HEALTH CARE REFORM AND ITS IMPACT ON MUNICIPALITIES: AN OVERVIEW

1. Kitch Drutchas Wagner Valitutti & SherbrookOne Woodward Avenue, Suite 2400Detroit, MI 48226-5485313.965.7900 www.kitch.com Detroit Lansing Mt. Clemens Marquette Toledo Chicago

2. HEALTH CARE REFORMAND ITS IMPACT ON MUNICIPALITIES:AN OVERVIEW a presentation to the Michigan Municipal League Public Law Employment Seminar January 23, 2013 Michael R. Shpiece Kitch Drutchas Wagner Valitutti & Sherbrook One Woodward Ave, Suite 2400 Detroit, MI 48226 (313 965-7994 Michael.Shpiece@Kitch.com

3. WHAT IS FEDERAL HEALTH CARE REFORM AND WHAT DOES IT INCLUDE? MICHAEL SHPIECE

4. BACKGROUND ACA = • The Patient Protection and Affordable Care Act, P 111-48 • The Health Care and Education Reconciliation Act of 2010, PL 111-152 MICHAEL SHPIECE

5. What Does ACA Do? • 1. Increase the number of people with health care coverage. • Adult Children covered to age 27 • Prohibit rescissions • Coverage for high-risk individuals with pre-existing conditions • 2. Decrease costs for individuals and employers. • Various tax credits and other programs • Reinsurance and grants for early retiree coverage MICHAEL SHPIECE

6. What Does ACA Do (cont.)? • 3. Increase the “comprehensiveness” of coverage. • Reduce “donut hole” in Medicare Part D • Eliminate annual and lifetime maximums • Cover Preventative Care • 4. Improve Quality/Effectiveness of health care. • Research and Pilot Projects • ACOs, Medical Homes • 5. Establish Health Exchanges and other means to improve accessibility. MICHAEL SHPIECE

7. What Does ACA Do (cont.)? • 6. Increase rate regulation and Insurance Market reforms. • 7. Improve Program Integrity/Enforcement/Accuracy of payments. • 8. Increase availability, education, and training of Health Care Workers. • 9. Improve availability of Drugs and Innovative Therapies. • 10. Other Provisions: Nursing Mothers/”Economic Substance” Doctrine/Funding for Elder Justice Programs/Simple Cafeteria plans/Health FSA limits/Wellness programs 2d Amendment MICHAEL SHPIECE

8. IS THE ACA CONSTITUTIONAL? The US Supreme Court Decision (see attached article) Other Challenges -- Contraception -- 10th Amendment -- Was it Constitutionality Passed? -- Gun Rights/First Amendment -- Other Will Congress Fund it? Will States Follow it? MICHAEL SHPIECE

9. WHAT ARE THE KEY REFORMS AFFECTING EMPLOYERS? PROVISIONS CURRENTLY IN EFFECT • No Lifetime Limits • No Annual Limits -- phased in • No rescissions, except for fraud/intentional misrepresentation • Must cover preventive without cost sharing • Does not apply to Grandfather Plans • Must cover adult dependent children to age 26 • Grandfather Plans do not have to cover if child eligible for other employer-sponsored coverage • Plans cannot exclude adult child because they are eligible under other parent’s employer-sponsored coverage MICHAEL SHPIECE

10. WHAT ARE THE KEY REFORMS AFFECTING EMPLOYERS (cont.)? PROVISIONS CURRENTLY IN EFFECT • Must provide SBC and Glossary of Standard Definitions • Revised Appeals Process with external review • Does not apply to Grandfather Plans • Provider Selection Provisions • Does not apply to Grandfather Plans • Rebates from insurance carriers • Large Groups (over 100) – if loss ratio LT 85% • Small Groups (under101) – if loss ratio LT 80% MICHAEL SHPIECE

11. WHAT ARE THE KEY REFORMS AFFECTING EMPLOYERS (cont.)? PROVISIONS TO COME • Insured employer health plans cannot discriminate in favor of HCIs MICHAEL SHPIECE

12. REQUIRED INSURANCE AND STATE EXCHANGES • INDIVIDUAL REQUIREMENTS As I read the US Supreme Court’s decision, technically, there is no requirement that individuals have health coverage. But if an individual doesn’t have cover, there will be a “Shared Responsibility Payment.” Applies to everybody except: religious conscientious objectors, health care sharing ministries, illegal aliens, incarcerated individuals. Penalty: For 2014, $95/year/person For 2015, $375/year/person For 2016, $750/year/person After, $750/year/person + COLA MICHALE SHPIECE

13. INDIVIDUAL REQUIREMENTS (cont.) Up to 3 per taxpayer; children under 18 assessed at 50% Exempt from Penalty: Cost more than 8% of income (indexed) Taxpayers under 100% of Poverty Line Members of Indian Tribes Gaps of less than 3 months (one gap per year) Hardship cases “Acceptable Coverage” Any employer-sponsored government plan; and many other types of coverage. MICHAEL SHPIECE

14. EMPLOYER OBLIGATIONS Employee contribution limited to 9.8% of household income and 40% of coverage cost Employers must provide “minimum essential coverage” to all full-time employees Only applies to employers with 50 or more full time employees (30 hours/week) MICHAEL SHPIECE

15. EMPLOYER OBLIGATIONS (cont.) • If Employer doesn’t offer minimum essential health coverage to all FT employees, pay $2,000/year + COLA for all employees after first 30 • If Employer has employees getting premium tax credit or cost sharing deduction, pay $3,000/year + COLA for those employees Payments are on a monthly basis MICHAEL SHPIECE

16. MINIMUM ESSENTIAL COVERAGE • Ambulatory patient services • Emergency services • Hospitalization • Maternity and newborn care • Mental health and substance use disorder services • Prescription drugs • Rehabilitative and habilitative services and devices • Laboratory services • Preventive and wellness services and chronic disease management • Pediatric services, including oral and vision care To be determined by regulations MICHAEL SHPIECE

17. GRANT OPPORTUNITIES HIT TECHNOLOGY COMMUNITY PREVENTIVE HEALTH ACTIVITIES HEALTH CARE WORKFORCE EDUCATION PROGRAMS HEALTH EDUCATION CENTER PROGRAMS

18. GRANT OPPORTUNITIES (cont) PEDIATRIC HEALTH CARE (2 Years) PUBLIC HEALTH WORKFORCE LOANS (3 Years) MICHAEL SHPIECE