WHAT WILL HEALTH REFORM MEAN FOR CALIFORNIA’S CHILDREN AND YOUTH WITH SPECIAL HEALTH CARE NEEDS? Edwin Park Co-Director of Health Policy Center on Budget and Policy Priorities July 7, 2010

Health Reform Would Significantly Expand Coverage Will cover 32 million of the uninsured by 2019, according to the Congressional Budget Office. Results in 92% of population having health insurance (94% of legal residents). Greatest health coverage gains since enactment of Medicare and Medicaid 45 years ago. Urban Institute estimates that roughly 3.75 million of California’s uninsured would become newly eligible for Medicaid or the exchange subsidies. Another 1.5 million of the uninsured are already eligible for public programs. UC Berkeley Labor Center has similar estimates (4.35 million of the uninsured would become newly eligible). 2

Key Coverage Provisions Affecting Children and Youth with Special Health Care Needs Maintenance of effort requirements and immediate market reforms. Medicaid expansion. Extension of CHIP. Insurance market reforms. Establishment of new health insurance exchanges for individuals and small employers, with subsidies for premiums and cost-sharing available to low- and moderate-income people. Tax credits to small employers to offer coverage. 3

Immediate Medicaid/CHIP “Maintenance of Effort” Requirement States cannot reduce Medicaid or CHIP eligibility levels or make enrollment procedures more restrictive for children through September 30, Looks at eligibility and procedures in effect as of date of enactment of health reform (March 23, 2010). Exception for states whose CHIP programs run out of federal CHIP funding. Similar Medicaid MOE for adults, but only through December 31,

Dependent Coverage through Age 26 All insurers offering plan through employers or in the individual market must offer dependent coverage through age 26. Applies to self-insured plans too. Only applies to plans that offer dependent coverage. Does not require plans to cover families. If employer plan is “grandfathered” than adult child must have no access to employer-sponsored coverage of their own. If added to plan, insurers can only charge the same increase they would have charged for any other dependent child. Takes effect start of first plan year after September 23, Expected to cover 1.24 million young adults with only modest effect on premiums. 5

No Denial to Children for Pre-Existing Conditions Insurers can no longer deny offer of coverage to children (through age 19) with pre-existing conditions and can no longer deny coverage of pre-existing conditions. Takes effect start of first plan year after September 23, Applies to all plans except “grandfathered” individual market plans. Plans may charge higher premiums. Pending California legislation implementing this provision would limit how much premiums could be charged for adding children with pre-existing conditions. 6

Pre-Existing Condition Insurance Plans (PCIPs) $5 billion to states to finance coverage of those who are medically uninsurable (denied coverage by insurers because of their health status or pre-existing conditions). Must be uninsured for at least 6 months and denied coverage because of pre-existing condition. California has elected to operate its own pool. Will be run by MRMIB. Start accepting applications in August and begin providing coverage in September. 7

No Lifetime or Restrictive Annual Limits First plan year starting after September 23, 2010, all plans can no longer impose lifetime dollar limits on benefits. Cannot place restrictive annual dollar limits on benefits (defined as $750,000 rising each year to $2 million to plan years after September 23, 2012). Plans can ask for waiver if causes reduction in benefits or increases in premiums (like mini-medical plans. No annual dollar limits starting in Applies to all plans except grandfathered individual market plans. 8

Other Immediate Reforms Affecting Children and Youth Preventive services without cost-sharing in all plans, including Bright Futures well-child visits and screenings. Prohibition on rescissions except for fraud or intentional misrepresentations. Children of state employees now eligible for CHIP. 9

Medicaid Expansion in 2014 Requires states to expand their Medicaid programs on January 1, 2014 to all non-elderly adults and children up to 133% of the federal poverty level ($29,400 for a family of four). No assets test. –Includes childless adults (such as youth), who generally could not be covered under Medicaid beyond age 20 under prior law. –Includes people with disabilities. –States have the option to cover these populations at regular Medicaid match starting on April 1, –Means some older children 6-18 now on Healthy Families will be switched to Medi-Cal and gain EPSDT benefits. 10

Federal Support for Medicaid Expansion Federal government will pick up the overwhelming bulk (96%) of expansion costs over next 10 years. The federal matching rate for “newly eligibles” will be: – : 100% –2017: 95% –2018: 94% –2019: 93% –2020 and beyond: 90% Regular match for current eligibles who newly enroll. Likely CHIP match for children switched from CHIP to Medicaid. 11

Medicaid Benefits for the Newly Eligible States are required to provide “benchmark” benefits to some of the newly eligible population, rather than the regular Medicaid package. Affects primarily non-disabled adults. Children, however, will continue to receive full package including EPSDT. Benchmark benefits can be as good as regular Medicaid package, or be less comprehensive and more akin to typical private insurance plans. Up to the state. Critical that state offer full benefits package particularly for vulnerable populations like youth with special health care needs. 12

New Medicaid Options for Home and Community-Based Care Expands existing option to provide HCBS services without a waiver. Expands scope of services and states no longer permitted to cap enrollment or limit geographic scope. Can also be targeted to specific groups. Takes effect April 1, New Community First Choice Option to allow statewide HCBS services to individuals up to 150% of poverty meeting needs criteria. Federal government will pay higher Medicaid matching rate (+6%). No caps. Starts October 1, Money to rebalance so at least 50% of LTC dollars spent on HCBS but CA already meets threshold. Extension of Money Follows the Person Demonstration Projects through $450 million per year. Only have to been in institutional care for 90 days or more. 13

2014 Medicaid Requirement to Cover Youth Formerly in Foster Care States must provide Medicaid coverage to youth who were previously in foster care. Through age 26. Must have been in foster care on the date of attaining 18 years of age or higher emancipation age elected by state and were enrolled in Medicaid while in foster care. Takes effect January 1,

Medicaid Eligibility Determination and Enrollment Change in how income is counted to align with federal income tax rules, which will be used to determine eligibility for the exchange subsidies. Some income currently counted under Medicaid are not counted under income tax rules, making some people newly eligible. Takes existing disregards into account by providing for 5 percentage point add-on. Effectively means Medicaid eligibility level will be 138% of poverty. Extends presumptive eligibility option for children and pregnant women to newly eligible populations (and existing parents). Must have coordinated procedures with exchange. 15

Primary Care Physician Rate Increases Requires states to increase Medicaid primary care physician rates to 100% of Medicare rates in 2013 and Federal government will pick up 100% of the increase in costs. States, however, can reduce rates after

Extension of CHIP through 2015 CHIPRA (enacted in 2009) extended CHIP through the end of fiscal year Health reform extends CHIP through 2015 by providing $40 billion over 2 years. –$ billion in 2014 –$ billion in 2015 Should be more than enough funding to allow states like California to maintain and expand their programs. As noted, MOE. CHIP required to use new income counting rules as well. Requires Secretary to study comparability of CHIP to exchange plans by

Adjusted Community Rating in 2014 Starting in 2014, insurers cannot deny coverage to anyone based on a pre-existing health condition. Insurers can no longer vary premiums based on health status or pre-existing medical conditions. Age can still be 3:1 and tobacco use at 1:5 to 1. Other factors like gender and industry are no longer permitted. 18

Essential Benefits Package Applies to individual and small group market plans. Defined by Secretary of Health and Human Services but must include at least certain services: –Ambulatory patient services, emergency services, hospital care, maternity and newborn care, mental health and substance abuse services, prescription drugs, rehabilitative and habilitative services and devices, lab, preventive and wellness services, and pediatric services. –Comparable to scope of services provided in typical employer based plan. Pediatric benefits must include vision and dental. Requires plans to have maximum out-of-pocket limits on in- network care. Equal to levels under Health Savings Accounts (currently $5,950 for individuals and $11,900 for families). 19

Exchange Tax Credits for Individuals and Families States must set up health insurance exchanges for individuals and small businesses (but can expand to larger firms) by January 1, New federal tax credits for people to purchase exchange plans. Generally for those between 133% of the poverty line and 400% of poverty but legal immigrants with lower incomes subject to 5-year Medicaid/CHIP bar would be eligible. 20

Subsidy Scale 21 % of Poverty% of Family Income Annual Premium Amount for Family of Four (2010) 100%2%$ %3%$ %4%$1, %6.3%$2, %8.05%$4, %9.5%$6, %9.5%$8,379

Subsidies for Cost-Sharing Subsidy eligible are given subsidies to purchase at least a plan with an actuarial value of 70%. Actuarial value is a measure used to compare the relative value of benefits. The greater the benefits (and the lower the cost- sharing), the higher the AV. Those with incomes below 250% of poverty get higher actuarial values. –Below 150% of poverty: 94% – % of poverty: 87% – % of poverty: 73% Lower maximum OOP caps as well. 22

Small Employer Tax Credits Tax credits for small employers that offer health coverage. Employers must contribute at least 50% of the cost. Full credit available to firms with 10 or fewer workers and average wages of $25,000 or less. Credit phases out by size (up to 25) and by wages (up to $50,000. Credit is 35% for % for 2014 and beyond (but only for 2 years and only for exchange). Credit is 25% and 35% respectively for nonprofits. 23