Bringing the Affordable Care Act to Utah What’s at Stake for All of Us

Pete Suazo Business CenterApril 9, 2013

Who is UHPP?

The Utah Health Policy Project (UHPP) is a nonpartisan, nonprofit organization dedicated to building lasting solutions to the challenges of the uninsured and rising health care costs.

www.healthpolicyproject.org

www.facebook.com/utahhealthpolicyproject

@UHPP

Where Utah stands…

• The ACA and health exchanges (marketplaces)

• Utah’s current status: Partnership Exchange*

• Small business focus

• Where we go from here

*Warning: Status could change at any moment

The Affordable Care Act (ACA)

• Also called “Obamacare”• Signed: March 23, 2010:• Upheld: June 28, 2012• Enrollment: October 1, 2013• Implementation: January 1, 2014

Where did the ACA come from?

• Heritage Foundation — January 19891

• Heritage included an individual mandate using private-sector insurance

• Same model used in Massachusetts

[1] “Heritage Rewrites History,” Wall Street Journal, February 12, 2012

Where Utah was going before the ACA?

# of uninsured Utahns12011

411,926 442,000

2022

[1] U.S. Census Data; Kaiser Commission on Medicaid and the Uninsured, December 2012

Who are Utah’s uninsured?

[1] U.S. Census Bureau's division of Housing and Household Economic Statistics, 2012

• 76% earn less than 200% of the federal poverty level ($46,000 for a family of 4)

• 411,926 Utahns lack health insurance1

• 57% would be eligible for Medicaid expansion

• 56% of adults are employed

How do the uninsured receive care?

[1] “Utah hospitals absorb $698 million in unpaid bills,” Salt Lake Tribune, February 6, 2013[2] “Hidden Health Tax: Americans Pay a Premium,” Families USA, 2009.

Bad debt

Charity care1

$1,017 Amount added to an

average family’s yearly insurance premiums to care for the uninsured2

By 2019… 77% of Utahns will be covered by the private insurance market

[1] Kaiser Commission on Medicaid and the Uninsured, December 2012

Where Utah will be after the ACA1

Where are Utahns going to find insurance?

• After 2014, there will be a mandate to purchase insurance or pay a penalty

• The ACA sets up exchanges (marketplaces) for individuals and small businesses

What is an “Exchange”?

• A new, transparent, and competitive insurance marketplace

• A place to review and buy affordable and qualified health plans

• Choices of plans that meet minimum benefits and affordability standards

Whoops… HHS calls ‘em Marketplaces

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What the ACA does for people…

Adults under age 26 can stay on parents plan

Men and women pay the same for coverage

Insurance offers free preventative care like blood pressure checks, flu shots, and

screenings

No one can be denied or priced out of coverage for a

pre-existing condition

No lifetime caps on insurance payments

How will coverage be more affordable?(in billions)

• Advancable premium subsidies will help cover the cost for purchasing insurance

• Subsidies will be available for people earning up to 400% of the federal poverty level ($92,200 for a family of four)

• No one will pay more than 9.5% of their income for coverage.

Who is eligible for premium subsidies?(in billions)

Utah’s Current Status

Utah’s current choice

Utah’s Choice: Partnership Model

• Utah operates small business (SHOP*) marketplace (Avenue H)

• Federal government runs individual marketplace

• Details (Medicaid screening, consumer assistance, navigators) are TBD

*SHOP = Small Business Health Options Program

First, Gov. Herbert wanted a state-run plan

“I intend to move forward with Utah’s version of an exchange [Avenue H].”

- Gov. Gary Herbert to HHS Secretary Kathleen SebeliusDecember 14, 2012

And HHS was open to the idea

“I am pleased to inform you that Utah has received conditional approval to operate a State-based Exchange.”

- HHS Secretary Kathleen Sibelius to Gov. Gary HerbertJanuary 3, 2013

And finally, a partnership exchange

“[A partnership exchange] allows Utah to stay true to its principles and objectives and the feds to...pick up the slack.”

- Gov. Gary HerbertFebruary 5, 2013

When will we know the final decision?

Soon… (we hope)

…but time is running out…

[1] www.statehealthfacts.org 3/7/13)

ACA across the nationState Decisions1

18: State-run

7: Partnership

26: Federal ?

ACA in the West

[1] www.statehealthfacts.org 3/7/13)

?

Utah health reform since 2008

• Utah began health reform in 2008 under Gov. Huntsman

• Attempted a comprehensive Massachusetts-style system, but abandoned it

• In 2008/2009, Utah set up Avenue H—a pilot exchange for small businesses

What is Avenue H?

• Utah’s state-run health exchange for small businesses

• Established in 2009 as a “web-based” insurance marketplace based on free-market principles

• Operates as a defined contribution market and offers hundreds of coverage plans

• Serves 313 employers—0.46% of Utah’s small businesses—as of November 2012

• 1/3 of businesses who start the enrollment process join the exchange

• Criticized as complicated, slow, and expensive

Does Avenue H work?

UHPP: Avenue H needs more reforms and investment to become an effective tool

for Utah small businesses

[1] Avenue H Dashboard (November 2012); accessed March 9, 2013, http://goo.gl/VfLdh

Avenue H in 2014 and beyond

• Utah goal to maintain a “defined contribution” marketplace

• Will adopt ACA “community rating” and the state’s essential health benefits

• Unclear on how Avenue H will interface with federally-run individual marketplace—and Medicaid screening

Small Business Focus for Utah

Which Utah firms offer insurance?

# Employees: % Offer

insurance

<10 employees 31.2%

10-24 employees 56.5%

>50 employees 92.9%

Agency for Healthcare Research and Quality, Center for Financing Access, and Cost Trends. 2008

42% of Utah’s 67,000 small businesses are in SL County

What worries small businesses?

UHPP/SBM Utah Small Business Healthcare Survey, 2009

Cost is the #1 reason they don’t offer coverage

What ACA does for small businesses• Tax credits• Shared risk allows more stable

premiums and lower costs• More level playing field (hiring,

cost, entrepreneurship) with large businesses

• Employees at firms <50 FTE can get coverage on the individual marketplace—or Medicaid

How does the ACA affect me?

Less than 50 employees

(FTEs)

More than 50 employees

(FTEs)

76% of Utah firms employ 50 or fewer employees

Agency for Healthcare Research and Quality, Center for Financing Access, and Cost Trends. 2008

No mandate or penaltiesEligible for tax credits

Mandate or penalties if firm offers no insurance or inadequate insurance

How do I calculate 50 FTE?

• FTEs are calculated by summing the hours of full, part-time, and seasonal workers. For example, two PT employees are equivalent to one FT employee

• Example:

• A full-time employee is defined as working an average of at least 30 hours a week or 130 hours in a month.

40 full-time employees (30h/week = 40 FTE20 half-time employees (15h/week = 10 FTE

Total = 50 FTE

What timeframe do I use?

• Employers have a choice of calculating FTE by averaging the full twelve (12) months of the year, or by looking at a six (6) consecutive month period during the year (starting in 2013)

• To calculate FTE in a given month, employers must add all the hours worked (up to 120 hours per employee) and divide the total by 120

• If an employer has at least 50 FTEs for 2013, it will be considered a large employer for 2014

What are the employer penalties?

Businesses with 51 or more FTE employees who do not offer coverage to full-time workers (penalty excludes first 30 employees)

$2,000

Example A firm with 61 workers that does not offer coverage would pay an amount equal to 61 minus 30, or 31, times the applicable per-employee payment amount

What are the employer penalties?

$3,000

Businesses with 51 or more FTE employees who offer coverage but have at least one FTE get a subsidy in the individual exchange (penalty excludes first 30 employees)

Note For an employee to receive a subsidy on the individual exchange, the employee’s contribution to the lowest-cost single plan must be more than 9.5 percent of family income or the actuarial value of the plan must be below 60 percent

Big decisions ahead…

• Will Utah meet HHS requirements for a partnership exchange, or revert to a Federally-facilitated exchange?

• How much flexibility will HHS give Utah?

• Will Utah expand Medicaid (like OH, NM, AZ, MT, NV, and CO)?

If Utah reverts to federal exchange…

• Feds build ACA-compliant individual and small business exchanges for Utah

• Future of Avenue H uncertain• Utah’s homegrown advantages

(demographics, integrated healthcare systems, existing reforms) are diminished…

Learn more about health reform

Health Care Reform: What It Is, Why It's Necessary, How It Works By Jonathan Gruber and Nathan Schreiber (Illustrator)$13.95 (Hill and Wang)

Health Reform Hits Main StreetProduced by the Kaiser Family Foundation.http://healthreform.kff.org/the-animation.aspx

Questions?

HEALTH REFORM

Additional Slides

Medicaid in Utah

• Medicaid Expansion eliminates all eligibility categories for people living below 133% of the Federal Poverty Line (FPL)

• 133% of FPL is $25,000 for a family of three.

What Medicaid Expansion does for Utah

Medicaid gap

Full Medicaid coverage is not provided to childless adults at any income levels

Chart Source: Utah Dept. of Health

Expansion covers the gap

Expanding Medicaid will give over 150,000 Utahns access to quality healthcare coverage

Chart Source: Utah Dept. of Health

Medicaid Expansion: Top 5 Reasons

1. Will bring over $5 billion in federal funding to Utah over 10 years

2. State pays only admin. first 3 years, 100% federal match for 3 years, phasing down to 90% in year 10—only 4% more than without

3. Medicaid best option delivers more efficient and lower cost health care

4. It closes that coverage gap5. No other realistic, cost-effective option

Expansion brings new funding to Utah…

[Chart] The Cost and Coverage Implications of the ACA Medicaid Expansion: National and State-by-State Analysis; Kaiser/Urban Institute

…and offsets local and state spending

[1] Salt Lake Tribune editorial (3/4/13); Fiscal note for HB157, “Medicaid Amendments”

The national picture...

Source: The Advisory Board Daily Briefing (2/13/13)

Utah is one of 5 states still undecided…

1535

252

Governors of MT, NM, CO, ND, NV, and AZ are all supporting Medicaid Expansion

Yes

Yes

YesYes

Yes

Yes

Yes?

…and in the neighborhood

Yes

Source: The Advisory Board Daily Briefing (2/13/13)

Impact of the Affordable Care Act

[Chart] Washington Post Wonkblog - http://www.washingtonpost.com/blogs/wonkblog/wp/2012/06/24/11-facts-about-the-affordable-care-act/

Implementation begins: 2014

$415

$156

$56 $114

How the ACA is funded: Cuts(in billions)

Medicare payment rates

Medicare Advantage (Part D)

Uncompensated care for hospitals (DSH) Other

[Chart] Washington Post Wonkblog http://www.washingtonpost.com/blogs/wonkblog/wp/2012/08/30/how-congress-paid-for-obamacare-in-two-charts//

[2013-2022]

How the ACA is funded: Revenues

$55

$106

$111

$216

$318

$87 Penalties (individuals)

Penalties (employers)

‘Cadillac’ health plans

Cost-savings

High-earners taxes

Medical devices tax

(in billions)

[Chart] Washington Post Wonkblog http://www.washingtonpost.com/blogs/wonkblog/wp/2012/08/30/how-congress-paid-for-obamacare-in-two-charts//

[2013-2022]

The ACA and the Deficit(in billions)

[Chart] Washington Post/CBO

The ACA and Individual Penalties(in billions)

[Chart] Kaiser Family Foundation