Affordable Care Act (ACA):
What Every Rehab
Professional Should Know
February 7, 2014 NYU Wasserman
Center presented by Anthony
LaGattuta, MBA, MA, EA
The Affordable Care Act:
Impact on NYS
WORK DISINCENTIVES:
LOSS OF PUBLIC SUPPORTED
HEALTH BENEFITS
Today’s Agenda
• Brief History Health Care Reform
• The Problem(s): Uninsured and
Unsustainable Costs
• Solution:
– Insurance Market Reform & Employer ER Mandate
– Individual Responsibility
-- Insurance Purchase Subsidies and Public
Programs
• Revenue
• Quality/Health Care Reform
• Help in NYS
4
Material consulted:
Inside National Health Reform by John E. McDonough; Health Care Reform
Simplified: What Professionals in Medicine, Government, Insurance, and
Business Need to Know by Dave Parks; ObamaCare Survival Guide: The
Affordable Act and What It Means for You and Your Healthcare by Nick J.
Tate; Why Obamacare is Wrong for America: How the New Health Care Law
Drives Up Costs, Puts Government in Charge of Your Decisions, and Threatens
Your Constitutional Rights by Grace-Marie Turner, James C. Capretta, Thomas
P. Miller and Robert E. Moffit
Beating Obamacare: Your Handbook for Surviving the New Health Care Law
by Betsy McCaughey; Selected Tax and Other Provisions of the 2010 Health
Care by Danny Santucci (A Continuing Education Course for Tax
Practitioners);Implementing Federal Health Care Reform: A Roadmap for
New York State by the NYS Health Foundation;“System Failure: How Obama
Botched Obamacare” by Charles R. Morris and “Health Scare: Obamacare Is
Down but Not Out” by J. Peter Nixon—Articles in 12/20/13 edition of
Commonwealth; PowerPoint Presentations by: Kaiser Foundation, Empire
Justice Center, Legal Aid Society.
TABLE 17-2: HISTORY OF HEALTH CARE REFORM
•
•
•
•
•
•
•
•
TR, FDR, TRUMAN, JOHNSON, CARTER, CLINTON (S), OBAMA
PRIVATE INSURANCE FOR THE WEALTHY IN THE 1920S
SECTION 106 OF THE INTERNAL REVENUE CODE EXEMPTS HEALTH INSURANCE
ESPECIALLY AFTER WW2 SINCE WAGE CONTROLS. HEALTH INSURANCE
PROVIDED PRIMARILY BY EMPLOYERS AND UNIONS. NOW COST OF HEALTH
INSURANCE APPEARS ON THE W-2-SUBJECT TO TAX IF IT EXCEEDS CERTAIN
THRESHOLDS (“CADILLAC PLANS”)
MEDICARE/MEDICAID CAME IN UNDER JOHNSON IN 1965; LEADERS HAD
HOPED TO EVENTUALLY TO COVER EVERYONE JUST AS SSA ITSELF HAD
EXPANDED TO COVER MOST OF THE POPULATION.
“HILARYCARE” WOULD HAVE REORGANIZED WITH 159 BOARDS THE PRIVATE
MARKET AROUND REGIONAL ALLIANCES AND HMOS AND WOULD INSURE
AFFORDABLE PREMIUMS . THE PLAN WAS DEVELOPED WITH HER “CABAL” OF
500 BUT KEPT OUT THE PUBLIC. THE INSURANCE CARRIERS AND MOST OF THE
MEDICAL PROVIDERS PUSHED BACK. REMEMBER “THELMA AND LOUISE”.
EVEN WITH A MAJORITY THE DEMOCRATS COULD NOT AGREE ON A BILL.
IN 1997 CLINTON PASSED THE CHIP PROGRAM COVERING CHILDREN
KENNEDY AND HATCH MANAGED THIS LEGISLATION THRU.
MGRS OF ACA TRIED TO WORK THRU CONGRESS WITH BOTH PARTIES AND
BROUGHT IN THE INSURANCE CARRIERS AND MEDICAL PROVIDERS.
WHAT CHANGED? UNSUSTAINABLE GROWTH OF MEDICAL INSURANCE COSTS
[1/6TH OF ECONOMY) AND THE NUMBER OF THE UNINSURED/BANKRUPTS
ESPECIALLY WITH THE GREAT RECESSION. ALSO “ROMNEYCARE”
6
The Problem
•
•
•
•
50 million people uninsured
Costs rising
Fragmented coverage and care
Insurance company practices
 don’t cover “pre-existing conditions”
 lifetime and annual limits
 drop people when they get sick
TABLE 4-1: HEALTH INSURANCE IN US BY GROUP (2010)
Insurance Types
People
Share Most Recipients
(millions)
Medicare
47
15% Retirees & Disabled
Medicaid/CHIP
40
13% Poor & Children
ER Insurance
150
48% Low to High Income
(70%-80% of premium by ER)
Private Ins/Other
27
9%
Medium to High Income
Uninsured
50
16% Young adults, Low Income *
TOTAL
314
100%
*includes undocumented immigrants and unsigned up
Medicaid eligibles.
TABLE 5-1: IMPACT OF ACA ON UNINSURED (2019)
Without ACA
With ACA
Uninsured
54 Million
23 Million
Still uninsured
10 Million
Undocumented immigrants
13 Million
Now Insured
31 Million
By Medicaid Expansion*
15 Million
By Healthcare Exchanges
16 Million
Total Americans
54 Million
54 Million
*Assumes all 50 States participate in Medicaid Expansion.
Current Uninsured: 29% of Hispanics, 19% of African-Americans, 15% AsianAmericans, and 14% European-Americans
TABLE 17-1:HOW WILL THE ACA AFFECT COVERAGE IN NEW YORK STATE?
Currently
% Insured
Uninsured
Uninsured
Post ACA Post ACA
Eligible for Medicaid but
1,100,000
42% 110,000- 660,000Unenrolled
440,000
1,000,000
Newly Eligible for Medicaid
90,000
3% 50,00020,000Child70,000
40,000
less Adults 100%-133% FPL)
Access to Exchange Eligible for
700,000
27% 570,000
130,000
Subsidies (0-400% FPL)
Access to Exchange Ineligible for
340,000
13% 80,000
260,000
for Subsidies (over 400% FPL)
Affordability Exemption Takers
200,000
Penalty Payers
60,000
Undocumented
390,000
15% 0
390,000
Immigrants
TOTAL
2,620,000 100% 810,000- 1,460,0001,160,000 1,820,000
THE NYS UNINSURED RATE IS ONLY 12.9% COMPARED TO 17.1% NATIONAL.
TABLE 4-2: WHO BENEFITS MOST/LEAST FROM ACA?
Insurance Types
Comments
Medicare
$455 Billion in Spending Cuts
Medicaid/CHIP
System could be overwhelmed
ER Insurance
Taxed for the first time (“Cadillac
(70%-80% of premium by ER) programs”); “Mini-Meds” drop enrollees
Private Ins/Other
Lower Prices/New Protections
Uninsured
Finally Get Covered at Low/No Cost
Note: it will cost approximately $3,000 per annum for each new enrollee.
$1.1 trillion over 33 million people over 10 years. Plans range $7,200 to
$12,000.
Possible Solutions?
Left
Right
Single payer
Tax Credits
• big government
• free market
• “non-starter”
in this political
environment
• doesn’t solve
all the problems
Solution
• Build on current system
T Mix of public and private
• Fix the problems
T Increase access and affordability
TABLE 1-1: THE TEN TITLES OF THE (PP)ACA
Title I
Quality, affordable health care for all Americans
Title II
The role of public programs
Title III
Improving the quality and efficiency of health care
Title IV
Preventing chronic disease and improving public health
Title V
Health care workforce
Title VI
Transparency and program integrity
Title VII
Improving access to innovative medical therapies
Title VIII
Community living assistance services and supports
Title IX
Revenue provisions
Title X
Manager’s Amendments including the Reauthorization of the Indian
Health Care Improvement Act
1,000 pages+, 10 titles, 67 subtitles, 500 provisions, 1000 places for
regulation-writing, 44 definitions on NYS website, $1B to administer
ACA Vision
• ACA has a two-fold vision – universal
coverage and cost control
• Cost control provisions relate primarily to
changing the way we deliver care
– Payment reforms
– New service delivery models
• Universal coverage provisions utilize a “threelegged stool” approach
15
The Three-legged Stool
• First leg is insurance market reform
(affecting employer and individual coverage)
– Reforms w/out reductions
• Second leg is individual responsibility
• Third leg is insurance purchase subsidies
(individuals and small businesses) and public
programs
– Eligibility streamlining and expansion
– Coordinated enrollment with Exchange
– New marketplace (negotiating leverage for
states) with tax subsidies up to 400% FPL
16
ROCKY ROLL-OUT
• Website problems-volume, complexity,
language/culture, accessibility
• People dropped from plans not meeting
guidelines or just being dropped
• More doctors dropping out from Medicare/
Advantage (11 States) or not in Medicaid
• Few psychiatrists to cover up mental health
and behavioral disorders
• People don’t want Medicaid-only to
purchase on the exchange
• Many premiums higher than anticipated
• Some people not covered still where
Medicaid not expanded or loss of DSH$
• Not enough younger workers buying in yet:
the “the death spiral”
• Using future Medicare cuts to fund
unemployment insurance
• Confusion about (children’s) dental
insurance that is often a separate insurance
• The suspending of Title IX (CLASS) and limits
on the 1099s for payments of $600+ *
• Almost 2000 waivers for large employers for
full compliance
*one of many unrelated tax measures
Some countervailing positive
forces:
 Health premiums have been
leveling off
 Once people are enrolled
especially in
Medicaid it will be hard to
throw them out
 Once people choose a health
care plan they
are likely to stay with despite a
change of jobs
TABLE 9-1: IMPACT OF ACA ON INSURANCE COSTS
NEW ACA BENEFIT/REGULATION
No Pre-existing Condition Rejection
Children Insured on Parents Plans to Age 26
No Caps on Annual Benefits
No Caps on Lifetime Benefits
No Rescissions
“Essential Health Benefits” Must Be Covered (including
preventive health)
Tighter “Medical Loss Ratios” (Less % to overhead)
Restrictions on Premium Discrimination “community rating” (except tobacco use, age [only up to 3x], & wellness)
Public Review by States of “unreasonable increases” in
health insurance coverage
Summary of Benefits up to 4 pages (12 pt font or +)
New Standards on In/External Appeals with assistance
Choice of Primary Care Providers and Emergency Services
PRESSURE ON COSTS
DEFINITELY
INCREASE
SOME INCREASE
TEN “ESSENTIAL BENEFITS”
**Ambulatory patient services
**Emergency services
**Hospitalization
**Maternity and newborn care
**Mental health and substance use disorder
services
(including behavioral health treatment)
**Prescription drugs
**Rehabilitation and habilitative services and
devices
**Laboratory services
**Preventive and wellness and chronic disease
management
**Pediatric services, including oral(dental) and
vision care
Note: grandfathered plans temporarily
exempt from these requirements.
TABLE 12-2: EXAMPLES OF A OR B SERVICES RECOMMENDED BY THE US
PREVENTIVE SERVICES TASK FORCE
RECOMMENDATION
MEN WOMEN PREGNANT CHLN
WOMEN
Alcohol
misuse,
screening
&
behavioral counseling
Cervical cancer Screening
Colorectal cancer Screening
Dental caries in preschool children
prevention
Depression screening
Hearing loss in new born screening
Hepatitis B virus infection screening
HIV screening
Lipid disorder in adults screening
Obesity in adults screening
Sexually-transmitted
infections
counseling
Syphilis screening
Tobacco
use/-caused
disease
screening
Type 2 diabetes mellitus in adults
screening
Visual impairment in children
screening
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
TABLE 6-1A: MEDICAID EXPANSION-MANDATE & GOVERNMENT ASSISTANCE
The Stick
The Individual Mandate
Everyone has to get health insurance or pay a fine
The Carrots Government Assistance in the Form of:
Medicaid Expansion Exchanges
Small Businesses
Fully Subsidized
Partially Subsidized* Tax Credits*
*on a Sliding Scale-estimated average subsidy of $5,290 in 2014
TABLE 8-2: TAX CREDITS FOR SMALL BUSINESSES
DATES
# OF
AVERAGE
CONTRIBUTION TAX CREDIT
EFFECTIVE
EMPLOYEES
YRLY WAGES TO PREMIUM
2010 TO 2013
1 TO 10
UNDER
50% OR MORE
35%
11 TO 25
$25,000
<35%
OVER 25
NONE
2014 TO 2015
1 TO 10
UNDER
50% OR MORE
50%
11 TO 25
$25,000
<50%
OVER 25
NONE
TABLE 8-3: PENALTY FOR EMPLOYERS WITH 50+ EMPLOYEES WHO HAVE AN
EMPLOYEE WHO GETS GOVERNMENT FINANCIAL ASSISTANCE ON A HEALTH
EXCHANGE
TYPE OF EMPLOYER
EMPLOYER NOT
EMPLOYER OFFERING
OFFERING COVERAGE
COVERAGE
THE LESSER OF…
PENALTY PER FULL-TIME
$2,000
$2,000
EMPLOYEE
OR
PENALTY PER EMPLOYEE
NA
$3,000
WHO GETS TAX CREDIT
ON EXCHANGE
PENALTY APPLIES TO
ONLY FOR THE 31ST
ALL EMPLOYEES
EMPLOYEE AND BEYOND
TABLE 5-3: PENALTY FOR NOT OBTAINING INSURANCE (HIGHER OF)
Year
Flat Fee Amt
Percent of Income
Income (individual)
(upto maximum)
2014
$95
or 1.0%
$285
$28,500*
2015
$325
or 2.0%
$975
$48,750*
2016
$695
or 2.5%
$2,085
$83,400*
After 2016 Adjusted for Cost of Living
*NO PENALTY IF UNDER FEDERAL TAX FILING REQUIREMENTS ($10,000)
TABLE 5-4: VULNERABILITY TO “INDIVIDUAL MANDATE” PENALTY
Key Sub-Groups
Total
% in
in
US
2010
Pop
Uninsured (not including 13 M
37 M
12%
undocumented immigrants-70%
patients in NYS public hospitals)
Covered by Medicaid Expansion
14 M
4.5%
(50 States)
Can buy thru Exchanges
14 M
4.5%
(subsidies)
Can buy thru Exchanges (w/o
9M
3.0%
subsidies)
Income (cont’d)
MAGI
MAGI is Modified Adjusted Gross Income is
based on IRS rules.
Section 36B(d)(2) of Internal Revenue code of 1986; 42 C.F.R. § 435.603(d); 42 C.F.R. §
435.603(e)
Gross Income
Gross income = wages, SS income, investment income, unemployment,
pensions, IRA distribution, alimony, and income from self-employment,
Self-Employment Income
Self employment income is income after expenses claimed on schedule C.
Adjustments
Adjustments = alimony, moving expenses, student loan
interest, and self-employed health insurance
contributions
Income Disregards
Old Rule = Many disregard rules.
New Rule = Only 1 disregard: 5% of your
Modified Adjusted Gross Income. 133%
becomes 138%
42 U.S.C. § 1396a(14)(I)(i); 42 C.F.R. § 435.603(d)(1)
Resources
Old Rule – No Resource Test
New Rule – NO CHANGE. No Resource
Test
42 U.S.C. § 1396a(C); 42 C.F.R. § 435.603(g)
TABLE 5-2: ELIGIBILITY FOR GOVERNMENT ASSISTANCE (UNDER 65)
Family of 4
Individual
Percent of
Individuals
Government
Income
Income
Poverty Level Can Get
Subsidies?
Level
Level
(2014)
Coverage in:
Above
Above
Above 400%
Their State’s
No
$94,200
$45,960
Health
Exchange
$31,323$15,282From 133% up Their State’s
Yes
$94,200
45,960
to 400%
Health
Exchange
$23,551$11,491From 100% up Medicaid**
Yes
31,322
15,282
to 133%*
$0-23,550
$0-11,490
From no
Medicaid
Yes
income up to
100%
*an add another 5% in NY
**only in NY and other States that have expanded Medicaid
***initial eligibility based on income for the tax year ending two years prior to the
enrollment period.
TABLE 6-1B: FEDERAL ELIGIBILITY REQUIREMENTS FOR MEDICAID
ENROLLMENT (higher more liberal allows more income)
Household Income as a Percent of Poverty Level
Pregnant Women
133%
Children 6 & Under
133%
Children 7 to 18
100%
Elderly & Disabled
75%
Working Parents
25%
Childless Adults
0%
TABLE 6-2A: PRE-ACA MEDICAID INCOME THRESHOLDS-% OF FEDERAL
POVERTY LEVEL
STATE JOBLESS
CHLRN’S AGES PREGNANT ADULTS
AVG RANK
PARENTS 0-1 1-5 6WOMEN
WO
19
CHLRN
MN
275 275 280 275
275
Not el
276
1
NM
30
69 235 235
235
Not el
173
11
TN
73 134 185 133
250
Not el
146
21
KN
36
62 185 150
185
Not el
128
31
SD
54
54 140 140
133
Not el
110
41
AL
11
25 133 133
133
Not el
89
51
Note: 50 States and DC constitute 51 ranks.
REMEMBER: the higher % States allow more income and are less restrictive.
Alignment is not perfect in
NYS…
Traditional Eligibility
Categories
New
Eligibility
Group
MAGI
41
Coordinated Enrollment
• Single application for tax subsidies,
Medicaid and Child Health Plus
• Applications must have on line, in person,
mail and telephone options
• Data matching through SSA, State Labor,
Treasury & Homeland Security
• Both Exchange & Medicaid agency must
screen for all programs &, if agreement:
– Governmental Exchange can enroll in Medicaid
– Medicaid agency can enroll in subsidies
42
TABLE 7-2: PAYING FOR NEW HEALTH RXCHANGE ENROLLEES UNDER ACA
PLAN NAME
MAX OUT-OF POCKET LIMITS
ESSENTIAL
PERCENT OF
INDIVIDUALS
FAMILIES
HEALTH
COSTS
BENEFITS
COVERED
Bronze
$5,950
$11,900
Yes
60%
Silver
$5,950
$11,900
Yes
70%
Gold
$5,950
$11,900
Yes
80%
Platinum
$5,950
$11,900
Yes
90%
Note: these limits are pegged to Health Savings Accts (2010) and assume above
400% FPL.
TABLE 7-3: COST OF PREMIUMS ON HEALTH EXCHANGES FOR A FAMILY OF
FOUR
% OF FPL
INCOME
% OF INCOME
MAXIMUM
MONTHLY
LEVEL
YR PREMIUM
PREMIUM
400%
$88,200
9.5%
$8,379
$698
300%
$66,150
9.5%
$6,284
$524
250%
$55,125
8.1%
$4,438
$370
200%
$44,100
6.3%
$2,778
$232
150%
$33,075
4.0%
$1,323
$110
133%
$29,327
2.0%
$587
$49
TABLE 15-3: REVENUE GENERATED BY ACA (2010-2019 IN $BILLIONS)
TOTAL REVENUE FOR ACA
$1,218
100.0%
MEDICARE SPENDING CUTS
$455
37.4
MEDICARE PAYMENT RATE CUTS
$196
16.1%
MEDICARE ADVANTAGE CUTS
$136
11.2%
OTHER MEDICARE/MEDICAID CUTS
$123
10.1%
NEW TAXES AND FEES
$414
34.0%
HOSPITAL INSURANCE/UNEARNED
$210
17.2%
INCOME TAX
FEES ON INSURERS & DRUG COMPANIES
$107
8.8%
INDIVIDUAL AND EMPLOYER PENALTY
$65
5.3%
EXECISE TAX ON “CADILLAC” PLANS
$32
2.6%
ALL OTHER REVENUE SOURCES
$349
28.7%
OTHER REVENUE PROVISIONS
$108
8.9%
REINSURANCE & RISK ADJUSTMENT
$106
8.7%
COMMUNITY ASSISTED LIVING
$70
5.7%
POSITIVE EFFECTS ON REVENUE
$46
3.8%
EDUCATION CUTS
$19
1.6%
Note: $143 of $1,218 applied to federal deficit.
HEALTH CARE REFORM
NOT EVERY CHANGE THAT OCCURS FROM NOW
ON IS “OBAMACARE,” BUT PRETTY NEARLY SO.
THE FOLLOWING TWO SLIDES CONTAIN SOME
72 KEY PROVISIONS.
Suspend billing during fraud invest.
Coordination of Dual Eligibles
(SSDI and SSI)
National Practitioner Data Bank (on
Establish adult health quality
fraud, waste and abuse)
measures
Durable medical equipment and
“free choice” voucher allowing any
homehealth svc require face-to-face
worker whose premium would cost
encounter
btwn 8%-9.8% of income to use the
exchange and apply ER’s contribution.
Terminate providers terminated by
Freeze support of support towards
other States or federal govmt or failed Medicare Advantage at 2011 amt.
to payback overpayment
No payments outside the USA
States have year to pay overpayments
State Medicaid coding must be
Must provide access to medical
compatible with the federal govmt
assessment equipment
Discourage fraudulent multiple
FDA to develop protocol biological
employer welfare arrangements
products similar to other medications
Insurers will use model reporting
Continue 340B program limiting price
form (finance, benefits, reg. status)
of outpatient drugs for certain
entities-community hths cntrs, etc.
and orphan drugs
Elder Justice Act sets up Coordinating “Cadillac tax” on group and selfand Advisory Board
insured not individual private market
Mobile/stationary forensic centers
Health Savings Accts more limited in
contribution and no OTC medicine
Train Long-Term Ombudsman
Limit on executive compensation on
programs
large insurance companies
Train nursing home surveyors
$1B temporary tax credit cap on new
therapies
State demonstrations on alternative
Limit on biofuel tax credit to exclude
to tort litigation (weak Senate
black liquor
resolution)
OPM to offer 2 multistate plans
Tax transactions lack economic
substance face 20%-40% tax
Pregnancy Assistance Fund for
Improvement in funding for Indian
parenting teens and women
Health Care Improvement
Additional support for prospective
Comprehensive Environmental
payment in hospitals
Response, Compensation, and
Liability Act of 1980 more support
Medicare Physician Compare website National Center on Minority and
set up
Health Disparities upgraded
Community Health Centers additional Elimination of cosmetic procedures
funding (can serve undocumented)
tax
Navigators
While there is plenty of assistance available, we should
recommend consumers to seek our “Navigators,” who
counsel applicants and submit applications directly. Referral
should be made to the Centers for Independent Living (such
as CIDNY) and other advocacy groups. Undocumented
immigrants still may be able to get some assistance for their
children and, thus, should be recommended to go to agencies
serving immigrants (such as Catholic Charities).
More Information
•
•
•
•
•
www.healthcare.gov
https://nystateofhealth.ny.gov
http://obamacarefacts.com
healthreform.kff.org/the-animation.aspx
www.nymetronra.org