5/12/2015
Lincoln Chapter of NEAHU
"Springtime 2015 ACA Update"
Jesse A Patton LUTCF, HIA, MHP, FAHM, HIPAAA, EHBA, PHIAS
Health Insurance Quiz
•
Suppose your health plan covers lab tests in full if you go to an in-network lab, but only pays 60% of
allowed charges if you go out of network. You forget to check and go get your blood test at a lab that
turns out to be out of network. The lab bills you $100 for the blood test. Your health insurance allows
only a $20 charge for that test. How much would you have to pay out of pocket for that lab test?
$0
$40
$80
$88
Don't know.
16% Correct Answer
•
Suppose that under your health insurance policy, hospital expenses are subject to a $1,000 deductible
and $250 per day copay. You get sick and are hospitalized for 4 days, and the bill (after insurance
discounts are applied) comes to $6,000. How much of that hospital bill will you have to pay yourself?
$0.
1,000
$2,000
$4,000.
Don’t know 51% Correct Answer
•
Which of the following best describes a “health insurance formulary?"
The form you send to your insurance company when you need to have a medical bill paid
The name for permission you must get from your insurance company before surgery will be covered
The list of prescription drugs your health plan will cover.
Don’t know. 33% Correct Answer
Current System:
•
Uneducated patients
•
No understanding of cost
•
No understanding of quality
•
No understanding of alternatives
•
No guidance
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5/12/2015
Risk Spreading
Concentration of Health Spending in the U.S. Population
97%
100%
73%
80%
64%
60%
40%
80%
49%
24%
20%
3%
0%
Top 1% Top 5% Top 10% Top 15% Top 20% Top 50% Bottom
50%
Population Percentile Ranked by Health Care Spending
Note: Population includes those without any health care spending. Health spending defined as total payments, or
the sum of spending by all payer sources.
Source: KFF calculations using data from Agency for Healthcare Research and Quality, Medical Expenditure Panel
Survey
Price
Utilization
Price
Price includes
what insurers
pay out in
benefits to
hospitals,
physicians, and
other health
care providers
on behalf of
their members.
Utilization is the
volume factor.
More tests, more
services, more
drugs, more
procedures drive
up utilization –
and thus overall
costs.
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5/12/2015
Intensity
Utilization
Price
Price
Selection
Intensity
Utilization
Price
Leveraging
Selection
Intensity
Utilization
Intensity is the
impact of
replacing a
product or
service with a
more expensive
one. New health
care services
add increasing
costs.
Selection
impacts overall
costs when
someone with
lower than
average benefit
expenses
leaves the
group.
When health care
expenses rise, but
member’s
copayments stay
the same, the
impact to overall
costs is called
leveraging.
Price
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5/12/2015
How Does Trend Affect My Rates?
Example:
2015
2016
Claim
$1100
$1265
Deductible
-$1000
$100
-$1000
$265
Insurance
Payment
x .9
$90
x .9
$238.5
% Increase
15%
0
265%
Assumptions: Policy Year 2003 | Deductible $400 | Coinsurance 90/10 | C$500 | Trend @ 15%
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May 12, 2015
Understand the factors that impact
health insurance premiums
When health care expenses rise, but
member’s copayments stay the same, the
impact to overall costs is called leveraging.
Selection impacts overall costs when
someone with lower than average benefit
expenses leaves the group.
Intensity is the impact of replacing a
product or service with a more
expensive one.
Leveraging
Selection
Intensity
Utilization
Utilization
Utilization is the number of health
care products and services
provided.
Utilization
Price includes what insurers pay
out in benefits to hospitals,
physicians, and other health
care providers on behalf of their
members.
Price
May 12, 2015
The Nation’s Health Dollar: Where
Does It Go?
Physician & Clinical Services 22%
3¢
Nursing
Home and
Home
Health
30¢
30¢
14¢
13¢
9¢
Hospital Care
Physician Services
Prescription
Drugs
Admin
Other
Medical
Services
1¢
Durable Medical
Products
Source: Adapted from Centers for Medicare and Medicaid Services,
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5/12/2015
ACA-Health Care Reform-Turns 5
• March 23, 2010—President Obama signed the Affordable Care
Act (ACA), which is intended to provide affordable coverage
options through Medicaid and Health Insurance Marketplaces.
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5/12/2015
Promoting Health Coverage through
Universal Coverage
the ACA
Medicaid Coverage For
Low-Income
Individuals
Individual
Mandate
Marketplaces With Subsidies
for Moderate Income
Individuals
Health Insurance
Market Reforms
Employer-Sponsored Coverage
ACA coverage of the uninsured:
Estimates so far
• Commonwealth Fund: Uninsured rate among adults 19-64 declined
from 20% in Q3 2013 to 15% in Q2 2014 (9.5 million people).
• Gallup: Uninsured rate among all adults declined from 17.1% in Q4
2013 to 13.4% in Q2 2014.
• Urban Institute: Uninsured rate among adults 18-64 declined from
17.9% in Q3 2013 to 13.9% in Q2 2014 (8.0 million people).
• RAND: Uninsured rate among adults 18-64 declined from 20.5% in
September 2013 to 15.8% in March 2014 (9.3 million people).
• Kaiser Family Foundation: 57% of exchange enrollees were
previously uninsured.
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5/12/2015
Cost Is Primary Reason For Remaining Uninsured
AMONG THE UNINSURED AGES 18-64: As you may know, the health care law requires nearly all Americans to have health
insurance this year or else pay a fine. Which of the following comes closest to why you personally have not gotten health
insurance this year?
36%
You tried to get coverage but it was too expensive
14%
You don’t think the requirement applies to you
You didn’t know about the requirement to have health insurance
13%
You tried to get coverage but were unable
12%
You would rather pay the fine than pay for health insurance
7%
NOTE: Some other reason (vol.) and Don’t know/Refused responses not shown.
SOURCE: Kaiser Family Foundation Health Tracking Poll (conducted April 15-21, 2014)
Exchange Populations
DEMOGRAPHICS
 What will individual exchange members look like?

Median Age: 33, Median Income: 238% FPL
Race
Health Status
Marital Status
Language
The majority are
white
The majority are
in relatively good
health
Most are not married
1 in 5 speaks a
language other
than English at
home
Married
Non-English
White
Excellent/Very
Good/ Good
Educational
Attainment
Employment
Status
Three-fourths
do not hold a
college degree
More than half
are employed
full-time
No College
Degree
Employed FullTime
Break Down on 2014 Subsidies
• Kaiser Family Foundation released numbers 55% of
individuals that got subsidies in 2014 will owe on
average $800-Appoximate 4.6 million.
• 45% or 3.8 million will get refund on average $800.
• Of the 55% that owe --10% or 850,000 will owe
between $2,306 to $3,837
• 1% or 85,000 will owe the entire subsidy back for
2014.
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5/12/2015
Half of U.S. Health Spending is Government
• Health care comprises ~100% of spending growth
Medicare is Principal Driver of High Costs
Source: Congressional Budget Office
ACA Has Increased Govt. Spending
Federal Health Care Spending, 2011-2022 ($Billions)
$300
$250
$200
$150
$100
$50
$0
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
New Obamacare spending
8
5/12/2015
The Myth of ‘Free-Market’ U.S. Health Care
Source: OECD, WHO
2012 Public Health Expenditure per Capita
(US$ purchasing power parity-adjusted)
Norway
Netherlands
UNITED STATES
Denmark
Luxembourg
Austria
Germany
Sweden
Belgium
France
Canada
Japan
Iceland
United Kingdom
Australia (2011)
Finland
Ireland
New Zealand (2011)
Italy
Spain (2011)
SWITZERLAND
Portugal
Greece
South Korea
SINGAPORE (2011)
• In 2012, U.S.
government
(federal, state,
local) spent more
per person on
health care than all
but 2 other
countries in the
world
$5,222
$4,375
$4,160
$4,029
$3,846
$3,716
$3,691
$3,336
$3,323
$3,317
$3,224
$2,997
$2,847
$2,762
$2,733
$2,669
$2,628
$2,623
$2,481
$2,190
$1,879
$1,718
$1,617
$1,248
• Post-ACA, U.S will
likely become #1
$851
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
Who Gets Subsidized Health Care? You
The vast majority of Americans receive federally
subsidized health insurance
– Medicare (everyone over 65, certain disabled people)
• $600 billion a year
– People with insurance through their employers
• $500 billion a year
– Medicaid (pre-ACA, certain poor people)
• $450 billion a year
– ACA (everyone below 400% of the federal poverty level)
• $200 billion a year (when fully implemented)
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5/12/2015
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5/12/2015
Cumulative Increases in Health Insurance Premiums, Workers’
Contributions to Premiums, Inflation, and Workers’ Earnings,
1999-2014
250%
Health Insurance Premiums
Workers' Contribution to Premiums
Workers' Earnings
Overall Inflation
200%
212%
191%
150%
131%
127%
100%
54%
72%
50%
38%
43%
17%
0%
1999
2000
2001
2002
2003
13%
2004
28%
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
SOURCE: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2014. Bureau of Labor Statistics, Consumer Price
Index, U.S. City Average of Annual Inflation (April to April), 1999-2014; Bureau of Labor Statistics, Seasonally Adjusted Data
from the Current Employment Statistics Survey, 1999-2014 (April to April).
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5/12/2015
Average Annual Premiums for Single and Family Coverage,
1999-2014
$2,196
1999
$5,791
$2,471*
2000
$8,003*
$3,383*
2003
Family Coverage
$7,061*
$3,083*
2002
Single Coverage
$6,438*
$2,689*
2001
$9,068*
$3,695*
2004
$9,950*
$4,024*
2005
$10,880*
$4,242*
2006
$11,480*
$4,479*
2007
2008
$4,704*
2009
$4,824
$12,106*
$12,680*
$13,375*
$5,049*
2010
$13,770*
$5,429*
2011
$15,073*
$5,615*
2012
2013
$5,884*
2014
$6,025
$0
$2,000
$4,000
$6,000
$15,745*
$16,351*
$16,834*
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000
* Estimate is statistically different from estimate for the previous year shown (p<.05).
SOURCE: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2014.
Percentage of All Firms Offering Health Benefits, 1999-2014
100%
90%
80%
70%
66%
68%
68%
66%
66%
69%*
63%
60%
50%
55%
57%
58%
58%
55%
60%
61%
59%
63%
60%*
59%
61%
57%
55%
59%*
52%
47%
40%
50%
49%
45%
48%*
47%
50%
45%
44%
30%
All Firms
20%
Firms with 3-9 Workers
10%
0%
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
*Estimate is statistically different from estimate for the previous year shown (p<.05).
NOTE: Estimates presented in this exhibit are based on the sample of both firms that completed the entire survey and those
that answered just one question about whether they offer health benefits. The percentage of firms offering health benefits is
largely driven by small firms. The large increase in 2010 was primarily driven by a 12 percentage point increase in offering
among firms with 3 to 9 workers. In 2011, 48% of firms with 3 to 9 employees offer health benefits, a level more consistent
with levels from recent years other than 2010. The overall 2011 offer rate is consistent with the long term trend, indicating
that the high 2010 offer rate may be an aberration.
SOURCE: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2014.
Percentage of Firms Offering Health Benefits to At Least
Some of their Workers, by Firm Size, 2014
100%
94%
90%
90%
80%
70%
60%
52%
50%
40%
30%
20%
10%
0%
3 to 49 Workers
50 to 99 Workers
100 or More Workers
NOTE: Estimates presented in this exhibit are based on the sample of both firms that completed the entire survey and
those that answered just one question about whether they offer health benefits. Sixty-two percent of workers at firms
offering health benefits with 50 or more workers are covered by the health benefits offered by their firm. Firm size
categories are determined by the number of workers at a firm, which may include full-time and part-time employees.
SOURCE: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2014.
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5/12/2015
Percentage of Covered Workers Enrolled in Either a HDHP/HRA or
HSA-Qualified HDHP, 2006-2014
25%
19%
20%
20%
20%
2013
2014
17%*
15%
13%*
10%
5%
8%*
8%
2008
2009
5%
4%
0%
2006
2007
2010
2011
2012
* Estimate is statistically different from estimate for the previous year shown (p<.05).
SOURCE: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2006-2014.
Percentage of Covered Workers Enrolled in Plans Grandfathered
Under the Affordable Care Act (ACA), by Firm Size, 2011-2014
70%
All Small Firms (3-199 Workers)
63%
All Large Firms (200 or More Workers)
60%
53%
50%
56%
ALL FIRMS
54%*
46%
48%*
49%
40%
36%*
35%*
30%*
30%
26%*
22%*
20%
10%
0%
2011
2012
2013
2014
* Estimate is statistically different from estimate for the previous year shown (p<.05).
NOTE: For definitions of Grandfathered health plans, see the introduction to Section 13.
SOURCE: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2011-2014.
13
5/12/2015
New Market Landscape in 2015
• Everyone must enroll in one of these
plans or programs
Individual or Small Group
Plans
Offered
Outside
Exchange
Offered in
Exchange
Large Group
Plans
Grandfathered Plans*
(Individual, Small or Large Group)
Grand-mothering
Government
Programs
• Medicare
• Medicaid
• CHIP
• Tricare
• Veterans
* Existed 3/23/10, with minor changes allowed under ACA. Added employees and dependents OK.
40
Individual Enrollment
Iowa
2014
2013
4% Increase
189,264
181, 159
8,105
Nebraska
2014
110,243
2013
124,753
-12% Decrease (14,510)
Just 36,000 Have Enrolled On
HealthCare.gov
• The AP (4/2) reports 36,000 people have enrolled
through HealthCare.gov during the special
enrollment period “offered to uninsured people who
didn’t realize they were legally required to have
health insurance starting in 2014, and are getting hit
with a tax penalty for not signing up.”
• According to the AP, that’s “not a lot, considering
that an estimated 4 million people are potentially
eligible.”
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5/12/2015
Individual responsibility

Beginning in 2014, individuals can choose to:
 carry health insurance, or
 pay a fee to offset the cost of treating the uninsured
 Qualifying coverage: Medicare, Medicaid, Veterans’ coverage , Tricare, employer
coverage, private insurance

The fee is the greater of:
 $95 per adult, $47.50 per child in the household or 1% of your income
that exceeds the tax filing threshold in 2014
 $325 per adult, $162.50 per Child or 2 percent of income in 2015
 $695 per adult, $347.50 per Child or 2.5% of income in 2016 and
thereafter
 Maximum per household is the income percentage or 3 times the flat fee
Silver and Bronze Premium Changes from 2014 to 2015
Percent change in second-lowest silver and lowest-cost bronze plans, by county in 48 states and the District of Columbia
Silver
Bronze
Alaska (all counties)
Max
2%
4%
Min
28%
Western Minnesota counties
Average across
3,126 counties
Summit County, Colorado
-45%
-40%
-50%
43%
-40%
Summit County, Colorado
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
Source: Kaiser Family Foundation analysis of premium data from Healthcare.gov and insurer rate filings to state regulators. F or
more information see “Analysis of 2015 Premium Changes in the Affordable Care Act’s Health Insurance Marketplaces” Sep 2014
15
5/12/2015
ACA Co-Op’s
• Aggregated underwriting losses at the Co-Ops $244
million through September 30th compared to $72
first quarter of 2014.
• Tennessee’s Community Health Alliance freezes
enrollment for 2015 as preventative measure
• Arizona’s Meritus Mutual Partners has loans at
1,000% of the value of its capital
• Co-op pricing on average10% -40% below
competitors
• Maine only Co-op operating in BLACK
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5/12/2015
2016 Proposed Rates-Wellmark BC/BS
Iowa
Individual
South Dakota
Group-Small
Individual
Group-Small
Grandfathered Plans
Announced in June
Announced in June
Announced in June
Announced in June
Pre-ACA Non
Grandfathered
(Grandmothered)
Plans
Announced in June
Announced in June
Announced in June
Announced in June
ACA-PPO
26.5%
10.7%
42.9%
18.8%
ACA-HMO
28.7%
5.9%
N/A
N/A
Reason for 2016 Increases
• 1.7 Million Members 110,000 Individual with
30,000 being ACA
• 18% Greater than expected members with
claims larger than $50,000
• 33% Greater than expected RX claims
• ACA block 5 times higher Insulin cost than
Non-ACA Block
• $1.00 of premium $1.28 in claim cost
Rate Issues 2016
• 135 Individual Contracts- Carried coverage 3
months-Cancelled Coverage due death or nonpayment
• $401,000 of collect premium
• $4.7 million of paid claims
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5/12/2015
2016 Rates
• And for 2016, Assurant Health’s Time Insurance Co. is
planning a 52 percent rate increase in Oregon on ACA plans,
Milwaukee Business Journal
• Assurant plans to “substantially complete its exit from the
health insurance market in 2016
• Assurant Health unit showed a loss of $63.7 million last year,
compared with a profit of $5.8 million in 2013.
• Fortis acquired Time Insurance Company, the company at the
heart of Assurant Health, in 1977. Time itself was founded in
1946, and it was one of the companies that helped create the
modern U.S. group health insurance industry.
Essential Benefits Defined in 2014
Section 1302(b) defines essential health benefits to include:
•
•
•
•
•
•
•
•
•
•
Ambulatory patient services
Emergency services
Hospitalization
Maternity and newborn care
Mental health and Substance use disorder services
Prescription drugs
Rehabilitative and habilitative services and devices
Laboratory Services
Preventive and wellness services and chronic disease management
Pediatric services, including oral and vision care
Rating Factors
Geography
Age
Tobacco
Use
54
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5/12/2015
2014 – Product Framing
Plus catastrophic plan offering for individuals
younger than 30/financial hardship
The benefit requirements listed above for exchange plans
will also apply to Individual and small group fully insured
plans sold outside of the exchanges
Average Copayments for Primary Care Physician Visits
$40
$37
$35
$30
$28
$25
$22
$19
$20
$15
$10
$5
$0
Bronze
Silver
Gold
Platinum
SOURCE: Kaiser Family Foundation analysis of Marketplace plans in the 37 states with Federally Facilitated or Partnership exc hanges in 2015
(including New Mexico, Oregon, and Nevada). Data are from Healthcare.gov Health plan information for individuals and families available here:
https://www.healthcare.gov/health-plan-information/
Average Out-Of-Pocket Limit In Plans with Combined Limit for
Medical and Prescription Drug Cost Sharing
$7,000
$6,359
$5,826
$6,000
$5,000
$4,529
$4,000
$3,000
$1,975
$2,000
$1,000
$0
Bronze
Silver
Gold
Platinum
SOURCE: Kaiser Family Foundation analysis of Marketplace plans in the 37 states with Federally Facilitated or Partnership exc hanges in 2015
(including New Mexico, Oregon, and Nevada). Data are from Healthcare.gov Health plan information for individuals and families available here:
https://www.healthcare.gov/health-plan-information/
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5/12/2015
HHS Tells Insurers To Cover All
Forms Of Female Contraception
• The New York Times (5/12) reports that the Administration
yesterday “put health insurance companies on notice that
they must cover all forms of female contraception, including
the patch and intrauterine devices, without imposing copayments or other charges.
• Moreover, HHS “said that insurers must cover genetic testing
and counseling for certain women who have a family history
of breast or ovarian cancer.” Said Secretary Burwell, “Tens of
millions of women are eligible to receive coverage of
recommended preventive services without having to pay a
copay or deductible. ... Today we are clarifying these coverage
requirements.”
• Three ACA requirements were delayed:
Section 4980H of
IRS Code
Section 6056 of
IRS Code
Section 6055 of
IRS Code
Employer shared
responsibility provisions
Information reporting
requirements which are
linked to employer
mandate
Information reporting
requirements which apply
to self-insuring employers,
insurers, and certain other
providers of “minimum
essential coverage”
• The delay is over, for most employers compliance begins 1/1/15
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5/12/2015
Calculating Penalties /
FAILURE TO OFFER COVERAGE
 For employers who offer coverage to less than 95 percent of
full-time employees. In 2015 transitional relief allows offering
to 70% of full-time, the penalty will be calculated according to
the following formula if at least one full-time employee receives
a premium tax credit for getting coverage on an exchange:
Number of fulltime employees
the employer
employed for
the year
Up to 30
2015 up
to 80
$2,000
PENALTY
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5/12/2015
Calculating Penalties /
UNAFFORDABLE COVERAGE OR FAILS TO MEET MINIMUM VALUE
 For employers who offer coverage to at least 95 percent of full-time
employees but must pay a penalty on the basis of the coverage being
unaffordable or not providing minimum value, 2015 at least 70% of
full-time. The penalty will be calculated separately for each month
according to the following formula if at least one full-time employee
receives a premium tax credit for getting coverage on an exchange:
Number of
full-time
employees
who received
a premium
tax credit for
that month
1/12 of
$3,000
PENALTY
 The penalty for any calendar month is capped at the penalty the
employer would have paid had it not offered coverage
Plan Affordability /
 Employers generally will not know employees’ 9.56% of
household incomes. Therefore, the final regulations provide for
three affordability safe harbors that are based on information
available to employers:
Form W-2 wages
safe harbor
Rate of pay
safe harbor
Federal poverty line
safe harbor
Coverage meets the affordability
standard if the employee’s share
of the premium does not exceed
9.56 percent of the amount
reported in Box 1 of Form W-2
Coverage meets the affordability
standard if the employee’s share
of the premium does not exceed
9.56 percent of the employee’s
monthly salary or 130 times the
lowest hourly rate paid the
employee during the month
Coverage meets the affordability
standard if the employee’s share
of the premium does not exceed
9.56 percent of the federal
poverty line for a single
individual
ACA-Tax Issues
• 2014 forms are optional but required in 2015 which
will be reported 2016
*1094-1095-C Larger Employer with 50 or more
Self-funded Coverage
*1094-1095-B Fully Insured Carriers or
Self-Funded under 50
*1094- 1095-A Marketplace will send to insureds
Those getting Premium Tax Credits must
file form 8962 with Tax Return
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5/12/2015
Employer Mandate
Reporting: Minimum Essential Coverage
ACA contains a number of reporting requirements including the new
reporting requirements of IRC sections 6056 and 6055.
Provides two sets of rules:
1.
6055 Report – Collect information for the "individual mandate."
Applies to insurance carriers, self-insured plan, etc. that provide
minimum essential coverage to individuals.
2.
6056 Report- Collects information on compliance with the
"Employer Mandate." Applies to applicable large employers.
67
Employer Mandate
6055 Reporting: Minimum Essential Coverage
• IRC Section 6055 requires any entity, including group health plans
(whether insured or self-funded), that provides minimum essential
coverage to report annually
• Under final regulations, reporting is required beginning in early 2016
to report coverage provided in 2015. Due February 29th or if filing
electronically March 31st .
• An applicable large employer will report on Forms 1094-C
(transmittal) and 1095-C
• An applicable large employer will need to provide a statement
regarding the filing to each covered employee
– Form 1095-C may be used to satisfy this requirement
– Statement must be provided by January 31st of each year
68
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5/12/2015
Penalties for Noncompliance
• Employer becomes subject to penalties for failure
to file an information return and failure to furnish
payee statements
• Employer shall pay a penalty of $100 for each
statement with respect to which such a failure
occurs, but the total amount imposed on such
employer for all such failures during any calendar
year shall not exceed $1,500,000
Form 1094-C Overview
Transmittal of Employer-Provided Health Insurance Offer and
Coverage Information Returns
• •Purpose: Enforcement of the Employer Mandate
• •Who Files: Members of Applicable Large Employers (ALEs)
with at least one full-time employee
• •How Many: 1 to the IRS per ALE member
• •How: Paper or Electronically Note: Entities filing at least
250 returns under Sections 6055 or 6056 are required to file
electronically
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5/12/2015
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5/12/2015
Questions
26