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Overview of the Affordable Care Act

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Gregory Wellman

on 18 September 2017

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Transcript of Overview of the Affordable Care Act

Expand health insurance coverage among the uninsured
Shift health care in the U.S. to a more patient-centered, multi-disciplinary model (patient-centered medical home)
Impose free-market rules on health plans
Expand quality controls on health care delivery
Reduce overall cost/capita of health care in the U.S.
Reform private health insurance
Reinforce evidence-based medicine

The Affordable Care Act
Patient Protection and Affordable Care Act (P.L. 111-148) signed into law 3/23/2010
amended by:
Health Care and Education Reconciliation Act signed into law 3/31/2010

The Individual Mandate
Requires U.S. citizens and legal residents to have qualified coverage
Those that do not pay a tax penalty based on flat tax or % of income up to the cost of the "Bronze Plan" adjusted for inflation

The Employer Requirement
> 200 employees
must automatically enroll all employees in a plan (individual employees can "opt - out"
50 - 200 employees

Offer coverage to all full-time employees (30+ hrs/week)
Employer pays a tax of $2,000 for each full-time employee (first 30 exempt) who does not have a qualified health plan. If employee plan does not meet minimum coverage (at least) or is unaffordable (making them eligible for subsidy) and at least one employee is granted the subsidy, the employer will pay an annual tax of the lesser of $3,000 per subsidized employee or $750 per employee across the board.
e.g. $2,000/employee. Business of 60 FT employees would pay (60-30) x $2,000 = $60,000
< 50 employees
ACA Medicaid Changes (Originally)
low-income, non-eldery (covered by Medicare) adults (citizens or legal immigrants will be covered under Medicaid at the state level
Standardizes 133% of FPL as the cut point for ALL individuals
States are to receive 100% federal funding for all additional Medicaid costs incurred as a result of this these added beneficiaries through 2016 with decrease to 90% by 2020
If a state does not participate in the "Medicaid expansion", they forfeit these additional dollars
AND could forfeit federal funding for existing Medicaid programs
This was challenged by a large number of states
2014 (enrollment began 10/1/13)
Bronze, Silver, Gold & Platinum
Premium and cost sharing credits
Premium subsidy tax credits are refundable to individual or advanceable to the insurer
Cost sharing happens at point of service
Survived Supreme Court challenge
Qualified Plan
Ambulatory services
Emergency visits
Maternity and newborn
Mental health, substance abuse
Prescription drugs
Laboratory tests
Preventive health and chronic disease mgmt
Pediatric services
Originally schedule for 2014; delayed to 2015/2016
Small Business Incentive
Applies to business < 25 employees and therefore exempt
Applies to employees < $50,000/year
For employers covering 50%+ of employees
Employer utilizes the Small Business Health Options Program (SHOP) exchange
Business receives credit on health plan costs of up to 35%
Medicaid Coverage (Pre-ACA)
Children through the Children's Health Insurance Program (CHIP) using 133% FPL family for children <6; and 100% FPL for children 6 - 18 years.
Adult caregivers of children (133% FPL family)
Pregnant women (133% FPL)
Elderly poor (combined with Medicare for "duels")
Long-term care
(Technically a voluntary program by states although all participate)
Gaps in Medicaid
Childless, poor adults (not in mandatory groups) above the state defined income level
Individual states set the poverty level
For example: Arkansas uses 17% of the FPL as the cut point for Medicaid coverage ($3,900 for a family of 4)
States receive federal funding for some of this
Appealed to the U.S. Supreme Court
SCOTUS: Ruling on the Affordable Care Act
National Federation of Independent Businesses v. Sebelius & Florida v. Department of Health and Human Services
The Court agreed to deliberate on two components of the ACA including whether each was severable or if the entire law would have to be declared invalid in wake:
The individual mandate
(already discussed)
Deemed constitutional
based on the congressional power to tax (5-4)
Did not have to rule on severability although dissenters said it was not therefore had it been the ACA would be entirely invalid
The Medicaid expansion
Deemed unconstitution
ally coercive to the states because ALL Medicaid funding was being revoked, not just the new funding (7-2)
This action was severable as a single unenforceable section thereby keeping the rest of the the ACA intact
(W. Bush)
(W. Bush)
(H. Bush)
Chief Justice
Individual Mandate is a tax and is constitutional
No votes would also rule ACA invalid in it entirety
Medicaid rule is UNconstitutionally coercive
Medicaid section is severable and can be remedied with the rest of ACA remaining intact
Medicare (Health plan for 65+)
Part A: Hospitalization
Part B: Physician visits, home health care, preventive services
Part C: Medicare Advantage
Part D: Prescription drugs
Medicare Changes
A number of payment cuts and payment restructuring
Oversight board responsible for recommending changes to reduce per capita costs (These were called "death panels") - this was removed
In-Home demonstration program intended to promote independence, treat high-use beneficiaries and reduce hospitalization/long-term care
Better coordinate care to "duels"
Improve coverage (Part D) in the "donut hole" with a phase out of the "coverage gap" by 2020
Accountable Care Organizations
Accountable Care Organizations (ACO)
Grouping of primary care physicians, specialists, hospitals and other health professionals
legally joined (doesn't have to be a health system)
and covering a minimum of 5,000 beneficiaries
Have a defined process for establishing
evidence-based medical practice
, coordinate care &
report on the quality of patient-centered care
Payment for physician services, hospital care, rehab, follow-up
Quality measures reported each quarter with
additional $$ to top 25% who achieve target
Base payment
where there are
excessive readmissions
(MI, heart failure, pneumonia, COPD, cardiac and vascular surgery
payment based on top 25% of
hospital-acquired conditions
(e.g. infection)
Prohibits Medicaid payment for hospital acquired conditions (may be adopted by Medicare)
ACO Impacts on Pharmacists
Pharmacists as part of the health care professional team
Increased emphasis on insuring medications to patients at discharge (many of the programs have gone away due to pharmacy costs
Follow-up with patient post discharge on medication compliance/adherence
Improved communication with providers (e.g. does this warrant retail pharmacies communicating refills to physician offices)
Private Insurance Changes
Dependent coverage for children to 26 years old
No lifetime insurance cap limits/no annual limits (this starts 1/1/14)
No pre-existing condition exclusions
Insurance companies may use individual v. family, age, geography, tobacco use
Limits on the annual deductibles for beneficiaries
Waiting period for beginning of coverage limited to 90 days
Prohibits plans from rescinding coverage except for fraud
Depending on size of firms covered, they are required to spend 80-85%, respectively of revenues on health services (Medical Loss Ratio - MLR)
Required preventive care and screening coverage for women without cost sharing or co-payment (including contraception with religious org exception)

New Agencies
Patient-Centered Outcomes Research Institute (PCORI)
To assist patients, clinicians and policy makers in making informed health decisions by advancing clinical effectiveness research
Paid for by a $1/covered life fee on health and major medical insurance, COBRA or accident coverage, Health Reimbursement Arrangements (HRA), Flexible Spending Arrangements (FSA) and state and local government health plans
Center for Medicare and Medicaid Innovation (CMMI)
Under the Center for Medicare and Medicaid Services (CMS) which traditionally needs congress' approval for innovations that must be budget neutral
CMMI can enact innovations that are not budget neutral without congressional approval
State-Based Health Insurance Exchanges
Creation of state-based web portals used as an access point for those that need health insurance
Original draft of ACA made this a requirement for ALL states
This was changed to an opt-in/opt-out option for each state before approval
Can be accessed by:
Individuals (U.S. citizens and legal immigrants)
Businesses up to 100 employees
Small Business Health Option Program (SHOP) Exchange
Businesses with >100 employees can't use SHOP until 2017
Must include at least 2 multi-state plans
Creates the Consumer Operated and Oriented Plan (CO-OP) program to foster development of non-profit, member-run health plans with $4.8 billion in seed money
Hospitals 501 (c) (3) Tax Exempt
Must limit charges in Emergency Departments and medically necessary care to indigents
Assess individual's financial assistance eligibility before turning charges over to collections
Conduct community needs assessment and implement strategies within 3 years or pay excise tax
How is this paid for?
Additional fees to the pharmaceutical industry and to the health insurance industry
Increase in the Medicare tax
Tax on medical devices
How is this paid for?
New investment income tax (...increase taxes on the wealthy) targeting married individuals with income greater than $250,000/year or singles with income greater than $200,000/year
How is this paid for?
Qualified employers who have not provided health insurance to their employees (the have to pay a fee)
Individuals who are required to carry health insurance but do not (through annual tax penalty)
How is this paid for?
Excise tax on tanning salons!!!!
Does not apply to "spray-ons", topical creams or photo-therapy
The tanning salon tax replaced a 5% tax that was going to be placed on cosmetic surgery. The "Botax" disappeared two days after the AMA came on-board for the ACA.
References not embedded previously:
McLaughlin DB Responding to Healthcare Reform: A Strategy Guide for Healthcare Leaders. Chicago, IL. Health Administration Press. ISBN: 978-1-56793-416-8
Kaiser Family Foundation. Focus on Health Care Reform. A guide to the Supreme Court's Affordable Care Act decision. July, 2012. Available at: http://kaiserfamilyfoundation.files.wordpress.com/2013/01/8332.pdf
Kaiser Family Foundation. Focus on Health Care Reform. Summary of New Health Reform Law. April, 2011. Available at: http://kaiserfamilyfoundation.files.wordpress.com/2011/04/8061-021.pdf
Internal Revenue Service. Patient-Centered Outcomes Research Institute Fee. Available at: http://www.irs.gov/uac/Newsroom/Patient-Centered-Outcomes-Research-Institute-Fee
Internal Revenue Service. Affordable Care Act Tax Provisions. Available at: http://www.irs.gov/uac/Affordable-Care-Act-Tax-Provisions
Internal Revenue Service. Small Business Health Care Tax Credit for Small Employers. Available at: http://www.irs.gov/uac/Small-Business-Health-Care-Tax-Credit-for-Small-Employers
Internal Revenue Service. Indoor Tanning Services Tax Center. Available at: http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Indoor-Tanning-Services-Tax-Center
LexisNexis Legal Newsroom. Indoor Tanning Taxes. October, 2012. Available at: http://www.lexisnexis.com/legalnewsroom/tax-law/b/internationaltaxation/archive/2012/10/10/indoor-tanning-taxes.aspx
Rosenbaum S, Westmoreland M. The Supreme Court's surprising decision on the Medicaid expansion: How will the federal government and states proceed. Health Affairs. 2012;31(8):1663-72
Shaw FE, Asomugha CN, Conway PH, et al. The patient protection and affordable care act: Opportunities for prevention and public health. Lancet. 2014;384:75-82.
Sanders AE. A Gap in the Affordable Care Act: Will Tax Credits be Available for Insurance Purchased Through Federal Exchanges. 64 Vanderbilt Law Review 1259 (2013).
Cannon MF. A Reference Guide to the Halbig Cases: Can the IRS Issue ACA Subsidies Through Federal Exchanges
Bronze: 60/40 with plan covering 60% of health expenditures
Silver: 70/30 with plan covering 70% of health expenditures
Gold: 80/20 with plan covering 80% of health expenditures
Platinum: 90/10 with plan covering 90% of health expenditures
NOTE: Cap limits exist for each plan based on % FPL earnings. Current limits of ~$6,000 individual and $12,000 family
Balancing the Insurance Risk Pool
Individual Premium Subsidies
Tax subsidies are available for individuals between 100% and 400% of the FPL
For 2013, this would be approximately $23,500 to $94,000 for a family of four
Issues as a refundable tax credit on federal income tax; or can be "advanced" directly to the insurance company
Expected that approximately 80-85% of new enrollees in 2014 would be eligible for this credit
Other Initiatives Under the ACA
National Strategy for Quality Improvement in Health Care: Creation of national quality tracking measures for quality
Medicare Hospital Value-Based Purchasing Program, which redistributes $1 Billion based on hospital quality metrics
National Prevention, Health Promotion and Public Health Council to implement the National Prevention Strategy
Also promotes a number of prevention strategies under:
Advisory Committee on Immunization Practices
Bright Futures
US Preventive Services Task Force
SCOTUS: Hobby Lobby Case
Filed suit under the Religious Freedom Restoration Act of 1993 (RFRA), which prohibits the government from from "substantially burdening a person's exercise of religion..." specifically targeting 4 of the 20 FDA approved contraception methods (Plan B-One Step, Ella, Copper IUD and IUD with progestin), which may prevent implantation of a fertilized egg.
It was argued by the government that Hobby Lobby was a corporation and therefore not covered under RFRA. A corporation does not exercise religious practices, people do.
SCOTUS ruled that a corporation = person. As such, they must comply with RFRA.
This clears the way for SCOTUS to then consider the question of whether the ACA substantially burdens a "corporations" exercise of religion?
ACA taxes a company $100/affected person/day for not providing a qualified plan. For Hobby Lobby, this amounts to $1.3 million/day or $475 million/year.
If Hobby Lobby were to drop coverage and send employees to the exchange, then if ONE employee requires subsidy, then they must pay $2,000/employee/year. This amounts to $26 million/year. It was never argued that this is cheaper than providing health insurance.
Hobby Lobby Continued
Argument: The company provides the insurance, not the contraception therefore, it remains for the covered employee to obtain one of the four methods of contraception....
Is it wrong for a person (Hobby Lobby) to perform an act that is innocent in itself (providing health insurance) but that has the effect of enabling or facilitating the commission of an act considered immoral by another? SCOTUS stated that "...the federal courts have no business addressing (whether the religious belief asserted... is reasonable.)" Restated: "...it is not for us [SCOTUS] to say that their religious beliefs are mistaken or unsubstantial. Instead, our 'narrow function... in this context is to determine' whether the line drawn reflects 'an honest conviction'." Which they did.
Hobby Lobby Continued
Since it poses "substantial burden", Part 2 must be considered: Does the law provide
a "1) furtherance of a compelling governmental interest; and 2) is the least restrictive means of furthering that compelling governmental interest."
On "furtherance of a compelling government interest", SCOTUS has ALREADY ruled that there is a constitutional right to birth control (
381 US 479); and in this case they agree that providing cost free access to the four challenged methods of contraception is compelling.
SCOTUS give thumbs UP to #1.
On the question of whether this is the least restrictive measure, the court states that if the government feels strongly that these four measures are a high priority, they should underwrite it. ACA will cost $1.3 Trillion over the next 10 years, this would be a small amount. In addition, they have already granted a safe harbor (exempt for the contraception requirement) for religious organizations in the ACA.
SCOTUS gives thumbs DOWN to #2.
Hobby Lobby (...and just in case)
Ruling applies to "closely held companies" implying the family holding nature of Hobby Lobby, however expansion will be hard to hold off.
SCOTUS wanted to make it clear that this ruling is specific to the contraceptive mandate challenged and should not be construed as meaning that religious objection could necessarily be claimed to:
Turn down coverage for vaccinations
Create discriminatory hiring practices
To not pay your income tax because an individual has religious objection to war
The balance of the ACA remains intact.
Religious organizations are not required under the Act to provide contraception as part of THEIR plan, however the insurance company in these cases is required to provide an add-on contraception plan at no cost. This has been subjected to many suits now working their way through the courts.
Burwell v Hobby Lobby
Supreme Court Challenge
Recall that tax credit (subsidies) are available to individuals who purchase qualified plans on "state" exchanges. Read literally, it does not apply to individuals in a state that utilizes the federal exchange.
States could not be forced to bring up exchanges because it is unconstitutional to compel or coerce a state to enact and enforce a federal regulatory program.
The IRS chose to extend the subsidies to all.
A number of suits were filed subsequently. In the case of Halbig v. Burwell, the D.C. Circuit ruled the IRS is imposing taxes never authorized by Congress (7/22/14). On the same day, in a separate but similar suit (King v. Burwell), the Fourth Circuit court ruled the other way, that the interpretation of the IRS is appropriate.
Appealed to the US Supreme Court.
The Result
Eviction or foreclosure
Received utility shut-off
Domestic violence
Death of close family member
Fire, flood or natural disaster
Un-payable medical expenses
Care of ill, disabled or aged family member
Dependent child denied CHIP
Under a current appeal for a qualified plan
M-Caid ineligible because state isn't in expansion
Canceled plan and new plan unaffordable
"Another hardship" (new)
Exemptions (to individual mandate)
Election 2012
(W. Bush)
(W. Bush)
(H. Bush)
Chief Justice
States using federal exchange still receive subsidies
In essence, the majority was based on the opinion that the intention of Congress was to enact a law that would provide:
Guaranteed issue (you can't be denied)
Adjusted community ratings: Prevention against insurers varying premiums in a region based on age, gender, health status, etc. (stabilizes employer costs)
The two above can only operate with coverage requirements and tax credits
As a result, the intention of Congress must have been to extend credits to all states irregardless of the exchange
The Court also predicted a "death spiral" if the provision did not hold
The majority interpreted the context of the writings into the intent of the law and upheld it.

The dissent strenuously felt the letter of the law should be upheld.
The Prevention and Public Health Fund
In 2000, 14% of the workforce was 55+ years of age.
This is expected to be 20% by 2020.
This will increase the impact of chronic diseases such depression, anxiety, diabetes on productivity. (Estimated that ~30% of employees experienced some form of depression or are in treatment.)
PPHF provisions: 1) Waiving co-payments on preventive services (immunizations, cholesterol screening, flu shots; 2) Funding for community preventive services; 3) Funding to create workplace wellness programs (create an incentive of up to 30% of the cost of the employee plan).
Results of The PPHF
These provision have increase vertical integration and mergers between hospitals, physician groups and payers (ACO's)
There has also been an increase in the number of employer provided employee wellness programs with many partnered organizations
Dollarized degree of benefit from these programs is still to be determined
Vu M, White A, Kelley VP, et.al. Hospital and health plan partnerships: The Affordable Care Act's impact on promoting health and wellness.
Am Health Drug Benefits
. 2016;9(5):269-78.
Choice and the ACA Marketplace
Going into the implementation and use of the marketplace confidence among consumers was low with 2/3's of those who needed to select a plan feeling low confidence in at least one concept about health insurance
In a separate study of subjects selecting from a number of different choices of health insurance provided in a menu by their employer, 40-70% of employees selected a plan that was financially inferior to a number of equally effective plans
This is likely due to difficulties that consumers have in translating premiums and co-pays in to estimated costs based on their individual health care consumption (evidenced by studies that show more appropriate selection where estimated health spending is provided)
1) Blumberg, L. G., Long, S. K., Kenney, G. M., & Goin, D. (2013). Public understanding of basic health insurance concepts on the eve of health reform. Retrieved from http://hrms.urban. org/briefs/hrms_literacy.html
2) Bhargava, S., Loewenstein, G., & Sydnor, J. (2015). Do individuals make sensible health insurance decisions? Evidence from a menu with dominated options (NBER Working Paper #21160). Retrieved from https://www.cmu.edu/dietrich/sds/docs/bhargava/w21160.pdf
3) Barnes AJ, Hanoch Y, Rice T., et.al. Moving beyond blind men and elephants: Providing total estimated annual costs improves health insurance decision making. Med Care Res and Rev. 2016:DOI:10.1177/10775587166669210.
Current State of ACA - Percent of Providers on a Given Exchange
Contraction appears to be occurring on exchanges with 38% projected to have 1-2 providers available.
Overall Health Care-Related Trends (Comparison of Insured, Uninsured and Medicaid: 2013 to 2014)
LESSER health status decline for uninsured and Medicaid
GREATER decline in health status for insured
GREATER likelihood of obesity and chronic condition (HTN, DM) for insured (likely due to new diagnosis) with decrease in chronic condition for Medicaid
Medicaid patients appeared healthier across expansion and non-expansion states particularly among new enrollees
No significant changes in utilization across all three categories except increase in generalist visits by insured, decrease in "care greater than 10 time" for Medicaid and decrease in ER visits for uninsured
Improved appearance of health in the uninsured as compared to the insured may be indicative of adverse selection -OR- could indicate the impact of ACA clause preventing denial for pre-existing coverage (OR BOTH)
Jacobs PD, Duchovny N, Lipton BJ. Changes in health status and care use after ACA expansions among the insured and uninsured. Health Affairs. 2016;35(7):1184-88.
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