1
million people when it went into operation on July 1, 1966.
• Before 1966, only about half of all older Americans had health
insurance.
• In 1972, Congress extended eligibility for Medicare to permanently
disabled people who have received Social Security Disability Insurance
(SSDI) payments for two years and individuals with end-stage renal
disease (ESRD).
Who are Medicare
collateral
beneficiaries?
Where Do Medicare Dollars Go?
:
Financial Outlook
Medicare Trustees Report
• For the last 7 years, Trustees have issued Medicare Funding
Warning
• “Medicare’s actual future costs are highly uncertain”
• “Congress and the executive branch must work together with a
sense of urgency to address” exhaustion of HI trust fund and
the growth in Parts A, B and D.
Affordable Care Act of 2010 - Medicare
• Phases out the Part D donut hole by 2020
• Freezes Part C Medicare Advantage Plans and provides bonuses to
plans with high quality ratings
• Creates new Independent Payment Advisory Board to recc ways to
reduce Medicare spending
• Reduces annual increases to Medicare providers
• Increases HI from 1.45 to 2.35% for individuals with incomes over
$200,000
• Increases premiums for Part D for higher income for those over
$85,000/year
Clear so far?
What is Medicaid?
Medicaid
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What is it?
What kind of law is it?
How is a person eligible?
What is the benefit conferred?
Who administers it?
Who pays for it?
What is its constituency?
What is its history?
Who are collateral beneficiaries?
What size is it
Medicaid
• Federal State Partnership for Healthcare (doctor visits, hospital
stay, custodial care, prescriptions etc)
• For indigent (low income and low resources)
• Children
• Aged
• Disabled or Blind
• Non-disabled adults – parents caretakers and pregnant women
Medicaid Facts
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Covered 54 million people in 2010
Cost $404 billion in 2010
Federal share was $272 b or 68%
State share was $131 b or 32%
Federales pay sliding share (low of 50% to high of 83%)
depending on poverty of state
Who Receives Medicaid?
• Provides health coverage to 43 million children – half the low
income children in the US
• Provides health care to 11 million non-elderly, non-disabled
low income adults
• For 8 million disabled people
• For 4 million low income seniors
Medicaid Eligibility
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Indigent
Low income – less than $20,000 / year
Low resources - $2000 individual, $3000 couple
Citizenship
Children Eligible
• CHIP – Children’s Health Insurance Program and Medicaid work
together
• State by state decisions about eligibility
• Under 100% of poverty children are usually Medicaid
• Over 100% of poverty children enrolled in CHIP – in some
states up to 250% of federal poverty level
Medicaid Mandatory Coverage
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SSI elderly and disabled
Pregnant women under 133% of federal poverty level
Children under 6 up to 133% of FPL
Children over 6 up to 100% of FPL
Medicaid Benefits
Mandatory
Optional
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• Prescription drugs
• Clinic services
• Physical or occupational
therapy
• Eyeglasses
• Dental services
Inpatient hospital
EPSDT
Nursing home
Lab and Xray
Doctor visits
Medicaid Administration
Medicaid varies
considerably
among states
Affordable Care Act - Medicaid
• 2014 – all people with incomes below 133% of federal poverty
level will be eligible for Medicaid in every state
• States have options to expand that coverage
• Expansion of Medicaid is key component for reducing number
of people without insurance
• Estimate an additional 26 million people will be added to
Medicaid by 2020 under ACA
Law of the Uninsured
Recall there are 48 million uninsured
What Happens When Some of the
40+ million Uninsured Get REALLY Sick?
EMTALA
• Emergency Medical Treatment and Active Labor Act
• Anti-Dumping Law, 42 usc 1395dd
History of EMTALA
• Hill-Burton was passed in 1946, authorizing grants to construct hospitals. In return
the hospitals were to provide a certain amount of uncompensated indigent care to
the community. In 1974, it was found that hospitals actual provision of care was
minimal. New rules and regs were promulgated and hospitals were forced to notify
patients in writing of their obligation to provide hill-burton care. That did not work
either.
• IN 1986, Congress passed EMTALA.
Two Duties on Hospitals
1. appropriate medical screening to determine whether patient
has emergency medical condition
2. hospital cannot transfer a patient with an emergency medical
condition until that condition has stabilized
All Hospitals?
• duty on "participating hospitals" (42 usc 1395dd (e)(2))
• Take public funds $ and
• hospitals with emergency rooms to screen incoming
emergency patients (whether or not they have insurance) to
determine:
What Emergency Conditions Must Hospitals
Treat?
• Health in serious jeopardy
• Or
• Woman in labor
If Emergency Condition
If so, must stabilize prior to transfer or discharge
• transfer is allowed if doctor certifies, in writing, that:
– 1. the benefit to the patient outweighs the risk
– 2. the receiving hospital has the space, personnel, and agrees to
receive
Remedies for EMTALA Violations?
• if violated, civil penalties, atty fees, personal injuries action,
but most importantly
• "if the violation is gross and flagrant or is repeated, ...exclusion
from participation." 42 usc 1395dd (d) (1)
Actual Logo of Personal Injury Firm of
Friedman, Domiano and Smith, Cleveland, Ohio
Who pays for the uninsured do for healthcare?
• Who pays for the cost of uncompensated care?
• Public health care subsidies
• or
• Private health insurance plans
Which brings us to Obamacare
What is it?
What kind of law is it?
How is a person eligible?
What is the benefit conferred?
Who administers it?
Who pays for it?
What is its constituency?
What is its history?
Who are collateral beneficiaries?
What size is it
Obamacare =
The Patient Protection and Affordable
Care
Act 42 USC 18001, Public Law 111-148
(905 pages)
and
Health Care and Education
Reconciliation Act,
Public Law 111-152 (54 pages)
The Health Law Rollout, May 2, 2013
http://online.wsj.com/article/SB10001424127887324482504578453011880989472.html?mod=WSJ_HealthLaw_MiddleTopSummaries
Goal of Affordable Care Act
is to provide health care insurance
to 2/3 of those without it –
about 30 million people
by 2018.
Eligibility for ACA Insurance?
Low income – Poverty Line – should get free
or very low cost
100% to 400 % of poverty line – eligible for
tax credit subsidy on health insurance
How will people get health insurance?
Either – Expanded state Medicaid
or
EXCHANGES of private insurance
run by states or federal government – where
people can receive subsidized health insurance
Expansion of Medicaid coverage for low
income people is a state by state decision due
to USSCT decision.
NFIB v Sibelius, 132 S Ct 2566 (2012).
If in a state which expanded Medicaid
and the applicant is at or near poverty line,
they can receive health insurance coverage
through their state Medicaid program.
If not in a state which expanded Medicaid
and/or
between 100 and 400% of poverty line,
then get health insurance through
Health Insurance Exchanges.
WHAT ARE THE EXCHANGES?
The State or Federal Government provide health
insurance exchanges.
Coverage will begin January 1, 2014.
Families with incomes between 100 and 400% of
poverty level will qualify for tax credits to make
premiums more affordable.
What if States do not want to run
EXCHANGES?
If State chooses not to, the federal
government will do so.
WHAT IS THE SUBSIDY?
If at or below poverty line and state agrees
they can enroll in Medicaid.
Up to 400% of poverty line are eligible for
some subsidy (tax credits) in purchasing
health insurance on EXCHANGES.
What is the penalty for not having
healthcare insurance?
In 2014 penalty is $95 or 1% of taxable income.
Goes up in each year by 2016 it sill be $695 for
each adult or 2.5% of taxable income. The fines
cannot be higher than the cost of purchasing
health insurance. Penalty paid in following year’s
taxes.
How do people actually sign up?
Go to www.healthcare.gov
create a Marketplace account
(must have email address)
or call 1.800.318.2596
What options for health insurance are
available on the exchanges?
Bronze
Silver
Gold
Platinum
All have different premiums, deductibles and
copayments.
All plans will cover essential health benefits:
Addiction treatment, care for newborns and
children, chronic disease treatment (diabetes and
asthma), emergency services, labwork, maternity,
mental health services, physical therapy,
prescription drugs, preventive and wellness
services, etc.
http://www.forbes.com/sites/investopedia/2013/10/01/how-to-choose-between-bronze-silver-gold-and-platinum-health-insurance-plans/2/
All plans – Bronze, Silver, Gold and Platinum –
cover the same Essential Health Benefits. The
monthly health insurance premium will be higher if
you choose a higher level plan, such as Gold or
Platinum. But consumers will also pay less each
time they visit a health care provider or get a
prescription filled. Conversely, the monthly
premium will be lower if choose a Bronze or Silver
plan, but will pay more for each doctor visit,
prescription or health care service that you use.
http://aspe.hhs.gov/health/reports/2013/MarketplacePremiums/ib_premiumslandscape.pdf
Impact on Medicare?
The law does not directly cut benefits for people
on Medicare. It does increase free preventive
services and rebates towards cost of prescription
drugs in Part D Medicare.
The ACA expects to receive $700 billion from
Medicare savings over the next 10 years – savings
from performance changes from hospitals and
doctors.
WHAT ABOUT DEATH PANELS?
The law does not set up death panels.
It does set up an Independent Payment Advisory
Board (IPAB) to recommend spending cuts if
Medicare costs exceed targets. The 15 member
board can reduce Medicare reimbursement rates
for treatment and drugs if Congress does not.
IPAB cannot ration care, increase taxes or reduce
low income subsidies.
IMPACT ON INSURANCE COMPANIES
Expands the pool of potential customers but rewrites
many of the industry rules.
Now have federal and state oversight – used to be state
oversight.
Have to spend 80% of premiums on healthcare costs.
Cannot exclude pre-existing conditions or set premiums
based on individual health history.
Has to provide free preventive care services. Has to
allow parents to enroll children up to age 26.
IMPACT ON EMPLOYERS
Companies with 50 full-time (over 30 hours a
week) employees will have to provide health
insurance or pay penalties.
Penalty pushed back to 2015.
Aren’t some companies dropping
health coverage?
Yes. Several companies have been offering
what is called “mini-meds” to their
employees. These plans have covered 4
million people but cap total benefits to
employees, as high as $100,000 but
sometimes as low as max of $3000 per year.
New law prohibits annual benefit caps.
Why disallow caps on benefits, won’t that cost
more?
The goal of the law is to prevent people from
having to go bankrupt because of huge medical
bills.
Two million people per year go bankrupt due to
medical bills – making it #1 cause of bankruptcy.
That should end.
There may be a switch to high deductible plans to
save money.
Cost of Obamacare?
The Congressional Budget Office estimated
the cost of the ACA at $1,168 billion dollars
from 2012 to 2022. This does not try to
offset current costs for the uninsured.
http://www.cbo.gov/sites/default/files/cbofiles/attachments/43472-07-24-2012-CoverageEstimates.pdf
What is going to happen next?
Expect considerable changes in all phases of
these laws.
E.g. Medicare was changed in over 50 ways
from 1965 to 2000.
http://www.ssa.gov/history/pdf/hlth_care.pdf
Stay Tuned!