Overview of theOverview of the

Patient Protection and Patient Protection and Affordable Care Act of Affordable Care Act of 20102010

For CWA LeadersFor CWA Leaders

April 2010April 2010

National Health Care National Health Care Reform Finally Reform Finally AchievedAchieved Not our bill, but it Not our bill, but it

moves us forward.moves us forward. A tough fight.A tough fight. A fight to protect A fight to protect

CWA members and CWA members and retirees, to retirees, to improve our improve our bargaining bargaining position, and to position, and to achieve progress achieve progress for all.for all.

CWA Leads on Issues CWA Leads on Issues Critical to Our Members and Critical to Our Members and RetireesRetirees

Retiree health careRetiree health care– Coalitions; ads; joint visitsCoalitions; ads; joint visits– Result: $5 billion reinsurance Result: $5 billion reinsurance

trust fund; premium rating limitstrust fund; premium rating limits

Tax on high-cost health plansTax on high-cost health plans– Reports, briefingsReports, briefings– Labor & Coalition letters, visits & Labor & Coalition letters, visits &

adsads– Patch thru calls & worksite callsPatch thru calls & worksite calls– Result: delayed effective date to Result: delayed effective date to

2018; reduced tax by 80%2018; reduced tax by 80%

Reform & Reform & CWA Negotiated PlansCWA Negotiated Plans We keep our plans: existing bargained-for plans We keep our plans: existing bargained-for plans

are exempt from most changes through expiration.are exempt from most changes through expiration.

Some good reforms apply after contract expiration:Some good reforms apply after contract expiration:

– No exclusions for pre-existing conditions.No exclusions for pre-existing conditions.

– No lifetime or annual limits on benefits.No lifetime or annual limits on benefits.

– Children covered until age 26.Children covered until age 26.

– Preventive care with no deductible or copay.Preventive care with no deductible or copay.

– Waiting period for coverage limited to 90 days.Waiting period for coverage limited to 90 days.

Implementation of reforms is subject of bargaining.Implementation of reforms is subject of bargaining.

More on Reform &More on Reform & CWA Negotiated PlansCWA Negotiated Plans

Limits pre-tax health Limits pre-tax health FSA contributions to FSA contributions to $2,500 per year, $2,500 per year, indexed for inflationindexed for inflation

Penalty increased to Penalty increased to 20% if HSA funds used 20% if HSA funds used for non-medical claimsfor non-medical claims

No reimbursement of No reimbursement of over-the-counter meds over-the-counter meds in health accounts in health accounts unless prescribedunless prescribed

Reform & RetireesReform & Retirees

As of 1/1/11 Medicare As of 1/1/11 Medicare covers prevention & covers prevention & screenings with no screenings with no deductibles or co-paysdeductibles or co-pays

““Doughnut hole” in Doughnut hole” in Medicare Rx plan Medicare Rx plan closed by 2020closed by 2020

$5 billion trust to help $5 billion trust to help cover high-cost claims cover high-cost claims of retirees age 55 - 64of retirees age 55 - 64

Reform & CWA Reform & CWA EmployersEmployers

Must negotiate over new benefit requirements Must negotiate over new benefit requirements after current bargaining agreements expire.after current bargaining agreements expire.

Waiting periods for new employees limited to no Waiting periods for new employees limited to no more than 90-days.more than 90-days.

Must provide vouchers to some low-income Must provide vouchers to some low-income workers to purchase coverage through workers to purchase coverage through exchanges. exchanges.

Must report value of health plan on employee Must report value of health plan on employee W-2s (not taxable.)W-2s (not taxable.)

Small employers can purchase health coverage Small employers can purchase health coverage through exchanges; may qualify for subsidies.through exchanges; may qualify for subsidies.

More on Reform and CWA Employers More on Reform and CWA Employers

–– Excise Tax on High-Value Excise Tax on High-Value PlansPlans 40% tax on high-cost plans delayed to 2018 40% tax on high-cost plans delayed to 2018

applies to cost above thresholds.applies to cost above thresholds.

2018 Thresholds: $10,200 for single coverage; 2018 Thresholds: $10,200 for single coverage; $27,500 for family coverage.$27,500 for family coverage.

Thresholds indexed to CPI + 1% in 2019; CPI only Thresholds indexed to CPI + 1% in 2019; CPI only beginning in 2020.beginning in 2020.

Adjustments for age and gender and separate Adjustments for age and gender and separate threshold for retirees will reduce the tax. threshold for retirees will reduce the tax.

Separate vision and dental plans excluded; Separate vision and dental plans excluded; contributions to savings accounts included.contributions to savings accounts included.

Negotiations between Labor and White House cut Negotiations between Labor and White House cut tax by 80% – from $149 billion to $32 billion.tax by 80% – from $149 billion to $32 billion.

$210

$107

$52

$32

$17

$5

$3

Medicare Taxes for High Income Earners

Taxes and Fees on Drug Companies, DeviceMakers and Insurance Companies

Penalties on Employers not ProvidingCoverage

Excise Tax on High Cost Health Plans

Penalties on Individuals for Non-Coverage

Tax Change for Medicare Part D Subsidy

Excise Tax on Tanning Services

Main Revenue Source: Main Revenue Source: Medicare Tax on Medicare Tax on WealthyWealthy

Figures in billions $ New 0.9% Medicare tax on wages over

$200,000/$250,000.

Plus

For the first time, a 3.8% Medicare HI

tax applied to unearned income for those with incomes

over $200,000/$250,000.

More on Reform & CWA Employers –More on Reform & CWA Employers – Medicare Retiree Drug Medicare Retiree Drug SubsidySubsidy Business deduction for retiree Business deduction for retiree

benefit expense remains in effect.benefit expense remains in effect.

Medicare Retiree Drug Subsidy Medicare Retiree Drug Subsidy (RDS) for 28% of retiree Rx costs (RDS) for 28% of retiree Rx costs remains in effect.remains in effect.

Companies may no longer deduct Companies may no longer deduct the cost of benefits for which they the cost of benefits for which they have received a subsidy.have received a subsidy.

Provision eliminates windfall but Provision eliminates windfall but reduces value of subsidy.reduces value of subsidy.

CWA Mobilizes Big CWA Mobilizes Big Time!Time!

177 Coordinators177 Coordinators 7,372 Letters to 7,372 Letters to

Members of CongressMembers of Congress 31,218 Calls to MOCs 31,218 Calls to MOCs

from worksitesfrom worksites 38,739 Patch thru 38,739 Patch thru

callscalls 300+ Visits to MOCs300+ Visits to MOCs Plus Town Hall Plus Town Hall

meetings, rallies, sit meetings, rallies, sit ins, fly ins, etc.ins, fly ins, etc.

The Principles that Guided The Principles that Guided Our Work & the Progress Our Work & the Progress We MadeWe Made

Cover All Americans –Cover All Americans – 32 32 million uninsured covered; from million uninsured covered; from 83% to 95% of population 83% to 95% of population coveredcovered

Control Costs –Control Costs –federal deficit federal deficit reduced $1.3 trillion over 20 reduced $1.3 trillion over 20 years; estimated to cut employer years; estimated to cut employer premium trend by 15% to 20% premium trend by 15% to 20%

Strong Government Role – Strong Government Role – rules and standards for rules and standards for insurance companies; health insurance companies; health insurance exchanges; cost insurance exchanges; cost controls; quality oversight.controls; quality oversight.

The Principles that Guided The Principles that Guided Our Work & the Progress Our Work & the Progress We MadeWe Made Fair Financing – Fair Financing – relies on wealthy, employers relies on wealthy, employers

and health industry to pay their shareand health industry to pay their share

Improve Health Quality –Improve Health Quality – 100% coverage of 100% coverage of prevention; provider payments based on prevention; provider payments based on quality & outcomes.quality & outcomes.

Reform Addresses CWA Reform Addresses CWA Members’ ConcernsMembers’ Concerns Janet of Virginia Beach is concerned about her Janet of Virginia Beach is concerned about her

cousin, a self-employed, single dad who cannot cousin, a self-employed, single dad who cannot afford the $400 a month needed for insurance afford the $400 a month needed for insurance coverage. He goes without, betting and hoping coverage. He goes without, betting and hoping that he and his daughter do not become ill or that he and his daughter do not become ill or get in an accident.get in an accident.

Janet’s cousin will be able to buy affordable coverage Janet’s cousin will be able to buy affordable coverage through the health insurance exchanges at much through the health insurance exchanges at much lower rates.lower rates.

Individuals and small employers will band together to Individuals and small employers will band together to create a large insurance pool, and insurers will not be create a large insurance pool, and insurers will not be able to underwrite and charge more for small groups. able to underwrite and charge more for small groups.

The government will provide subsidies and tax credits The government will provide subsidies and tax credits for individuals and small businesses who have a hard for individuals and small businesses who have a hard time finding affordable coverage. time finding affordable coverage.

Reform Addresses Reform Addresses CWA Members’ CWA Members’ ConcernsConcerns Veronica of Arkansas worried about her Veronica of Arkansas worried about her

father who worked all of his life, but father who worked all of his life, but when he had a massive stroke, got when he had a massive stroke, got shunted from hospital to hospital shunted from hospital to hospital because he had no health insurancebecause he had no health insurance..

Now, with the health care reform legislation, Now, with the health care reform legislation, Veronica’s dad will be able to get coverage Veronica’s dad will be able to get coverage through the health insurance exchanges. through the health insurance exchanges.

No one will be denied coverage for a pre-No one will be denied coverage for a pre-existing condition.existing condition.

Subsidies are available to keep coverage Subsidies are available to keep coverage affordable. affordable.

Reform Addresses Reform Addresses CWA Members’ CWA Members’ ConcernsConcerns Pamela of Brooklyn worries about Pamela of Brooklyn worries about

her grandmother who finds it hard her grandmother who finds it hard to pay her Medicare deductible to pay her Medicare deductible and prescription costs.and prescription costs.

Health care reform will benefit Pam’s Health care reform will benefit Pam’s grandmother by closing the Medicare grandmother by closing the Medicare prescription drug “doughnut hole” prescription drug “doughnut hole” over time, making prescription drugs over time, making prescription drugs more affordable.more affordable.

Key Implementation Key Implementation DatesDates

Note: Bargained-for plans exempt from Note: Bargained-for plans exempt from most new rules until expiration of most new rules until expiration of current agreement. Implementation of current agreement. Implementation of most provisions is subject of bargaining.most provisions is subject of bargaining.

Health Care Reform Health Care Reform Timeline – Timeline – 20102010 Companies must report impact of Companies must report impact of

change in taxability of Retiree Drug change in taxability of Retiree Drug Subsidy paymentsSubsidy payments

Reinsurance trust for retiree medical Reinsurance trust for retiree medical coverage establishedcoverage established

$250 rebate for seniors who hit $250 rebate for seniors who hit Medicare Part D “doughnut hole”Medicare Part D “doughnut hole”

Health Care Reform Health Care Reform Timeline – Timeline – 20112011 Children covered to age 26 (CBA caveat)Children covered to age 26 (CBA caveat) No lifetime and restricted annual limits (CBA No lifetime and restricted annual limits (CBA

caveat)caveat) No pre-existing condition exclusions for No pre-existing condition exclusions for

children 18 and younger (CBA caveat)children 18 and younger (CBA caveat) Employers report health plan value on Employers report health plan value on

employee W-2s (no tax)employee W-2s (no tax) HSA withdrawal penalty increased to 20%HSA withdrawal penalty increased to 20% No OTC drugs from account-based plansNo OTC drugs from account-based plans Long-term care benefit availableLong-term care benefit available Begin phase out of Medicare D doughnut holeBegin phase out of Medicare D doughnut hole

Health Care Reform Health Care Reform Timeline – Timeline – 20132013 Deduction for employer Medicare Part D Deduction for employer Medicare Part D

Retiree Drug Subsidy eliminatedRetiree Drug Subsidy eliminated

Medicare payroll tax increased for high wage Medicare payroll tax increased for high wage employees (over $200,000 single/$250,000 employees (over $200,000 single/$250,000 joint filers)joint filers)

Medicare tax applied to unearned income Medicare tax applied to unearned income (dividends, sale of stock, etc) of the (dividends, sale of stock, etc) of the wealthiest taxpayers (over $200,000 wealthiest taxpayers (over $200,000 single/$250,000 joint filers)single/$250,000 joint filers)

$2500 cap on health FSA contributions$2500 cap on health FSA contributions

Health Care Reform Health Care Reform Timeline –Timeline – 20142014 Individuals must have health coverage or Individuals must have health coverage or

pay a penaltypay a penalty Health Insurance Exchanges operationalHealth Insurance Exchanges operational Premium and cost-sharing subsidies for Premium and cost-sharing subsidies for

low and middle income individuals low and middle income individuals availableavailable

Medicaid eligibility expandedMedicaid eligibility expanded Insurance market reforms: guaranteed Insurance market reforms: guaranteed

issue, premium rating restrictions, waiting issue, premium rating restrictions, waiting period limits, no annual dollar limits, etc.period limits, no annual dollar limits, etc.

Health Care Reform Health Care Reform Timeline –Timeline – 2016 & 20182016 & 2018 2016 -- Cross-border sales of 2016 -- Cross-border sales of

health insurance allowedhealth insurance allowed

2018 – Excise tax on high-cost 2018 – Excise tax on high-cost health plans kicks inhealth plans kicks in

SummarySummary

Really good for family, friends, or laid off members Really good for family, friends, or laid off members without insurance, and small businesses.without insurance, and small businesses.– And it’s primarily financed by taxing the richAnd it’s primarily financed by taxing the rich

We keep our plans – existing bargained-for plans are We keep our plans – existing bargained-for plans are exempt from most changes through expiration.exempt from most changes through expiration.

Some improvements in the bill may raise plan costs Some improvements in the bill may raise plan costs initially,initially,

But the hidden cost of 32 million uninsured in our But the hidden cost of 32 million uninsured in our plans will be removed.plans will be removed.

New regulations on insurance companies will create a New regulations on insurance companies will create a fairer system.fairer system.

Long-range cost controls will moderate cost increases Long-range cost controls will moderate cost increases and lower the pressure we face at the bargaining and lower the pressure we face at the bargaining table.table.

Some aspects of health bill will raise our costs.Some aspects of health bill will raise our costs. Overall impact will be positive.Overall impact will be positive.

Next Steps for CWANext Steps for CWA

Inform members about facts of health Inform members about facts of health care reform and safeguards in it. care reform and safeguards in it.

Develop bargaining agendas for the Develop bargaining agendas for the new health care environment.new health care environment.

Analyze impact of changes and work Analyze impact of changes and work with Congress to fix unintended with Congress to fix unintended consequences.consequences.

Engage with employers about impact of Engage with employers about impact of the legislation on our plans and on our the legislation on our plans and on our members. members.