HEALTH CARE REFORM &
THE UNINSURED IN CALIFORNIA
Presented by: Phil Lebherz, with Ankeny Minoux
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All information published herein is gathered from sources which are thought to be
reliable, but the reader should not assume that the information is official or final.
Reliance on this information or other linked or recommended resources received from
LISI shall be at your sole risk, and LISI assumes no responsibility for any errors,
omissions, or damages arising. Users of this information are encouraged to confirm
with other sources, and to seek qualified advice if embarking on any actions that could
carry personal or organizational liabilities.
Agenda
 Health Care Reform Legislation Overview
 The Uninsured in California – Positive Progress
 Keynote: Phil Lebherz
Perspective on Legislation and
the Future of Health Insurance
Q&A
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Legislative Timeline
March 23rd, 2010:
Patient Protection and Affordable Care Act
March 30th, 2010:
Health Care and Education Reconciliation
Act of 2010
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Approaches to Expanding Coverage
Requires most US
citizens to have
health insurance
Expand
Medicaid to 133%
of FPL
New regulations
on health plans
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Create
state-based
exchanges for
individuals
Create
employer
exchanges for
small businesses
Individual Mandates and Subsidies
Individual Mandate
• Those without coverage pay tax penalty – exemptions for:
• Financial hardship
• Religious objections
• Native Americans
• Those without coverage less than 3 months
• Undocumented immigrants
• Lowest cost plan option exceeds 8% of income
Individual Subsidies
• Income limits for subsidies – 133% - 400% of FPL
• Premium credits or cost-sharing subsidies.
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Individual Tax Consequences
$695 fine for
non-compliance
Increase excise tax
on disallowed
distributions from
HSAs to 20%.
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Exclude OTC Rx
in
HSA, FSA & HRA
Limit FSA
contributions to
$2500 per year
Employer Mandates
 Employers with 50 or fewer EEs are exempt
 Employers with >50 EEs who do not
offer coverage
 Employers with >50 EEs who do
offer coverage
 Employers with >200 EEs to automatically
enroll their employees
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Small Business Tax Credits
 For employers with up to 25 employees
 2010-2013, up to 35% tax credit
 2014 and beyond, up to 50% tax credit
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Insurance Exchanges
Effective 2014
Available to individuals and small groups
Can allow large groups beginning 2017
Five plan types offered
GI with rating based on age, area and tobacco use
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Changes to Private Insurance
 Temporary High Risk Pool (2010)
 Insurance Exchanges (2014)
 Carriers’ Medical Loss Ratios
 80% for small group (100 and below)
 85% for large group.
 Premium increase review process
 Excise tax on “Cadillac” plans
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Changes to Private Insurance
 No lifetime limits
 Dependent coverage to age 26
 No rescinding except in cases of fraud
 No pre-existing on children (2010), everyone (2014)
 No experience rating
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Changes to Private Insurance
 Deductibles not to exceed $2,000/$4,000
 Limit waiting periods to 90 days
 Allow states to merge IFP & small group
 SG definition changes to 2-100
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‘Grandfathering’ Provision
Current Plans unaffected by mandates
 Only Changes Allowed:
 Add or delete new employees/dependents
 Part of collective bargaining agreement
 Exceptions:
 No waiting periods over 90 days
 Prohibition on Lifetime Limits
 New standard for recissions
 Dependent coverage to age 26
 Certain annual limits (group only)
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Financing - Taxes
 ‘Cadillac Plan’ Tax
 Insurer Fees
 Health Insurers - $8B (2014) - $14.3B (2018) +
 Pharma - $27B
 Medical Device - $20B
 Medicare Payroll Tax
 .9% increase for wages > $200k/$250k
 Tax now applies to unearned income
 Tanning Services – 10% tax
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Timeline for Change - 2010
 Temporary National High Risk pool created
 Tax credits for small employers
 Dependent coverage increased to age 26
 Remove Lifetime limits & prohibit pre-existing
exclusion for children
 Minimum Preventive service level w/o cost sharing
 Establish premium increase review process
 $250 Rebate for Medicare beneficiaries
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Timeline for Change - 2011
 Excludes OTC Rx from HSA/HRA/FSA
distributions
 Increase tax on distributions from HAS/FSA not
used for qualified medical expenses to 20%
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Timeline for Change - 2013
 CO-OP program for non-profit member run
insurance companies
 Operating rules for Health Insurance
administration
 Increase itemized deduction to 10%
 Limit FSA contributions to $2500
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Timeline for Change - 2014
 Require health coverage
 End exclusions for adults with pre-existing
conditions
 Assess LG employers for not offering coverage
 Create State-based Exchanges for IFP and SG
 Require GI coverage for SG market and Exchanges
 Reduce OOP limits for lower income members
 Limit Deductibles to $2000/$4000
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Timeline for Change – 2014 (cont…)
 Limit waiting period to 90 days
 Create essential health benefits package
 Allow states to merge IFP and SG markets
 Require carriers to meet new operating standards
and reporting requirements
 Expand Medicaid to all individuals under age 65
under 133% FPL
 Impose fees on the health insurance sector
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Timeline for Change – 2015 and later
2016
 Permit states to form health care choice compacts
and allow insurers to sell policies in any state
participating in the compact
2018
 Impose an excise tax on insurers of employer-
sponsored health plans with high values
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