ACA 3 leg stool
ACA 3 leg stool
- CR: no use of pre existing conditions for premiums in private insurance
- Individual mandate
- Low-income subsidies in indv marketplace
ACA’s 3 primary goals
- Cover _
- Increase _
- Reduce _
ACA’s 3 primary goals
- Cover the uninsured by subsidizing coverage
- 2 mechanisms
- Medicaid expansion
- subsidized private coverage for people in exchanges
- 2 mechanisms
- Increase regulation of private health insurers
- CR + GI
- Reduce healthcare spending “bending the curve”
- healthcare spending as a percentage of GDP
heterogeneity of the uninsured
- The Relationship Between the Uninsured and Income
- high vs low-income insurance type
*
- high vs low-income insurance type
heterogeneity of the uninsured
- The Relationship Between the Uninsured and Income
- Higher income= more likely to have private insurance
- Lower income= more likely to have public insurance
- There are uninsured people at all levels of income
- most uninsured= working families
heterogeneity of the uninsured
- The Relationship Between the Uninsured and Employment Setting
- big vs small employer
heterogeneity of the uninsured
- The Relationship Between the Uninsured and Employment Setting
- strong relationship: uninsured and where one works, specifically focusing on the size of the employer
- Big employer= more likely to be insured
- (spread out admin cost/less underwriting/ bargaining)
- Small firms and self employed had the most uninsured
ACA main insurance provisions (2014)
- medicaid _
- state _
- Mandates
ACA main insurance provisions (2014)
- medicaid expansion
- state health insurance exchanges
- individual mandate
- employer mandate “play or pay”
Medicaid expansion
(as initially written) to all nonelderly under _ FPL
Coverage before ACA
Who lacked Medicaid coverage?
Who administers Medicaid?
Medicaid expansion
(as initially written) to all nonelderly under 133% FPL
Coverage before ACA
Who lacked Medicaid coverage?
- childless adults, and to a lesser extent parents, lacked Medicaid coverage
Medicaid is administered by the states (have discretion)
State Health Insurance Exchanges/Marketplaces
What does it provide?
How do they help people get insurance?
Goal?
State Health Insurance Exchanges/Marketplaces
What does it provide?
- Private insurance options for individuals and small businesses (SHOP)
How do they help people get insurance?
- Tax credit varying by income for individuals between 100% and 400% FPL to offset premium
Goal?
- transform the individual/small group health insurance markets to operate more like the large group market (more insurance options, cheaper premiums)
State Health Insurance Exchanges/Marketplaces
- How does it prohibit the use of pre-existing conditions by insurers for premiums?
- what can the adjust community rating on?
- potential problem with ACR +GI?
- solution for adverse selection?
State Health Insurance Exchanges/Marketplaces
How does it prohibit the use of pre-existing conditions by insurers for premiums?
- Adjusted community rating
- guaranteed issue
What can they adjust community rating on?
- smoking
- geographic area
- age
The potential problem with ACR +GI?
- adverse selection
- older and sicker people getting coverage
- younger/ healthier people passing
Solution for adverse selection?
- individual mandate
- requires people to purchase coverage or pay a penalty on their taxes
employer play or pay
employer play or pay
play by offering coverage or pay a penalty if a firm doesn’t offer coverage
What caused the CBO to increase their projected # of uninsured due to ACA?
2012 supreme court case that made Medicaid expansion optional= less people insured
2010 ACA’s Secondary Provisions in Effect Earlier than 2014 (read 5 times)
2010 ACA’s Secondary Provisions in Effect Earlier than 2014 (read 5 times)
- National high-risk pool
- Dependent children’s coverage up to age 26
- No use of pre-existing conditions for children’s premiums
- No copayments for USPSTF’s A/B-rated services (preventative services)
- Restrictions on using lifetime and annual limits
- Tax credits for small businesses with low-wage workers
- Drug discounts for Part D’s “doughnut hole”
- CLASS: voluntary living assistance coverage (abandoned)
2010 ACA’s Secondary Provisions in Effect Earlier than 2014
- describe national high risk pool
- why was it temporary?
2010 ACA’s Secondary Provisions in Effect Earlier than 2014
describe the national high-risk pool
- Government administered source of health insurance coverage for people who are deemed uninsurable due to Pre existing conditions (chronic health conditions)
- Money to bolster HRP already in states
- Money to create HRP in new states
why was it temporary?
- ACR+GI in 2014
2010 ACA’s Secondary Provisions in Effect Earlier than 2014
CLASS Act
Goal
Why abandoned
2010 ACA’s Secondary Provisions in Effect Earlier than 2014
CLASS Act
Goal?
- keep the disabled out of nursing homes
- Have insurance plan pay for certain home health services
Why abandoned?
- Concerns about adverse selection leading to excessively high premiums
SHOP EXCHANGES
Who does it help and how?
how pick insurance?
Growth in exchanges?
SHOP EXCHANGES
Who does it help and how?
- tax credit against corporate income tax for small businesses
how pick insurance?
- firm picks a metal tier
- workers to choose among the plans in that metal tier
Growth in exchanges?
- States can add bigger firms as the exchanges grow
- but, poor roll out of indv exchange
Why did CBO project low ACA spending year 2010-2013?
Why do spending estimates increase after 2014?
Why did CBO project low ACA spending year 2010-2013?
- delays in people enrolling in Medicaid/ buying subsidize coverage on exchanges (unawareness/ procrastination)
Why do spending estimates increase after 2014?
- individual mandate penalty growing in size over time
ACA’s Main Financing Provisions goals?
Total cost of ACA _ Financing of ACA = _ deficit
ACA’s Main Financing Provisions goals?
Goals
- raise taxes
- to reduce spending
Total cost of ACA < Financing of ACA = decrease deficit
ACA’s Main Financing Provisions (5)
Medicare _
Reductions in _
Reductions in _
New fees on _
new tax
ACA’s Main Financing Provisions
- Medicare HI payroll tax increase (HIGH INCOME PEOPLE)
- Reductions in FFS Medicare payments’ annual updates (mostly hospitals)
- Reductions in Medicare Advantage payments*
- New fees on drugs, devices, and insurers
- “Cadillac Tax” on high-cost private insurance plans 2018*
Which 2 ACA financing provisions will pass costs onto consumers?
Which 2 ACA financing provisions will pass costs onto consumers?
- New fees on drugs, devices, and insurers (HIGHER PRICES)
- “Cadillac Tax” on high-cost private insurance plans
Cadillac tax
- Describe Cadillac tax
- goal of excise tax?
- Impact on consumers?
- tax passed on as a higher premium
- What is the tax combating? Why inefficient?
- Result of generous plans?
Describe Cadillac tax
- excise tax on insurers for high-cost private insurance plans above a threshold
goal of excise tax?
- reduce HC spending by discourage people from getting generous health plans
Impact on consumers?
- tax passed on as a higher premium
What is the tax combating? Why inefficient?
- the inefficient employment-based tax exclusion (magnitude of tax subsidy indv receive tied to plan generosity)
- causes people to obtain health insurance plans that are too generous
Result of generous plans?
- Moral hazard- overutilization/ low value care
Why will the Cadillac tax make more money in the future?
Why will the Cadillac tax make more money in the future?
- plan thresholds indexed to general inflation
- inflation rate of insurance plans > general inflation
- over time, more plans will be taxed
ACA: Reducing in Spending- Private (2)
REDUCE PRIVATE SPENDING
ACA: Reducing in Spending- Private
- Cadillac tax
- combat moral hazard from generous health plan due to the employment-based tax exclusion
- State health exchange flat subsidy
- NOT tied to generosity of plan
- Flat subsidy based on 2nd cheapest silver plan
ACA: Reducing admin overhead- Private (3)
increased competition and transparency
ACA: Reducing admin overhead- Private (3)
- State Health Insurance Exchanges fostering competition and transparency
- New state CO-OP plans and (as initially written) multi-state OPM plans
- Minimum Medical Loss Ratio (MLR) requirements for insurers
- benefits paid/ premiums collect
- minimum MLR requirement to insure lower administrative costs if the competition alone doesn’t work
ACA reductions in PUBLIC SPENDING (3)
ACA reductions in PUBLIC SPENDING (3)
- FFS Medicare payments: Decrease annual updates to provider payments
- Productivity adjustments to market basket (HOSPITALS better use of inputs)
- reduction in prices paid for drugs for seniors in the donut hole of Medicare Part D
- Reduction in prices for drugs form the _Medicaid*_ program (increased rebate)
- Price based on average market price (AMP)
Efforts to decrease inefficient Medicare utilization (5)
UTILIZATION!!!!
Efforts to decrease inefficient Medicare utilization (5)
- Medicare reduced payments to hospitals with high readmission rates
- Price adjustment: IPPS/DRG payments
- bundled payments over a longer episode of care
- Created ACOs (“Shared Savings Program”)
- Savings/ penalty based on utilization
- Created CMMI
- create new payment models
- Created Independent Payment Advisory Board (IPAB)
- b4 MedPac (Senate vote)
- Alter Medicare payments (no senate)
- Payment models: disincentivize the utilization of low value services
