ACA

For more than you may ever have wanted to know about the history of the implementation of Affordable Care Act, this is the page!  (Newer blogs about the Repeal and Replace effort are not listed here, but can be found on the main page.)The following set of links will take you to columns written specifically about parts of the law and health policy directly affected by the 2012 Supreme Court Decision:

Obamacare's Silver Surprise

100 Days and Counting: Ten Things You Need to Know About Obamacare

Obamacare is Making Insurance Companies More Efficient

Grim Numbers Result from Failure To Expand Medicaid

Without Obamacare, We Would Have Even More School Crossing Guards

States Refusing to Set Up Exchanges are Helping Their Children

Failure to Expand Medicaid: Just Another Death Penalty?

The Rule of 9 and the ACA Medicaid Expansion

Better Off With a Federal Exchange

Florida's Medicaid Expansion Rejection Will Cost Residents

ACA and the Collapse of Capitalism

The ACA Decision is In

What the ACA Decision Really Means for You

What the ACA Decision Really Means for the Future of Private Health Insurance

What the ACA Decision Really Means for the Future of Medicare and Medicaid

Public Health, Mental Health, and Health Policy in a Post-ACA World

Saving the Medicaid Expansion

But there's more!  If you scroll down the rest of this page, you will find the following, initially written after the law was passed in 2010, and updated after the Supreme Court's ruling:

Health Reform: The New Structure for Health Insurance - April 12, 2010
ACA: What It Costs and Who Pays - April 26, 2010
A Consumer Guide to ACA Mental Health Benefits - March 31, 2010
Medicaid Expansions in ACA - April 8, 2010

Health Reform: The New Structure for Health Insurance

April 12, 2010 (Updated July 2012)

Introduction

When new health insurance reform goes into effect fully in 2014, most people will continue to choose from a variety of private health insurance plans that will be available in their state.  As is currently the case, the people who will have access to a public plan are older and disabled adults (Medicare) and poor and near-poor individuals and families (Medicaid and/or Children’s Health Insurance Plans).

Private insurance plans will be required to offer certain benefits.  They will also be presented to consumers in a different way so as to help consumers decide what type of plan to purchase.  While these plans will be offered through single-state or (after 2016) multi-state “exchanges,” in practical terms from the consumer’s perspective what the exchanges will do is to decide which plans meet the standards for the state or states, put the approved plans into different categories, make them available for purchase, and provide information to consumers.   

The exchanges won’t operate until 2014, and so as the new changes are phased-in, the Federal Government and states will continue to regulate the insurance market, and in the meantime high-risk adults have access to PCIP until 2014.

General Provisions Affecting Everyone’s Coverage

Every regular health insurance plan offered through an Exchange will be required:

• To assure that insurance won’t be denied for pre-existing conditions;
• To continue to provide benefits – and not to cancel insurance – if people get sick; 
• Not to put lifetime or annual benefit limits on policies; 
• To offer preventive care and immunizations; and 
• To cover unmarried children up to age 26 on parents’ plans, if the children don’t have insurance offered through work.    

Most of these provisions took effect in 2010; all will be in place by 2014.

Loss Ratios

The primary mechanism in the law aimed at assuring that health insurance plans pay out a reasonable amount of money on the care of people they insure is the requirement of minimum loss ratios.  In plain language, this requirement means that as of 2011 insurers must pay out at least 85 cents in benefits for every dollar they receive in premiums.  Insurers failing to meet this requirement began rebating dollars to consumers and businesses in 2012.

Essential Benefits, Cost-Sharing, and Plan Rankings

While all plans will be required to cover certain essential health benefits, not all plans will be the same.  This is because essential benefits will be defined in part by states, and co-pays and deductibles will still vary depending on the plan.

The following benefits must be included in all plans offered after2014 as “essential health benefits:”

• ambulatory patient services,emergency services,
• hospitalization,
• maternity and newborn care,
• mental health and substance use disorder services,
• 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. 

States have the option of adding to the essential benefits, but may be responsible for picking up the costs of these additional mandates.  Also, the scope of services outlined above must be equal to the scope of services determined by the Federal Government to be in a typical employer plan.

There are a few exceptions.  Exchanges will be able to approve catastrophic-only plans, but only for individuals who are under age 30, and these must provide for at least three primary care visits per year, too.  Exchanges will also be able to offer child-only plans covering children up to age 21 that mirror the plans offered for adults.

Premium Costs, Deductibles, and Out-of-Pocket Costs for Insurance

There are several ways in which individuals and families may get their premium costs, deductibles, and out-of-pocket costs reduced.

The most important of these is the tax credit subsidy created by the federal government for households earning up to 400% of poverty.  This are huge.  A family of four making $60,000 per year, for example, will be entitled to a credit of over $9,000 if they have to purchase insurance individually through the exchange.

Also, as an incentive to individuals to maintain healthy lifestyles, premium prices can be reduced up to 30% for people who participate in wellness programs.

In addition, there will be an annual limit on deductibles in the small group market of $2,000 for an individual and $4,000 for a family.

Finally, standard out-of-pocket maximum limits, which are currently $5,950 for individuals and $11,900 for families, will be reduced for people up to 400% of poverty on a sliding scale - to one-third from 100 to 200 percent of poverty, to half from 200 to 300 percent, and to two-thirds from 300 to 400 percent.

Ranking of Plans

Not every plan will cost the same, and not every plan will have to provide the exact same levels of coverage.  Approved plans will be put into one of four categories – Bronze, Silver, Gold, or Platinum – depending on the level of coverage they provide.  Bronze plans will provide a level of coverage equal to 60% of the full actuarial value of benefits offered under the plan; Silver plans will provide a level of coverage equal to 70%, Gold equal to 80%, and Platinum equal to 90%. Because they provide the least amount of coverage, Bronze plans will be the least expensive to purchase.  Generally, every insurer offering plans through an exchange will be required to offer at least one Gold plan and at least one Silver plan.

Standard Health Plans Offered By States and the Community Health Insurance Option

States will have the option of offering a standard health plan, and can contract with private insurers to offer the standard plan through the exchange.  These plans are designed to insure lower-income people not covered by Medicaid expansion, can only be offered to individuals (not groups), and must include all the essential health benefits.  Also, the cost-sharing for the standard plan for people earning less than 150% of poverty must be at the Platinum level, and for everyone else at the Gold level.  If they are private plans, they must also have minimum loss ratios of 85%.

In addition, the Federal Government is required to be prepared to offer a Community Health Insurance Option to be available for purchase on the Exchanges, but individual exchanges that do not wish to offer this option do not have to do so.

Conclusion

Health insurance offerings will change under health reform.  Change began in 2010, and private health insurance will be offered through new state health exchanges beginning in 2014.  Many plans offered after 2014 will look very similar to plans being offered today, but there will also be new choices available to individuals.  Benefit packages will be amended to conform to new minimum standards, and plans will be categorized into Bronze, Silver, Gold, and Platinum depending on the level of coverage they provide. 

--Paul Gionfriddo  

Health Care Reform: What Does It Cost and Who Pays?

April 26, 2010 (Updated July 2012)

Introduction

Health care reform legislation will carry a huge price tag.  Initially set at around $940 billion over ten years in 2010, CBO's updated July 2012 estimate is that ACA will "cost" $1.17 trillion – but that it will reduce the federal deficit by $109 billion.  This is because health care costs will increase more quickly if we do nothing.

The question this analysis considers is the following one:  When ACA is fully implemented, what will it cost on an annual basis, who will pay, and who will save?

How Health Reform Will Change Coverage

Because most of the new coverage provisions and insurance exchanges don’t begin until 2014, CBO projects that it will be 2016 before coverage changes dramatically. The result is a change in coverage for the non-elderly population as follows (these included numbers revised in July 2012 after the Supreme Court decision):

Number of People Insured

                                                                        2010                2016                Increase/(Decrease)

Medicaid and CHIP                                       35 million        46 million                  11 million

Employer-provided insurance                         162 million      159 million                 (3 million)

Individual and Other Insurance                        29 million        24 million                  (5 million)

Exchange-purchased insurance                         none              24 million                  24 million

As a result, the number of uninsured people will decrease between 2010 and 2016 by 27 million, from 52 million to 25 million.

What will this cost?

While these costs will phase-in over the next decade, by 2019 the coverage provisions in health reform will result in an annual cost of $217 billion, in three categories:

Medicaid and CHIP                                  up to $98 billion

Consumer Insurance Subsidies                   at least $115 billion

Small Employer Tax Credits                       at least  $4 billion

Medicaid and CHIP costs are direct payments to be made by state governments on behalf of low income people (from 2014 through 2016 the Federal Government will reimburse 100% of these costs, and by 2020 will be permanently reimbursing 90% of these new costs). Consumer insurance subsidies will be provided as Federal tax reductions for taxpayers with household income up to 400% of poverty who buy health insurance.  Small employer tax credits will be provided to “mom and pop” businesses that offer insurance to employees.  These will generally benefit employers with 25 or fewer employees who provide insurance and whose average salaries are less than $50,000. 

Significant New Taxes and Major Spending Decreases in the Reform Law

The Federal Government provided for nearly $230 billion of revenue as of 2019 to cover the $217 billion in costs, resulting in a net deficit reduction in 2019 of $12 billion (which is a portion of the total deficit reduction over the next ten years combined of $109 billion).  Approximately half of these dollars will come from new taxes and fees, and the other half from spending cuts.  

New Taxes and Fees on Individuals and Businesses

New taxes and fees will add up to $109 million, or around half of what is needed to pay for the reforms.  Of these, three of the most important account for $35 million.  They are:

• Penalty payments by uninsured individuals who choose not to buy insurance will raise $3 billion a year.  These tax penalities begin in 2014 and 2015, and in 2016 and thereafter will be generally 2.5% of income (e.g., $1,083 for an individual making $43,320).
• Penalty payments by businesses will raise $10 billion a year. These will be paid by employers with more than 50 employees who choose not to provide health insurance to employees and instead pay a fine of $2000 per worker each year if any worker receives federal subsidies to purchase health insurance.
• Starting in 2018, there will be a 40% excise tax on high premium insurance plans (over $27,500 for families and $10,200 for individuals), which will raise $20 billion in 2019.

Some other provisions related to individuals that will generate significant additional revenue include:

• An increased Medicare tax of 0.9% and a new Medicare tax of 3.8% on both earned and unearned income above $200,000 (individuals) and $250,000 (families), beginning in 2013.
• A new 10% excise tax on indoor tanning services, which went into effect in 2010.
• Raising the percentage after which people can deduct medical expenses from their taxes from 7.5% to 10% of Adjusted Gross Income (this will take effect for non-elders in 2013, and for elders in 2016).
• Limiting health flexible spending arrangements in cafeteria plans to $2,500, beginning in 2013.

Some other provisions related to corporations that will generate significant additional revenue include:

• Imposing an annual fee on health insurance providers that will raise $14.3 billion in 2018 when fully implemented.  (This begins in 2014.)
• Imposing an annual fee on importers and manufacturers of branded drugs that will eventually settle in at almost $3 billion annually by 2019. (This began in 2011.)
• Imposing a 2.3% excise tax on manufacturers and importers of some medical devices. (This begins in 2013.)

Non-Coverage Provisions Generally Reduce Spending

Most of the remaining dollars needed for health reform will come from cuts in Federal spending for health care that will add up to over $118 billion in 2019. Among the most significant are:

• Revisions to Medicare market basket updates, which will result in over $40 billion of annual savings by 2019.  “Market baskets” are projections of future Medicare payments based on both the cost and configuration of services in a current year and how these are expected to change over time.  Savings to Medicare means that payments to hospitals and other providers will be reduced, either because it is believed that costs will go down for some procedures, or less expensive procedures and services will be substituted for them, or a combination of both.
• Reductions in Medicare Advantage payments of over $26 billion per year as of 2019.  These are payments made to insurance companies, not individuals.  The companies will also be required to pay out at least 85 cents in benefits for every dollar in premiums taken in.
• Payment adjustments to home health care providers, which will result in $5 billion in savings by 2016 growing to over $10 billion by 2019.
• Reductions in Medicaid prescription drug payments to drug companies of $5 billion or more as of 2017.
• Reductions of $5 billion each in both Medicare and Medicaid “Disproportionate Share Hospital” payments as of 2018.  These will be borne by hospitals that have traditionally had high volumes of lower-income patients.  The Federal Government expects that as more people are insured, there will be less need for these payments.
• An adjustment to the calculation of Medicare Part B premiums, which will result in almost $5 billion of annual savings by 2019.
• Reducing the Medicare Part D premium subsidy for higher income individuals that will result in savings of more than $2 billion by 2019.
• Readmission rate reductions for hospitals of $1 billion or more as of 2015.  This is intended to penalize hospitals that discharge people early who then need to be re-admitted.

Which Households Benefit from ACA's Reform? Lower and Lower-to-Middle Income

In light of this list of new taxes, other revenues, and spending cuts, who will benefit?  Because nearly all of these spending cuts and most of the new taxes will impact businesses, some individuals and households will benefit the most.

First, in those states that expand Medicaid, households making up to $29,327 for a family of four, or up to 133% of poverty, will save all of their insurance costs because they will be covered by Medicaid and/or CHIP, with free coverage of children likely continuing to extend to 200% of poverty or more.

Second, households making up to 400% of poverty ($43,320 for an individual, $88,200 for a family of four in 2010) will also save, because their health insurance premiums will be subsidized by the government, usually significantly.  In 2016, the average Exchange subsidy is estimated by the CBO to be $5,300.  Here are two examples of how the subsidy will be calculated:

• Families of four earning $88,200 (400% of poverty) will have their insurance premium capped at $8,379 annually, or 9.5% of income.  If their plan costs $1,115 per month, or $13,375 per year, then their subsidy will be $4,996.
• An individual earning $21,660 (200% of poverty) will have his or her insurance premium capped at $1,365, or 6.3% of income.  If the plan costs $402 per month or $4,824 per year, then his or her subsidy will be $3,459.

Third, Medicare Gap coverage will benefit people in the Medicare Part D Donut Hole, and while the initial payment in 2010 will be up to $250 for those in the Donut Hole, the total coverage subsidy will grow to $1,300 or more for Medicare recipients with high drug costs in 2019.

Which Households Pay More for ACA's Reform? Upper Income With Cadillac Plans

Even with a lower cost plan, households in the upper income range –above $200,000 for an individual and $250,000 for a family, will pay more because they will pay a higher Medicare tax on earned income and a new Medicare tax on unearned income.  How much more they pay depends on how much unearned income they have – those with more will pay a greater amount of new taxes because they already pay a tax on earned income.

Starting in 2018, the Cadillac health plan excise tax could also increase insurance costs for a segment of the population that cuts across income levels and enjoys comprehensive health coverage, but because the imposition of that tax was delayed for eight years when ACA was enacted, it is hard to predict just how many plans and people will be affected by it at that time.

All households, regardless of income, that refuse to buy insurance will also pay, because they will be subjected to a new 2.5% penalty tax on income.

Which Households Neither Gain Nor Lose from Reform? The Group-Insured Middle

Households with group insurance, and those in the middle and upper middle income brackets (which, depending on family size, begin in the $50,000 to $100,000 range and continue up to the $200,000 to $250,000 range) will neither gain nor lose unless they have a high-cost plan.

Conclusion

Because the federal deficit is not projected to increase as a result of tax reform, by itself reform requires no new general income tax increases in addition to the provisions that are in the law.  However, certain tax increases that are built into the law will affect wealthier households more than others, and reductions in payments to health care providers that are built into the bill could be passed along to individual consumers in the form of higher fees for health services and higher insurance premiums (though there are some protections built into the law to prevent this).  The subsidies being offered to people at lower and middle income levels will result in a lowering of their cost of insurance, and the closing of the Medicare Donut Hole will lower out-of-pocket drug costs for many recipients of Medicare.

--Paul Gionfriddo

A Consumer Guide to Mental Health Benefits in Health Reform
March 31, 2010 (Updated July 2012)

People using mental health services will see many positive changes in their access to care and supports over the next ten years as a result of the new health reform legislation. 

For instance:

• Beginning in 2010, no child can be denied coverage on the basis of a pre-existing condition, such as a mental illness.  Beginning in 2014, neither can any adult.
• Health insurance which people already have can’t be cancelled by health insurers because they get sick.
• Starting in 2014, households earning up to 133% of poverty ($14,404 for an individual, $29,327 for a family of 4) will be eligible for Medicaid in those states that agree to the federally-funded expansion.
• Starting in 2014, households earning up to 400% of poverty ($43,320 for an individual, $88,200 for a family of four) will receive tax credits to cover part of the cost of private health insurance.
• Beginning in 2010, children up to age 26 can now remain on their parents’ insurance policies, so that many young adults with mental illness will no longer become uninsured and uninsurable when they reach adulthood.
• Funding for patient navigation services will make more navigators available to assist people with mental illness in managing their care and obtaining it where and when they need it.

There are also many other provisions scattered throughout the law that will add benefits:

• New funding for treatment, research, and education for women with post-partum depression. 
• Starting in 2014, including benzodiazepines (such as xanax and valium), barbiturates, and smoking cessation drugs in all Medicaid and Medicare Part D programs.
• Starting in 2014, including mental health and prescription drug services as basic insurance benefits.
• Starting an eight state, 3 year demonstration project to assure that adults with mental illness do not lose their Medicaid benefits when they enter a behavioral health facility as an inpatient.   

The law also adds at least five new programs to increase collaboration between health and mental health providers to prevent and manage chronic conditions, to increase educational opportunities for providers, and to co-locate some primary and specialty care in community-based mental health settings.

These are just some of the changes that are going to result from the new law, and they point toward more access to higher quality, better coordinated, person-centered, closer-to-home care.  

–Paul Gionfriddo

Medicaid Expansions for People to 133% of Poverty and Former Foster Youth in Health Reform

April 8, 2010 (Updated July 2012)

Introduction

The Affordable Care Act added two new groups of people to the state populations who must be covered under state Medical Assistance Programs (“Medicaid”) – adults and families earning up to 133% of poverty level and former foster youth. The federal and state governments usually share the costs of the Medicaid program, but in the case of these new expansions the Federal Government agreed to pay 100% of the cost from 2014-2016, and then at least 90% every year thereafter.  However, the Supreme Court ruled in June 2012 that the federal government not make this Medicaid expansion mandatory on the states.  Therefore, only people living in states that pick it up as an option will be eligible for the expanded Medicaid program.  The Congressional Budget Office estimates that 6 million of the originally projected new Medicaid enrollees will lose access to the program as a result.    

Background on Medicaid

Under Section 1902 of the Social Security Act, states must have Medicaid plans, and must:

• Make the plans statewidePay at least 40% of the non-Federal share of the cost;
• Provide for a fair hearing for anyone denied benefits;
• Provide for administration of the plan and designate a single state agency as lead agency;
• Make reports to the Federal government when asked, and otherwise safeguard information;
• Have an open application process;
• Set quality assurance standards.

In addition, Medicaid plans must cover certain groups of individuals, including:

• People receiving a variety of forms of state assistance;
• People on SSI;
• Qualified pregnant women and children;
• Families whose income is below minimum state standards.

New Populations Covered by Medicaid As a Result of Health Reform

The Health Reform law added, effective 2014, two more groups to those eligible for Medicaid.  They are:

• Families earning up to 133% of the Federal Poverty Level (around $30,000 for a family of four);
• Youths up to age 25 who have been in foster care for at least six (non-consecutive or consecutive) months of their lives. 

Additional Provision Assisting Former Foster Youth

To assist former foster youth with this and other health care-related decisions, the Health Reform Law also requires (as of October 2010) the provision of information to foster children aging out of the system about their option to give a medical power of attorney to a non-relative adult to play the role a biological parent would typically play in helping them to get information about health care and insurance choices available to them.

--Paul Gionfriddo