Health Care Reform 2010

1. Health Care Reform 2010 Mark Liebow, M.D., M.P.H.

2. AFFORDABLE CARE ACT THEMES • “It’s a big bleeping deal”-Vice President Biden • The recent law has three large themes designed to take effect at different times and affect overlapping groups of people.

3. AFFORDABLE CARE ACT THEMES • Reform the private insurance market • Increase coverage • Improve the health care delivery system

4. AFFORDABLE CARE ACT THEMES • Insurance reform has started already and affects those with insurance • Some coverage expansion starts now but most is in 2013-14. This affects uninsured people. • Delivery system improvements will gradually kick in, but most won’t take effect for years. This affects everyone.

5. Reforming the Insurance Market • The new law changes rules in the private insurance market, the regulation of which had traditionally been left to the states. • Some take effect this year, while others are being phased in over the next four years. • These changes are widely popular and may limit efforts at repeal.

6. Reforming the Insurance Market • 2010 reforms include: • Plans may not exclude pre-existing conditions in policies covering children. • Children up to 26 can stay on parents’ policies (if not eligible for coverage by own employer) • Coverage without co-payments for USPSTF A and B-rated preventive services, recommended immunizations, and certain preventive services and screenings for women must be covered.

7. Reforming the Insurance Market • 2010 reforms include: • Prohibits individual and group plans from imposing lifetime limits on coverage and allows annual limits only as approved by DHHS Secretary • Prohibits rescission of existing policies except for fraud. • Requires plans to report medical loss ratios.

8. Reforming the Insurance Market • Insurance companies are not able to drop a policyholder who has been making claims. • Premiums for older and sicker patients will still be higher than for younger and healthier ones, but the differences will be smaller than they are now. • A process being developed will review health plan premiums and require plans to justify increases.

9. Reforming the Insurance Market • State-based insurance exchanges will be a way of guaranteeing access to all those eligible to participate seeking insurance and keeping costs down by competition. • States will start designing exchanges through legislation and rule-making in 2011. • Accurate risk adjustment will be crucial to ensure companies in the exchange aren’t killed by adverse selection.

10. Reforming the Insurance Market • The individual mandate, which became extremely controversial, is necessary not to increase coverage but to make insurance reforms such as guaranteed issue/re-issue and excluding pre-existing conditions feasible, as otherwise people could wait until they were ill to buy insurance.

11. Increasing Coverage • Some increased coverage will come through expanding Medicaid. It will become a universal coverage program for poor U.S. citizens. • Other increases in coverage will come from subsidizing private insurance for people somewhat higher up the income scale.

12. Increasing Coverage • Minnesota has a chance to expand Medicaid to those making less than 133% of the Federal poverty level in 2011 instead of 2014. The new Governor must decide whether to do this by 1/15/11. • There is a temporary national high-risk pool for health coverage.

13. Changing the Delivery System • If there is any overriding plan here, it’s try lots of things and see what works. • There will be permanent, substantial funding for comparative effectiveness research. • Congress delegated some of its power over Medicare to an Independent Payment Advisory Board that will recommend spending reductions for Medicare if the rate of growth of Medicare spending exceeds a target rate.

14. Changing the Delivery System • Those recommendations would become law unless Congress enacted a law that had equivalent savings. • Work will start soon on developing a methodology for Medicare to pay on value rather than just on volume. • Medicaid payment to primary care physicians for primary care services will be 100% of Medicare rates in 2013 and 2014.

15. Elections Have Consequences • Payments to Medicare Advantage programs were cut substantially, which will pay for a significant chunk of reform costs. • Payments to companies to keep giving drug benefits to retirees instead of having them go onto Medicare Part D will no longer be tax deductible, which will raise billions of dollars. • The “doughnut hole” in Part D will close, though it won’t be gone until 2020.

16. Paying for It All • This law pays for itself. • Individuals who don’t get insurance will pay a penalty. • Employers of over 50 employees who do not offer coverage or who have employees receiving credits for insurance will pay penalties. • Rules for HAS spending have been tightened

17. Paying for It All • The threshold for itemized deductions for unreimbursed medical expenses will rise from 7.5% to 10%. • The Medicare tax will rise to 2.35% for individuals earning over $200,000 and couples earning over $250,000 and there will be a 3.8% surtax on unearned income for higher-income taxpayers, starting in 2013. • There will be a 40% excise tax on high-cost insurance policies starting in 2018.

18. Paying for It All • There will be annual fees on pharmaceutical manufacturers and medical device manufacturers, starting in 2012. • There will be annual fees on health insurers starting in 2013. • There will be a 2.3% excise tax on the sale of any taxable device starting in 2013. • There is a 10% tax on indoor tanning services.

19. What Didn’t Happen • The Sustainable Growth Rate (SGR) formula hasn’t been fixed and so we still face huge cuts in what Medicare will pay for each service unless Congress continues to override the formula. Any draconian cut will be devastating for physicians who don’t do procedures. We would be lucky to get a 11 month freeze (through the end of 2011) but are more likely to get one for 6 months.

20. What Didn’t Happen • This is a problem with budget rules, not with a genuine interest in cutting physician fees. Unfortunately, the willingness to spend money, even if it is just accounting figures, is not big in Washington and is not going up next year. • The problem will get even bigger each year, in part because Baby Boomers will be reaching Medicare age next year and in part because of coverage expansions in Medicare due to the Affordable Care Act.

21. What Didn’t Happen • Congress hasn’t dealt with getting CPT codes revalued except to give a temporary bonus for Medicare services to primary care physicians. Evaluation and management services will remain considerably undervalued compared to procedural and technical services, so the shortage of primary care physicians is likely to grow for now. Since many internists are of an age where they may retire in the next decade, there is little hope of overcoming the shortage soon.

22. What Didn’t Happen • Not much has been done except for demonstration or pilot projects to pay for coordination of care/non-visit care. This is particularly a problem for internists as we have older, sicker patients to whom we often provide comprehensive care. • There is no short-term solution for new clinicians to deal with any influx of new patients as more people have health insurance.