Colorado’s Changing Health Insurance

Landscape

May 2, 2013

Progressive 15 Summit

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• CHI is a trusted and leading source of credible health information for Colorado leaders.

• We are nonpartisan. We do not take positions on bills.

• Our insight is used to:

Colorado Health Institute: An Introduction

• How Coloradans get health insurance.• What’s changing.

Today’s Discussion

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• I can’t afford health insurance. Will that change in 2014?

• What’s happening to my Medicare?

• I employ a handful of people. Will I be required to buy them health insurance?

• Can large employers just switch everyone to part-time and avoid this whole mess?

Questions You May Be Asking Yourself

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• Change in health insurance is coming for many of you.

• Small employers will have complex choices.

• Heads up! The Affordable Care Act definition of “affordability” may not match yours - or that of people in your community.

Three Takeaways

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Coverage Today

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Why Does Health Insurance Matter?

Condition Uninsured Adults Compared to Insured Adults

Cancer More likely to be diagnosed at advanced stage

Heart Attack At greater risk of death

Diabetes Significantly worse glycemic control

Trauma Higher mortality rate in severe car accidents

Source: Institute of Medicine. “America’s Uninsured Crisis”

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Geography Matters

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Geography Matters

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Geography Matters

Who is covered by individual policies? About 8 percent of Coloradans.

At a Glance:

7.7%

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Individual Market in Colorado

High-Risk PoolsIndividual (or Non-Group)Market

• Not manymandated benefits• Can be turned

down for a pre-existing condition

• Insurance plans can’t reject individuals based on pre-existing health conditions.• Implemented in 2010 for children • Will be implemented in 2014 for adults

• Plans agreed to provision only if coupled with “individual mandate.”

Understanding Guaranteed Issue

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Understanding the Individual Mandate

Beginning in 2014, individuals and families will be required to have health insurance or pay penalties:

• 2014 - Greater of $95 or 1 percent of income• 2015 - Greater of $325 or 2 percent of income• 2016 - Greater of $695 or 2.5 percent of income

• May be eligible for premium credits for health insurance depending on income level.

• Can access credits for individual insurance through the Connect for Health Colorado Exchange starting in 2014.

What’s in Store for the Individual Market?

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Levels of Premium Credits

Federal Poverty Level (FPL) Percent of Income for Health Insurance

Up to 133% FPL 2% of income

133-150% FPL 3-4% of income

150-200% FPL 4-6.3% of income

200-250% FPL 6.3% - 8.05% of income

250-300% FPL 8.05-9.5% of income

300-400% FPL 9.5% of income

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The government will provide tax credits to families buying health insurance through the Exchange, limiting the percent of annual income spent on health insurance.

For a family of four, at 400% FPL in 2012:• Annual income: $92,200•Maximum percent of income for health insurance: $8,759

Source: Kaiser Family Foundation

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What is a Health Insurance Exchange?

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Exchange Projections by County by 2016

Individual Exchange Percentage of Population

COLORADO 316,000 6.5%Adams 28,324 6.2%Arapahoe 40,060 7.2%Cheyenne 144 7.3%Douglas 11,249 4.3%Elbert 1,278 7.7%Kit Carson 515 6.8%Larimer 17,509 6.1%Lincoln 392 7.3%Logan 1,319 7.0%Morgan 1,748 6.6%Phillips 288 7.1%Sedgwick 177 7.2%Washington 317 7.2%Weld 20,711 7.9%Yuma 633 6.8%

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Who is covered by Employer-Sponsored Insurance?Nearly two of three Coloradans.

At a Glance:

57.8%

Small Group Market in Colorado

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• 1-50 employees

• Mandated benefits

• Guaranteed issue and renewal

• Premium rating:• Smoking status • Industry • Age • Family size • Location

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Colorado Employers and Health Reform: Carrots and Sticks

• Eligible for tax credits if insurance is offered.

• Small Business Health Options Program (SHOP) Exchange in 2014

• For businesses < 100 employees

What’s in Store for the Small Group Market?

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Defined Contribution

Defined Benefit

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Carrots and Sticks:Colorado Employers and Health Reform

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Understanding Employer Responsibilities

• Large employers not offering insurance pay penalty ($2,000 per full-time employee) if employee receives a tax credit.• Large employers offering insurance

will pay penalty if at least one full-time employee receives premium tax credit.

What Do Large Employers Need To Provide?

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Affordable: Employee’s share is 9.5

percent or less of household income

Adequate:Employer covers at least 60 percent of

total allowed cost of benefits

Uninsured Gaining Employer-Sponsored Coverage by 2016

Uninsured to ESI Percentage Increase in

ESI Due to Uninsured

COLORADO 160,000 6.3%

Adams 17,509 7.7%Arapahoe 19,849 6.7%Cheyenne 84 8.6%Douglas 4,573 2.3%Elbert 750 8.6%Kit Carson 302 8.6%Larimer 8,051 4.8%Lincoln 230 8.6%Logan 774 8.6%Morgan 1,025 8.6%Phillips 169 8.6%Sedgwick 104 8.6%Washington 186 8.6%Weld 8,690 6.2%Yuma 371 8.6%

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Who is covered by Medicaid? Low-income children, parents, pregnant women, individuals with disabilities and the elderly.

At a Glance:

• Would expand Medicaid to 133% of FPL.

• Passed House and Senate

• Governor Hickenlooper supports

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S.B. 200 – Medicaid Expansion

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Eligibility Standards for Programs in Colorado

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NOTES: Federal health reform does not make changes to Medicaid eligibility for seniors and people with disabilities. CICP will likely continue to serve individuals who do not qualify for Medicaid or CHP+ or who are uninsured or underinsured.

Eligibility Standards in Colorado After Expansion

New Medicaid Enrollees Percentage Increase in Medicaid and CHP+

COLORADO 210,942 26% Adams 19,668 19% Arapahoe 24,175 27% Cheyenne 112 38% Douglas 5,299 39% Elbert 1,005 55% Kit Carson 394 25% Larimer 13,707 35% Lincoln 305 38% Logan 1,014 29% Morgan 1,322 21% Phillips 223 32% Sedgwick 137 34% Washington 245 34% Weld 8,540 17% Yuma 484 24%

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New Medicaid Enrollees by 2016

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Who is covered by Medicare?People 65 and older as well as younger people with disabilities.

At a Glance:

9.2%

Nearly All Colorado Seniors Have Medicare

Source: 2011 Colorado Health Access Survey

Many also have supplemental insurance

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• Phases in coverage of the “donut hole” (Medicare Part D drug benefit coverage gap).

• Improves coverage of prevention services.

• Changes and reductions in payment.

• But uncertainty about providers

Health Reform: Mostly Good News for Seniors

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Who is Uninsured in Colorado?About 16 percent of the population, up from about 14 percent in 2009.

At a Glance:

15.8%

Estimate: 390,000 Will Still be Uninsured

Source: Colorado Health Benefit Exchange Research, Prepared by Jonathan Gruber, January 2012

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A Few Last Notes37

• Answer: For many of us, insurance will become more affordable.• Subsidies for families up to 400% of FPL• Preventive Services with no cost sharing• But many of us will still pay something.

I Can’t Afford Health Insurance. Will That Change in 2014?

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• Answer: You won’t be required.

• Tax credits available for small employers (1-25 employees)• Think about defined contributions (not a defined

benefit)• Individuals (your employees) will have to get

insurance

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I Employ a Handful of People. Am I Going to Have to Buy Them Health Insurance?

• Answer: You could, but …

• Individual mandate still holds

• Benefits packages are a competitive differentiator

• “Combinations” of part-timers add up to full time equivalents (IRS rules)

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As a Large Employer, Can I Switch Everyone to Part-Time and Avoid This Whole Mess?

• Answer: Mostly things that are helpful to seniors.

• The closing of the donut hole• Covering preventive services

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What’s Happening to My Medicare?

• Change in health insurance is coming for many of you.

• Small employers will have complex choices.

• Heads up! The Affordable Care Act definition of “affordability” may not match yours - or that of people in your community.

Three Takeaways

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Amy Downs downsa@coloradohealthinstitute.org