information on the new wv health care act

An Overview of the Affordable Care

Act and Its Impact on West Virginia

Greater Greenbrier

Chamber of Commerce September 21, 2011

2

ACA Has Three Main Goals

Expands health insurance. 95% of all

Americans covered by 2016

Strong regulations of the insurance

industry

Cost containment, particularly for

Medicare

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Expansion of Health Insurance

Beginning in 2014, expands Medicaid to 133 % of the Federal Poverty Level, an estimated 122,000 to 157,000 low-income West Virginians will gain coverage.

Federal government pays almost all of the costs (95.9%).

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Expansion of Health Insurance

Creates state health exchanges for

individuals and small businesses.

An exchange is a marketplace that

allows consumers to compare and

choose policies that best suits their

needs. Policies offered through a web

site, 1-800 number, or in person.

Expansion of Health Insurance

Beginning in 2014, significant tax credits for

individuals between 100% and 400% of the

Federal Poverty Level. An estimated 178,000

West Virginians will qualify for premium tax

credits in the exchange.

Small employers may also be eligible for tax

credits

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An Example of Tax Credits for

Individuals in the Exchanges

Family of four with annual income of

$55,000. The total monthly premium is

$1,1 85 and the tax credits equal $840 a

month, 70% of the premium.

Source: Kaiser Family Foundation’s

Subsidy Calculator at www.kff.org

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The Exchange and

Small Businesses

Eligibility for the exchange is 50 or

fewer employees, about 42,000 West

Virginia businesses employing 280,000

people.

Businesses with fewer than 25 employees

may be eligible for tax credits

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Health Exchanges

Offer the promise of higher quality

while containing cost.

Central issues:

Who governs the exchanges?

What is their mission?

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Senate Bill 408

Adopted last Spring, SB 408 establishes the West Virginia Health Benefit Exchange. Only the second exchange established in the country, since passage of the ACA.

Housed in the Offices of the Insurance Commissioner, and governed by a ten member board.

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Insurance Reforms for Plan Year

Beginning After September 23, 2010

End pre-existing limitations for children

Young adults can stay on their parent’s

policy until age 26

Prohibits lifetime caps and limits annual

caps on benefits

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Insurance Reforms for Plan Year

Beginning After September 23, 2010

For new plans sold after September 23,

2010:

Must cover effective preventive

measures with no cost sharing

Patient protections

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Insurance Reforms 2014

An end to pre-existing limitations

An end to gender underwriting

Guarantee issuance and renewal

Impact on entrepreneurship and

impact on industry competition

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Individual Responsibility

Beginning in 2014, individuals must

have health insurance or pay a penalty.

Exemptions for religious objections

and financial hardship.

Without individual responsibility, we

cannot adopt the major insurance

reforms.

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Individual Responsibility

If individuals are free to sign up for

health insurance only when they face

major expenses, and drop the

insurance once their treatments have

been paid for, the rest of us will have

to cover the cost of their care. This

individual mandate is the flip side of

the abolition of exclusion for pre-

existing conditions.

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Cost Containment

“The current (payment) system, based

on volume and intensity, does not

disincentivize, but rather pays more for

overuse and fragmentation.”

Mark McClellan

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Cost Containment Continued

Payment reform – moving from fee-for-

service to payment that promotes

quality and coordination of care

Accountable Care Organizations

Reduced payment for hospital acquired

infections and preventable hospital

readmissions

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Emphasis on Prevention, Primary

Care and Public Health

All new plans must cover and may not charge for preventive services that are clinically appropriate.

Annual wellness visits in Medicare. Preventive services covered without cost sharing.

Doubles appropriations to community health centers and National Health Service Corp and increases appropriations for public health.

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Reduction in the Growth

of Medicare

These reductions reduce the annual

growth in Medicare from 6.8% to 5.5%,

according to the Commonwealth Fund

Commonwealth Fund: The Impact of Health Reform

on Health System Spending, May 2010

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Employer Responsibility

Free Rider Provision

An employer with more than 50 employees that does not provide insurance, and if

One or more of its employees receives a tax credit for an individual policy purchased in the exchange, then

The employer pays a penalty

Penalty is $2,000/year/FTE minus the first 30 employees

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Small Business Tax Credits

Phase I: 2010 through 2013

Employers with 10 or fewer employees

and average salary of $25,000 or less

qualify for a 35% tax credit on the

premium the employer pays. Phased out

to employers with 25 or fewer employees

making on average $50,000 or less.

Employer must pay at least 50% of the

premium. Owners do not qualify.

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Small Business Tax Credits

Phase II: 2014 and beyond

Same focus on very small businesses.

However, the tax credit is increased to

50% of the employers’ premium

contribution.

Limited to two years after 2014.

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32%

67%

88%95% 98%

0%

20%

40%

60%

80%

100%

Less than

10

10 to 49 50 to 99 100 to 249 250 +

Percentage of Employers Who

Offer Health Insurance

Source: Employee Benefits in West Virginia, Workforce (April 2006)

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Other Impacts on Employer

Medical Loss Ratios:

Insurance companies must report the

percentage of premiums collected spent

on paying claims and improving quality

versus administrative cost.

Must meet minimum medical loss ratios:

80% for small group market, 85% for large

group market spent on benefits for policy

holders, or provide rebates to their

customers.

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Other Impacts on Employer

The ACA originally required businesses

to file 1099-MISC forms on all their

vendors. This requirement was finally

repealed. Took a year to repeal after

both Democrats and Republicans

agreed that it should be repealed.

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Overall Impact of the

ACA on Employers

By 2016

The impact on premiums for the small

group market will be between a 1%

increase and a 2% reduction.

The impact on the large group market will

be between zero impact and a 3%

reduction.

Source: Congressional Budget Office, November 30, 2009

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Contact Information

Gibbs Kinderman

West Virginians for Affordable Health Care

HC 69, Box 88

Marlinton, West Virginia 24954

gibbskinderman@frontiernet.net

www.wvahc.org