Brian Colby Policy Director

Who Am I?

Policy Director

LobbyistAnalystCommunicator/Reporter

Former Small Business Owner

What do we call it?

• Patient Protection and Affordable Care Act• PPACA• ACA• Obamacare• Health Reform• Whatever you call it, it is what it is.

What is the Status of the Law

• On March 23, 2010, President Obama signed into law the Patient Protection and Affordable Care Act.

• In a June 28, 2012 decision, the U.S. Supreme Court upheld much of the ACA, but struck down a requirement that states expand their Medicaid program or face financial penalties. The Medicaid expansion will now be optional for the states.

• Medicaid is a joint federal and state program that provides health coverage for certain low-income individuals and families.

November Elections

• Changes in leadership in the Senate and at the White House could see the repeal of the law or major changes.

• For now, it is what it is until it changes.

Decisions for the MO Legislature

• 1. Should Missouri establish a “state based” health insurance exchange or allow the federal government create one for Missourians to use?

• 2. Should Missouri expand its Medicaid program?

What About Abortion in a possible Medicaid Expansion?

• The Medicaid expansion is governed by the same abortion restrictions as provided in the regular Medicaid program. For many years Medicaid has been subject to the Hyde Amendment, which prohibits the use of Medicaid monies for abortions or abortion coverage, except when necessary to save the life of the mother or in cases of rape and incest. The Hyde Amendment, however, is an annual rider to the Medicaid appropriation. – MO Catholic Conference Medicaid Fact Sheet 2012

Mandated Benefits, SB 749 and Religious Liberty

• SB 749 passed, was vetoed and the veto was overridden

• A lawsuit has been filed to challenge the regulations.

• No more action in front of the state on this issue for now.

What was Congress Thinking?

Self Reinforcing Negative Feedback Loop

Cost Rising Faster than Income• Health Care Cost have been going up 4 times our National

Income - GDP

• Since 1980 it has doubled every 10 years.

• The government pays a large share of over all health care spending.

• Rising costs of health care is taking up a larger and larger share of the budget

Really Smart People

• Jonathan Gruber, PhD at MIT– adverse selection and the self reinforcing negative

feedback loop

• Len Nichols, PhD at George Washington U-”If we can control the rising cost of health care, we can’t pay back the Chinese.”

Why are Cost Rising?

Good question:-if you ask a health care economist he or she will likely tell you that we do not have a Global Budget.

“If you don’t have a global budget, you might as well be squeezing a balloon. If you try and squeeze cost

at one end it just pops out the other.” - Uwe Reinhardt, PhD, Professor at Princeton

Health Insurance Coverage ofthe Nonelderly Population, 2010

266.0 Million

SOURCE: KCMU/Urban Institute analysis of 2011 ASEC Supplement to the CPS.

Private Non-group

5.5%

Nonelderly Uninsured by Poverty Levels and Age, 2010

Total = 49.1 million uninsuredNote: Federal Poverty Level (FPL) for a family of four in 2010 is $22,050/year. Children includes all individuals under age 19. SOURCE: KCMU/Urban Institute analysis of 2011 ASEC Supplement to the CPS.

<138% FPL139-399% FPL400%+ FPL

Children

10%

Adults44%

Children

5%

Adults 32%

Children1%

Adults8%

Access to Insurance through the Workplace by Income, 2005

Source: Urban Institute analysis of the February and March 2005 CPS Supplements, 2006, for the Kaiser Commission on Medicaid and the Uninsured.

55%

4%13%

35%

<100% 100-199% 200-399% 400% +

Percent of employees not offered insurance through own or spouse’s employer

Percent of Federal Poverty Level

The Correlation between Income and Employer Sponsored Insurance

• The higher the income the more likely you will be offered insurance at work.

• The lower the income the least likely you will be offered insurance at work.

• There is an inverse correlation between your ability to pay and your need to pay for your own insurance. In our system, if you need insurance chances are you can’t afford it and if you can afford it, chances are you don’t need it.

The Market is Broken at the Low Income Scale

• If your customer has no money, you have no market.

• The private marketplace is becoming out of reach for low income workers.

Average Annual Premiums for Single and Family Coverage, 1999-2012

* Estimate is statistically different from estimate for the previous year shown (p<.05).Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2012.

$15,745*

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

<15K 15K to20K

20K to25K

25K to30K

30K to35K

35K to40K

40K to50K

>=50K

1,000 or More Workers100-999 Workers25-99 Workers10-24 Workers1-9 Workers

Establishment Offer Rates by Size and Average Worker Earnings, 2000-2005

Notes: Wages cutoffs are adjusted for inflation to 2005 dollars.

Source: Kaiser Family Foundation calculations based on data from the National Compensation Survey, 2000-2005, conducted by the Bureau of Labor Statistics.

Off

er R

ate

Average Worker Earnings

Who Cares?

• Why does coverage matter?

Barriers to Health Care Among Nonelderly Adults, by Insurance Status, 2009

6%

4%

6%

11%

13%

9%

6%

11%

27%

26%

42%

55%

Could Not AffordPrescription

Drug*

Went WithoutNeeded Care Due

to Cost*

No PreventiveCare

No Usual Sourceof Care

Uninsured

Medicaid/ Other Public

Employer/ Other Private

* In past 12 months.Respondents who said usual source of care was the emergency room were included among those not having a usual source of care.SOURCE: KCMU analysis of 2009 NHIS data.

Percent of adults (age 18 – 64) reporting:

Diagnosis of Late-Stage CancerUninsured vs. Privately Insured

2.9

2.32.22.0

0.0

0.5

1.0

1.5

2.0

2.5

3.0

ColorectalCancer

Lung Cancer Melanoma Breast Cancer

NOTE: Odds ratios were adjusted for age, sex, race/ethnicity, facility type, region, and income and education on basis of postal code. They represent the odds of being diagnosed with stage III or state IV cancer vs. stage I cancer.Analysis based on cases occurring between 1998-2004.SOURCE: Kaiser Family Foundation, based on Halpern MT et al, Association of insurance status and ethnicity with cancer stage at diagnosis for 12 cancer sites: a retrospective analysis." The Lancet Oncology. March 2008.

Equal likelihood between

Uninsured and Insured

Ratio of probability of diagnosis of late vs. early stage cancer, Uninsured/private insurance

• EMTALA• Emergency Medical Transportation and Active Labor Act

– Passed 1986 signed into law by President Ronald Reagan– mandates that hospitals treat and stabilize patients with

emergency medical conditions regardless of their ability to pay.– Hospitals agreed to take on this role in part because of a federal

promise to pay disproportionate share hospital (DSH) payments to hospitals that saw the uninsured. These payments will phase down with the anticipation of health reform increasing coverage for more people. This will be important.

Hospitals’ Role

Emergency Room Care is the Most Expensive

• $1000 versus $100

• People without insurance utilizing this system puts burdens on hospitals that forces hospitals to raise prices for everybody.

• Health reform said we need to cover people to start to bring down cost.

How do we bring everyone into the System?

• Cover the very low income workers with publicly financed insurance via Medicaid.

• Cover the middle income folks not covered at work, including small businesses, family farmers and sole proprietors on to the exchange that provides affordable insurance.

New Requirements

• Everybody needs to find coverage somehow• Medicare – disabled and over 65• Medicaid for lowest income• Dependents – on parents until 26• Exchange – some small business, family

farmers, sole proprietors of modest income• Traditional Employer based coverage

Expanding Coverage Under the Affordable Care Act

* Medicaid also includes other public programs: CHIP, other state programs, Medicare and military-related coverage. The federal poverty level for a family of three in 2012 is $19,090. Numbers may not add to 100 due to rounding. SOURCE: KCMU/Urban Institute analysis of 2011 ASEC Supplement to the CPS.

18%

20%

6%

56%

54%

10%

37%

49.1 M Uninsured

<139% (Medicaid)

Federal Poverty Level

139-399% (Subsidies

)

400%+

Private Non-Group

Medicaid*

Employer-Sponsored Insurance

Uninsured

266 M Nonelderly

The new voluntary marketplaceThe Exchange

• Web-based shopping tool or store• Compares coverage and price• Set up by state or federal government• Voluntary individuals and business can buy

insurance inside and outside the Exchange• Individuals will be provided tax credits only

inside the exchange.

Question #1

• 1. Should Missouri establish a “state based” health insurance exchange or allow the federal government create one for Missourians to use?

Pro and Cons?

Proponents say exchanges…– Pools risks inside the individual and small group

markets making individual ins. more like group ins.– Brings down cost because of price transparency,

competition and choice

Opponents say exchanges…-are unnecessary-will drive up costs

Question #2

• 2. Should Missouri expand its Medicaid program?

What is Medicaid?

• President Lyndon Johnson signed Medicare and Medicaid into law on July 30, 1965, in Independence, Missouri in a ceremony attended by former President Harry Truman. Medicaid is a joint federal-state program offers health coverage for low-income people of specific populations– children up to age 19– parents of very low income– pregnant women– disabled individuals– Long term care for seniors age 65 of low income and few assets

How the New Medicaid Program would change MO current program.

• Moves income eligibility from 17% to 138% FPL for families with dependent children.– Family of 3 at 17% of FPL has an income of $3504– Family of 3 at 138% FPL has an income of $25,390

• For the first time will include adults without dependent children.– Individual at 138% of FPL has an income of $15,415

Coverage and Cost

• 255,000 people would gain coverage

• The feds pay 100% of newly eligible cover for the first 3 years calendar years starting 2014-2016 then fed share phases down 95% in 2017, 94% in 2018 and 90% in 2019 and beyond.

State Share of Cost• Urban Institute and the Department of Social Services did some

projections in 2010 that estimated the cost to the state in the first three years would be negligible but in 2017 the cost could be $50 million rising to $189 million in 2020 and $253 million in 2022.

• New analysis is being done so those numbers may change.

• Some folks believe a “woodwork” effect could cost the state more. No woodwork effect factored into DSS est.

• DSH payment begin to dramatically reduce in 2017, many argue that it could cause major disruption in our hospital system.

Estimates # of People Covered

• Health Insurance Exchange 305,000

• Medicaid Expansion 255,000

Thank You

• Brian Colby

• bcolby@mohealthalliance.org