PRESENTATION TO OBICI HEALTHCARE FOUNDATION BY JILL HANKEN, STAFF ATTORNEY VIRGINIA POVERTY LAW CENTER MAY 2012 THE AFFORDABLE CARE ACT 700 E Main St. Suite 1410, Richmond, VA T: F:

Virginia Poverty Law Center The statewide support center for legal aid in Virginia providing support in ADVOCACY TRAINING LITIGATION on the civil justice issues faced by low-income Virginians

THE AFFORDABLE CARE ACT Purpose Key Provisions Implementation in Virginia U.S. Supreme Court The Future

PATIENT PROTECTION & AFFORDABLE CARE ACT (ACA) Comprehensive care o Available to all legally in U.S. o Affordable Health Insurers Compete o On good care and customer service o Not by denying care. Foundation for Better Medical Care o Effective health care, not just volume o Leads to lower health care costs

ACA’S MAJOR CHANGES Big changes on January 1, 2014  Medicaid expansion(+16 million enrolled)  State health exchanges created (+24 million insured)  Employer and individual mandates But there are many new improvements & protections in place today.

Private Health Insurance “Patient’s Bill of Rights” Allows children to stay on parent’s plan until 26 th birthday (even if married).* Ends lifetime dollar caps & phases out annual limits Ends arbitrary rescissions of coverage Ends denial of coverage for kids with pre- existing conditions.* *Some exceptions apply

“PATIENT’S BILL OF RIGHTS”, cont’d Ends co-pays or other out-of-pocket expenses for Preventive Care* Gives choices of primary physician and direct access to OB/GYN* Ends prior authorization for Emergency Care* Gives new rights to Insurance Appeals * Some exceptions apply

ENSURING REASONABLE PREMIUMS Rate Review  Federal and state governments begin annual review of health insurance premium increases. Medical Loss Ratio (MLR)  Insurers must pay out 80¢ - 85¢ of each $1 premium for medical benefits -- or pay rebates to consumers.

PRE-EXISTING CONDITION INSURANCE PLAN (PCIP) “Bridge” to 2014  Uninsured for at least past six months  Must have Pre-existing condition(s) Premiums range from:  ≈$100 per month (for children 0-18)  ≈$400 per month (adults over age 55) Deductibles for covered benefits (except for preventive services), & co-pays Apply on-line

MEDICARE REFORMS Closing the Rx “Doughnut Hole” o $250 Rebate (2010) o 50% discount brand-name drugs (2011) o Doughnut hole ends by 2020 New preventive benefits o adds comprehensive annual check-up, other prevention benefits o no out-of-pocket costs. Improves solvency of Medicare Trust Fund

MORE EARLY REFORMS Small employer tax credits  Up to 35% of premium cost (up to 50% in )  Small firms with ≤25 full-time equivalent employees  Average annual wages under $50,000 Grants to states  Over $182 million to Virginia!  Planning  Research  Workforce  Community Health Centers

ACTIVITY IN VIRGINIA Virginia Health Reform Initiative (VHRI)  Reforming Health Care in Virginia  Report Winter 2010  Planning for Health Benefits Exchange  Report Fall 2011  VHRI meetings scheduled Spring 2012  General Assembly adopted Patient Bill of Rights 2012 General Assembly rejected Exchange Legislation

LITIGATION Numerous constitutional challenges to individual mandate (and Medicaid expansion)  2 Cases in Virginia U.S. Supreme Court heard cases in March and will decide by June.

JANUARY 1, 2014 is 20 MONTHS AWAY! What Happens Then?

MEDICAID EXPANSION Income limits go up to cover more people <65  133% Federal Poverty Line (FPL)  $14,857 individual; $30,657 for family of 4  Income calculation similar to “adjusted gross income” for income taxes No Asset Limit for newly eligible people  Unless they are over age 65 or receiving long term care services “Benchmark” benefits for newly eligible

OTHER MEDICAID Expansion Funded  100% FFP  95% FFP 2017  90% FFP 2020 and after Higher RX rebates Increase in primary care rates (= Medicare) in 2013 Increase CHIP Match New Community Based Long-Term Care Options But Hospital DSH payments go down

HEALTH BENEFIT EXCHANGE New Marketplace  To compare / purchase private health insurance  For people without affordable job-based coverage and small employers  Not affordable if it costs ↑ 9.5% family income; covers ↓ 60% costs Standardized coverage  “Essential Benefits” - hospital, ER, mental health, maternity, Rx, preventive care, chronic disease management, pediatric (oral/vision) and more. Premium assistance based on income Limits on out-of-pocket costs based on income

COVERAGE LEVEL OPTIONS IN THE EXCHANGE 4 standard levels: Platinum – 90/10 Gold – 80/20 Silver – 70/30 Bronze – 60/40 Options vary by how much should be covered by the plan and how much is paid by enrollee cost sharing Plus catastrophic plans for people under age 30 or if no other coverage is affordable

MINIMUM COVERAGE REQUIREMENT Affordability requires spreading risk over large pool that includes healthy people Who Is Exempt from mandate? o Lowest-price Exchange plan costs > 8% of family income o Income below tax filing threshold (e.g. $9,500 single/$19,000 couple in 2011) o Excused for other financial hardship o Religious objectors o Native Americans o Undocumented immigrants o Incarcerated persons o Those uninsured for less than 3 months.

TAX PENALTIES FOR NON-EXEMPT WITHOUT INSURANCE Individual / family penalty is much less than cost of insurance.  $95 /person or 1% family income  $325/person or 2% family income  $695/adult; $375/child or 2.5% family income (max. $2085/family) Also penalties on large employers (more than 50 full-time workers) who don’t offer coverage

>$92,200 for a family of four; >400% of federal poverty line (FPL) (2012)  Job-based coverage, or  Full-cost coverage in the exchange $69,150-$92,200; % of FPL  Job-based coverage, or  Subsidized exchange coverage: premiums capped at 9.5% of income $46,100-$69,150; % of FPL  Job-based coverage, or  Subsidized exchange coverage: premiums capped at 6.3 – 9.5% of income $30,657-$46,100; % of FPL CHIP Job-based coverage, or Subsidized exchange coverage: premiums capped at 3% - 6.3% of income <$30,657 for a family of four; < 133% FPL Medicaid Children Adults (non-disabled adults, not eligible for Medicare) Family Income HEALTH REFORM COVERAGE OPTIONS BY INCOME

WHICH VIRGINIANS WILL GAIN COVERAGE? Of the over ONE MILLION uninsured Virginians:  420,000 adults are expected to newly qualify for Medicaid  106,000 (adults and kids) are expected to get a subsidized Exchange plan  100,000 currently eligible but uninsured children are expected to enroll in FAMIS/Medicaid The rest will remain uninsured... *Urban Institute Estimates, 2011

WHO WILL STILL BE UNINSURED? U.S. Citizens  Exempt from the mandate (no penalty)  People who choose not to be covered (penalty may apply) Low Income Legal Immigrants  Many are ineligible for Virginia’s Medicaid program  Can’t afford Exchange products Undocumented  Not covered by Medicaid (except for emergencies), FAMIS or the Exchange

WEBSITES FOR MORE INFORMATION Official Gov’t Website – Families USA – Kaiser Family Foundation –

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