Building the Future of Health Care Roberta Rifkin, VP of Government Affairs December 14, 2012

Health Care in America Not available to everyone 2 Expensive Inefficient

The Need for Reform 50 million uninsured Costly –Highest expenditures per person $7960 USA--$5352 Norway (next highest) Paying for quantity, not quality Unsustainable –2012 $21,000 –2021 $42,000 3

Under Construction The Patient Protection and Affordable Care Act (ACA) was signed into law on March 23, 2010 ACA is a starting point to achieve health reform A Better Patient Experience Improved Community Health Lower Costs 4

5 Three Core Areas of Construction Coverage –Exchanges –Medicaid expansion –Market reforms Affordability –Individuals: premium subsidy, cost sharing –States: Medicaid expansion reimbursement –Small Businesses: tax credit Quality –Community-driven solutions

Construction Timeline Implementing since 2010 –Market reforms –Funding innovation –Transition to new marketplace Pivotal Year –New Marketplace –Individual Mandate –Employer responsibility 6

The Construction Team Federal State Community 7

Federal Construction Team Leads planning and implementation; issues regulations and guidance Monitors state and community activities Keeps construction moving forward 8 The Blueprint

Key Federal Plans Market Reforms Essential Health Benefits Coverage Responsibility Exchanges Taxes and Penalties Reporting Requirements 9

Federal: Market Reforms Already Implemented Dependent Coverage to Age 26 No Rescissions Phasing Out Annual Limits $0 Copay for Prevention Closing the “Donut Hole” No Pre-Existing Condition Exclusion 18 and under Effective in 2014 No Pre-Existing Condition Exclusion for 19 and older Cap Raised on Wellness Program Rewards to 30%

Federal: Responsibilities for Coverage after 1/1/14 Individuals Penalty for none or not having minimum value coverage (60% AV) Some exemptions apply Large Employers (>50) Penalty for no coverage offered Penalty if coverage is unaffordable or inadequate Small Employers (<50) No penalty for not offering coverage

Federal: Health Insurance Exchange 12 Web-based marketplace to buy health coverage beginning in 2014 for:  Individuals  Small employers (<50) States have flexibility to establish their own exchange or participate in the federally facilitated exchange. The Exchange will be the only means for individuals to access federal subsidies that will lower consumer premiums and provide cost sharing. Small Employers who purchase coverage in the Exchange may be eligible for tax credits

Federal: Essential Health Benefits (EHBs) EHBs define the scope of coverage for small group and individual plans beginning in States can select a benchmark plan as the standard for EHBs or default to most populated small group plan –New York has chosen the Oxford EPO plan 13

14 Federal: Products in the Exchange Plans can be offered by Qualified Health Plans (QHPs), Multi-state Plans, and CO-OPs. Products sold in the Exchange must meet the following: Bronze = 60% Actuarial Value Silver = 70% Actuarial Value Gold = 80% Actuarial Value Platinum = 90% Actuarial Value A catastrophic plan will also be available

Federal: Exchange for Small Employers (SHOP) Small Business Health Options Program (SHOP) will have rolling enrollment State decides if employers will choose plan or precious metal level Premiums aggregated for SHOP 15

Federal: Exchange for Individuals Initial Open Enrollment: –Begins October 1, 2013 –Ends March 31,

Federal: Premium Subsidies and Cost Sharing Premium Subsidies Subsidy is advance payment of premium Cost Sharing Will reduce out of pocket expenses (deductibles, co-pays, etc) FPLIncome: Family of 4Income: Individual Max Premium as % of Income Cost Share Reduction Maximum Actuarial Value* 100%$23,050.00$11, % 133%$30,656.50$14, %66%94% 150%$34,575.00$16, %66%87% 200%$46,100.00$22, %50%73% 250%$57,625.00$27, %070% 300%$69,150.00$33, %070% 400%$92,200.00$44, %070% * Maximum Actuarial Value reflects a Silver Plan

Enrollment Scenario: Brian Age: 35 Single Job: Waiter Income: $12,500 Access: Navigator Eligibility Determination: Medicaid Choices: Medicaid Plans Brian

Enrollment Scenario: Maria and Steve Ages: 27, 28 Married Jobs: Steve- Writer Maria- Day Care (PT) Income: $31,000 Access: Web Portal Eligibility: Subsidy: Premium tax credit/cost sharing Choices: QHP – bronze, silver gold, platinum Multi-state plan option CO-OP Maria and Steve

Enrollment Scenario: Carol Age: 55 Divorced Job: Consultant for Energy Companies Income: $100,000 Access: Toll-free Telephone Line Eligibility: No subsidy Choices: QHPs Plans outside the Exchange Carol

Enrollment Scenario: Audrey Age: 42 Married, 1 child Job: Manages a shoe store with 20 employees Income: $36,000 Access: Web Portal Eligibility: Employer Contribution Choices: Employer selects a metal level of coverage Audrey can buy up or down Audrey

Federal: Employer Options for 2014 Small Group Options in 2014  Purchase coverage as done today  Use the New York State SHOP  Drop coverage: employees can use the state Exchange  Use a private exchange or IH website Large Group Options in 2014  Provide coverage as done today  Drop coverage: employees can use the state Exchange  Use a private exchange or IH website  Go self-funded

Federal: Taxes and Penalties Summary 2013 Medicare tax income adjustment Eliminates employer tax deduction for Medicare Part D Increased threshold for medical expense deduction FSA Cap Medical Device and Pharmaceutical Taxes 2014 Employer Responsibility Individual Mandate Health Insurer Tax 2018 Cadillac Tax

Federal: Taxes and Penalties Effective in 2013 –Medicare taxes for earners making more than $200,000 single or $250,000 joint –Eliminates employer tax deduction for Medicare Part D drug subsidy payments –Increased threshold for medical expense deduction 10% of AGI for unreimbursed expenses, waived for 65 and older

Federal: Taxes and Penalties FSA Cap –$2500 Medical Device Tax Pharmaceutical Tax Health Insurer Tax Cadillac Tax –Insurers taxed for employer- sponsored health plans aggregate expenses that exceed $10,200 for individual coverage and $27,500 for family coverage

Federal: Reporting Requirements Employer Premium Contribution on W2 forms –Reporting only, non-taxable –For employers with >250 forms Summary of Benefits and Coverage (SBC) –Insurers use Federal template for benefit summary –Employers will distribute Employers Report on Coverage Offered –Reporting to HHS/Treasury on coverage offered –Informing employees about Exchange options

Possible Delays: The Future of ACA Implement –Obama Administration issuing regulations and distributing funding Repeal –House has voted to repeal over 30 times –Could repeal specific provisions Defund –Provisions relying on funding from appropriations process may be underfunded or not funded at all could include IRS appropriations to implement tax credits in Exchange

Possible Delays: The Fiscal Cliff The “Fiscal Cliff” –Expiring December 31 st Bush Tax Cuts –Tax breaks for high earners –Payroll tax reductions Doc Fix (Sustainable Growth Rate Formula adjustments) –Could reduce Medicare provider payments by ~27% on January 1 Avoiding sequestration from Budget Control Act of 2011 –If “fiscal cliff” is not averted, CBO predicts a 4% drop in GDP and almost certain recession

Possible Delays: Sequestration Congress directed to cut $1.2 trillion over 10 years, or sequestration is automatic –$109 billion in cuts for 2013 Defense budget cut 50% 50% cut to nondefense funds –Health cuts: Will impact some appropriations for ACA implementation –Medicare cuts: Capped at 2% –Medicaid and CHIP exempt

State Construction Team 30 Use Federal Blueprint Flexible Floor or ceiling

New York’s Construction Plan Medicaid Redesign Exchange Establishment 31

New York: Medicaid Redesign Team Medicaid Redesign Team created by Governor in 2010 Some changes to Medicaid include: –Moving all beneficiaries to managed care by 2016 –Centralizing administration –Addressing benefits, housing, cultural issues 32

New York State: Exchange Blueprint New York has applied to be a state-run Exchange Active participation in plan selection for the Exchange Reduce total plan offerings in the state Offer a mix of standardized & insurer designed products 33

Community – Spheres of Influence You can make a difference Recognize your role Small changes matter Engage in your spheres of influence –Home –Work –Physician’s Office –Neighborhood 34 Find Your Place at the Table

Reducing the Mortgage on our Future 35 The ACA is a starting point to help us reduce our “mortgage” If we focus on quality, lower costs will follow

How Do We Get There? 1.Revitalize & grow primary care 2.Payment reform 3.Enhance health information 4.Culture of health 5.Greater alignment of health system 36 5 Key Actions

Buffalo: Our Healthy Future Our community can achieve this!