Patient Protection and Affordable Care Act:Overview for Connecticut

Financing

Coverage expansions

individual mandate

employer responsibility

insurance reforms

Grants, demonstrations

November 2010

Financing: taxes, fees, & payment adjustments

• Slower growth of Medicare rates for health care providers (“market basket update”)

• Taxes on high-income earners, high-cost health plans, some health sector businesses

• Reductions to Medicare and Medicaid DSH payments

• Changes to Medicare Advantage• Changes in Medicare area wage adjustment

for hospitals

Coverage Expansions• Medicaid expansion

All non-elderly adults earning up to 133%FPL

• Federal tax credits for individuals and familiesPeople earning 133-400%FPLPeople with unaffordable or inadequate ESI

o Premiums total >9.5% of income or actuarial value <60%

• Federal tax credits for small businessesBusinesses with <25 FTEs and <$50,000 average

annual wagesCredits begin in 2010. After 2013 businesses can

receive only two years of assistance.

Individual insurance mandate

• All adults and children must maintain health insurance if an affordable option is available.

• Penalties for non-compliance: Uninsured will owe the greater of $695 or 2.5% of income above the income tax filing threshold.

• Affordability: Insurance considered unaffordable if premiums total > 8% of income.

• All ESI, individual market plans, grandfathered plans satisfy federal insurance mandate.

Employer responsibility• Businesses with >50 employees must offer insurance

that meets these minimum standards:Employee premiums < 9.5% of income Actuarial value of > 60%Free Choice Vouchers (premiums 8 to 9.8% income)

• OR  pay a fee to help defray the cost to taxpayers for subsidiesEmployers that offer coverage but have workers who receive

federal subsidies pay:o Lesser of $3000 per year per employee who receives federal

subsidies or $2000 multiplied by total number of employees

Employers that do not offer coverage pay:o $2000 per FTE, minus first 30 employees

Insurance market reforms• Eliminates: Rescissions, annual and lifetime coverage

caps, exclusions for pre-existing conditions

• Minimum medical loss ratios: 85% large group, 80% individual and small group markets

• Community Rating: Age 3:1, tobacco use 1.5:1, additive (i.e. total = 4.5:1)

• Dependent coverage up to age 26• No cost-sharing for primary care and many

preventive services• Uniform explanation of insurance benefits

Building the evidence-base for reform

• Support for innovation in:Quality improvementWorkforce developmentPayment reformTransparencyService delivery reform and care

coordinationWellness and preventionReducing racial and ethnic

disparities Insurance consumer protections

PPACA contains more than one hundred demonstration projects pilot programs, & grants

More than $22 billion authorized to support these initiatives