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Affordable Care Act: An Overview

This overview provides information on the Affordable Care Act (ACA), including changes to employer-sponsored coverage, Medicaid expansion, non-group coverage standards, subsidies, individual mandate, marketplace plans, and uninsured rates.

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Affordable Care Act: An Overview

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  1. Affordable Care Act: An Overview Karen Pollitz, Senior Fellow Kaiser Family Foundation March 1, 2019

  2. Sources of Health Insurance Coverage for Non-Elderly, 2012-2017 2012 2017 SOURCE: KFF analysis of the 2013, 2018 American Community Survey, US Census Bureau.

  3. ACA Made Specific Changes to Employer-Sponsored Coverage and Expanded Medicaid Specific provisions affected employer-sponsored coverage • Pre-existing condition exclusion periods prohibited, all plans • Other specific changes for all plans include: • Cover dependents to age 26 • Cover preventive services without cost-sharing • No annual, lifetime dollar limits • Out-of-pocket maximum for in-network cost sharing ($7,900 in 2019) • Large employer mandate • Share of population covered by ESI has remained relatively stable Significant eligibility expansion for Medicaid • Pre-ACA, eligibility was categorical (children, parents, disabled, or elderly) • ACA expanded eligibility to 138% FPL, federal government pays 90% of cost in 2020 • Supreme Court ruled in 2012 that expansion is a state option • In 2017, 12.7 million Medicaid enrollees were eligible because of the expansion • In 2017, 2.2 million poor adults in non-expansion states, in the “coverage gap”

  4. Status of State Medicaid Expansion Decisions ME◊ VT WA NH MT ND MN OR MA NY WI SD ID ◊ MI RI CT WY PA NJ IA NE ◊ OH DE IN IL NV MD CO UT ◊ WV VA CA DC KS MO KY NC TN AZ SC OK AR NM GA AL MS LA TX AK FL HI Adopted (37 States including DC) Not Adopting At This Time (14 States) NOTES: Current status for each state is based on KFF tracking and analysis of state activity. ◊Expansion is adopted but not yet implemented in ID, ME, NE, and UT. (See link below for additional state-specific notes). SOURCE: “Status of State Action on the Medicaid Expansion Decision,” KFF State Health Facts, updated January 4, 2019. https://www.kff.org/health-reform/state-indicator/state-activity-around-expanding-medicaid-under-the-affordable-care-act/

  5. ACA Substantially Changed Non-Group Coverage Standards for ACA-compliant policies • No medical underwriting • Pre-existing condition exclusion periods prohibited; Guaranteed-issue and renewability • Modified community rating; rates vary by age (3:1), family size, geography, tobacco (1.5:1) • Benefit and cost sharing standards • 10 essential health benefits (EHB) categories required • Metal tiers define cost-sharing levels; out-of-pocket maximum for in-network cost sharing • Subsidies • Premium tax credits for eligible individuals 100% to 400% FPL • Cost sharing reductions (CSR) for eligible individuals 100% to 250% FPL • Marketplaces administer subsidies, conduct annual open enrollment, facilitate plan comparison and choice, provide consumer assistance • State flexibility waivers authorized (Section 1332) Individual Mandate • Congress reduced penalty to zero, effective in 2019 Non-compliant policies still exist • Grandfathered, “grandmothered” plans don’t comply; cannot sell to new policyholders • Short-term limited duration insurance doesn’t comply; can sell to new policyholders

  6. Many Marketplace Plans Have High Deductibles, Cost-Sharing Subsidies (CSR) Apply In Silver Plans Average combined annual deductible, medical and Rx, self-only SOURCE: Healthcare.gov data for 39 states with Federally Facilitated or Partnership exchanges. FPL refers to Federal Poverty Level.

  7. Marketplace Benchmark Plan Premiums Have Increased, but Stable For Those With Subsidies National average monthly premiums, tax credit amounts, and individual contributions for the benchmark Silver plan for a 40-year old consumer with income at 200% FPL, 2014-2019 SOURCE: Kaiser Family Foundation Health Insurance Marketplace Calculator

  8. Factors Contributing to Premium Increases in Benchmark Plans • Issuers adopt one-time price correction in response to under-pricing, losses in early years (2017) • Termination of CSR payments to issuers leads to “silver loading” (2018 and 2019) • Pricing for expected adverse selection due to repeal of mandate penalty, expansion of short-term plans (2019) • Lack of competition in areas with single issuer • Uncertainty

  9. Most Individual Market Participants Buy Through the Marketplace and are Eligible for Subsidies Individual market enrollment first quarter 2015-2018 18.8 M Source: Kaiser Family Foundation analysis of data from Mark Farrah Associates Health Coverage Portal TM and Centers for Medicare and Medicaid Services (CMS) Notes: Data on the share of off-exchange enrollment in compliant vs. noncompliant plans in 2018 are not available, so this assumes the share to be the same as in 2017. For 2015 through 2017, we assume the share of off-exchange enrollment in non-compliant plans in Q1 is the same as share of annual enrollment in non-compliant coverage. Enrollment is measured as average members per month.

  10. Number of Uninsured and Uninsured Rate Among the Non-elderly Population, 2008-2017 NOTE: Includes nonelderly individuals ages 0 to 64. SOURCE: Kaiser Family Foundation analysis of 2008-2017 American Community Survey (ACS), 1-Year Estimates.

  11. Eligibility for ACA Coverage Among Nonelderly Uninsured, 2017 Eligible for Financial Assistance 55% Total = 27.4 Million Nonelderly Uninsured NOTES: Numbers may not sum to totals due to rounding. Tax Credit Eligible share includes adults in MN and NY who are eligible for coverage through the Basic Health Plan. Medicaid/Other Public also includes CHIP and some state-funded programs for immigrants otherwise ineligible for Medicaid. SOURCE: Kaiser Family Foundation analysis of 2017 American Community Survey (ACS), 1-Year Estimates.

  12. Texas v. US Lawsuit Challenges Constitutionality of ACA • Republican state attorneys general are arguing that the ACA in its entirety is unconstitutional because the individual mandate (without a tax penalty) is unconstitutional. • The Trump administration is not defending the ACA in court, instead arguing that only the ACA’s pre-existing condition protections should be invalidated. • A district court judge has sided with the Republican state AGs, ruling that the ACA is unconstitutional, though the ruling has been stayed. • Democratic state attorneys general have intervened in the case to defend the ACA and have appealed the decision to the 5th Circuit.

  13. KFF Resources • ACA/Marketplace Frequently Asked Questions https://www.kff.org/health-reform/faq/health-reform-frequently-asked-questions/ • Marketplace Subsidy Calculator https://www.kff.org/interactive/subsidy-calculator/ • ACA Analyses and Data https://www.kff.org/health-reform/ • Private Insurance Analyses and Data https://www.kff.org/private-insurance/ • Employer Health Benefits Survey https://www.kff.org/health-costs/report/2018-employer-health-benefits-survey/ • Uninsured https://www.kff.org/uninsured/ • State Health Facts https://www.kff.org/statedata

  14. Contact Information Karen PollitzSenior Fellow Email: karenp@kff.org Phone: 202-654-1307

  15. Freshman Member Briefing onthe Affordable Care Act Recent & Potential Legislative and Administrative Changes March 1, 2019 Sabrina Corlette, J.D.

  16. A team of nationally recognized experts on private health insurance and health reform Conduct research on issues related to health policy and health services Based at Georgetown University’s McCourt School of Public Policy About CHIR

  17. Individual mandate penalty repeal Texas lawsuit to strike down ACA Short-term health plans Association plans The ACA in 2019 • Marketplace cuts • Navigators • Outreach • Elimination of CSRs • 1332 Waivers • Proposed: subsidy reductions, higher OOP costs, HRAs

  18. ACA’s Present: 2018-2019 • Premiums relatively stable (-1.5%) • Insurer participation stable • Majority public support • ~87% receive premium subsidies • BUT: • 3.7% decline in enrollment • 8.8% still uninsured • Off-exchange enrollment declining (-38%, 2017-18)

  19. ACA: What’s Going on in the States? • Codifying pre-existing condition protections • Rejecting – or embracing – Trump administration actions • Individual mandate • 1332s: Reinsurance • Marketplace conversions • ACA improvements • Subsidy wraps • Public option/Medicaid buy-in

  20. ACA: Future Legislative Action? • Reversing Trump administrative actions • 1332, Short-term plans, AHPs • Marketplace support • Navigators • Outreach • Reinsurance? • Cost-sharing reduction subsidies? • Affordability improvements?

  21. Sabrina Corlette, J.D. Research Professor (202) 687-0880 sc732@georgetown.edu @SabrinaCorlette Questions?

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