45 th Annual WMSHP Spring Seminar

1. The Affordable Care Act* 45th Annual WMSHP Spring Seminar Richard Lichtenstein, PhD, MPH S.J. Axelrod Collegiate Professor of Health Management and Policy University of Michigan School of Public Health *The Patient Protection and Affordable Care Act of 2010

2. The Affordable Care Act (ACA) March 23,2010 • This is historic legislation that ranks with Social Security, Medicare and the Civil Rights Act in terms of creating social change • Health care “progressives” have been advocating for a national health insurance plan in the US since at least 1913. • They have been thwarted many, many times, but this time they were successful!

3. The Affordable Care Act (ACA) March 23,2010 • The law is certainly not “perfect,” but it moves us forward substantially. Originally estimated it would add up to 30-32 million more insured people (out of 45 million uninsured). Now, estimates are lower (24 million) due to failure of some states to undertake Medicaid Expansion. • Two major obstacles to the implementation of the ACA have been overcome: the Supreme Court Case in June, 2012 on the Individual Mandate; and the possibility that President Obama would lose the Nov. 2012 election. • BUT, Medicaid Expansion and the Employer Contribution (Mandate) still loom as problem areas.

4. Major Features of The Affordable Care Act • Individual Mandate: Everyone must have insurance, or face a “penalty” if they don’t purchase a plan • Penalty is $95 in 2014 and increasing to $695 in 2016 - OR - 2.5% of income by 2016 • Exemptions: financial hardship, those who don’t pay Social Security for religious reasons, Indian tribes, unauthorized immigrants, uninsured for period of less than 3 months, etc. • In June 2012, the Supreme Court said this is a TAX and is constitutional • Cost-sharing subsidies to households below 250% of FPL and premium tax credits for households below 400% FPL

5. Major Features of The Affordable Care Act • Employer Contribution (mandate): Penalizes companies with over 50 workers who don’t provide insurance ($2,000/worker), but exempts paying penalty for first 30 workers. • Provides tax credits for small employers (<25 workers, average wage < $50K) to help pay for insurance. • Issue of small employers reducing hours (under 30 per week) or jobs (under 50 employees). • IMPLEMENTATION OF THIS SECTION OF THE ACA HAS BEEN DELAYED UNTIL: • 2015 for companies with 100 or more workers* • 2016 for companies with 50 – 99 workers * Additionally, requirements for percent of full-time workers that are offered health insurance in order to avoid a fine has been decreased from 95 to 70 percent

6. Major Features of The Affordable Care Act Employer Contribution: • 96% of firms in the United States have fewer than 50 employees and are therefore exempt from the employer mandate • 96% of firms with 50 or more employees already offer health insurance to their employees 96% Other changes to employer sponsored insurance: • Covers dependents up to 26 years old (already in effect, est. >3 million newly-insured) • Cadillac Tax: Excise tax on high coverage plans (>$27,500 for family), beginning in 2018.

7. Major Features of The Affordable Care Act Health Insurance Reforms: • “Guaranteed issue”—cannot exclude people with pre-existing conditions • No rescission • No annual or lifetime caps, etc. (Now in Effect) • Covers dependents up to 26 years old Essential Health Benefits Package • Minimum coverage for non-grandfathered health plans (in and outside of marketplaces) • Mainly relevant to new, non-employer sponsored plans • Not standardized across the US – Each state can decide how they will meet the EHB requirement. • States must select benchmark plans for benefit design Limit on Annual Out-of-Pocket Spending (in 2014): • Individual: $6,350; Family: $12,700 Most of these features are designed to end insurance company efforts to avoid “adverse selection”

8. Essential Health Benefits Categories and Benchmark Plans Ten EHB categories: • Ambulatory patient services • Emergency services • Hospitalization • Maternity and newborn care • Mental health & substance abuse disorder services* • Prescription drugs* • Rehab and habilitative services and devices • Laboratory services • Preventive and wellness services and chronic disease management* • Pediatric services, incl. oral and vision care States could select EHB benchmark plan from several options: 3 largest small group plans, 3 largest state employee health plans, 3 largest FEHBP plans, or largest HMO in commercial market

9. Insurance Reform • Federal Government can regulate insurance company rate increases and unfair practices. • HI companies must spend 80-85% of premiums on health care (medical loss ratio, “MLR”). • Insurance companies are already sending rebates to consumers when they fail to meet these standards.

10. Major Features of The Affordable Care Act Insurance Marketplaces (Exchanges): In 2014, individuals and employees of small employers can purchase private insurance plans through state-based insurance marketplaces. • States can be “active purchasers” or take all comers • All health insurance plans offered through marketplaces must be “qualified health plans” and meet AV levels • Health plans may fear adverse selection with platinum plans • Funding for “Navigators” to help people choose plans

12. Status of State Action on Health Insurance Marketplaces, as of April 2014 Source: Kaiser Family Foundation, State Health Factshttp://kff.org/health-reform/state-indicator/marketplace-enrollment-as-a-share-of-the-potential-marketplace-population/#map

13. Major Features of The Affordable Care Act Medicaid Expansion: • Medicaid will cover everyone under 133% of FPL, including childless adults (12-20 million people). • Feds cover 100% of costs for newly eligible (2014-17), then 95% (2018-19), then 90% of costs after 2020. • Effective in 2014. • Reauthorized CHIP until 2019. • Temporarily raises Medicaid Rates to Medicare Rates for Primary Care Providers. • The Supreme Court said that the federal government could not penalize states that failed to expand Medicaid by withdrawing all Medicaid funds (per the ACA). Implementation of the Medicaid expansion is still mandatory, but the remedies available to the Feds are limited.

14. Federal Poverty Level (FPL) – 2014 Source: Families USA. http://www.familiesusa.org/resources/tools-for-advocates/guides/federal-poverty-guidelines.html

15. Affordability Premium tax credit • The lower your income, the higher your credit Cost Sharing Reduction Plans • All of them are silver plans (but usually around the cost of bronze plans) • Lowers coinsurance of ER, prescription drugs, etc. You can be eligible for bothpremium tax credits and cost sharing reduction plans

16. What Americans pay for a silver plan on the exchanges 40-year-old making $51,705 per year (450% of Poverty), with no financial assistance $154 $261 At 450% FPL, an enrollee would not be eligible for premium tax credits $311 $365 $481 Notes: Premiums indicate the amount a 40-year-old would need to spend on the second-lowest cost silver plan in a given county or region. Source: Premiums for state-based exchanges were obtained through a Kaiser Family Foundation review of insurer rate filings to state regulators. Premiums for federally-facilitated and partnership exchanges were obtained from data published by HealthCare.gov, as of January 22, 2014, available at https://www.healthcare.gov/health-plan-information/.

17. What Americans pay for a silver plan on the exchanges 40-year-old making $40,215 per year (350% of Poverty), with moderate financial assistance $154 At 350% FPL, eligible enrollees would have to pay a maximum of 9.5% of their income on premiums for a benchmark silver plan $261 $311 $47 $318 $163 $318 Notes: Premiums indicate the amount a 40-year-old would need to spend on the second-lowest cost silver plan in a given county or region. Source: Premiums for state-based exchanges were obtained through a Kaiser Family Foundation review of insurer rate filings to state regulators. Premiums for federally-facilitated and partnership exchanges were obtained from data published by HealthCare.gov, as of January 22, 2014, available at https://www.healthcare.gov/health-plan-information/.

18. What Americans pay for a silver plan on the exchanges 40-year-old making $28,725 per year (250% of Poverty), with significant financial assistance $154 $193 $69 At 250% FPL, eligible enrollees would have to pay a maximum of 8.05% of their income on premiums for a benchmark silver plan $193 $118 $193 $173 $193 $289 Notes: Premiums indicate the amount a 40-year-old would need to spend on the second-lowest cost silver plan in a given county or region. Source: Premiums for state-based exchanges were obtained through a Kaiser Family Foundation review of insurer rate filings to state regulators. Premiums for federally-facilitated and partnership exchanges were obtained from data published by HealthCare.gov, as of January 22, 2014, available at https://www.healthcare.gov/health-plan-information/.

19. Affordability Source: Kaiser Family Foundation http://kff.org/interactive/uninsured-gap/

20. Who bought insurance? • Current breakdown: • 8 million signed up for private health insurance through April 2014 • Surpassed expectations • Medicaid Expansion: • Between approximately 3 million people are estimated to have enrolled in Medicaid and CHIP as a result of expanded eligibility through Source: Whitehosue.gov http://www.whitehouse.gov/the-press-office/2014/04/17/fact-sheet-affordable-care-act-numbers

21. Medicare Changes: • No Part D doughnut hole by 2020. • Increases Medicare payroll tax to 2.35% from 1.45% for the affluent (over $200k/year per individual ($250k couple). Additional 3.8% tax on unearned income over $200k/year per individual ($250k couple). • Creates Independent Payment Advisory Board (IPAB) • Beginning in 2014, if Medicare per-capita spending > target growth rate, IPAB submits cost-saving legislative proposals • Restrictions on IPAB proposals. IPAB cannot propose: • Increasing revenues (through taxes, cost-sharing, etc.) • Changing benefits or eligibility • Hospitals and hospices excluded through 2019 • Missed deadlines for appointments to IPAB Major Features of The Affordable Care Act

24. Other Financing: • Excise tax on high coverage plans (>$27,500 for family), beginning in 2018. • Individual and employer penalties for not purchasing insurance. • Medicare tax increases. • Elimination of “excess payments” to Medicare Advantage Programs. • Decrease in Medicare provider payment growth rates. • Taxes on sectors of health care system (e.g. insurers, pharma, device, etc.) Major Features of The Affordable Care Act

25. Prevention and Public Health: • Creates National Prevention, Health Promotion and Public Health Council to coordinate federal wellness programming. • Disseminate evidence-based preventive services and community preventive services. • Initial allocation of $15B to Fund ($6.5B cut in 2012 for “doc fix”). Examples of programs funded in FY13: • increase CDC-sponsored fellowships for public health workforce; • state health departments to increase healthcare-associated infection prevention efforts; • Community Transformation Grants to reduce chronic diseases; • health insurance enrollment support efforts Major Features of The Affordable Care Act

26. Major Features of The Affordable Care Act Long-term Care: “Community Living Assistance Services and Supports” (CLASS). Voluntary payroll deductions for long-term care assistance. After 5-year vesting period, all participants would be eligible for average of $50/day for non-medical support services for people with functional disabilities. Increase Medicaid support for home and community-based services programs. Nursing homes required to disclose more information to the public. • (This Program has been suspended by the Obama Administration. Funding method was unsustainable.)

27. Workforce: • Increased funding for Primary Care residencies and practitioners. • Addresses nursing shortage by increasing capacity for education programs, supporting training programs, etc. • Funding for training that employs medical home and disease management models. • Also some funding for dental professions. Community Health Centers: • $11 billion additional funding over 5 years. • School-based health centers, nurse clinics, etc. encouraged. • (Some funding to be used by HHS for health insurance enrollment outreach before 2014). Major Features of The Affordable Care Act

28. Abortion: • No federal financing for abortion Undocumented Workers/Illegal immigrants: • Cannot purchase HI from a marketplace. Major Features of The Affordable Care Act

29. Waste, Fraud and Abuse: • Efforts are expanded. Malpractice Reform: • Grants to states to experiment with new approaches to malpractice reform. Major Features of The Affordable Care Act

30. ACA—Issues for Pharmacists • Can patients shop effectively on the exchanges for plans with needed drugs? • What to do about restrictive formularies and two-drug policies in health plan formularies? • Will disease-oriented lobbyists have an impact on on ACA pharmacy policies in the future? Thanks to James Lang, Pharm.D, MBA, Vice-President for Pharmacy Services, BCBSM, for his help with the pharmacy provisions of the ACA.

31. 1. Can patients shop effectively on the exchanges for plans with needed drugs? Use example of a patient with epilepsy who is stable on current drug regimen: • In the exchanges, usually difficult to see what drugs are on a plan’s formulary. • Patients can usually can click through to plan’s website to see formulary • May find that formularies for exchange plans are more restrictive than those for employer-sponsored plans

32. 2. What to do about restrictive formularies and two-drug policies in health plan formularies? • Formularies for plans in the ACA can follow the two-drug policy for each class of drugs. Unlike Part D of Medicare, there are no “protected classes” of drugs in the ACA. • Protected classes in Part D: • Anti-retrovirals • Anti-convulsant agents • Anti-neoplastics • Anti-depressives • Anti-psychotics • Immunosuppressant drugs (for organ rejection)

33. 2. What to do about restrictive formularies and two-drug policies in health plan formularies? • Appeals. Pharmacists can appeal any drug exclusions, co-pay and deductible amounts. Pharmacists usually win these appeals because the reviewing entities generally side with the patients. • Urgent Review. Pharmacists can request an urgent review in cases where switching medications could harm the patient. This can be done even before the prescription is needed. • Maximum out-of-pocket limits will also prevent patients who have to pay substantial amounts for drugs from going bankrupt

34. 3. Will disease-oriented lobbyists have an impact on ACA pharmacy policies in the future? • Knowledgeable people feel that the two-drug policy in the ACA may become more like Medicare Part D policy in a few years by allowing certain protected classes. Most likely to be protected: • Anti-retrovirals • Anti-convulsant agents • Anti-neoplastics