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The Brave New World of Health Benefit Exchanges (Resistance is Futile: Ready or Not, Here Comes Covered California)

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Presentation on theme: "The Brave New World of Health Benefit Exchanges (Resistance is Futile: Ready or Not, Here Comes Covered California)"— Presentation transcript:

1 The Brave New World of Health Benefit Exchanges (Resistance is Futile: Ready or Not, Here Comes Covered California)

2 Summary of PPACA No pre-existing condition exclusions; No lifetime benefit caps; MLRs (80% individual/small group; 85% large group); Dependent coverage up to 26; Mandate to buy coverage or pay a penalty 2014: > of 1% income or $95; 2016: > of 2.95% or $695.

3 Summary of PPACA Businesses with 50 or more FTE employees (ramping up to 100 in 2016) must offer minimum affordable coverage to employees or pay fine ($2,000 per employee > 30). This requirement suspended until after 2014.

4 Summary of PPACA Mandate to purchase coverage and development of health benefit exchanges are, fundamentally, conservative ideas: Use of the marketplace to achieve greater efficiency. Idea developed by the Heritage Foundation; implemented by then-Gov. Mitt Romney (R- Mass.).

5 Summary of PPACA Affordability promoted by (1) expansion of Medicare, (2) subsidies for low-income consumers, (3) expanded tax credits for small business, (4) standardization and simplification of product offerings, and (5) marketplace competition.

6 Summary of PPACA Medicaid is a joint federal and state funded program that provides health care for over 60 million low income Americans. Every State has different eligibility requirements; PPACA would have required all states to increase eligibility levels to 138% of the Federal Poverty Line ($23,550 for a family of four).

7 Summary of PPACA Expansion designed to "cover the gap" between those who qualify for Medicaid and those who qualify for Exchange subsidies. About half of the uninsured in America would be covered by Medicaid Expansion; because every State already covers those who have no income, expansion would almost exclusively be covering the working poor and their families.

8 Summary of PPACA Millions of Americans would be able to get care before they are forced to use costly last minute emergency services. The uninsured currently cost state taxpayers billions in unpaid hospitals billsone of the main causes of rising premium costs.

9 Summary of PPACA The federal government pays 100% of expansion costs for the first three years and 90% thereafter until 2022. The US Supreme Court ruled that the Medicaid expansion could not be Constitutionally required, so states have the option of to expand or not. 25 states & DC have expanded; 23 have refused; two pending.

10 Summary of PPACA Until 3/31/14, Americans earning < 400% of the federal poverty level (FPL) can get a type of subsidy called advanced premium tax credits. Those making < 250% FPL can get subsidies to lower out-of-pocket costs. Those making less than 138% FPL (in some States) may be eligible for Medicaid.

11 Summary of PPACA Current small-business tax credit program: Up to 35% of premium (or 24% if non-profit) if employer pays at least half of the total premium. Small business = 25 or fewer FTE employees, paid on average less than $50,000. In 2014, the tax credit increases to 50% (or 35% for non-profits) for two years.

12 Summary of PPACA Subsidies and tax credits for small business are only available through health exchanges.

13 Summary of PPACA Standardization: All plans cover 10 categories of essential health benefits: ambulatory patient care; emergency service; hospitalization; maternity & newborn care; mental health & substance abuse; prescription drugs; rehab services & devices; lab services; preventative & wellness care with no co-pay or deductible; chronic disease support; pediatric care, including dental and vision.

14 Summary of PPACA All health exchange plans fall into one of four metal tiersPlatinum, Gold, Silver, and Bronze. Coverage is identical in all plans; the only difference is in the amount of deductibles and co-pay requirements, scaled from most expensive to least. QHPs agree to offer identical plans outside the Exchangewithout subsidies.

15 Summary of PPACA California divided into 19 geographic areas; QHPs set their own rates and compete with one another on price, medical network, and other service termsjust as they do today. Exchanges hope to use the power of competitive marketplace by simplifying comparative shopping, use of multiple distribution channels, and unprecedented marketing & outreach.

16 Summary of PPACA Two separate exchanges are being created: 1) for individuals; 2) for small business (SHOP = Small Business Health Options Program). Within SHOP, the employer decides whether and when to participate (no open/closed enrollment), which tier of coverage (if any) it wishes to financially support, and whether it wishes to also contribute to dependent care.

17 Summary of PPACA Within SHOP: Employees then choose the plan or plans that meet their needs. Covered California aggregates premium and commission payments and collections. Any licensed, certified agent may sell policies even without a direct appointment. Within the individual exchange, appointment are still required, and the insurer sets commissionsas is done currently.

18 Summary of PPACA Many states were reluctant or hostile to PPACAbut not California. Covered California embraces No Wrong Door approach, and has taken several important steps to ensure agents play a meaningful role in selling individual and small- group exchange policies.

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