Health care that’s better, safer, less costly
Kit Wagar
ACA Specialist, Region 7
U.S. Department of Health and Human Services
(Missouri, Kansas, Iowa & Nebraska)
Reasons for change
The status quo was unsustainable:

Health insurance premiums for family coverage at large
companies rose 114 percent from 2000 to 2010
 At small businesses, premiums increased 85 percent

17.9 percent of the nation’s entire economic output is tied
up in health care

The share of Americans under 65 covered by job-based
health insurance had fallen for nine years in a row, falling to
59 percent in 2009

62 percent of all personal bankruptcies are at least
partly the result of medical expenses
Medical costs outstrip our ability to pay

Few people can afford significant medical services
on their own:
 A study released in May 2011 by the U.S. Department of
Health and Human Services found:
 Uninsured patients walk away from all or part of their hospital
bills 95 percent of the time
 The average uninsured family can afford to pay only 12
percent of a typical hospital bill
 Even patients with assets in the top 10
percent among the uninsured can pay the
full bill only half of the time
Everyone pays to treat the uninsured

Nationwide, uninsured patients receive as much as
$73 billion a year worth of uncompensated care
 (Health Affairs, September 2008)

Uninsured patients add more than $1,000 to the
typical health insurance policy as hospitals shift cost
to customers with the ability to pay

Eventually, everyone uses
the health care system
because of illness or injury
Affordable Care Act at a glance

Health reform seeks to:
 improve the quality of health care
 lower the cost of medical care and, in turn, health insurance
 increase access to that care
 expand the base of people contributing to the system
 reduce fraud

Virtually everyone plays a role
 Large employers are required to contribute
 Workers are required to contribute
 32 million newly insured lower the average cost
 Doctors and hospitals are required to improve care
 New programs control rising costs and improve delivery of care
Improving access to insurance
Help for small employers

Tax credits for small business, including farmers
 These credits cover up to 35 percent of the cost of employee
health insurance, beginning in 2010
 For nonprofit employers, the maximum credit is 25 percent
 The tax credit rises to a maximum of 50 percent in 2014
 Rises to 35 percent for nonprofits

In 2011, more than 360,000 employers nationwide used this credit

Eligibility for the credit:
 An employer must pay at least half the cost of health coverage for
workers based on the individual rate
 Maximum credit is available to employers with fewer than the
equivalent of 10 full-time workers and average wages of less than
$25,000 a year
 The credit phases out as the number of employees rises beyond 10
and average wages rise beyond $25,000 a year
 Credit ends at 25 employees or average annual wages of $50,000
Improving access for young adults

Young adults can now stay covered under a parent’s
health plan until age 26, if the plan covers dependents
 Coverage available even if the child is not in school, is
married or is living apart from the parent
 This is especially important for recent graduates, young
adults in entry-level jobs and graduate students
 Until 2014, a narrow exception exists for adult children who
have an offer of employer-sponsored insurance
 55,000 young adults in Missouri gained coverage in 2011
 25,000 young Kansans gained coverage

Filling gaps in coverage
For Children:
 Children under age 19 can no longer
be denied insurance coverage
because of pre-existing conditions
 Funding for the Children’s Health Insurance Program is
increased and extended through 2015
 Covers children from homes modestly above the poverty level
Beginning in 2014, Medicaid will cover foster children who
have aged out of the foster care system until age 26
Making insurance more valuable
Improving health insurance

The Patients’ Bill of Rights

For most individual and group health plans that begin or
renew after Sept. 23, 2010:

Lifetime limits on benefits are eliminated
 Annual dollar limits on
insurance coverage are phased
out and end in 2014
 No more dropping coverage
based on an unintentional
mistake on an application
 You now have the right to see
how insurers plan to spend any
rate increase larger than 10%
Making insurance more affordable

More bang for your buck:

Beginning this year, insurers serving individuals and small
employers must spend at least 80 percent of premiums on
health care services or improving the quality of care
 Insurers serving large employers must spend at least 85
percent of premiums on health care or quality improvement
 Insurance companies that fail to
meet these standards must pay
rebates to customers
Insurance rebates for 2011
 First rebates went out in July 2012


Rebates totaled more than $1.1 billion nationwide
12.76 million consumers received an average rebate of
$151 per family
 In Kansas, rebates totaled:
 $4,139,508
 $3.5 million in the individual market
 $603,559 in the small group market
In Missouri, rebates totaled:
 $60,664,562
 $16.3 million in individual market
 $38.4 million in small group market
 $5.9 million in large group market
Keeping people healthier

Lowering costs by improving health
Preventive care with no cost sharing
 All new health plans must cover many preventive services
without charging a deductible, co-pay or co-insurance
 No-fee preventive services benefit patients, insurers and
employers through lower future medical costs
 These services include:
 colonoscopies
 vaccinations for flu, tetanus,
measles, hepatitis A&B
 help quitting tobacco
 aspirin therapy
 screenings for diabetes,
obesity, high blood pressure,
depression and alcohol abuse
Preventive care specifically for women
No-cost prevention services for women include:
 Mammograms for women over 40
 Cervical cancer screening
 Breast cancer chemoprevention
counseling for at-risk women
 STI screening for women at higher risk
 Folic acid supplements
 Genetic screenings for pregnant women
 Osteoporosis screening for women over 60
Keeping women healthy

Insurers must now provide 8 new preventive services
specifically for women

These services carry no out-of-pocket cost and include:
 human papillomavirus (HPV) DNA testing every three years, regardless of





pap smear results, for women over 30
breastfeeding support and counseling, including breast pumps and
nursing-related supplies
gestational diabetes screening
well-woman visit to the doctor once a year
domestic violence counseling
contraception, including:
 all FDA-approved methods
 sterilization procedures
 patient education and counseling

Available under policies that begin or
renew after Aug. 1, 2012
Strengthening Medicare

New Medicare benefits began in 2011:
 a free annual wellness visit
 no-cost preventive care
 lower cost for prescription drugs
 In 2013, Medicare participants who hit the
doughnut hole coverage gap receive:
 a 52.5% discount on brand-name drugs
 a 21% discount on generic drugs
 In 2011, 3.5 million seniors saved $2.1 billion, an average of $605 each
 In 2012, 3.5 million seniors saved $2.5 billion, an average of $706
 In Missouri:
78,585 seniors saved a total of $46.76 million in 2011
75,201 seniors saved $48.8 million in 2012
 In Kansas:
38,692 seniors saved $23.44 million in 2011
36,383 seniors saved $24.05 million in 2012
The discount rises every year until the coverage gap is gone in 2020
Improving access to health care
Expanding access to care
 The Affordable Care Act provides $11 Billion to
expand community health centers over the next 5
years
 $9.5 billion is designated for new
health centers or expanding primary
care services at existing health centers
 An additional $1.5 billion will support
major construction and renovation
projects at health centers nationwide
 These changes are designed to double the 19 million
patients who receive treatment each year at community
health centers
Expanding the health care workforce

Rebuilding the Primary Care Workforce
 $1.5 billion for National Health Service Corps to place
providers in underserved areas
 New scholarships and loan
repayment incentives to provide
underserved areas with more:
 primary care doctors
 nurse-practitioners
 physician assistants
 mental health counselors
 Since 2008, the number of primary care providers has grown:
 by 353 in Missouri, the third most in the entire nation
 by 94 in Kansas, 25th most in the nation
 The goal is to train and place 16,000 new primary care
professionals throughout the nation by 2016
More resources for primary care
 The law set aside $250 million to expand primary care
 $168 million to train primary care physicians; more than 500 by 2015
 $32 million to train new physician’s assistants; more than 600 by 2015
 $30 million to train new nurse practitioners; more than 600 by 2015
 At least 75 percent of new residency
slots for 5 years must be in primary care
 From 2011 to 2015, Medicare fees to
primary care providers and general
surgeons are increased by 10 percent
 In 2013-14, Medicaid fees to primary care
physicians increase to the Medicare rate
 Includes nurse-practitioners working
under a doctor’s supervision
 Federal government picks up entire cost
Lowering costs, improving quality
Reducing costs by improving care

Linking Medicare payments to quality care:
 New payment models will pay for keeping people healthy,
not just for doing procedures
 Hospital payments will be based in part on improving care,
reducing infection rates and reducing hospital readmissions within 30 days
 Effective October 2012
 First year readmission penalties:
Missouri
 0.348% on average
 22 hospitals no penalty
 5 hospitals maximum 1%
Kansas
0.206% on average
17 hospitals no penalty
2 hospitals max penalty
 Doctors’ fees will be based partly on keeping patients healthy
and how well their patients recover from illness or injury
 Effective January 2015
Incentives to improve care
 Hospitals will be evaluated on 13 measures of care quality:
 Heart attack care
 Pneumonia treatments
 Surgery and post-op care
 Patient satisfaction
 Hospitals will be scored two ways:
 Performance relative to other hospitals
 Performance improvement over time
 The higher of those scores on each measure will be used in
determining incentive payment
 This policy gives hospitals the financial incentive to make
continuous improvement in the way they deliver care
 Continuous quality improvement
 Measures that reach high compliance scores will eventually be replaced
Accountable Care Organizations
 Accountable Care Organizations are providers and suppliers
working together to manage and coordinate health care
 ACOs are expected to save at least $960 million over 3 years by:
 providing better care
 preventing illness
 reducing redundant tests and
unnecessary hospital admissions
 As of January 2013, 259 ACOs serve
more than 4 million Medicare patients
 Iowa has 6
 Missouri has 4*
 Nebraska has 2
 Kansas has 0*
(St. Louis, St. Joseph, Kansas City, Springfield)
 *Several ACOs in this region serve more than one state. Missouri ACOs based
in Kansas City and St. Joseph also serve patients in Kansas
Fighting fraud

The law boosts spending on investigations by $350 million

The new emphasis is already paying off:
 In fiscal year 2009, anti-fraud efforts recovered:
 $2.51 billion for Medicare, up 29 percent from 2008

$441 million for Medicaid, up 28 percent
 In 2010 and again in 2011, total recoveries for Medicare and
Medicaid rose to more than $4 billion
 In 2012, recoveries hit a record $4.2 million
 Whistle-blower lawsuits recovered record amounts two years
in a row:
 $2.8 billion in 2011
 $2.5 billion in 2010
What’s ahead
Health Insurance Marketplaces
Beginning in 2014, insurance marketplaces will allow
you to look for the plan that is best for you
 You might think of these as a
Turbotax for health insurance
 Insurance options available at
your fingertips
States can design their own
Marketplaces or the federal
government will run the marketplace
 These will be the same
marketplaces where members of
Congress will buy their health
insurance plans
Health Insurance Marketplaces

Insurance Marketplaces allow small businesses with
fewer than 100 employees to pool their risk
By buying as a group,
small employers will get the
kinds of discounts that large
employers already receive
The larger number of
people in the plan will lower
administrative costs
The larger pool will reduce
the impact on rates of one
worker with high medical
costs
Marketplaces – A fairer system
 In 2014, private insurers will no longer deny coverage or
charge a higher price based on a person’s medical history
 Prices for individuals will vary based only on four criteria:
 Age
–
a maximum of 3 times the price of younger applicants
 Tobacco use –
 Location
–
a maximum of 50 percent higher than non-smokers
states can establish rating areas
 Family size
 Ending gender discrimination
 Women will no longer be charged more
than men the same age
 Currently, 22-year-old women are often
charged 50 percent more than men their age
simply because women bear children
A fairer market – Essential Health Benefits
 Currently, many plans offered in the individual market leave out
major categories of coverage
 Consumers often don’t realize the omission until they need the coverage
 62 percent don’t have maternity benefits
 34 percent don’t cover substance abuse
 18 percent don’t provide mental health coverage
 9 percent don’t cover prescription medication
In 2014, all health insurance plans must cover the following services:





Ambulatory patient services
Emergency Services
Hospitalization
Maternity and newborn care
Mental health and substance abuse
services, including behavioral health
treatment
 Prescription drugs
 Rehabilitative and habilitative
services and devices
 Laboratory services
 Preventive and wellness services
and chronic disease management
 Pediatric services, including oral and
vision care
Expanding mental health parity

The Affordable Care Act extends full coverage of mental health
and substance abuse services to more than 62 million
Americans beginning in 2014
 The law extends parity requirements to individual and small group
plans beginning in 2014
 30.4 million who now have insurance will obtain mental health and
substance abuse coverage on par with general medical services
 5.1 million people whose insurance now excludes mental health or
substance abuse services will gain access to those services
 27 million people who currently lack health insurance will obtain
insurance, including mental health coverage
 25 percent of people without health insurance have a mental health
condition, a substance abuse problem, or both
Making insurance affordable
Help for the middle class
Beginning in 2014:

Workers without health benefits receive tax credits to help
buy insurance through the marketplaces
 Credits will be available up to 400 percent of the poverty level
 Maximum income of:
 $45,960 for 1 person
 $94,200 for family of 4

The IRS estimates the average credit will be more than $5,000
 These tax credits allow family farmers, the self-employed and
small business owners to compete for employees with large
companies that provide generous benefits
Affordable Health Plans
 Expected contribution to insurance premiums
 For an individual:
Annual Income % of FPL
 $13,788
120*
 $16,200
141
 $20,107
Expected
Contribution
Approximate
Monthly Premium
2% of income
Reduction in
Out-of-Pocket
Maximum
Consumer’s
Portion of
Total costs
$23
2/3
6%
3.5%
$47
2/3
6%
175
5.15%
$86
2/3
13%
 $25,852
225
7.18%
$155
1/2
27%
 $31,597
275
8.78%
$231
0
30%
 $40,215
350
9.5%
$318
0
30%
 Incomes below 250% of the poverty level qualify for lower co-pays and
deductibles
* This level of income would be eligible for Medicaid in states that expand their programs in
accordance with the Affordable Care Act
Affordable Health Plans
 Expected contribution to insurance premiums
 For a family of 4:
Annual Income % of FPL
 $28,260
120*
 $33,205
141
 $41,212
Expected
Contribution
Approximate
Monthly Premium
2% of income
Reduction in
Out-of-Pocket
Maximum
Consumer’s
Portion of
Total costs
$47
2/3
6%
3.5%
$97
2/3
6%
175
5.15%
$177
2/3
13%
 $52,987
225
7.18%
$317
1/2
27%
 $64,762
275
8.78%
$474
0
30%
 $82,425
350
9.5%
$653
0
30%
 Incomes below 250% of the poverty level qualify for lower co-pays and
deductibles
* This level of income would be eligible for Medicaid in states that expand their programs in
accordance with the Affordable Care Act
Key requirements of a Marketplace

Marketing of policies
These functions include:
 Toll-free phone number
 Website
 Presenting benefits in a standardized format
 Providing electronic calculator to determine actual cost of policy
 Includes premium subsidies for less than 400% of poverty level
 Cost-sharing reductions for households at less than 250% of poverty
 Determining eligibility for Medicaid and CHIP
 Certifying people too poor to make personal responsibility payments
 Certifying the plans that qualify to be sold on the marketplace
 Active vs. passive marketplace
Marketplace operations

Enrollment:
 Coverage through the Marketplaces will begin on Jan. 1, 2014
 The first enrollment period will begin on Oct. 1, 2013, and end on
March 31, 2014
 In subsequent years, consumers can enroll between October 15
and December 7

Operations:

One section serves individuals; another is for small business
 Small employers can choose an employee plan
 Or they can offer employee choice
 (Employee choice is not available in federally run exchanges until 2015)
 Employee choice means employers choose a level of coverage and a
standard contribution per employee
 Employees choose a plan and apply the employer contribution to any
health plan within that level of coverage
No wrong door to enrollment
Simply Awesome Consumer Site:
www.Healthcare.gov
New one-stop
consumer site for
information on
insurance options
Details about the
new consumer
protections under the
Affordable Care Act
Information at your
finger tips allows you
to shop for insurance
based on benefits,
prices, insurer ratings
Re-designed Healthcare.gov
 Designed to evolve throughout the
year as we near Open Enrollment
 Scheduled to go live in June
 Links to key questions consumers
have about health insurance,
eligibility & enrollment
 Drive people to personally
connect so the marketplace can
reach them later
 Direct users to appropriate
destination to the state they live in
 Footer contains links for nonconsumer users to access
information important to them
Interactive insurance application
Dynamic – the questions change depending on the
applicant’s answers
 Directs applicant to private insurance,
Medicaid, Children’s Health Insurance
Program, Tri-Care
 Determines eligibility for insurance
affordability programs
 Pings data hub to confirm job status,
income from previous years
 The applicant has an opportunity to
note changes in circumstances
 The paper applications are available at:
 http://cciio.cms.gov/resources/other/index.html#hie (Look under “forms”)
 Video demonstrations of the online application are available here:

http://www.enrollamerica.org/blog/the-single-streamlined-application-is-here
 Video demonstrations show the process for:
 a family of 3 in Missouri
 a single man in Arizona
Finding the right health plan

Once an application is filed, the
website offers:
 A comparison tool to evaluate policies
 A calculator to estimate each plan’s:
 premiums
 co-payments
 deductibles
 maximum out-of-pocket costs
 Filtering options let the user narrow the
choices based on specific criteria
 The most relevant plans are presented
first, based on the applicant’s answers
 Key data listed with links to plan details
Corporate responsibility
In 2014:

Almost everyone will be required to contribute to the
health care system
 Large employers – 50 or more full-time workers – can
choose either to:
 provide health insurance benefits to their employees, or
 make shared responsibility payments to cover the cost of the
tax credits that help employees buy private insurance
 $2,000 per employee (excluding the first 30 employees)
More than 96 percent of firms with more than 50 workers
already offer health insurance to their employees
 Small employers – those with fewer than 50 full-time workers –
are exempt from any shared responsibility payments
Individual responsibility
In 2014:

Individuals can choose to:
 carry health insurance, or
 pay a fee to offset the cost of treating the uninsured

The fee is the greater of:
 $95 per person in the household or 1% of income in 2014
 $325 per person or 2 percent of income in 2015
 $695 per person or 2.5% of income in 2016 and thereafter
 Maximum per household is the income percentage or 3 times the flat fee
 The flat fee for each child is half the adult amount
What about people too poor to buy
insurance?
Expanding access to insurance

For people with incomes too low to buy health
insurance:
 Medicaid expands to cover families with income up to
133 percent of the poverty level
 Single adults will be eligible as well as families with
children
 Hospitals will no longer shift the cost of this care to people
with insurance
 Maximum annual income of:
 $15,282 for 1 person
 $31,322 for a family of 4
The Supreme Court wrinkle
States have a choice
 States have the option:

They can choose to expand
Medicaid coverage and receive
generous federal funding
 Or states can refuse the expansion
and continue receiving the funding
they receive for their current
Medicaid programs
The Medicaid expansion
Beginning in 2014, federal aid to states rises dramatically
 For new enrollees, the federal government picks up:
 100 percent in 2014-2016;
 95 percent in 2017;
 94 percent in 2018;
 93 percent in 2019; and
 90 percent in 2020 and each year thereafter

From 2012-21:
 CMS Actuary estimates federal spending will cover about 94
percent of new Medicaid expenditures; states pay 6 percent

This estimate did not consider states’ savings from:
 less uncompensated care
 less need for State-financed health programs
 greater efficiencies in the delivery of care
The choice in Missouri

In May 2010, the Kaiser Family Foundation did the
most widely quoted study on the Medicaid expansion
 The study projected two scenarios:
 57 percent standard enrollment (current national average)
 75 percent enhanced enrollment (because of increased emphasis)




From 2014 to 2019:
New enrollees:
Reduction in uninsured:
New state spending:




Spending per person:
New federal spending:
Match Ratio:
State spending beyond
current law :
Standard
Enhanced
307,872
46%
$431 million
437,735
71%
$773 million
$11.95 per year
$8.4 billion
19.5 to 1; (95.1%)
1.7%
$21.43 per year
$10.2 billion
13 to 1; (93%)
3.1%
The choice in Kansas

In May 2010, the Kaiser Family Foundation did the
most widely quoted study on the Medicaid expansion
 The study projected two scenarios:
 57 percent standard enrollment (current national average)
 75 percent enhanced enrollment (because of increased emphasis)




From 2014 to 2019:
New enrollees:
Reduction in uninsured:
New state spending:




Spending per person:
New federal spending:
Match Ratio:
State spending beyond
current law :
Standard
Enhanced
143,445
51%
$166 million
192,006
75%
$260 million
$9.64 per year
$3.48 billion
21 to 1; (95.4%)
1.7%
$15.09 per year
$4.03 billion
15.5 to 1; (93.9%)
2.6%
Questions?