The Patient Protection and Affordable Care Act,
Obamacare

The Patient Protection and Affordable Care Act,

Learning Objectives

• Describe key aims of the Patient Protection and Affordable Care Act of 2010 (ACA) with respect to access, cost, and quality. 
• Identify three specific provisions of the ACA designed to expand access to health insurance coverage.
• Describe the general eligibility criteria for obtaining health insurance coverage through the exchanges and Medicaid expansion with attention to between state difference
• Define cost sharing. Describe its intended purpose, relation to moral hazard, and potential unintended consequences for patients.
• Differentiate between co-pay, co-insurance and deductible.
• Explain the four parts of Medicare with respect to covered services.
• Compare and contrast Medicare and Medicaid with regard to population served, program management, including how the ACA changes the programs
• Examine the relationship between access to insurance coverage and total medical spending.

Article Readings:

1.  Mary Agnes Carey and Julie Appleby.  Kaiser Health News. (2013).  FAQ: What You Need To Know About The New Online Marketplaces. Kaiser Health News.  Sep 16, 2013

Introduction

This module has two sections, each of which focuses primarily on how we pay for medical care.

• The first section provides an introduction to the Patient Protection and Affordable Care Act of 2010 (ACA), which went into effect in January 2014. At that time the "individual mandate" went into effect (with some caveats), coverage from the state exchanges began, Medicaid coverage began in the states choosing Medicaid expansion, and other consumer protections went into effect (guaranteed issue for adults, caps on out of pocket costs). These changes will have significant impact on access, cost, and equity however there will be inequities between states, especially for low income groups. This initial section will look at the major provisions, and more of the details will emerge in subsequent modules.
• The second part looks at how we fund and reimburse for medical care with emphasis on insurance coverage. This section will briefly examine the four major sources of health insurance coverage in the United States today: 
1. employer-sponsored insurance (ESI),
2. Medicare, 
3. Medicaid,  and
4. individual plans.  

For individual plans we will focus on the newly created Exchanges.

Health Care Reform-History and Original Bill

The Patient Protection and Affordable Care Act (ACA)

On March 23, 2010, President Obama signed comprehensive health reform, the Patient Protection and Affordable Care Act, into law. Before we dive into this fascinating, complicated and often overwhelming piece of legislation, let's start with a broad view.

Please watch this video to give you another, rather clever overview of Health Care Reform that will bring you up to speed in an even more user-friendly manner:

The ACA is the most important piece of federal health policy since the creation of Medicare in 1965. Implementation of the ACA is dynamic as each year new provisions are scheduled to be put into place, and existing provisions struck down, changed, and postponed. Disagreement continues about the right of the US Federal Government to impose these regulations across the nation. Medicare has always been a national program. Aside from Medicare and some Medicaid regulations most of health policy has been left to the states. The federal government funds part of Medicare and sets basic requirements, but Medicaid is managed by the states. The states regulate private insurance (with exceptions). The states regulate and fund most public-health activities, including those we consider the police powers of the state. Examples are immunization requirements, motorcycle helmet laws, Medicaid benefits, Departments of Public Health, and scope of practice for healthcare providers.

What does the US Constitution say about health and health care? Answer the "Quiz Me" below to find out.

The emphasis of the ACA is on expanding access, not saving money. There is no an expectation that the ACA will reduce national health expenditures. The hope is to save enough money with the reforms to expand access to care. ACA in a nutshell is as follows:

You may want to download the full Summary of the Affordable Care Act from the Kaiser Family Foundation as a general reference. 

ACA Provisions

The Individual Mandate

The minimum essential coverage provision of the ACA, known as the individual mandate, requires most people to maintain a minimum level of health insurance coverage for themselves and their tax dependents in each month beginning in 2014. The individual mandate can be satisfied by obtaining coverage through employer-sponsored insurance, Medicare, Medicaid, an Exchange plan, or an individual plan. Persons exempt from the individual mandate include undocumented immigrants, religious objectors, and low income persons with no affordable coverage option (coverage for the very poor depends on the state).  

How does the individual mandate work?

The Employer Mandate

The employer mandate requires that firms with at least 50 full time equivalents offer health insurance, or pay a fine. This was to go into effect January 2014,but has been postponed until January 2015.

Essential Benefits
As of January 2014 all private insurance plans (including Exchange plans) must cover a specific set of comprehensive benefits. There are also limits or caps on cost sharing.

In 2014 the cost-sharing caps (out-of-pocket max after paying premiums) were $6,350 for an individual plan and $12,700 for a family plan). Plan specifications are set by the state. Required services include mental health, substance abuse care, ambulatory care, maternity care, preventive care, prescriptions, and laboratory studies.

The State Marketplaces (Exchanges)

Each state has an Exchange (may be run by state or federal government) on which individuals can shop for what we refer to as a non-group insurance plan for themselves and/or their family. The Exchange web site filters plans according to how the consumer answers some basic questions about plan and network preferences. Premiums are community rated- which basically means that women, persons with medical conditions or other risk factors may not be charged more than healthy persons. Only age, zip code and family size are used to calculate premiums. In some states tobacco use is also a factor.

Just like at a web site for purchasing electronics, the consumer is able to do side-by-side comparisons of the plans on the important elements, including premium, co-pays, co-insurance, deductibles, drug coverage, and out of network care. Plans are tiered as bronze, silver, gold and platinum. There are catastrophic plans available for persons under 30 years of age.  As you approach platinum level, the plans pay for a greater proportion of medical care costs for a higher premium.

For persons between 100 and 133% of the Federal Poverty Level (FPL) there may be federal assistance in the form of premium support, cost sharing subsidies and tax credits to offset some of the cost. These are based on annual income and premium price. The cost of plans is not uniform across the country (or even within a state) and so the amoquess unt of support needed also varies.

How poor is poor?

See if you can guess the correct answer to these three questions about poverty levels and eligibility.

The Medicaid Expansion

The original intent of the ACA was to expand Medicaid coverage across the nation to persons with FPL < 133% (you may sometimes see 138% used, consider them to be the same number). The federal government would pay 100% of Medicaid costs for this newly enrolled group; over time, the states would be expected to cover an increasing percentage. As it stands now, the federal government pays at least 50% of Medicaid costs.   This Federal Matching Assistance Percentage (FMAP) is based on state per capita income. States were told that they must expand Medicaid as above or could risk losing their federal funding for the current Medicaid program.   On June 28, 2012, the US Supreme Court issued its opinion in National Federation of Independent Business v. Sebelius. Mandating that the states expand Medicaid was found to be beyond the scope of federal powers. The court declared it was coercive to take away the entire state Medicaid program for failure to comply with expansion.

Medicaid expansion is now optional for the states. As of June 2014, 27 states (including Washington DC) were expanding, 3 states were considering expansion, and 21 states had chosen not to expand at this time. Updated information on state Medicaid expansion decisions are available at KFF.

* If the annual premium is considered affordable in that area (based on zip code) the enrollee may not qualify for assistance.

If you would like more detail on the Supreme Court's decision on the constitutionality of the individual mandate and Medicaid expansion, see the resources below.

• A guide to the Supreme Court's Affordable Care Act Decision (2012)
• The full opinion of the Supreme Court's Affordable Care Act Decision (2012)

Provisions of the Affordable Care Act, By Year

View the Key Features of the Affordable Care Act By Year and note the major categories covered by the ACA. Note that the ACA addresses some of the key themes of this course, i.e., quality, access, cost, equity, and population health.

Review Quiz

The health reform law promises to deliver big changes in the U.S. health care system. But, as with other sweeping pieces of legislation, it can be hard to get the real facts about what it does. And it is all too easy for misinformation about the law to spread. Please press the Next button and test your knowledge of the health care reform law

Take this short quiz to see how much you remember.