New York Association on Independent Living October 5, 2010 Heidi Siegfried, Coordinator

1. Making Health Care Reform Work for Us in New York State:From National Legislationto Statewide Implementation New York Association on Independent Living October 5, 2010 Heidi Siegfried, Coordinator New Yorkers for Accessible Health Coverage 646-442-4147 * hseigfried@cidny.org

2. Basic Take-Aways • The new health care reform law is a major, historic step forward • The current status quo was NOT an option over the long-term. • Approximately 2 million of New York’s 2.8 million uninsured will get health coverage. • Even so, we still have more to do to get to true universal health care across America and here in New York, so there is continued work ahead. • Goal: All residents of our state, regardless of their financial situation or immigration status, will have comprehensive insurance coverage that’s affordable-to-buy and affordable-to-use. • Goal: All residents of our state, regardless of their financial situation or immigration status, will also have places to go receive the high-quality , affordable services from culturally-competent health care professionals.

3. THE NEW LAW ITSELF: The Patient Protection and Affordable Care Act (PPACA)

4. PPACA Overview Three broad areas of focus: • Insurance coverage reform • Delivery system reform • Financing-related provisions

5. I. Insurance coverage reforms: • Private insurance market • Employer-based plans • Public programs

6. A. Private insurancemarket reforms: • Overall insurance rules and regulations • Individual/family coverage mandates • New “Health Insurance Exchanges”

7. Insurance rules and regulations:Coverage basics • Elimination of pre-existing condition exclusions • Currently allowed in NY for first year • Elimination of annual and lifetime coverage limits • Elimination of “rescissions” (retroactive cancellations of coverage based on claims experience, for fraud only, Ian’s law) • Young adult dependents – can remain on parents’ plan thru age 26; NY law already allows some to stay on through age 29

8. Insurance rules and regulations:Policyholder benefits • Standardized “essential benefit package” – comparable to “typical employer plan”(as determined by HHS – updated annually); minimum actuarial value of 60% • No out-of-pocket costs for preventive care • Limits on annual deductibles for small group plans ($2K indivs./$4K families) • State-based consumer counseling and ombuds programs re: how to sign-up & how to use – to be offered to individuals/families and small groups

9. Insurance rules and regulations:Cost Regulation • Limits on premium variations – only allowed based on age (3:1) [NY law does not allow this], geography, family size, and tobacco use (1.5:1) • Required “medical-loss ratios” (amount of premium income to be spent on claims – 85% (large groups); 80% (individuals/families, small groups) [the latter is 82% in NY] • Premium rate increase review procedures established – encouraged at state level; federal govt. back-up process; plans with “excessive increases” can be removed from Exchanges

10. Insurance rules and regulations:Business operations • Regulation of marketing practices • Standardized eligibility and enrollment procedures • Standardized claims forms and payment processing • Standardization of appeals processes (both internal and external) for denials of coverage for a particular service

11. Individual/ family “mandates” • Only if: • not eligible for a public program • not offered employer coverage • Tax penalty for non-compliance: • ramp up from 2014-16 • Top rates: $695/$2,085 (individuals/families), or 2.5% income, whichever is greater

12. Individual/family mandates • Exemptions: • If premium cost is >8% income • Non-legal immigrants • Native-Americans • Incarcerated • Uninsured <3 mos. • Non-tax filers • Religious beliefs

13. “Health Insurance Exchanges” • Government-sponsored “marketplaces” to pool: • Individuals & Families • Employer groups • Bulk-purchase bargaining with plans to: • lower premium costs • lessen cost growth (over time) • State-based, with federal fall-back

14. Exchanges: Who Qualifies • Individuals and families who are not eligible for public programs or don’t have employer-sponsored coverage • Initially available to smaller groups (<100 employees) • Larger groups (>100 employees) eventually possible (at discretion of HHS secretary) • Only open to citizens and legal residents • All Members of Congress and Senators and their direct staff must use

15. Exchanges: Benefit Packages • Standard “essential benefits package” to be offered • Cannot include abortion coverage (which must be purchased separately as a rider); states can ban abortion coverage altogether • Differing “tiers” of plans based on “actuarial values”: bronze, silver, gold, platinum – 60%, 70%, 80%, 90% • Lower-cost, limited-benefit “catastrophic plans” can be offered – available up to those up to age 30, and to those who are exempt from mandate

16. Exchanges: Affordability Provisions • Sliding-scale premium subsidies: • For low- and moderate-income individuals and families (up to 400% of the “Federal Poverty Level” (“FPL”) – e.g., $44K individuals/$88K family of 4) • People cannot be required to spend more than 9.5% of income on premiums • Subsidies cannot be used for abortion coverage riders • Annual sliding scale out-of-pocket limits (for deductibles, co-pays, co-insurance) for low- and moderate-income individuals/families (up to 400% FPL)

17. Exchanges: Other provisions • Small group and individual exchanges can be merged by states • States can form regional, geographically-contingent exchanges • Plans offered must meet standards for provider capacity

18. B. Employer-sponsored coverage reforms: • Large groups (>50 employees) • Small groups (<50 employees) • Special program for age groups: • Young adults • Early retirees

19. Employer Coverage: Large Groups • If >200 employees: mandate to provide coverage to all workers if providing coverage • Penalties incurred if no coverage offered and if any employee(s) gets premium subsidies via new insurance Exchanges • Employees may opt out of employer plan to new insurance Exchange in certain circumstances; vouchers available if <400% FPL • Eventual access to Exchanges if/when allowed by HHS secretary

20. Employer Coverage: Small Groups • Tax credits to assist purchasing coverage: • start in 2010 • ramps-up by 2014 in amount (initially <35%, then to 50%) • eligibility and amount depends on employer size (initially <10 employees), and average wage base (initially < $25K/yr., excluding principals/owners) • Overall, smaller and lower-wage businesses get better deals • Slightly lower tax credit rates for non-profits • Coverage offered via Exchanges starting in 2014

21. Employer Coverage: Special Age Groups • Targets: cohorts with high rates of uninsurance • Young adult dependent coverage (age 19-26) can stay on parents’ plan • Early retirees (age 55-64) – temporary re-insurance program for high-cost claims (up to 2014)

22. C. Public Insurance Program Reforms • Low(er) income individuals/families: • Medicaid • State Child Health Insurance Program (SCHIP) • New state-based “basic health plan” option • Medicare – seniors and long-term disabled • Other options

23. Medicaid: Individuals and Families • Expanded eligibility (up to 133% FPL – ~$14K indivs. /~$29K family of 4) • Elimination of various differential categories for eligibility based on age, family composition, pregnancy, etc. • Standardized, comprehensive benefits • Community Choice Option, 1915 (i) option, and Balancing Incentive • No out-of-pocket costs for preventive care

24. Medicaid: State Requirements • Expansions possible as soon as 2011, but no later than 2014 • Increase federal matching fund support (“FMAP”) for states starting 2014 • Streamline enrollment and re-certification procedures • Increased reimbursement rates for primary care to Medicare levels • “Maintenance of effort” requirement

25. Child Health Insurance (SCHIP) • mostly dealt with in Jan. 2009 via “Child Health Insurance Program Reauthorization Act” • Reauthorization extended via PPACA from 2014 to 2019 (additional 5 yrs.) • Funded extended via PPACA from 2014 through 2015 (additional 2 yrs.)

26. State-based “basic health plan” option • Can be offered by states to individuals and families between 133%-200% FPL (~$14K-$22K indivs./~$29-$44K family of 4) • An alternative to private coverage through Exchanges • States get 95% of premium subsidies that would have otherwise gone to qualifying individuals and families • Medicaid benefit package • No co-pays for preventive services

27. Medicare: Improvements • Eliminate Part D coverage gap (“donut hole”) over 10 years • $250 rebate in 2010 once Part D coverage gap is reached • 50% discount on brand-name drugs in Part D coverage gap (starts in 2011); includes biologics • Lowering of “catastrophic coverage” eligibility level for Part D (over 10 years) • Elimination out-of-pocket costs for preventive care and annual physical • Freeze sliding-scale Part B premium levels

28. Medicare: Program Improvements • Expand and streamline eligibility for Medicare Savings Plans that help lower-income beneficiaries with their out-of-pocket costs and Part B premiums • Raise reimbursement rates for primary care • Eliminate over-payments to private “Medicare Advantage” plans • Improve long-term financing of Part A Trust Fund for an additional decade

29. Other Public Program Options • Temporary high-risk pools – funding offered to states – fed govt. to offer fall-back program • Two new national plans via Office of Personnel Management offered through state exchanges; one must be non-profit • Creation of non-profit co-op plans incentivized – can be national, multi-state, statewide, or regional • New, voluntary long-term care insurance program (“Community Living Assistance Services and Supports” aka “CLASS”); financed via payroll deductions – employees must opt-out; provides $50-$75/day for personal care  • States allowed to apply for waivers from PPACA paradigm starting in 2017 to implement alternative schemes, if they meet set criteria

30. II. Delivery System Reform • Goals – to improve: • Access • Quality • Efficiency • Cost control • Reforms leveraged via: • Public programs: Medicare and Medicaid • Insurance regulations • Pooling via Exchanges

31. Delivery System Reform: Areas of Focus • Expanded access to services • Quality Improvement • Public health • Wellness • Workforce development • Reimbursement reforms

32. Expanded Access: Where to get care • Various expansions of primary, preventive, and home/community-based services • Doubling of funding for community health centers and the National Health Service Corps • Expanded funding for school-based health services • New “patient-centered medical homes”, “accountable care organizations” and “community-based collaborative care networks”

33. Expanded Access: Other Reforms • Bonus payments to primary care providers to practice in medically-underserved areas • Non-profit hospitals to offer expanded free/discounted care to uninsured and under-insured patients • A whole variety of new initiatives to address various health care disparities

34. Quality Improvement • Disease management and chronic care coordination programs for patients with serious and multiple medical conditions • New programs to expand and improve trauma and emergency care services • Comparative effectiveness research • State-based pilot programs in medical malpractice reform • New Federal Coordination of Health Care Office” to focus on “dual-eligibles” (people on both Medicare and Medicaid)

35. Wellness • Technical assistance to employers for wellness programs • Grants to small employer groups to establish wellness programs • Allow employers to offer premium discounts to employees participating in wellness programs • State-based pilot wellness programs for individual markets • Disclosure of nutritional information by fast-food chains and vending machines

36. III. Financing PPACA Reforms • Public program cost savings (over the long term) via Medicare and Medicaid (see above) – as compared to current projections • New taxes: • Medicare payroll • Unearned income • Excise tax on comprehensive employer plans • “Special interests” taxes • Tax deduction limitations • Penalties for coverage mandate non-compliance

37. PPACA Tax Measures • Increased Medicare payroll taxes (0.9%) on upper-income earners ($200K indivs./$250K joint-filers) • New 3.8% tax on unearned income for same  • Excise tax on “top-of-the-line” employer plans (2018): • $10,200 for individuals/$27,500 for families (annual premiums) • Higher thresholds for early retirees, high-risk professions • 40% tax only on value above these levels • Dental and vision benefits excluded from threshold calculations

38. PPACA Tax Measures (cont’d) • New taxes on pharmaceutical and medical device manufacturers, health insurance companies, and indoor tanning services  • Elimination of tax deduction for employers who receive Medicare Part D subsidies for their retiree drug benefit programs  • Limits on deductions for Health Savings Accounts, and higher penalties for unallowedwithdrawls from them  • Tax penalties on employers and individuals/families who don’t comply with coverage mandates (subject to certain terms and conditions)

39. Implementation: Goals • Dual focus: national and state • GOAL: Max out and go beyond PPACA to move to true universal health care • Monitor and weigh-in on proposed new rules and regulations • Stakeholders to be monitored at every step along the way (especially insurers)

40. Implementation: New York • Much of implementation will happen at the state level • State and local lawmakers will need to be educated about PPACA requirements, options, and implications • New laws will need to be passed at state level, and/or regulations written • New programs will need to be created – with Gov., Legislature, Dept. of Health, State Insurance Dept., other state agencies

41. Federal Implementation So Far • Denials of coverage for pre-existing conditions for children banned • Small business tax cuts – begin in 2010; IRS has posted materials online • Young adult dependent coverage – some insurance plans are already offering voluntarily, and more will start as of Sept. 23, 2010, and ramp-up through start of new benefit year (Jan. 1) • Medicare Part D prescription drug coverage gap (“donut hole”) – automatic rebate checks ($250) • Temporary high-risk pools funding to states for uninsured people with “pre-existing conditions” • Employer early retiree re-insurance program

42. More Federal Implementation for 2010 • Consumer assistance program funding for states • Rate review funding for states • Appeals procedures • Prohibition of rescissions • “Patients’ Bill of Rights” consumer protections: • Ends lifetime limits on essential benefits • Limits unreasonable annual benefit caps • Ends co-pays for preventive services • Expands choice of primary care providers • Expands access to emergency services

43. Implementation: NAIC National Association of Insurance Commissioners • Charged with developing recommendations re: • rate review • consumer ombuds services • grandfathering of current plans • high-risk pools • medical-loss ratios • annual/lifetime limits • preventive coverage • pre-existing conditions • adult dependent coverage • Rescissions • Appeals • long-term care insurance • 21-member consumer advisory group established – released initial report of recommendations in May

44. New York: Implementation So Far • Governor’s Health Care Reform Cabinet established (May 13) • Governor appointed Health Care Reform Advisory Committee (Aug. 31) including: providers, consumers, employers, labor, local governments, insurers, policy experts • Temporary “NY Bridge Plan” for pre-existing conditions – enrollment opened Aug. 20, and coverage begins Oct. 1st; applicants must be uninsured for 6 months prior • Rate review funding to states – NY restored “prior approval” procedures in June

45. Resources: Overall Analyses • Kaiser Family Foundation: www.healthreform.kff.org • Families USA: www.familiesusa.org/health-reform-central • Community Catalyst: www.communitycatalyst.org • Health Care for All New York: www.hcfany.org

46. Resources: Constituency-Specific • AARP: www.aarp.org/health • Consumers’ Union: www.consumersunion.org/health • Faithful Reform in Health Care: www.faithfulreform.org • Medicare Rights Center: www.medicarerights.org • Raising Women’s Voices: www.raisingwomensvoices.net • Small Business Majority: www.smallbusinessmajority.org • Young Invincibles: www.younginvincibles.org

47. Resources: Government • White House: www.healthreform.gov • Congress: http://energyandcommerce.house.gov http://finance.senate.gov/issue • National Association of Insurance Commissioners: www.naic.org/index_health_reform_section.htm

48. Thanks for hanging in there!