Health Care Reform Update September 2010 Michael Mayers Ken Preede Policy & Government Advocacy Department

2 Bill Passage House passed Health Care Reform legislation on Sunday, March 21, 2010 by a vote of Senate passed Health Care Reform Legislation on March 25, 2010 by a vote of President Obama signed the bill into law on March 26, 2010.

Major Changes to US Health Delivery System Inclusion of state-based insurance “exchanges” for individual and small-group markets beginning in 2014 Insurance market reforms ending pre-existing condition exclusions and policy rescissions in the commercial market and limiting out-of-pocket expenses for beneficiaries Mandatory minimum medical care ratios for Medicare Advantage and commercial insurance plans. A medical care or loss ratio is the proportion of premium dollars that health insurers spend on patient care, compared to administrative expenses 3

Major Changes to US Health Delivery System Mandates for all business with more than 50 employees to provide health insurance to their employees Mandates on individuals to purchase health insurance or face a tax penalty beginning in Major expansion of Medicaid to cover those with incomes less than 133% of the Federal Poverty level (FPL) NO public option insurance plan (except for existing public plans such as Medicare, VA and Medicaid) 4

Positive Aspects of Health Care Reform for Molina Expansion of Medicaid to 133% of Federal Poverty Level and to childless adults Extension of Medicaid drug rebate to managed care enrollees Extends CHIP through 2015 Extends authorization for Medicare Advantage SNP plans through 2013 Includes commercial insurance market reforms and individual mandates Does NOT include minimum Medical Cost Ratios for Medicaid health plans 5

Positive Aspects of Health Care Reform for Molina Inclusion of a insurance industry tax beginning in 2014 on health insurance premiums including payments to Medicaid MCOs (excluding some non-profit insurers). The tax will be assessed on market share of total national premiums in any given tax year and will raise between $8 billion and $14.3 billion annually. Payment cuts to Medicare Advantage plans to existing fee- for-service reimbursement levels (but not using a competitive bidding process as was originally proposed in the Senate). 6

What’s Next? Implementation, implementation, implementation Technical corrections Healthcare “hangover” Election Day 2010 Repeal? Revise? 7