Presentation Transcript

1. HEALTH CARE REFORM:PATIENT PROTECTION AND AFFORDABLE CARE ACT (PPACA)Public Law No. 111-148Northeast Indiana Human Resource AssociationMonday, April 2, 2012 Presented by: Steven L. Jackson Faegre Baker Daniels LLP 111 East Wayne Street, Suite 800 Fort Wayne, IN 46802 260.460.1673 Steven.jackson@FaegreBD.com
2. DISCLAIMER My remarks in this address reflect my personal opinion and observations based on more than 30 years (or so) of working in the health care/legal system. My remarks do not reflect the opinions of my firm, its clients, or their employees.
3. Problems in Current U.S. Health Care System Too Expensive Poor Outcomes as Measured by Mortality/Morbidity Poor Coverage Poor Allocation of Health Care Resources Approximately 70% of lifetime health care dollars spent in last 6 months of life Bioethics Lags Science
4. Is There Money in the System?? For Fiscal 2009 Millions Highest Paid Acute Care$20.8 Hospital CEO Highest Paid Insurer CEO $106. Highest Paid Specialty $28.9 Care Provider CEO
5. Is there Money…(cont.) AARP August 25, 2010 Report 2004-2009 Average Retail Price For 207 prescription drugs +41.5% 2004-2009 General Inflation rate +13.3%
6. Impetus for Reform:The Growing Uninsured Population Source: U.S. Bureau of the Census
7. Impetus for Reform:The Growing Health Care Cost Burden Source: U.S. Centers for Medicare & Medicaid Services.

8. Cost Shifting 101

9. Average Health Insurance Premiums and Worker Contributions for Family Coverage, 1999-2008 $12,680 119% Increase $5,791 117% Increase Note: The average worker contribution and the average employer contribution do not add to the average total premium due to rounding. Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2008.
10. Cost Shifting Hidden tax paid by insured population Helps cover unpaid healthcare costs of government-insured and uninsured population Significant contributor to rampant increase in health insurance costs 11
11. The Principles of Healthcare Reform Have Been Clearly Articulated Coverage Expansion of the total population that is insured Cost Reduced costs Improved value – highest quality for lowest cost Delivery System Reform Increased provider accountability for outcomes through economic rewards and sanctions Source: Modified from Kaufman Hall 12
12. 4 Key Concepts in PPACA Individual Coverage Mandate Employer Mandate Health Insurance Exchanges Market “Reforms” 13
13. How (And How Soon) PPACA affects every business maintaining a health plan The first set of changes hit employer group health plans at the start of the first plan year after 9/23/2010 (1/1/2011 for calendar year plans) 14
14. Immediate Impact(The Goodies) Small employer tax credit Early retiree reinsurance program Elimination of pre-existing condition limitations for children (under 19) Temporary high risk pool for individuals 60-days’ prior Notice of Material Modifications
15. Beginning In 2011 Lifetime annual benefit limit restrictions Non-discrimination rules for insured plans Expansion of dependent coverage rules Over the counter medications not permitted from FSA, HSA, HRA Form W-2 reporting for health care costs
16. Beginning In 2011 (cont.) Plan appeals process changes New cafeteria plan for qualified small employers Certain small group insurance market reforms Government long-term care insurance program (CLASS) New benefit summaries (2012)
17. Beginning In 2013 Health flexible spending account cap Changes to rules governing itemized deductions for medical expenses Increased Medicare tax for high-income earners
18. Beginning In 2014(The Bill Comes Due) Employer “Play or Pay” provisions Individual mandate provisions Market “reforms,” including elimination of pre-existing condition exclusions, expansion of guaranteed issue and renewability, and prohibition against discrimination based on health status
19. Beginning In 2014(The Bill Comes Due) Annual limit and waiting period restrictions Additional dependent coverage expansion HIPAA wellness incentives Minimum benefit package for small group market Purchasing exchanges for individual and small group insurance
20. Beginning In 2018 “Cadillac Plan” excise tax

21. PPACA Financial Aspects

22. Excerpt from BKD Audit Letter (10-15-10) “The implications of health care reform are nearly impossible to determine at this time. The legislation will affect almost every aspect of the Hospital’s operations over the next five years and beyond, encompassing such varied areas as how you are paid by Medicare and Medicaid, how you prove your tax exempt status, how you plan and negotiate your managed care contracts, how you forecast and plan for inpatient volume and even how you structure your own employees’ health insurance coverage…” (used by permission) 23
23. Health Care Reform How do you increase coverage and decrease the deficit? Federal budget estimates for next 10 years Gross cost of $940 billion Reduce federal deficit $143 billion Tax provisions to raise $437.8 billion Medicare/Medicaid cuts of $455 billion Source: Congressional Budget Office & Joint Committee on Taxation 24
24. Penalty for Not Providing Coverage Large employers subject to penalty if minimum essential coverage not provided to employees Penalties also apply if coverage is unaffordable or if employee receives premium credits Penalty not deductible Effective 2014 25
25. Penalty for not Providing Coverage Excise tax if employer does not offer coverage At least one employee receives health coverage assistance $2,000 ($167/month) per full-time employee reduced by 30 employees Applies to all full-time employees in excess of 30 even if only a portion receive health coverage assistance 26
26. Penalty for not Providing Coverage Excise tax if employer provides coverage but employee receives health coverage assistance $3,000 ($250/month) per employee that receives health coverage assistance Penalty not imposed if employer provides free choice voucher to employee 27
27. Excise Tax on High-cost Plans 40% excise tax if value of employer-sponsored health coverage exceeds threshold amount $10,200 individual coverage $27,500 family coverage Adjustments for high-risk professions, age & gender Tax levied at insurer level Can be the employer if self-insured Effective for tax years after 12/31/17 28
28. Individual Health Insurance Mandate All individuals required to maintain minimum essential coverage Penalty applies for failure to maintain coverage for individual & dependents Effective for taxable years beginning after 12/31/13 29
29. Additional Medicare Tax on Earned Income Additional 0.9% Medicare tax imposed on wages in excess of threshold amount $250,000 joint returns $125,000 married filing separate $200,000 in all other cases Thresholds not indexed for inflation Effective for tax years beginning after 12/31/12 30
30. Medicare Tax on Investment Income Medicare tax of 3.8% on lesser of: Net investment income Excess of modified AGI over threshold amount Applies to individuals, estates & trusts Effective for taxable years beginning after 12/31/12 31
31. Medicare Tax on Investment Income Threshold amounts $250,000 joint returns $125,000 married filing separate $200,000 in all other cases 3.8% tax in addition to 0.9% Medicare tax on wages in excess of threshold amounts 32

32. Grandfathered Plans

33. Health Status Discrimination Effective 2011, group health plans cannot establish eligibility rules based on Health status Medical condition or disability Claims experience Receipt of health care Medical history Genetic information Evidence of insurability
34. Patient Protections Individual may choose primary care physician (PCP). Child may designate pediatrician as PCP. Female may see OB/GYN without referral/authorization from PCP. Plan must cover emergency services w/o authorization in- and out-of-network

35. Long Term Care

    Long Term Care
36. Long Term Care in USA Primarily either Private Pay or Medicaid (little LTC insurance, mostly not covered by Medicare) Fort Wayne average private room rate $217 Cost shifting more pronounced than in acute care Demographic tidal wave about to hit the beach 37
37. CLASS Program Effective 2011, HHS will establish a national employee-funded long-term care program Involvement is voluntary, but employers are encouraged to participate and offer automatic enrollment Employers are required to facilitate payroll deduction
38. CLASS Program Benefits and costs, and many program details, not currently defined Estimated availability date 2013 Requires 5 years of payments with at least 3 years worked to be eligible for benefits Voluntary– must “opt out” Law requires program to be fiscally sound for 75 years– many question this No limitations for health reasons– many believe program will suffer from “adverse selection” 39
39. Accountable Care Organizations “ACO” – key to better health Care or the latest three letter meaningless acronym from Washington? HMO’s – the rage in the 70’s DRG’s – the rage in the 80’s PCP’s – the rage in the 90’s
40. IS PPACA Constitutional? One Federal Court of Appeals says “YES” One Federal Court of Appeals says “NO” The real issue is the role of the commerce clause in the concept of a limited federal government.
41. Is PPACA Constitutional?(cont.) “It is difficult to imagine that a nation which began, at least in part, as a result of the opposition to a British mandate giving the East India Company a monopoly and imposing a nominal tax on all tea sold in America would have set out to create a government with the power to force people to buy tea in the first place.” U.S. District Judge Roger Vinson
42. Only the United StatesSupreme Court Knows for Sure!

43. Thank You