Health Care Issues and Legislation Impacting Businesses Today

Susan R. Bailey MD October 17, 2012

Percent Distribution of National Health Expenditures, by Source of Funds, 1960-2010

Notes: Medicare and Medicaid were enacted in 1965; by January 1970, all states but two were participating in Medicaid. Starting with 2009 NHE data, CMS revised the Source of Funds measure from a classification that was either public or private to one that is more program-based. CMSs rational was that financing arrangements have become more complex and the lines between public and private payers have become blurred as a single program may have federal, state, local, and private funding. As a result, the category Other Third Party Payers includes both public and private programs and also some programs that receive funds from both public and private sources, such as Workers Compensation, Worksite Health Care, and School Health. Other Pub. Ins. Programs includes CHIP, the Department of Defense, and the Department of Veterans Affairs. Source: Kaiser Family Foundation calculations using NHE data from Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; National Health Expenditures by type of service and source of funds, CY 1960-2010; file nhe2010.zip).

Health Insurance Coverage of the Nonelderly Population, 2010

Private Nongroup 5.5%

266.0 Million
SOURCE: KCMU/Urban Institute analysis of 2011 ASEC Supplement to the CPS.

Average Annual Worker and Employer Contributions to Premiums and Total Premiums for Family Coverage, 1999-2011
$13,375* $12,680* $12,106* $11,480* $10,880* $13,770* $15,073*

$9,950*
$9,068* $8,003* $7,061* $6,438* $5,791

* Estimate is statistically different from estimate for the previous year shown (p<.05). Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2011.

Distribution of Health Coverage Costs as a Percentage of Payroll for Employees with Access to Coverage, 1999-2010

Source: Kaiser Family Foundation calculations based on data from the National Compensation Survey, 1999-2010, conducted by the Bureau of Labor Statistics.

Uninsured Rate by Worker Characteristics, 2010

Smaller Firms (< 100 workers) Larger Firms (> 100 workers) Not in union In union Construction/ Agriculture/Service Education/Finance/Social Service & Admin Blue collar White collar 10% 11% 30% 13%

Firm Size

Union Membership Industry

20% 6%

34%

Occupation

26%

Based on workers ages 18 to 64. White collar includes all professionals and managers; all other workers classified as blue collar. Industry groups are not inclusive of all industry types. Source: KCMU/Urban Institute analysis of 2011 ASEC Supplement to the CPS.

The Number of Uninsured Adults Has Increased in the Past Decade

In Millions:
41.3

Adults

Children
49.1 43.4

8.0

8.0 8.5

8.6

27.8

33.3

34.9

41.2

2000

2004

2007

2010

NOTE: Numbers may not sum to totals due to rounding. Source: Urban Institute analysis for KCMU, 2011. Based on data from the 2001-2011 ASEC Supplement to the CPS.

Expanding Health Coverage Under ACA

Universal Coverage

Medicaid Coverage (up to 138% FPL)

Individual Mandate Health Insurance Market Reforms

Exchanges (subsidies 139-400% FPL)

Employer-Sponsored Coverage
Note: In 2012, 138% , FPL for family of 4 is $31,809 and 400% FPL is $92,200

ACA is Expected to Substantially Reduce the Number of Uninsured by 2019

Total Nonelderly Population in 2019 = 282 million
Uninsured Medicaid/CHIP Private Non-group/ Other

8% 20% 18% 12% 11% 17%

Uninsured Medicaid/CHIP Exchanges/ Private Non-group/ Other

EmployerSponsored Insurance

57%

56%

EmployerSponsored Insurance

Without Health Reform

Source: Congressional Budget Office, March 18, 2011

With Health Reform

Effects of the Mandates

By 2014 all must purchase insurance or face a fine
2014 1% of taxable income or $95.00 2015 2% of taxable income or $325.00 2016 3% of taxable income or $695.00/$2085.00 max

Companies with more than 200 workers must automatically enroll employees Companies with more than 50 employees fined up to $3,000 per employee if not enrolled Companies with fewer than 50 employees receive some subsidies and tax breaks Families earning less than $92,200/year receive subsidies for health insurance

Effects on the Currently Insured

Premium increase if dont qualify for subsidies
Family of 4 earning more than $92K a year premiums and required coverage may increase

Tax increase
0.9% Medicare tax hike on earnings over $200K 3.8% tax on investment income 40% tax on non-union, high-cost health plans FSA contributions limited to $2,500/year

Fees passed on from pharma and insurance companies

Effects on employers play or pay?

Towers Watson/National Business Group for Health Survey Sept 2012

Play Continue as plan sponsor for all employees

Play and redirect Change contributions so low-paid employees qualify for federal subsidies

Selective play Limit eligibility to employer plan and direct others to Exchanges

Pay and redeploy Discontinue plan and provide financial top-up for employees

Pay Discontinue plan with no accommodations

Requirements for All Plans

The plan will be required to meet minimum (80% or 85%) loss ratio standards. No waiting periods for coverage of more than 90 days No lifetime coverage limits

Restrictions and phase-out (by 2014) of annual limits

No rescissions Provide coverage for adult children up to age 26 (if no other coverage)

Uniform explanation of coverage documents and standardized definitions

Must contain: No more than 4 pages At least 12-pt font Disclosures in plain language Copay, deductible, etc listed Limitations and exceptions listed Coverage fact labels for common conditions

Accountable Care Organizations

Common key elements: Cost control Assumption of risk Data Collection Managed patient care New payment models

Accountable Care Organizations

Medicare Shared Savings ACO
Goal: Improve quality while lowering cost for specific patient population

Who can create an ACO?

Physicians, network of physicians, partnership or joint venture with a hospital, or hospital-employed physicians New law bans physician-owned hospitals

How Many Could be Affected by the Individual Mandate in 2016?

32 million previously uninsured affected by the mandate

24 million qualify for exemptions from the mandate

219 million insured by employers, Medicaid, Medicares disability coverage, or individual insurance and not affected by the mandate

Projected Non-Elderly in 2016 = 275 million

Source: Kaiser Family Foundation analysis; Congressional Budget Office; Jonathan Gruber

What is the IPAB?

Independent Payment Advisory Board 15-member body appointed by President Have the authority to decrease Medicare reimbursement without Congressional OK Physicians: 2015 Hospitals and nursing homes: 2020

Medicare Crisis
The Gap Continues to Grow
Medicare Physician Payment Vs. Practice Costs

Health Reform Competing For Attention/Resources In a Crowded National Agenda

Jobs and economy Deficit reduction pressures Another debt ceiling event Rising energy costs Tax reform Entitlement reform Foreign policy challenges (Iran, Afghanistan, North Korea)

Resources for More Information

Kaiser Family Foundation http://www.kff.org U.S. Census Bureau http://www.census.gov/hhes/www/hlthins/ American Medical Association http://www.ama-assn.org Texas Medical Association http://www.texmed.org The Commonwealth Fund http://commonwealthfund.org