The Affordable Care Act in California: Overview and Update

1. The Affordable Care Act in California: Overview and Update Marian Mulkey California HealthCare Foundation Encore Fellows April 25, 2012

2. Coverage Provisions of the ACA • In 2014, the Patient Protection and Affordable Care Act (ACA) will broadly expand health coverage through: • Medicaid expansion • Insurance market reforms • New individual responsibilities • New employer responsibilities • Establishment of Insurance Exchanges

3. Additional Provisions of the ACA • Test new ways to pay for and organize care • Prevention and wellness provisions • Workforce training and development • (Voluntary long-term care insurance program)

4. Sources of Financing • Reduce spending in Medicare program • New taxes and fees on drug manufacturing, devices, health insurance sector • Increase Medicare payroll tax on high earners • Eliminate various tax benefits and exclusions • Impose penalties on employers and individuals • Reduce Medicare Disproportionate Share Hospital (DSH) payments • Impose tax on high-cost employer health plans

5. An Uncertain Environment • Supreme Court is considering: • Individual mandate • Severability of mandate • Jurisdiction / timing • Medicaid expansion • National election scenarios: • Status quo • Republicans control both Houses • Republican sweep

6. Medi-Cal and HF Eligibility Today

7. ACA Changes to Medicaid Eligibility • Expands eligibility to 133%* FPL to all nonelderly • Coverage for childless adults • Children ages 6-10 with incomes 100-133%* FPL transition to Medi-Cal from HF • Simplifies income eligibility standards • Imposes Maintenance of Effort requirements on states • *Or 138% of Federal Poverty Level with the ACA’s 5% income disregard; equivalent to annual income of about $15,000 for a single person or $31,000 for a family of four.

8. Medi-Cal and HF Eligibility in 2014

9. Private Insurance Changes • “Guaranteed Issue” in the individual market • Subsidies available through Exchange to help people afford coverage • Individuals and families up to 400% of the federal poverty level • Small, low-wage businesses (up to 25 employees, up to $50,000 average wages) • Individuals must obtain coverage, or face penalties • Businesses with more than 50 employees must provide coverage that meets standards, or face penalties

10. Health Benefit Exchange • Structured selection of plans intended to facilitate consumer choice • Access point for subsidized coverage, both public and private • Must provide coordinated enrollment with Medi-Cal and Healthy Families

11. Long-Term Impact: California Coverage • 2 to 3 million newly enrolled in Medi-Cal • 2 to 3 million gain private coverage through new market rules, subsidies, and mandates • 1 to 3 million remain uninsured • Undocumented Californians will make up 40%, or more, of those remaining uninsured

12. ACA Implications for Community Clinics • In 2014 under ACA, many more people will be eligible for Medi-Cal; access to care will be strained • A large group, even more marginalized than today, will remain without coverage and will look to clinics and other traditional safety net providers for care

13. ACA and “Essential Community Providers” • In general, Exchange-offered plans must: • Include “Essential community providers” in their networks • Pay Medi-Cal prospective payment system (PPS) rates • However, it appears there will be exceptions: • Plans and FQHCs may mutually agree on a rate less than PPS -- IF it is no less than plan’s generally applicable rate • Kaiser and other closed-network plans may be exempt -- IF they otherwise meet access and network adequacy standards for low-income enrollees

14. Issues on the Horizon • What will SCOTUS say? • Will California establish a Basic Health Program (BHP)? • What will be ACA’s impact on state spending? • What will be ACA’s impact on access to care for current and newly enrolled beneficiaries? • What will happen to access to care for populations “left behind”? • What public and private actions will emerge to: • Simplify eligibility and enrollment? • Coordinate purchasing across public programs? • Advance delivery system reform?

15. Additional resources