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PPACA* Outlook for Oklahoma(* Obamacare, ACA, Healthcare Reform)
• How did we get here?• What is the cost?
• Implementation challenges• Oklahoma City Health Underwriters
• March 12, 2013
OKLAHOMA FAST FACTS
• 84% of Oklahomans have health insurance (1)
-82% under age 65-private or public-99% over age 65-federal or ESI-600,000 uninsured
• $24 billion-Oklahoma Healthcare Expenditures-2009 (1)
-5% annual average increase
• $15,745/year- U.S. Average for Family Coverage- 2010 (1)
-Premiums up 97%;2002-2012
Source-(1) Kaiser Family Foundation; Health Research & Educational Trust
Oklahoma has “opted out” of the ACA• In 2012, State Question 756- 65% yes; 35% no• No legislative actions in 2011, 2012• No selection of EHB- Oct. 30th, 2012• No ‘Exchange Blueprint’- Nov. 19th, 2012
– Gov Fallin letter to Sec. Sebelius, “Opposed by majority of Oklahomans”“Threatens to erode the quality of American healthcare and the fiscal stability of the
nation”― Default to Federally Facilitated Exchange
• No Expansion of Medicaid- Nov. 19th, 2012
HEALTHCARE INSURANCE IS EVOLVING• Passage of PPACA most significant regulatory
overhaul of U.S. healthcare since Medicare/Medicaid in 1965
• Seeks to achieve the “Trifecta of Change”o Control of Costso Improved Qualityo Universal Coverage
• Major challenges for each element of change
PPACA Chronology
• 2009- HR 3590 (9-17-09) S 1790 (12-24-09) PL#111-148 (3-21-10)• 2010- Signed into law: Mar. 23rd, 2010
Immediate Provisions Age 26 dependents No lifetime dollar
limits No pre-ex for <19 years old Many other mandates
• 2011 Medical Loss Ratio Rule- 80%/85% -$22 Mil –OK $1.1 Bil – U.S. Rate Review Rule- reasonable criteria>10% increase Medicare Rx Discounts & Free Preventative Care - $1.86 Bil
Chronology Cont’d
2012 New Rules Implemented Tax- W2 Reporting; 1099 Hospital Readmission Penalty
Accountable Care Organizations - Medicare
2013 Final rules for Health Plans:EHBs
http://cciio.cms.gov/resources/data/ehb.htmlMarket ReformsBenefit and Payment ParametersMEWAMultistate Plan
Proposed rules on Eligibility (“Application Counselors”),
SHOP
Chronology Cont’d• 2013- Taxes and Mandates coming Self employed tax increase- 0.9% Medicare tax- 3.8%- Hi-Incomes: 250K/200K DME tax- 2.3% excise tax FSA capped @ $2500/year Contraceptive exemption ends Exchange Open-Enrollment 10/1/13
• 2014- Exchanges begin operation on 1/1/14 No pre-ex, health status or gender discrimination
• 2015- Physician payment reform measures
PPACA Costs
Cost- CBO EstimatesOverall Coverage Cost- For 10 yr period beginning:
2010 2012$938B $1.76T
$754 Billionin Subsidies
Implementation Cost: Unknown
PPACA CoverageWho Is- Is Not Covered Post-Implementation
• 2014 - 22 million Americans move to insured status• 2015-2019 - Add’l 10 million move to insured status * • 2020 - 23 million remain uninsured
Exchange Business Functions
Communication- Outreach, notification, educationOversight- Goverance & management support, resource
managementEligibility & Enrollment- Individual + SHOP exchange eligibility
determination and enrollmentCustomer service- Consumer support, broker/navigator
relationship mgmtFinancial Mgmt- Transaction processing, risk mgmt & reporting,
payment stream monitoring, rules mgmt, anti-fraud programsPlan Mgmt- QHP certification, rate/form review, licensing/
solvency, A/V reviews
Exchange Implementation Challenges
I. Funding- $1 billion in funding grants available to SBE states• Ohio- $63 million to establish; est. $43 million to operate• Minn.- $110 million to establish; $54-$60 million to operate
II. Timely Delivery- By Oct. 1st, 2013, no later than Jan. 1st, 2014 (Statutory deadline)• Bandwidth @HHS will be seriously challenged• Only one-third of regs have been issued• Central hub specs not issued
IV. Legal ChallengesReligious Liberty & Contraceptive Mandate• 40 Cases-11- Plaintiffs representing hospitals, universities, businesses and
some schools• Proposed rules issued February 1, 2013, open for public comment through April 8,
2013
V. Implementation Challenges• State of Oklahoma v. Kathleen Sebelius & Timothy Geithner• Seeks to uphold Section 1311 of PPACA- Restricts “Premium
assistance tax credits” to [only] exchanges established by states.”• IRS has no authority to offer those entitlements to states that opt-out
VI. Marketplace Sticker Shock• CBO 2009 Report on premium increases in the individual and
small group markets: -2% to +2%• Milliman Actuaries now estimate increases in the 30-40% range
for CY 2014.• Example: Ohio’s individual market will increase 55-85% by
2017; 10-20% in small group. (Exclusive of medical inflation)• Drivers of Increase:
— Benefit expansion— Risk pool composition change— Adverse selection— Carrier fee pass-through— Provider cost shifting
VII. Exchange Regulatory Environment• Federally Facilitated Exchange run and operated by HHS• QHP Management (Regulatory Functions) will be HHS
responsibility.1. Licensing 5. SERFF2. Solvency 6. Rate Review3. Mkt. oversight 7. A/V Review4. Consumer Protection 8. Network Adequacy
• Dual Regulatory Environment?― Exchange business- HHS― Non-exchange business- OID
General ACA Requirements• Two Exchanges
— American Health Benefit Exchange — SHOP (Sm. Bus. Health option) Small group
• Exchange/Non-exchange Requirements— Guaranteed Issue & Renewability— Modified Community Rating ( age, smoker, etc.)— Risk Sharing Among Carriers
• Large Groups Input— 50 FTE’s ( FTE+PTE hours > 50 FTE)— Play or Pay— > 200 FTE’s = auto enrollment— Not subject to EHB, rating rules, limits on deductibles
• Small Group/Individual Impact— Increased offerings— Employers have no requirement to offer or contribute to cost of their workers coverage— Tax Credits to employer— Premium subsidies to low-income EE’s