An Overview on the An Overview on the Affordable Care Act and Its Affordable Care Act and Its

Impact on West Virginia Impact on West Virginia

SBHC Back-to-School SBHC Back-to-School WorkshopWorkshop

August 9, 2011August 9, 2011

2

ACA Has Three Main ACA Has Three Main GoalsGoals

Expands health insurance. 95% Expands health insurance. 95% of all Americans covered by of all Americans covered by 20162016

Strong regulations of the Strong regulations of the insurance industryinsurance industry

Cost containment, particularly Cost containment, particularly for Medicarefor Medicare

3

Expansion of Health Expansion of Health InsuranceInsurance

Beginning in 2014, eBeginning in 2014, expands xpands Medicaid to 133 % of the Medicaid to 133 % of the FPL, an estimated 122,000 to FPL, an estimated 122,000 to 157,000 low-income West 157,000 low-income West Virginians will gain coverage.Virginians will gain coverage.

Federal government pays Federal government pays almost all of the costs (95.9%).almost all of the costs (95.9%).

4

Expansion of Health Expansion of Health InsuranceInsurance

An exchange is a marketplace An exchange is a marketplace that allows consumers to that allows consumers to compare and choose policies compare and choose policies that best suits their needs. that best suits their needs. Policies offered through a Policies offered through a web site, 1-800 number, or in web site, 1-800 number, or in person.person.

5

Health ExchangeHealth Exchange The exchange is open to individuals The exchange is open to individuals

who do not have employer who do not have employer sponsored health insurance and sponsored health insurance and small businesses.small businesses.

Significant tax credits for Significant tax credits for individuals between 100% and individuals between 100% and 400% of the FPL. An estimated 400% of the FPL. An estimated 178,000 West Virginians will qualify 178,000 West Virginians will qualify for premium tax credits in the for premium tax credits in the exchange.exchange.

6

An Example of Tax An Example of Tax Credits for Individuals in Credits for Individuals in

the Exchangesthe Exchanges Family of four with annual income Family of four with annual income

of $55,000. They pay $345 a month of $55,000. They pay $345 a month in premiums and the tax credits in premiums and the tax credits equal $840 a month, 70% of the equal $840 a month, 70% of the premium.premium.

Additional subsidies to assist with Additional subsidies to assist with deductibles and copays. All policies deductibles and copays. All policies must have out-of-pocket maximums.must have out-of-pocket maximums.

Source: Kaiser Family Foundation’s Subsidy Calculator at www.kff.org

7

The Exchange and The Exchange and Small BusinessesSmall Businesses

Eligibility for the exchange is Eligibility for the exchange is 50 or fewer employees, about 50 or fewer employees, about 42,000 West Virginia 42,000 West Virginia businesses employing businesses employing 280,000 people.280,000 people.

8

Health ExchangesHealth Exchanges

Offer the promise of higher Offer the promise of higher quality while containing cost.quality while containing cost.

Central issues: Central issues:

Who governs the Who governs the exchanges? exchanges?

What is their mission? What is their mission?

9

Senate Bill 408Senate Bill 408

Adopted in March, SB 408 Adopted in March, SB 408 establishes the West Virginia establishes the West Virginia Health Benefit Exchange. Only Health Benefit Exchange. Only the second exchange established the second exchange established in the country, since passage of in the country, since passage of the ACA.the ACA.

Housed in the Offices of the Housed in the Offices of the Insurance Commissioner, and Insurance Commissioner, and governed by a ten member board.governed by a ten member board.

1010

Board CompositionBoard Composition

Four agency heads:Four agency heads:

Insurance CommissionerInsurance Commissioner

Chair of the Health Care Chair of the Health Care AuthorityAuthority

Commissioner of MedicaidCommissioner of Medicaid

Director of the state’s CHIP Director of the state’s CHIP programprogram

1111

Board Composition Board Composition ContinuedContinued

Three consumer Three consumer representativesrepresentatives Individual consumersIndividual consumers Small businessSmall business Organized laborOrganized labor

Three industry representativesThree industry representatives Insurance companiesInsurance companies Medical providersMedical providers Insurance agentsInsurance agents

12

Difficult ChoicesDifficult Choices

What is the mission of the What is the mission of the exchange?exchange?

Three models:Three models:

Utah: market organizerUtah: market organizer

Massachusetts: active purchaserMassachusetts: active purchaser

Negotiations with insurance Negotiations with insurance companiescompanies

13

Insurance Reforms for Insurance Reforms for Plan Year Beginning Plan Year Beginning

After After September 23, 2010September 23, 2010

End pre-existing limitations End pre-existing limitations for childrenfor children

Young adults can stay on their Young adults can stay on their parent’s policy until age 26parent’s policy until age 26

14

Insurance Reforms for Insurance Reforms for Plan Year Beginning Plan Year Beginning After September 23, After September 23,

20102010 Prohibits lifetime caps and Prohibits lifetime caps and

limits annual caps on benefitslimits annual caps on benefits

Medical Loss RatiosMedical Loss Ratios

15

Insurance Reforms for Insurance Reforms for New Policies Sold After New Policies Sold After

September 23, 2010September 23, 2010 For For newnew plans sold after plans sold after

September 23, 2010:September 23, 2010:Must cover effective Must cover effective preventive measures with preventive measures with no cost sharingno cost sharing

Patient protectionsPatient protections

16

Insurance Reforms 2014Insurance Reforms 2014

An end to pre-existing limitationsAn end to pre-existing limitations

An end to gender underwriting An end to gender underwriting

Guarantee issuance and renewal Guarantee issuance and renewal

Impact on entrepreneurship and Impact on entrepreneurship and impact on industry competitionimpact on industry competition

17

Individual ResponsibilityIndividual Responsibility

Beginning in 2014, individuals Beginning in 2014, individuals must have health insurance or must have health insurance or pay a penalty.pay a penalty.

Exemptions for religious Exemptions for religious objections and financial objections and financial hardship.hardship.

Without individual responsibility, Without individual responsibility, we cannot adopt the major we cannot adopt the major insurance reforms.insurance reforms.

18

Impacts on Small Impacts on Small BusinessesBusinesses

Eliminates medical underwritingEliminates medical underwriting Tax credits for small businessesTax credits for small businesses Access to the exchange and Access to the exchange and

pooling to get the same benefits pooling to get the same benefits as large employersas large employers

1099-MISC reporting 1099-MISC reporting requirements finally repealed requirements finally repealed

19

98%95%88%

67%

32%

0%

20%

40%

60%

80%

100%

Less than10

10 to 49 50 to 99 100 to 249 250 +

Percentage of Employers Who Percentage of Employers Who Offer Health InsuranceOffer Health Insurance

Source: Employee Benefits in West Virginia, Workforce (April 2006)

20

Overall Impact of the Overall Impact of the ACA on EmployersACA on Employers

By 2016By 2016 The impact on premiums for The impact on premiums for

the small group market will be the small group market will be between a 1% increase and a between a 1% increase and a 2% reduction.2% reduction.

The impact on the large group The impact on the large group market will be between zero market will be between zero impact and a 3% reduction.impact and a 3% reduction.

Source: Congressional Budget Office, November 30, 2009

21

Cost ContainmentCost Containment

““The current (payment) The current (payment) system, based on volume and system, based on volume and intensity, does not intensity, does not disincentivize, but rather disincentivize, but rather pays more for overuse and pays more for overuse and fragmentation.” fragmentation.”

Mark McClellanMark McClellan

22

Emphasis on Prevention, Emphasis on Prevention, Primary Care and Public Primary Care and Public

HealthHealth All new plans must cover and may All new plans must cover and may

not charge for preventive services not charge for preventive services that are clinically appropriate.that are clinically appropriate.

Annual wellness visits in Annual wellness visits in Medicare. Preventive services Medicare. Preventive services covered without cost sharing.covered without cost sharing.

Doubles appropriations to Doubles appropriations to community health centers and community health centers and National Health Service Corp and National Health Service Corp and increases appropriations for increases appropriations for public health.public health.

23

Cost Containment Cost Containment ContinuedContinued

Payment reform – moving from Payment reform – moving from fee-for-service to payment that fee-for-service to payment that promotes quality and promotes quality and coordination of carecoordination of care

Reduced payment for hospital Reduced payment for hospital acquired infections and acquired infections and preventable hospital readmissionspreventable hospital readmissions

Accountable Care OrganizationsAccountable Care Organizations

24

Cost Containment Cost Containment ContinuedContinued

Reduced payment to Medicare Reduced payment to Medicare Advantage companiesAdvantage companies

Reduced Medicare payments Reduced Medicare payments to hospitals, skilled nursing to hospitals, skilled nursing homes, home health agencies, homes, home health agencies, & hospice& hospice

25

Reduction in the Growth Reduction in the Growth of Medicareof Medicare

These reductions reduce the These reductions reduce the annual growth in Medicare annual growth in Medicare from 6.8% to 5.5%, according from 6.8% to 5.5%, according to the Commonwealth Fundto the Commonwealth Fund

Commonwealth Fund: The Impact of Health Reform on Health System Spending, May 2010

2626

Kaiser Family Kaiser Family Foundation QuizFoundation Quiz

Ten true or false questionsTen true or false questions 36% of Americans got 0 to 4 36% of Americans got 0 to 4

questions rightquestions right 40% got 4 to 5 questions right40% got 4 to 5 questions right 25% got 7 to 10 questions right25% got 7 to 10 questions right Only 0.4% of Americans got all Only 0.4% of Americans got all

ten questions rightten questions right

2727

Knowledge Equal Knowledge Equal Support?Support?

13%

42%44%38%

34%28%

0%

10%

20%

30%

40%

50%

Low Score

MiddleScore

High Score

Repeal All

Expand

28

Opportunities to Opportunities to Be InvolvedBe Involved

Stories are powerfulStories are powerful

There is an opportunity for There is an opportunity for people to share their stories people to share their stories on our web site:on our web site: www.wvahc.org

2929

Opportunities to Opportunities to Be InvolvedBe Involved

OIC has scheduled Consumer OIC has scheduled Consumer Advocate meetings on the Advocate meetings on the development of the exchange development of the exchange on the third Monday of the on the third Monday of the month at 1 pm. You can month at 1 pm. You can participate by conference call participate by conference call or in person. Contact Perry or in person. Contact Perry Bryant to participate.Bryant to participate.

3030

Opportunities to Opportunities to Be InvolvedBe Involved

Health Care Implementation Health Care Implementation Coalition meets every other Coalition meets every other month. You can participate by month. You can participate by conference call or in person. conference call or in person. Contact Perry Bryant to be Contact Perry Bryant to be involved in the Health Care involved in the Health Care Implementation Coalition.Implementation Coalition.

31

Contact InformationContact Information

Perry BryantPerry Bryant

West Virginians for Affordable West Virginians for Affordable Health CareHealth Care

1544 Lee Street1544 Lee Street

Charleston, West Virginia 25311Charleston, West Virginia 25311perrybryant@suddenlink.net www.wvahc.org