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The Affordable Care Act and Texas Implementation

Texas Statewide Independent Living Conference

April 5, 2011

Stacey Pogue, Senior Policy Analyst, pogue@cppp.org Center for Public Policy Priorities

900 Lydia Street - Austin, Texas 78702 (512) 320-0222 – www.cppp.org

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Health Reform: The Big Picture

• Establishes a system for making comprehensive care available to all lawfully present Americans at an affordable price

• Competition in health insurance marketplace cannot be based on avoiding risk

• Lays a foundation for controlling costs and improving quality of care

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Timeline

2014 2013 2012 2011 2010

• 2010: Early insurance market reforms begin.

• 2010-2014: Start building new systems needed to support covering large numbers of uninsured.

• 2014: Big expansion of coverage starts.

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Health Reform Building Blocks

• No lifetime limits• Parent’s coverage for young adults to age 26• No pre-existing condition denials for kids• More accountability for premiums• New federal high risk pool: www.pciplan.com • Small employer tax credits• Medicare improvements

First Year Reforms

2010 - 2011

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Health Reform Building Blocks

• Can’t deny coverage• No pre-existing condition exclusions• Can’t charge more if you get sick• Limits on premium increases based on age• Minimum essential benefits and more

standardized plans• Small business tax credits increase

Private Market

2014

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Health Reform Building Blocks

• Eligibility up to 133% of the federal poverty level ($29,300/yr for family of four)

• Adds ≈ 1.3 million adults in Texas– Need improved eligibility system

• Full federal funding 2014-2016

• Maximum state share of 10%– Significant new state costs

Medicaid Expansion

2014

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Health Reform Building Blocks

• Exchange = state-based, organized insurance market

• Clear, comparable information on cost, coverage, value

• Open to:– Individuals without job-based insurance– Small employer groups – Members of Congress

• Premium assistance for <400% FPL ($88,000 for a family of four)

• Sliding-scale deductibles/copays and out-of-pocket caps

Exchange & Affordability

2014

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Coverage Level Options in the Exchange

4 standard levels, plus a catastrophic plan (for people under age 30 or if no other coverage is affordable)

Options vary by % of covered benefits paid by the plan on average vs % covered through out-of-pocket enrollee cost sharing

40%

30%

20%

90%

80%

70%

60%

10%

0% 20% 40% 60% 80% 100%

% covered by plan% enrollee cost share

All coverage has essential benefits, to be defined by HHS: hospital, ER, mental health, maternity, Rx, preventive care, chronic disease management and more.

Platinum

Bronze

Gold

Silver

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>$88,400 for a family of four;>400% of FPL

Job-based coverage, or Full-cost coverage in the exchange

$66,200-$88,400; 300-400% of FPL

Job-based coverage, or Subsidized exchange coverage: premiums capped

at 9.5% of income

$44,100-$66,200;200-300% of FPL

Job-based coverage, or Subsidized exchange coverage: premiums capped

at 6.3 – 9.5% of income

$29,300-$44,100;133-200% of FPL CHIP

• Job-based coverage, or• Subsidized exchange coverage:

premiums capped at 3% - 6.3% of income

<$29,300 for a family of four; < 133% FPL

Medicaid Medicaid

Children Adults (non-disabled adults,

not eligible for Medicare)

Fam

ily

Inco

me

Health Reform Coverage Options by Income

Family income based on 2009 federal poverty income levels for a family of four

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Texas Uninsured by Income Today… 88% of 6.4 million uninsured <400% FPL

<100% FPL<$22,100/yr for family of four

100-200% FPL$22,100-$44,200

200-300% FPL$44,00-$66,200

300-400% FPL$66,200-$88,200

>400% FPL>$88,200/yr

758K

628K

2.1 Million

1.8 Million

1.2 Million

Annual income limits given for a family of four, 2009-10 federal poverty level U.S. Census, CPS

6.4 million includes 1.6 million non-citizens;

~2/3 of ( just over 1 million) likely undocumented

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Health Reform Building Blocks

• Requirement to have coverage if you have an affordable option

• Several exemptions

• Needed for affordable coverage after market reforms

• Penalty is 1/6 of the cost of coverage

Individual Mandate

2014

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Health Reform Building Blocks

• Larger employers face penalties if full-time workers get subsidized exchange coverage– Penalty is ≈1/4 of the cost of coverage

• Small employers have no new obligations; won’t face penalties– May qualify for tax credits (2010)– Can purchase at a fair price in exchange – Or employees can directly get affordable

exchange coverage

Employer Responsibility

2014

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Under Reform - 2019

Employer

159 million

56%

Medicaid/CHIP

51 million

18%

Nongroup &

Other

26 million 9%

Private Exchanges

24 million

9%

Uninsured

23 million

8%

Employer

162 million

57%

Medicaid/CHIP35 million

12%

Uninsured

54 million

19%

Nongroup & Other

30 million 11%

Without reform - 2019

Source: The Congressional Budget Office Cost Estimate of H.R. 4872, Reconciliation Act of 2010, Mar. 20, 2010

282 Million U.S. Residents Under Age 65

Americans’ Coverage in 2019:If nothing changed compared to health reform law

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Which Texans would Gain Coverage If Reform were Fully Implemented Today?

Exchange with help

Exchange at full cost

Medicaid adults: newly eligible

Medicaid/CHIP kids: eligible NOW but not enrolled

Remain uninsured

≈ 2 Texans gain private coverage for each 1 gaining through Medicaid

Of the 6.4 Million Uninsured Texans today…

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Who Will Still be Uninsured?U.S. Citizens

• Not subject to mandate; will not owe penalty

– those with very low income

– those who would pay more than 8% of income for most affordable exchange coverage

• Subject to mandate; will owe penalty

– Some may choose not to buy coverage

– Others may still find coverage unaffordable

Undocumented:

• not covered by the mandate

• no Medicaid/CHIP (not before, not now),

• no premium help, and cannot buy at full cost from exchange

Legal Permanent Residents:

• Adults are excluded from Texas Medicaid under state law, but

• Can purchase from exchange and qualify for help with premiums

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Best Steps for Texas to take in 2011 to Implement Health Reform

• Start building a strong Texas insurance exchange to help families and small businesses get affordable insurance in 2014.

• Make sure the Texas Department of Insurance can enforce popular insurance reforms—like no pre-existing denials for kids, keeping kids on your policy until age 26, and making sure rate hikes are fair.

• Give state agencies and the exchange the authority and tools to build consumer-friendly systems for enrolling in health coverage.

• Fed law requires “No Wrong Door” and online application between exchange and Medicaid. Need integration between two enrollment systems from the start

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