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Financial Implications of Changes in Health Care Legislation


Financial Implications of Changes in Health Care Legislation Roberta Riportella, Ph.D. Professor, Health Policy Specialist School of Human Ecology – PowerPoint PPT presentation

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Title: Financial Implications of Changes in Health Care Legislation

Financial Implications of Changes in Health Care
  • Roberta Riportella, Ph.D.
  • Professor, Health Policy Specialist
  • School of Human Ecology
  • Family Living Programs
  • UW Madison and UW Extension

How Do We Create Health?
Health Insurance
  • ACA (Affordable Care Act) in broad terms and then
    some specifics for individuals and families, and
    for businesses.
  • Why most of reform is still likely
  • What roles Extension educators can play
  • Resources available
  • Extensions research evidence based programming
  • Current health care system
  • What was wrong
  • What is ACA poised to fix access via insurance

The Patient Protection and Affordable Care Act
  • Coverage 32/46 million uninsured covered by
    2014 (over 59 million, gt1/6)
  • Paying for new coverage 1 trillion
  • Dozens of insurance reforms to improve and
    secure coverage
  • Transformative reform Value provisions
  • Adequate access infrastructure and workforce

Why reform is still happening
  • Pledges by some in Congress to repeal all of it
  • Legal challenges to mandate
  • Some parts need budget
  • Workforce commission

What Role for Extension Educators
  • Helping consumers make decisions
  • Partner with AARP for Medicare population
  • Who else will do this? Insurers?
  • Lots of online information but is this education?
  • Do businesses/communities need more assistance in
  • Wellness aspects, health promotion programming

What Role for Extension Educators
  • A balanced voice to counter naysayers who do
    nothing but say no, its too expensive, etc.
  • Reform can be effective and cost effective if we
    give it a chance
  • Anything that moves us in direction of having
    more insured is a good thing for families,
    communities, the state and the nation
  • we all pay for the uninsured and
  • we (or family member) may be one step closer to
    being uninsured than we realize

What Role for Extension Educators contd.
  • Value added, deeper understanding of how
    inter-related these issues are (think Linda Booth
    Sweeneys system approach)

Relationship between Funding and Services
  • Medicare major payer of hospital care
  • Any change in how Medicare is structured
    (vouchers) would impact that infrastructure
  • Particularly relevant for rural hospitals, over
  • Markets not big enough to sustain services
    without extra support

Counties Dependence on Public Health Insurance
  • Over 50 of health care dollars expenditures are
    paid for by government
  • 32 Iowa County
  • 33 Columbia County
  • 35 Green County
  • 37 Milwaukee County
  • 39 Sauk, Rock Counties
  • 43 Crawford County
  • 2008 Medicare and BadgerCare numbers/population

Insurance in Our Current Health Care System
  • Combination of public and private insurance
  • Private insurance is mainly employer-based
  • History of employer-based system from WWII
  • Insurance was given as an extra benefit during
    wage freezes
  • Premium cost split between employer and employee
  • Employer control over employee share of that
  • Choice depends on negotiating power of employer
    with insurers
  • Locks people into jobs without portability
  • Particularly problematic in our troubled economy

Insurance in Our Current Health Care System,
  • Also direct-purchase private insurance plans
  • Pay entire premium, but can deduct from taxes
  • High deductibles
  • Self insured/funded plans
  • Largest employers
  • Almost 50 of Wisconsin employer market
  • Largely exempt

Insurance in Our Current Health Care System,
  • Public insurance includes
  • Medicare for those 65 (no income limits)
  • Medicaid (for certain low-income groups)
  • States have flexibility with eligibility and
  • State Children's Health Insurance Program (SCHIP,
    BadgerCare Plus in WI)
  • Military care (VA, TRICARE)
  • Indian Health Services

Direct- Purchase
Sources of Health Insurance Coverage, individuals
under age 65, by family income, 2007
  • As family income increases, the likelihood of
  • Employment-based coverage increases
  • Public coverage decreases
  • Individual coverage is fairly constant
  • Being uninsured decreases

Health Policy Brief Grandfathered Health
Plans, Health Affairs, Updated October 29,
2010 http//
Related Costs
Insurance Type
Other Government
Other Government
Employer- Based
Private Insurance Other Private
Out of Pocket
Wisconsins Attributes
  • Ranked 1 nationally in quality (AHRQ, federal
  • High levels of health information technology
  • High levels of physician/hospital integration
  • Low per capita Medicare spending
  • Low rate of uninsured (2-4 nationally)

Health Cares Three Main Problems
  • Access to care
  • Insurance
  • Providers
  • Quality
  • Costs

How Does Insurance Work?
  • Lots of people in pool, pay in for possible pay
  • Usually protects against financial risk for
    events that do not occur for all (fire, auto)
  • Health insurance
  • Most all use sometimes
  • Especially when preventive care is covered
  • No comparable insurance for home, etc. (premiums
    lower for preventive behaviors double bolt
    locks, smoke alarms, no accidents/tickets)

Wisconsins Coverage Today
  • 91 of all Wisconsinites insured
  • Vast majority (74) of insured ages 0-64 are
    covered by employer
  • Almost all of those ages 65 covered in some part
    by Medicare
  • 9 uninsured
  • 2007 to 2008, 22 increase in uninsured to
    595,000 people (30 increase for children, total
    83,000 children)
  • Most uninsured work at least part-time

Counties Color Key Most uninsured 25 Second most
uninsured 25 Second least uninsured 25 Least
uninsured 25 HatchedNo data
Problems with Health Care Access to Care
  • 59 million uninsured (at least part of 2009)1
  • up to 4 times more likely to lack a usual source
    of care
  • 3.5 times more likely to have postponed seeking
    care due to cost
  • 66 less likely to have had a recent physician
  • nearly 4 times less likely to obtain dental care,
  • 4.5 times less likely to obtain prescription

General Problems with Insurance
  • Some denied coverage outright pre-existing
  • Some denied after receiving service they thought
    was covered
  • Some dropped altogether
  • Insurance often not complete coverage, limits,
    deductibles, confusion
  • Many initiatives expect us to be smart consumers
    but different type of commodity

Summary Why Insurance Reform?
  • 16 of GDP Spent on Health Care
  • Most of the industrialized world spends less than
  • 50.6 Million People Uninsured
  • 6.6 million lost employer sponsored coverage
  • 5.2 million more enrolled in Medicaid
  • Growth in premiums crowding out wage increases

Possible Responses
  • Market reform
  • Let free market correct itself
  • E.g. Growth of managed care to control costs
  • Health Savings Accounts
  • Legislative reform
  • Change way insurers provide insurance or what
    entity is the insurer
  • Change way providers deliver care

What We Got in ACA
  • Legislative response that regulates insurers and
    puts in place new insurance entities
  • Yet leaves the current free market health
    insurance system largely in place as the base for
    these changes

ACA Will
  • Move more uninsured to insurance by
  • Mandating coverage
  • Removing barriers to current coverage (insurance
  • Increasing options
  • Exchanges
  • High risk pools (temporary)
  • Change some options for the publicly insured
  • Be easier to implement in Wisconsin

Wisconsin Ahead of the Curve
  • Ahead of most states on reform
  • Investments in expanding coverage
  • Maintaining eligibility
  • E-health
  • Quality initiatives
  • Reform will make other states look like WI
  • Already expanded BC beyond levels required in ACA

Big Picture Impacts
  • More than 125,000 WI citizens will gain access
  • More than a million who are underinsured will see
    policies improved and costs reduced
  • Tax credits and lowered costs for small business
  • Increased affordability of prescription drugs for
    WI seniors
  • Increased federal funding saves state taxpayer


(No Transcript)
Wisconsin Office of Free Market Health Care
(formerly Office of Health Care Reform)
  • Health care reform puts decision making power in
    the hands of states
  • WI can set up reform in a way that works best

  • http//

(No Transcript)
Wisconsin Office of Free Market Health Care
  • Encourage transparency in all efforts of the
    Office so that Wisconsin residents and employers
    may make appropriate health care decisions and
  • Assess the impact of the Patient Protection and
    Affordable Care Act (PPACA) on Wisconsin
    insurance markets and programs and
  • Seek council from a wide range of health care
    stakeholders including but not limited to
    consumers, small businesses, providers, insurers,
    labor unions, and other vested organizations and
  • Conditionally develop a plan for the design and
    implementation of a Wisconsin health benefit
    exchange that utilizes a free-market, consumer
    driver approach and
  • Explore all opportunities and alternative
    approaches that would free Wisconsin from
    establishing a health benefit exchange, including
    federal waivers.

(No Transcript)
Formerly Wisconsin Office of Health Care Reform
  • WI focus will be on
  • Implement significant changes taking effect right
    away and begin work on major components
  • Raise awareness
  • Influence reforms on national level

Market Reforms Effective Immediately
  • Consumer Assistance Office
  • 30 M in grants available for states to establish
    offices of health insurance consumer assistance
  • Assist with filing of complaints and appeals
  • Collect, track, and quantify problems and
  • Educate consumers on rights and responsibilities
  • Assist consumers with enrollment
  • Resolve problems with obtaining subsidies

Market Reforms Effective Immediately contd.
  • Rate Review
  • HHS is developing a process for annual review of
    unreasonable premium increases
  • Insurers must submit to Secretary and states
    justification for an unreasonable increase
  • 250M in grants to states over a 5 year period to
    enhance rate review activities
  • OCI has received 1M to work on this

Market Reforms Effective Immediately contd.
  • Medical loss ratio
  • Premium dollars must be spent on medical care vs
    administration costs
  • 85 for large group coverage
  • 80 for small group coverage
  • Uniform explanation of coverage documents

How Will Reform Change the Employer-Based System?
  • Health Care Reform builds on and expands the
    employer-based insurance system instead of
    limiting it
  • Overview of changes
  • Gives tax incentives for insuring employees
  • Fines large employers for not insuring employees
  • Requires very large employers to insure into
    employer-sponsored plans

Changes Affecting All Employers
  • Early Retiree Reinsurance Program
  • Counters trend of shrinking retiree coverage
  • Provides 80 reimbursement to employment-based
    plans for a portion of the cost of providing
    insurance to early retirees over age 55
  • More than 100 Wisconsin businesses enrolled
  • Claims range between 15,000-90,000
  • Eliminates tax-deduction for Medicare Part D
    retiree drug subsidy payments (Jan. 2013)

Changes for Large Employers
  • Fines businesses with 50 employees that dont
    provide health insurance (Jan. 2014)
  • 2,000 per person above threshold of 30 employees
  • Requires businesses with 200 employees to enroll
    workers automatically into insurance plans
    offered by the employer (Jan. 2014)

Incentives for Small Employers Tax Credits
  • A 6 year program
  • Employers must have avg. wages less than 50,000
    and pay 50 of employees premiums
  • Effective immediately, covers businesses lt25 FTEs
    who currently offer health care or who add
    coverage this year
  • Credit up to 35 of costs 2010, up to 50 2014
  • 90,000 Wisconsin non profit, for profit
    businesses eligible

Exchanges and Small Employers
  • Health insurance Exchanges (Jan. 2014)
  • Currently small businesses pay 18 more in
    premiums and double the deductibles as large
    firms for the same benefits.
  • In 2014 businesses with up to 100 workers can buy
    coverage in state-based Exchanges
  • This allows small businesses to pool resources
    for greater purchasing power to lower costs
  • Employers must provide free vouchers to
    low-income employees to enroll

How Insurance Changes Affect Individuals
Families Mandate
  • Mandates individuals have insurance by Jan. 2014
  • Tax penalties for continued lack of coverage
  • Fines gradually phased-in
  • Tax credits to help pay for insurance
  • Exemptions for financial hardship, those without
    coverage less than 3 months, etc.
  • Mandates similar to 2006 Massachusetts state plan

How Insurance Changes Affect Individuals
Families Removing Barriers
  • New Patients Bill of Rights (Sept. 23rd) for
    all new insurance plans
  • Insurance aspects
  • Cant exclude children with pre-existing
  • Policies cant be canceled by companies
  • No lifetime limits and restricted annual limits

Popular ACA Feature Coverage of Adult Children
  • Adult children under age 26 required to be
    included under family plans (Sept 2010)
  • However, most plan years start Jan 1, 2011.
  • In-laws not covered (grandchildren, spouses).
  • Until 2014, grandfathered group plans do not
    have to offer dependent coverage up to age 26 if
    a young adult is eligible for group coverage
    outside their parents plan.

How Insurance Changes Affect Individuals
Families Care Aspects
  • Can choose any primary care doctor within
    provider network
  • Free screenings and preventive care
  • No longer need referral for OB-GYN care
  • N.b. grandfathered plans in place before the
    law was signed March 23, 2010 may still require a
    referral and are not required to provide free
    preventive care
  • OCI in our state will be the sheriff

Increasing Options Exchanges by 2014
  • Exchanges will be new market places where anyone
    can buy an insurance plan.
  • Private health insurance companies offering
    competitively priced and vetted policies.
  • Compare to options we have as state/county
    employees lots of insurers vie for our
    business, within minimum standards.
  • Will make market more transparent
  • Will see price, quality, physician measures
  • The larger the pool, the lower the premiums
  • Subsidies will be offered to most families

  • Gives credits/subsidies for individuals and
    families to buy into Exchanges (Jan. 2014)
  • For those between 133-400 FPL
  • Publicly insured on BadgerCare may choose these
    (more choice of providers)
  • Uninsured not eligible for BadgerCare can then
    use subsidies to help enter exchanges
  • Taxes high income individuals and couples (Jan.

Examples of Savings with Federal Premium Tax
  • Between 500 M and 1 B in federal premium tax
    credits will be available to Wisconsin residents
  • Family of 4 earning 75,000 annually
  • 11,104 annual premium
  • 3979 in savings
  • 7125 is amount family pays (600/mo)
  • Single woman earning 30,000 annually
  • 4500 annual premium
  • 1991 in savings
  • 2509 is amount individual pays (200/mo)

Why Do Exchanges Matter
  • Could be key to increasing employer sponsored
  • 2 million people could purchase their health
    insurance through exchanges
  • Individuals and families who purchase their own
    health care coverage will have access to better
    plans and lower premiums (160,000)

Why Do Exchanges Matter contd.
  • Advance payment reform
  • Partner with large payers (Medicare, Medicaid)
  • Ensure greater portability in insurance and allow
    for movement between jobs
  • Create strong incentives for insurers and
    providers to better align around value
  • A choice for small businesses and their employees

How Insurance Changes Affect Individuals
Families Currently non-publicly insured
  • Privately insured
  • Increased restrictions on Health Savings Accounts
    and similar plans
  • With employer coverage
  • Unknown effects due to undetermined nature of
    small business health Exchanges
  • Possibility of cheaper plans if employed by a
    small business due to Exchanges larger
    purchasing power

How Health Care Reform Affects Individuals
Families on Medicaid
  • States cant lower eligibility requirements,
    maintaining for adults to 2014, for kids to 2019
    so for Wisconsin
  • Coverage for all kids to 2019
  • Pregnant women up to 300 FPL
  • Parents/caretakers up to 200 FPL
  • Childless adults up to 200 FPL
  • EXCEPT hardship exemption if state running
    deficit applies to
  • Optional non-pregnant, non-disabled adults gt133
    FPL (WI 55,000 of these)

Increased Federal Funding
  • Enhanced federal matching funds for all kids and
    childless adults below 133 FPL
  • Federal funds replace state dollars
  • Real savings to taxpayers
  • Annual Medicaid budget 6 B, 20 WI budget
  • ACA will bring 750-980 M in additional federal
    funding 2014-2019

How Health Care Reform Affects Individuals
Families on Medicaid
  • Attendant supports and services to individuals
    with disabilities requiring an institutional
    level of care (CLASS program)
  • Gives at least 50 per day
  • Effective Jan. 2011
  • More generous eligibility levels and
    targeted-services disabilities (Oct. 2010)
  • New Medicaid state plan option for people with
    chronic conditions
  • Will help fund home health related services to
    states taking up the option

How Insurance Changes Affect Individuals
Families on the BadgerCare Programs
  • When Medicaid is expanded to all adults up to
    133 FPL
  • Childless adults on BadgerCare Core and Basic
    under this level shift to Medicaid
  • When health insurance Exchanges take effect in
    Jan. 2014
  • Parents, caregivers, and childless adults above
    133 FPL may be shifted from BadgerCare to
  • This may lead to higher costs for low-income
  • Parents and children may have different coverage

Exchanges in 2014 Wisconsins Choice
  • Option 1
  • Lower BadgerCare eligibility to 133 FPL so that
    low-income parents, caregivers, and childless
    adults above 133 will be shifted into Exchanges
    and pay higher costs.
  • Childless adults below 133 FPL will be shifted
    from BadgerCare Core and Basic to Medicaid

Exchanges in 2014 Wisconsins Choice
  • Option 2
  • Create a Basic Health Plan to fund and maintain
    BadgerCare Plus for adults between 133-201 FPL
  • WI would get 95 of federal funding for Exchange
    subsidies otherwise for these adults
  • This option would mean lower premiums and
    cost-sharing than in Exchanges
  • Crowd-out restrictions limiting eligibility
    wouldnt be as strict
  • Possible problem of limiting access to care due
    to lower provider payments

Changing BadgerCare Programs Eligibility
Green Current BadgerCarePlus Orange
BadgerCare Core Basic Blue Current WI
Medicaid levels Red Those at risk of being
shifted to Exchanges in 2014
Self-Employed / Farmers
Over the proposed 133 level
Over the proposed 133 level
Medicaid Healthy Start
Kids 6
of Federal Poverty Level (FPL)
BadgerCare Core
Ages 0-5 6
Pregnant Women
Caretaker Relatives
Childless Adults
What Could Happen in 2014 for BadgerCare Core and
Those above 133 FPL shift to Exchanges
WI creates a new Basic Health Plan For those
133-201 FPL
Over the proposed 133 level
of Federal Poverty Level (FPL)
Those below 133 FPL will shift to Medicaid
Childless Adults
How Insurance Changes Affect Older Adults on
  • Reduces Medicare Part D drug gap
  • 250 rebate
  • 50 discount on drugs and 7 discount on generic
    drugs (Jan. 2011)
  • Completely closes the gap by Jan. 2020.
  • Reduces out-of-pocket amount that qualifies for
    catastrophic coverage (2014-2019)

How Insurance Changes Affect Older Adults on
Medicare, contd.
  • Medicare Advantage Plans
  • Prohibits Medicare Advantage plans from imposing
    higher cost-sharing requirements
  • Reduced federal payments to Advantage plans
  • Some insurers could stop offering additional
    benefits such as glasses and gym memberships
  • Basic Medicare benefits cant be cut

How Insurance Changes Affect Older Adults on
Medicare, cont.d
  • Higher federal funding to support relocating
    seniors who wish to live in community settings
  • 50M to support Aging and Disability Resource
  • Better care
  • Incentive payments for hospitals meeting higher
    quality standards
  • Higher payments for primary care providers
  • Free preventive screenings (Jan. 2011)
  • Free annual wellness visit (Jan. 2011)

How Insurance Changes Affect The Hard to Insure
  • Uninsured with Pre-Existing Conditions
  • Approximately 25 of Wisconsinites have a
    pre-existing condition
  • As of Sept 23, 2010, no children can be excluded
  • As of Jan 1, 2014, no adults with pre-existing
    conditions cant be denied insurance coverage
  • Complications of mandating pre-existing
    conditions coverage without cost limits
  • Temporary national high-risk pool for uninsured
    with pre-existing conditions

High Risk Pools
  • Why high risk pools?
  • Some people with medically expensive pre-existing
    conditions become medically uninsurable
  • Denied coverage because of a condition
  • Only can access restricted or very expensive
  • High Risk pools are government-created
  • Plans spread risk and costs of this population
    among insurers
  • Cost higher than regular plans, but rates are
    capped by law
  • Expected to disappear with Exchanges

Wisconsins High Risk Insurance Plan
  • Eligible if
  • Lost employer-sponsored insurance
  • Been rejected for coverage in private market
  • Have HIV/AIDS
  • Have Medicare because of a disability
  • 6 month waiting period for pre-existing

Federal High Risk Pools
  • Federal High Risk Pool
  • Eligible if
  • Citizen or national of U.S., or lawfully present
  • Have a pre-existing condition and have been
    uninsured for 6 months before applying
  • Costs
  • Premium 126-473 per month
  • Deductible 500, 1000, or 2,500
  • Out of pocket limit 1,000 for medical, 2,000
    for pharmacy

High Risk Plan Costs
  • Example of a high cost enrollee in the federal
  • 2500 (deductible)
  • 1000 (out of pocket limit medical)
  • 2000 (out of pocket limit pharmacy)
  • 4800 (400 monthly premium x 12)
  • 10,300/year

Wisconsin/Federal High Risk Comparison
  • Both plans cover same medical and drug benefits
  • Federal pool is cheaper and has no waiting period
  • But if dont meet criteria to get on federal plan
    (ex being uninsured for 6 months, proving
    citizenship) WI plan is still an option

How Insurance Changes Affect Veterans Their
  • Continued free prosthetic devices
  • Veterans and their families may enroll in
    Exchanges in addition to VA and TRICARE (2014)
  • Not subject to insurance mandates

Sources of Coverage After Health Care Reform
Implementation, 2019
(No Transcript)
Timing of implementation
  • http//

  • Increasing Access to Care through Providers

Why Is Access a Problem?
  • Few health care providers in rural areas
  • Strained public hospitals and clinics
  • Increased ER use but decreased supply
  • Health care professionals not trained to meet
    national demands
  • Geographic (underserved rural areas)
  • Specialization (few primary care doctors)

Creating Access by Increasing Primary Care
  • Increases funding for primary care physicians and
  • Tuition aid and remission
  • More training
  • Funds and trains more dentists
  • Free preventive care services required from new
    insurance plans
  • Increases Medicaid fee-for-service and managed
    care payments for primary and preventive care

Increasing Health Center Providers in Underserved
  • New school-based health centers (Jan. 2011)
  • Expand primary care to school-aged children
  • 1000 awards
  • 50 million annual funding
  • Community health centers
  • Increases funding (11 billion nationally)
  • Particularly benefits rural communities

Access through Nurses and Nurse-Managed Clinics
  • Creates new nurse-managed clinics
  • Trains nurse practitioners who will work in
    underserved areas
  • Nurse management clinics are access points in
    areas where primary care physicians are in short
  • Grants to employ and train nurse practitioners
    who provide primary care (Oct. 2010)
  • Loan repayment and retention grants for nurses

Other Access Measures for Hospitals and Providers
  • Increases ER and trauma department capacity (Oct.
  • Funds research on emergency medicine and
    innovative emergency care systems
  • New program network for providers to give and
    coordinate care to uninsured and underinsured
    populations (Oct. 2010)

Important Public Health Investments
  • Wisconsin has work to do
  • 43 of adults fail to meet physical activity
  • 76 do not consumer 5 or more fruits/veggies per
  • 22 of women over 40 hadnt had a recent
  • 36 of men over 50 have never had a colonscopy
  • 19.8 of adults smoke
  • 65 of adults are overweight or obese
  • Reform goes beyond funding direct treatment,
    focusing heavily on prevention
  • Synergies with Healthiest Wisconsin 2020
  • http//

How Do We Create Health?
Health Insurance
Workforce Grants Wisconsin Has Already Received
  • 2M to support training for nurses and geriatric
  • 3.8M primary medical care residency expansion
  • 7.2M for Health Profession Opportunity Grants
    that help train low income workers and tribal
    members for careers in health

Workforce Grants Wisconsin Has Already Received
  • 3.2M over 5 years to establish a Public Health
    Training Center
  • Grants have gone to Marshfield Clinic, UW
    campuses (Madison, Milwaukee, LaCrosse and Eau
    Claire), Marquette, Gateway Tech, College of
    Menominee Nation, MCW and others

Workforce Grants Coming Opportunities
  • 230M for graduate medical education
  • 10M for training direct care workers
  • 100M to establish National Centers of Excellence
    for Depression
  • 50M for graduate nurse education