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The Affordable Care Act: An Early Progress Report David Grande, MD, MPA Senior Fellow, Leonard Davis Institute of Health Economics Assistant Professor.

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Presentation on theme: "The Affordable Care Act: An Early Progress Report David Grande, MD, MPA Senior Fellow, Leonard Davis Institute of Health Economics Assistant Professor."— Presentation transcript:

1 The Affordable Care Act: An Early Progress Report David Grande, MD, MPA Senior Fellow, Leonard Davis Institute of Health Economics Assistant Professor of Medicine University of Pennsylvania February 5, 2014

2 Coverage Financial security Better health

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4 Insurance Pricing We can experience rate – vary premiums based on health status – More affordable insurance for the healthy – Sick get priced out We can community rate - “everyone” is charged same premium – More affordable insurance for the sick – Healthy don’t want to join and drop out Insurance market outside of ESI has been a failure

5 Eliminate Medical Underwriting or “pre-existing conditions” Individual Mandate Subsidize or Provide Coverage The Affordable Care Act

6 Affordability How much do you have to pay for insurance? (i.e. premium credits) – Premium contributions as % of income How much cost sharing do you have to shoulder at the point of care? (i.e. cost- sharing subsidies) – Cost sharing subsidies increase actuarial value of insurance for low income individuals (70-94%) Source: Kaiser Family Foundation: Summary of the New Health Reform Law

7 Example: 35 year old earning $30,000 per year (260% of FPL) Contribute 8.4% of income ($210/month) Calculate subsidy from “benchmark Silver plan” $287-$210 = $77/month – apply to any plan Subsidies tied to prices in local markets Individual $ exposure: age, income, benefit design Public $ exposure: prices in local markets Source: Center for Budget and Policy Priorities; HealthCare.gov

8 Coverage Projections 2019 Source: Congressional Budget Office, February 2014

9 It will take about 3 years…

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12 Marketplace Enrollment as % Eligible by State ~2 million enrolled (January 2014) Source: Kaiser Family Foundation

13 Awareness of Marketplaces Among Uninsured December 2013 Source: Robert Wood Johnson Foundation / Perry Undem Research/Communication 2014

14 77% have not visited Marketplace Why not? Source: Robert Wood Johnson Foundation / Perry Undem Research/Communication 2014

15 What do they know about the ACA? Source: Robert Wood Johnson Foundation / Perry Undem Research/Communication 2014

16 If the young and healthy don’t buy… will there be a “death spiral”?

17 Temporary Reinsurance Program Adverse Selection – Catastrophic Losses within a Plan Goal: Protect against actuarial uncertainty in early years of ACA (encourage plan participation)

18 Temporary Risk Corridor Program Adverse Selection – Sicker than Expected Enrollees within a Plan (Marketplace Plans) Goal: Protect against actuarial uncertainty in early years of ACA (encourage plan participation)

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20 Risk Adjustment Program Adverse Selection Across Plans Goal: Long-term mechanism to guard against cream skimming in community rated private market

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23 Source: Kaiser Family Foundation

24 Healthy PA Proposal Changes to existing Medicaid program – Collapse to 2 plans – low risk & high risk – Charge monthly premiums > 50% FPL – More limited benefits Expansion population – Marketplace plans – Requirements: Wellness program (HRA, annual exam, timely payment) Job search requirements

25 Healthy PA Questions Disruptions of coverage due to premiums – Experience in other states: 10-50% disenrollment Administrative burden – Verification systems Cost neutrality – What are the assumptions?

26 The Future Coverage: – likely close to target Risk Pool: – unknown but risk of premium spike low – premiums lower than expected Satisfaction: – Resolution of early enrollment problems – Limited networks – High deductibles Politics: – Will states get on board with implementation?

27 Google Searches through Source: Google Trends


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