Health Reform Overview Prepared by Cornerstone Government Affairs for the Association of Schools of Public Health Updated March 30, 2010

Disclaimer This presentation attempts to provide an early overview of a large and complex piece of new legislation. It was based on Congressional and non-Congressional sources which are listed at the end. While every attempt was made to ensure accuracy, we are not responsible for statements which may be in error. As clarifications or additional information become available, a revised version of this presentation will be distributed. – Cornerstone Government Affairs (March 30, 2010)

Patient Protection and Affordable Care Act (HR 3590, P.L ) Approved by House of Representatives on Sunday, March 21 st Passed by a margin of – All 178 Republicans and 34 Democrats voted “no”

Reconciliation Act (HR 4872) House and Senate passed Reconciliation Act of 2010 containing fixes to reform legislation on Thursday, March 25 th House passed HR 4872 by a margin of Senate passes bill 56-43, with 3 Democrats voting “no”

Health Reform Overview Covers an additional 32 million people, mostly through premium subsidies and expansion of Medicaid Costs approximately $938 billion over 10 years according to CBO – Will reduce federal deficits by $143 billion over that period – Will reduce deficits by $1.2 trillion over the following decade – Does NOT include the Medicare “doc fix” which is estimated to cost over $200 billion over 10 years.

Immediate Effects Insurance companies can no longer drop people from coverage after getting sick Bars insurance companies from discriminating against children under the age of 19 with pre- existing conditions Young adults can stay on parents plan until the age of 26 Creates high-risk pool for adults with pre- existing conditions without coverage

Immediate Effects Temporary reinsurance program created to cover early retirees aged (expires in 2014) $250 rebate given to seniors who fall into Medicare Part D “doughnut hole” Tax credits become available for small businesses to cover employees 10% tax is levied for tanning services

Individual Mandate Requires all U.S. citizens to have health insurance Exemptions granted for financial hardship, religious objections, American Indians, those without coverage for less than three months Penalties take effect beginning in January 2014

Individual Mandate Penalty is the greater of $695 per year (up to three times that amount for a family) or 2.5% of household income Penalty phased in accordingly: – $95 in 2014 (or 1% taxable income) – $325 in 2015 (or 2% taxable income) – $695 in 2016 (or 2.5% taxable income)

Employer Requirements Business with fewer than 50 employees exempt from any penalty Employer with more than 200 employees must enroll each in a health insurance plan Employers with more than 50 employees that offer coverage and have one full-time employee receiving a premium tax credit must pay the lesser of $3,000 for each employee receiving a premium credit or $2,000 per employee Effective January 2014

Expansion of Medicaid Expands Medicaid to cover all individuals under the age of 65 up to 133% of the federal poverty level (FPL) States will receive 100% of funds for newly eligible enrollees from federal government from – 95% in 2017, 94% in 2018, 93% in 2019, 90% in 2020 and thereafter

Childrens Health Insurance Program States must maintain eligibility levels for CHIP through Sept. 30, 2019 Between 2014 and 2019 states will receive 23% increase in CHIP federal match

Premium and Cost-sharing Subsidies Limits availability of premium credits and cost- sharing to legal US citizens purchasing in newly-created national exchange Those between % FPL (about $88K for family of four) are eligible for premium credits Cost-sharing subsidies available for those making % FPL

Premium Subsidies Credits are calculated on sliding scale Begin at 2% of income for those at 100% FPL Credits cap at 9.8% of income for those at % FPL Subsidies available beginning in January 2014

Limiting Out-of-Pocket Costs Out of pocket maximums ($5,950 for individuals, $11,900 for families) reduced to one third for those with income between % FPL Reduced to one half for those earning between % FPL Reduced to two thirds for those earning between % FPL

Small Business Tax Credits Tax credits provided for small businesses with fewer than 25 employees providing health insurance for workers with average income less than $50K , federal government provides tax credit up to 35% of employer’s contribution if employer pays 50% of premium cost 2014 and beyond, government provides tax credit of up to 50% of employer’s contribution if purchasing through the National Exchange

Small Business Tax Credits Tax-exempt small businesses eligible for tax credits up to 25% of employer’s contribution towards insurance premium Credits phased out as firm size and employee wages increase Full credits available to businesses with fewer than 10 employees earning an average of less than $25K

Insurance Exchanges Create state-based insurance exchanges called the American Health Benefit Exchanges and Small Businesses Health Options Programs Exchange only available to small businesses with fewer than 100 employees. Businesses with more than 100 employees are eligible after 2017 Only legal U.S. citizens able to purchase in exchanges Exchanges open in 2014 Federal support also offered for non-profit member run insurance cooperatives

Benefits Within National Exchange Qualified health plans offered in National Exchange must provide essential health benefits which include cost sharing limits Deductibles in small group market cannot exceed $2,000 for an individual and $4,000 for a family Out-of-pocket requirements cannot exceed those in HSA ($5,950 for individual and $11,900 for family)

Benefits Within National Exchange Coverage offered at four levels with actuarial value values defining how much insurers pay Bronze plan provides essential health benefits and covers 60% of the benefit costs of the plan Silver – 70% Gold – 80% Platinum – 90%

Disproportionate Share Hospital (DSH) Allotments Starting in 2014, DSH payments reduced by 75%, but payments are increased based on rates of uninsured and amount of uncompensated care provided Aggregate DSH allotments reduced by: – $500 million in 2014 – $600 million in 2015 – $600 million in 2016 – $1.8 billion in 2017 – $5 billion in 2018 – $5.6 billion in 2019 – $4 billion in 2020

Health Care Innovation Creates a new Center for Medicare and Medicaid Innovation at CMS to develop and test innovative payment and delivery models Accountable Care Organizations (ACOs), medical home models are eligible for receiving funds Integrated delivery systems must achieve high quality of care and achieve savings Pilot projects begin in 2012

Rural Protections Extends floor on geographic adjustments to Medicare fee schedule to increase provider fees in rural areas Boosts bonus payments for ground and air emergency services in rural areas Expands eligibility and length of Rural Community Hospital Demonstration Program for two years Extends outpatient hold harmless provision

Medicare Advantage Changes Medicare Advantage (MA) plans in high-cost areas will receive 95% of Medicare fee-for-service rates MA plans in lower-cost areas will see payments rise up to an additional 15% more than FFS rates Phase in payment changes over three year period beginning in 2011 Bonuses given to MA plans receiving 4 or more start in current 5-star ranking system beginning in 2012

Fixing Medicare Part D “Doughnut Hole” Seniors exceeding Part D coverage will receive a $250 rebate in 2010 Beginning in 2011, seniors receive 50% discount on brand-name drugs and biologics purchased when entering the coverage gap. 50% of discount funded by pharmaceutical companies Discount increases to 75% after 2011 and will apply to generics

Elimination of Pre-existing Conditions Discrimination against children under the age of 19 with pre-existing conditions eliminated immediately Creates in 2010 a high-risk pool for those adults with pre-existing conditions to receive federal subsidies High-risk pool eliminated in 2014 when insurers can no longer discriminate against individuals with pre- existing conditions Bans gender rating, eliminating higher premium costs for women in the individual market

Prevention and Wellness Creates a National Prevention, Health Promotion, and Public Health Council to coordinate prevention and wellness practices on federal level Establishes new mandatory spending in the form of a Prevention and Public Health Fund – $500 million in FY 10 – $750 million in FY 11 – $1 billion in FY 12 – $1.25 billion in FY 13 – $1.5 billion in FY 14 – $2 billion in FY 15 and each year thereafter

Prevention and PH Fund Uses “For programs authorized by the Public Health Service Act, for prevention, wellness, and public health activities including prevention research and health screenings, such as the Community Transformation grant program, the Education and Outreach Campaign for Preventive Benefits, and immunization programs” (Section 4002) The fund is directly appropriated by this legislation, not just authorized.

Prevention and Wellness Expands role of Community Health Centers to implement wellness programs for Medicare beneficiaries Expands scope of Community and Clinical Preventive Services Task Forces Creates grant program for school-based health centers Expands oral health programs

Prevention and Wellness Establishes community transformation grant program for State and local government agencies Establishes demonstration program to provide recommended vaccines to more children, adolescents, and adults. Reauthorizes section 317 immunization program Establishes labeling requirements for restaurants, retail food establishments, and vending machines

Prevention and Wellness Mandates the Secretary of HHS collect data on health disparities Incentivizes employer-based wellness programs Provides epidemiology and laboratory capacity grants for responding to public health emergencies Funds a childhood obesity program Fully covers proven preventive services and eliminates cost-sharing for preventive services in Medicare and Medicaid

Health Care Workforce Creates a National Healthcare Workforce Commission to disseminate information on health care workforce supply and demand, as well as training and retention best practices Establishes National Center for Workforce Analysis Creates competitive health care workforce development grant program under HRSA to shore up workforce and state and local levels

Health Care Workforce Establishes loan repayment program for pediatric specialists who commit to work in underserved areas Creates a public health workforce recruitment and retention program offering loan repayments in exchange for service at a state, local, or tribal health department Expands Public Health Service Corps Provides mid-career training for public health workers Loan repayment offered for allied health professionals employed at public health agencies

Health Care Workforce Increases funding for National Health Service Corps Expands nurse retention and student loan programs Establishes Regular Corps and a Ready Reserve Corps for service in time of national emergency Creates grant programs to grow numbers of primary care, geriatric, oral health, and psychiatric workforce

Health Care Workforce Authorizes advanced nursing education grants for midwifery Expands loan repayment programs for people from disadvantaged backgrounds Establishes a grant program aimed at promoting innovations in interdisciplinary care training Establishes a new state grant program for early childhood home visitation under HRSA

Increased Transparency Physician-owned hospitals that do not have a provider agreement will not be able to participate in Medicare Drug, device, biological and medical supply manufacturers must report gifts to physicians, medical practices, or teaching hospitals Physicians providing imaging services must offer in writing an alternative provider for that same service

Increased Transparency Establishes Patient-Centered Outcome Research Institute to compile comparative clinical outcomes research Secretary will establish procedures for monitoring and screening CHIP, Medicaid, and Medicare providers

Making Medicines Affordable for Children in Underserved Communities Expands scope of existing 340B drug discount program Allows more Americans to have greater access to cheaper medicines

Revenue Provisions Tax on “Cadillac Plans” that cost $10,200 annually for an individual, $27,500 for families effective January 1, 2018 Limits Flexible Spending Account contributions to $2,500 annually effective in 2013 Levies excise taxes on Pharmaceutical manufacturers beginning in 2011 in the amount of $2.5 billion annually. Manufacturers pay based on market share Levies excise tax on device manufacturers in the amount of $2 billion from 2011 – 2017, and $3 billion annually thereafter. A 2.3% sales tax on devices is also enacted effective in 2013

Revenue Provisions Includes additional 0.9% Hospital Insurance tax on earned income for households earning over $200K for individuals and $250K for jointly-filing couples Includes a 3.8% Unearned Income Medicare Contribution to unearned income including interest, dividends, annuities, royalties, and rents for households earning over $200K for individuals and $250K for jointly-filing couples

Sources and Additional Info Democratic Policy Committee: Kaiser Family Foundation, “Focus on Health Reform: Summary of New Health Reform Law”: Cornerstone Government Affairs Public Health and Workforce Side-by-side: House Ways and Means Committee: Department of Health and Human Services White House Reform Plan: