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National Health Care Reform and Michigan


National Health Care Reform and Michigan December 4, 2012 Peter Pratt President – PowerPoint PPT presentation

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Title: National Health Care Reform and Michigan

National Health Care Reform and Michigan
  • December 4, 2012

Peter Pratt President
Generally, What ACA Does and Doesnt Do
  • (Most) everyone will be required to have health
    insurancepublic or privateDONE
  • People with public or private coverage can keep
  • Private insurers need more regulation (no denials
    for pre-existing conditions, no annual or
    lifetime limits)DONE
  • Health care quality must improve, and the way we
    pay providers must foster this improvementMADE A
  • Health care costs are rising too rapidly and must
    be controlledNOT REALLY DONE

Why Does the ACA Matter to Michigan?
  • Cover many of the now uninsured through private
    insurance/the exchange (MIHealth Marketplace) and
    Medicaid expansion (PERHAPS)
  • Individual taxor penaltywith exemptions
  • Employer mandateor penaltywith exemptions (for
    firms with 50 or more FTEs)
  • Tax credits/subsidies for premiums, copays and
  • Medicaid expansion to 133 FPLperhaps
  • Determination of essential benefits (Michigan
    Essential Benefits Benchmark PlanPriority Health
  • Address increased demand for care
  • Many more insuredbut who will care for them?
  • Increased Medicaid payment rates to PCPs to 100
    of Medicare rates for 2013-14 only
  • Foster quality improvement
  • Cover proven preventive services and eliminate
    cost-sharing for them (Medicare)
  • Offer incentive payments to providers for primary
    care and coordinated care
  • Lower payments for avoidable rehospitalizations,
    hospital-acquired infections
  • Bundle payments for acute and post-acute care
  • Foster accountable care organizations, PCMHs

Covering Everyone?
  • New 2011 data 47.9 million uninsured, down by
    1.3 million from 2010
  • ACA covers 32M (95 of population excluding
    unauthorized aliens), but may cover up to 40M if
    everyone eligible signs up
  • Michigan
  • Estimated 1M people will be eligible for
    subsidies through the exchanges 640,000 will
    actually enroll (includes insured and uninsured)
  • Estimated 969,000 newly eligible for Medicaid
    400,000-600,000 will actually enroll

Mandates for Individuals
  • Must have coverage that meets minimum standards
  • Penalties Higher of
  • 95 (2014), 325 (2015), and 695
    (2016)/yr/family member up to 2,085 or
  • 2.5 of household income, if above filing
    threshold (9,350/individual or 18,700/couple in
  • Exemptions financial hardship (income below
    filing threshold or spend more than 8 of income
    on insurance), religion, American Indians
  • Individuals whose employers dont offer health
    insurance are NOT exempt
  • Individuals who dont take employer-offered
    coverage are NOT exempt

Subsidies for Individuals
  • Two kinds for premiums and for out-of-pocket
    costs (copays and deductibles)
  • Sliding scale premium tax credits up to 400 FPL
    (88K for family of four)if dont get affordable
    coverage from employer
  • Subsidies set to limit premium contribution to 2
    of income if total income 133 FPL to 9.5 of
    income if total income 300-400 FPL (133
    FPL29,000 for family of four subsidy covers
    all but 600)
  • Increases cost-sharing subsidies for lt250 FPL

Requirements for Employers
  • No employer mandate for employers lt 50 employees
  • Penalty for employers gt 50 NOT offering HI is
  • If employer does offer HI and has one or more
    employees receiving premium tax credit, pay
    lesser of 3,000 for each employee receiving the
    credit or 2,000 for each FTE
  • First 30 employees exempt from calculation of
  • Employers gt 200 must enroll employees
    automatically into employers lowest cost plan if
    they dont opt out
  • 98 of businesses unaffected, either because
    already offer coverage or they are exempt.
  • This all takes effect in 2014

Subsidies for Employers
  • Credits for small businesses (lt25 employees, avg.
    annual wage of 25K) 35 from 2010-2013 50
    starting 2014. Credits phase out as firm size
    average wage increase. As of 7/1/12, 7,000
    Michigan businesses have used the tax credits
  • Credits may not be attractive enough to get
    smallest businesses to offer health insurance
    (and no penalty if they dont)
  • No mandate, no credits for employers 26-50

Cost of Covering More People
  • Two kinds of costs are competing for publics
    attention cost to government and cost to
    individuals, families, and businesses
  • Every dollar that defrays cost of health
    insurance for businesses, families, and
    individuals will add to the governments costand
    who pays for government?
  • Individual and employer mandateseven with
    subsidies and limits, will people decide to buy
    HI or pay penalties?
  • Equity How much should people and employers w/HI
    pay for those without it? (1,000 a year now)
  • Firms with 3-9 employees offering HI (50, down
    from 59 in 2010)
  • Equity How much should employer and employee pay
    for employer-sponsored HI? Family coverage in
    2012 15,745. Employer share 72 Employee
    share 28 (largely unchanged since 2000)

Expansion of Public Programs
  • Expand Medicaid to all individuals (133
    FPL)Michigan covers childless adults now up to
    35 FPL
  • Feds fund
  • 100 of expansion population from 2014-16
  • 95 for 2017
  • 94 for 2018
  • 93 for 2019
  • 90 after that
  • State will save 1.3B over 10 years from
    expansion (mental health)
  • Increase Medicaid payment rates to PCPs to 100
    of Medicare rates for 2013-14 only
  • Increase payments to community health centers for
    new eligibles
  • Why does this matter? For businesses, fewer
    uninsured. For providers, better (but not great)
    payment pent-up demand

Health Insurance Exchanges
  • State-based exchanges starting in 2014 called
    American Health Benefits Exchange Small
    Business Health Options Programs, administered by
    government or non-profit organization.
  • Goal Sustainable, financially viable, and
    transparent options that offer meaningful
  • Michigan submitted short declaration of intent on
    November 16, 2012 for state-federal partnership
    (HHS approval by 1/1/13)
  • State-based exchange still a possibility, but
    blueprint must be submitted by 12/14/12
  • Applications to qualified health plans (early
  • Certification of QHP rates (Summer 2013)
  • Open enrollment on exchange begins (10/1/13)
  • Exchange in full operation (1/1/14)

Health Insurance Regulation
  • Guaranteed issue and renewability
  • No pre-existing condition exclusionsfor
    children, went into effect 9/23/10 for group, but
    not individual, plans
  • No lifetime limits or rescissions
  • Limit rating variation to family size, geography,
    age, tobacco use (not allowed for health status,
    gender, occupation) for example, rate for
    63-year-old cant be more than 3x rate for
  • Tighter oversight of health plans
  • HHS secretary can require plans to lower rates
  • More requirements for existing plans med loss
    ratios, cover lt26 years old, preexisting
    condition exclusion prohibition (2014), cover
    preventive services

Cost Containment
  • Encourage adoption and use of health IT
  • Reduce fraud, waste, and abuse
  • Simplify HI administration through
  • Reduce payments to Medicare Advantage plans
    after 2014, MA plans can earn 5 quality bonuses
  • Add 9.9B in reductions for IP hospitals, SNF,
    home health, and others from expected
    productivity gains
  • Reduce Medicaid and Medicare DSH allotments
  • Increase Medicaid drug rebates
  • Create Independent Payment Advisory Boardto
    rationalize and de-politicize cost control efforts

Paying for Reform
  • HC reform cant add to deficit, so must tax
    and/or cut spending
  • Net cost is 940B, cuts deficit by 138B over 10
  • Higher taxes for high-income individuals/household
    s (2013)
  • Medicare Part A payroll tax rate rises from 1.45
    to 2.35 for high-income taxpayers
  • 3.8 assessment on unearned income for
    high-income taxpayers
  • Taxes on policies with benefits over a certain
  • 40 tax on plan gt10.2K indiv/27.5K family
  • Vision and dental plans excluded from calculation
  • Penalties for individuals large employers who
    dont get/offer HI
  • Cuts in plan and provider payments
  • Insurers, medical device makers, Rx mfgers pay
    fees of more than 100B over 10 years, but with
    later start dates

The Fiscal Cliff/Budget Deficit
  • Budget sequester has 2 cut to Medicare (plus 27
    cut to physicians)
  • Medicare and Medicaid on the block if were to
    address deficit (769B in 2011, 21 of federal
  • Simpson-Bowles Cut hospitals before 2020
  • Raise eligibility age to 67
  • Raise Medicare Part B premiums
  • Give seniors vouchers (Ryan), but tie amount to
    HC cost inflation not GDP
  • Limit Medicaid expansion?
  • Limit subsidies to less than 400 FPL?
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