Today’s Talk Historical Background Gaps in the US Healthcare System Goals of Health Care Reform How Reform Will Affect Consumers How Reform Will Affect Employers What’s Next?
Evolution of U.S. Health Care Policy Our system is the result of several major policy decisions rather than one, unified health care policy. – Employer-based coverage – Government-sponsored coverage – EMTALA
Employer-Based Coverage During WWII, wage controls by the federal government led employers to offer health insurance instead of raising wages.
Medicare & Medicaid To cover the elderly and some of the very poor, the federal government enacted Medicare & Medicaid in mid 1960s.
EMTALA The Emergency Medical Treatment and Active Labor Act (EMTALA) of 1986 requires hospitals to screen and stabilize (treat) each and every patient who comes to the hospital ED seeking care.
Policy Decisions Have Left a Gap in Coverage for SC 2.2 million have employer-based health insurance 1.2 million rely on a government-sponsored program for coverage 178,000 have coverage purchased in the individual market 760,000 South Carolinians have no coverage *Source: Kaiser Family and Robert Wood Johnson Foundations
A Closer Look at South Carolina’s 760,000 Uninsured 557,000 live in working families that pay taxes to support government coverage for others 357,000 live at or below 133% of the federal poverty level SC has no program to help childless adults *Source: Kaiser Family Foundation
What Happens When the Uninsured Need Care? Remember EMTALA? – Last year, SC hospitals provided more than $1 billion worth of care for which they received no direct payment. – Those financial losses were passed along to insured patients and their employers.
The Myths You’ll have no choice in what health benefits you receive; a “health choices commissioner” will decide what benefits you get. Death panels will decide who lives. Illegal immigrants will get free health insurance. Federal funding of abortions will increase. Care will be rationed.
The Facts The new law will expand coverage to almost 500,000 of the 760,000 uninsured South Carolinians. No government-run, public option included. The new law includes health insurance reforms intended to protect consumers. The new law includes delivery system reforms that hold great promise for improving care.
2010 Federal Poverty Levels 100%133%150%200%300%400% Individual $10,830$14,404$16,245$21,660$32,490$43,320 Family of 4 $22,050$29,327$33,075$44,100$66,150$88,200
Provisions Going Into Effect in 2010 Temporary high risk pool for persons with pre-existing conditions and non-Medicare eligible retirees over 55 Transitional rebates to fill “doughnut hole” First round of insurance reforms 2010
High Risk Pool Temporary high risk pool to cover persons with pre-existing conditions and non-Medicare eligible retirees over 55 2010
Beginning to Fill Doughnut Hole Transitional rebates to help seniors in the prescription drug “doughnut hole” – A $1,720 gap in Medicare coverage of prescription meds Starts when annual drug costs exceed $2,830 Ends when annual costs exceed $4,550 – “Doughnut hole” closed by 2020 – First year rebate (2010) = $250 2010
First Round of Insurance Reforms No cancellation of coverage when an insured person becomes sick No denial of coverage for children with pre- existing conditions Young adults up to age 26 may remain on parents’ policies No lifetime limits on coverage 2010
Provisions Going into Effect in 2014 Premium assistance and subsidies for consumers Health insurance exchanges Essential health benefits Medicaid expansion Additional insurance reforms Individual mandate 2014
Cost Sharing Subsidies Beneficiary out-of-pocket spending will be capped for low-income persons purchasing coverage through the exchange. 2014 If you make: Out-of-pocket cost will be capped @: 100-150% FPL6% of the plan’s cost 150-200% FPL15% of the plan’s cost 200-250% FPL27% of the plan’s cost 250-400% FPL30% of the plan’s cost
To make it easier to shop for affordable policies To offer essential benefits as defined by HHS To serve businesses with fewer than 100 workers, self-employed, and unemployed To include a multi-state insurance plan similar to federal employee benefit plan To offer coverage to larger businesses beginning 2017 Health Insurance Exchanges 2014
Health Insurance Exchange Links buyers and sellers of insurance Insurance “Exchange” or “Connector” Uninsured (Not eligible for Medicaid/CHIP) Self Employed Small Business Others Private Plan
Essential Health Benefits Effective 1/1/2014, creates package that includes comprehensive set of services Must cover at least 60% of actuarial value of covered benefits Limits annual cost sharing to current HSA limits Requires all qualified health benefit plans to offer at least the essential package 2014
Premium Credits Provides refundable and advanceable premium credits to eligible individuals/families to purchase insurance through the exchange. If you make:Your premium contribution will be limited to: Up to 133% FPL2% of income 133-150% FPL3-4% of income 150-200% FPL4-6.3% of income 200-250% FPL6.3-8.05% of income 250-300% FPL8.05-9.5% of income 300-400% FPL9.5% of income 2014
Out-of-Pocket Limits The law will limit the amount any person buying through the Exchange will have to pay out-of-pocket. Limits will be tied to federal government’s HSA limits, as follows: 2014 If you make: You won’t pay more than: Based on 2010 HSA limits 100-200% FPL ⅓ HSA limits$1,983 ind/$3,967 family 200-300% FPL½ HSA limits$2,975 ind/$5,950 family 300-400% FPL ⅔ HSA limits$3,987 ind/$7,973 family
Medicaid Expansion By 2014, states must extend Medicaid eligibility to all legal residents up to 133% of poverty and under 65 years old. 133% FPL is $14,404 for individual and $29,327 for family of 4. Feds will cover 100% of states’ costs from 2014-2016 and the following portions after 2016: 2017 – 95% 2018 – 94% 2019 – 93% Beyond – 90% 2014
Additional Insurance Reforms No annual limits on coverage No denial of coverage for adults with pre- existing conditions No higher premium based on gender or medical history Insurers required to report share of premium income spent on medical care Limits on out-of-pocket costs 2014
Individual Mandate Beginning Jan. 1, 2014, US citizens and legal immigrants must have coverage or pay a penalty when they file their federal tax returns. – Individual penalties $95 per person in 2014 $325 per person in 2015 $695 per person in 2016 – Household penalties 1% of household income in 2014 2% of household income in 2015 2.5% of household income in 2016 *Exemptions for hardship 2014
Insurance Reforms & the Individual Mandate Many of the popular insurance reforms work only if we have an individual mandate. Why? – If you could buy auto insurance the day you had an accident, would you buy it beforehand? – If you could buy homeowners insurance the day your house burned down, would you buy it beforehand? – If you could buy health insurance the day you were diagnosed with cancer, would you buy it beforehand? – If only sick people bought insurance, what would happen to the premiums?
Provisions Affecting Employers Provides tax credits to small businesses that purchase health insurance for employees (2010) Allows young adults up to 26 to remain on parents policies (2010) Requires employers to report health care benefits value on W-2 forms (2011) Pay or play for large employers (more than 50 workers) (2014) Allows large employers to provide coverage through state exchanges (2017) Imposes 40% excise tax on Cadillac plans (2018)
Tax Credits for Small Employers Tax credits for small employers with less than 26 workers paying at least half of their workers’ health premiums Phase I provides tax credit up to 35% of employer’s contribution (tax years 2010 – 2013) Phase II provides tax credit up to 50% of employer’s contribution (tax years 2014 and beyond) Amount of tax credit varies with firm size and average wage 2010
Pay or Play for Large Employers Large employers (more than 50 workers) not offering coverage will pay $2,000 per year per worker minus first 30 full-time employees. Employers with 50 or fewer employees are exempt. 2014
What Happens Now? The new law contains broad concepts and requirements, but the details will come with regulations. Those regulations will be drafted by a variety of federal agencies, and interested persons will need to track the proposed regulations carefully. In short, there’s still a lot of work to be done!
Regardless of what happens… South Carolina’s hospitals were founded to provide care for their communities. Our state’s hospitals care for everyone, even those who can’t pay. We’re here to provide for the health needs of our communities. No matter what.
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