WHAT WILL HEALTH REFORM MEAN FOR CALIFORNIA

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WHAT WILL HEALTH REFORM MEAN FOR CALIFORNIAS
CHILDREN AND YOUTH WITH SPECIAL HEALTH CARE
NEEDS?
Edwin Park Co-Director of Health Policy Center on
Budget and Policy Priorities park_at_cbpp.org July
7, 2010
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Health Reform Would Significantly Expand Coverage

• Will cover 32 million of the uninsured by 2019,
  according to the Congressional Budget Office.
• Results in 92 of population having health
  insurance (94 of legal residents).
• Greatest health coverage gains since enactment of
  Medicare and Medicaid 45 years ago.
• Urban Institute estimates that roughly 3.75
  million of Californias uninsured would become
  newly eligible for Medicaid or the exchange
  subsidies. Another 1.5 million of the uninsured
  are already eligible for public programs.
• UC Berkeley Labor Center has similar estimates
  (4.35 million of the uninsured would become newly
  eligible).

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Key Coverage Provisions Affecting Children and
Youth with Special Health Care Needs

• Maintenance of effort requirements and immediate
  market reforms.
• Medicaid expansion.
• Extension of CHIP.
• Insurance market reforms.
• Establishment of new health insurance exchanges
  for individuals and small employers, with
  subsidies for premiums and cost-sharing available
  to low- and moderate-income people.
• Tax credits to small employers to offer coverage.

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Immediate Medicaid/CHIP Maintenance of Effort
Requirement

• States cannot reduce Medicaid or CHIP eligibility
  levels or make enrollment procedures more
  restrictive for children through September 30,
  2019.
• Looks at eligibility and procedures in effect as
  of date of enactment of health reform (March 23,
  2010).
• Exception for states whose CHIP programs run out
  of federal CHIP funding.
• Similar Medicaid MOE for adults, but only through
  December 31, 2013.

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Dependent Coverage through Age 26

• All insurers offering plan through employers or
  in the individual market must offer dependent
  coverage through age 26. Applies to self-insured
  plans too.
• Only applies to plans that offer dependent
  coverage. Does not require plans to cover
  families.
• If employer plan is grandfathered than adult
  child must have no access to employer-sponsored
  coverage of their own.
• If added to plan, insurers can only charge the
  same increase they would have charged for any
  other dependent child.
• Takes effect start of first plan year after
  September 23, 2010.
• Expected to cover 1.24 million young adults with
  only modest effect on premiums.

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No Denial to Children for Pre-Existing Conditions

• Insurers can no longer deny offer of coverage to
  children (through age 19) with pre-existing
  conditions and can no longer deny coverage of
  pre-existing conditions.
• Takes effect start of first plan year after
  September 23, 2010.
• Applies to all plans except grandfathered
  individual market plans.
• Plans may charge higher premiums. Pending
  California legislation implementing this
  provision would limit how much premiums could be
  charged for adding children with pre-existing
  conditions.

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Pre-Existing Condition Insurance Plans (PCIPs)

• 5 billion to states to finance coverage of those
  who are medically uninsurable (denied coverage by
  insurers because of their health status or
  pre-existing conditions).
• Must be uninsured for at least 6 months and
  denied coverage because of pre-existing
  condition.
• California has elected to operate its own pool.
• Will be run by MRMIB. Start accepting
  applications in August and begin providing
  coverage in September.

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No Lifetime or Restrictive Annual Limits

• First plan year starting after September 23,
  2010, all plans can no longer impose lifetime
  dollar limits on benefits.
• Cannot place restrictive annual dollar limits on
  benefits (defined as 750,000 rising each year to
  2 million to plan years after September 23,
  2012).
• Plans can ask for waiver if causes reduction in
  benefits or increases in premiums (like
  mini-medical plans.
• No annual dollar limits starting in 2014.
• Applies to all plans except grandfathered
  individual market plans.

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Other Immediate Reforms Affecting Children and
Youth

• Preventive services without cost-sharing in all
  plans, including Bright Futures well-child visits
  and screenings.
• Prohibition on rescissions except for fraud or
  intentional misrepresentations.
• Children of state employees now eligible for CHIP.

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Medicaid Expansion in 2014

• Requires states to expand their Medicaid programs
  on January 1, 2014 to all non-elderly adults and
  children up to 133 of the federal poverty level
  (29,400 for a family of four). No assets test.
• Includes childless adults (such as youth), who
  generally could not be covered under Medicaid
  beyond age 20 under prior law.
• Includes people with disabilities.
• States have the option to cover these populations
  at regular Medicaid match starting on April 1,
  2010.
• Means some older children 6-18 now on Healthy
  Families will be switched to Medi-Cal and gain
  EPSDT benefits.

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Federal Support for Medicaid Expansion

• Federal government will pick up the overwhelming
  bulk (96) of expansion costs over next 10 years.
• The federal matching rate for newly eligibles
  will be
• 2014-2016 100
• 2017 95
• 2018 94
• 2019 93
• 2020 and beyond 90
• Regular match for current eligibles who newly
  enroll. Likely CHIP match for children switched
  from CHIP to Medicaid.

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Medicaid Benefits for the Newly Eligible

• States are required to provide benchmark
  benefits to some of the newly eligible
  population, rather than the regular Medicaid
  package.
• Affects primarily non-disabled adults. Children,
  however, will continue to receive full package
  including EPSDT.
• Benchmark benefits can be as good as regular
  Medicaid package, or be less comprehensive and
  more akin to typical private insurance plans. Up
  to the state.
• Critical that state offer full benefits package
  particularly for vulnerable populations like
  youth with special health care needs.

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New Medicaid Options for Home and Community-Based
Care

• Expands existing option to provide HCBS services
  without a waiver. Expands scope of services and
  states no longer permitted to cap enrollment or
  limit geographic scope. Can also be targeted to
  specific groups. Takes effect April 1, 2010.
• New Community First Choice Option to allow
  statewide HCBS services to individuals up to 150
  of poverty meeting needs criteria. Federal
  government will pay higher Medicaid matching rate
  (6). No caps. Starts October 1, 2011.
• Money to rebalance so at least 50 of LTC dollars
  spent on HCBS but CA already meets threshold.
• Extension of Money Follows the Person
  Demonstration Projects through 2016. 450
  million per year. Only have to been in
  institutional care for 90 days or more.

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2014 Medicaid Requirement to Cover Youth Formerly
in Foster Care

• States must provide Medicaid coverage to youth
  who were previously in foster care.
• Through age 26.
• Must have been in foster care on the date of
  attaining 18 years of age or higher emancipation
  age elected by state and were enrolled in
  Medicaid while in foster care.
• Takes effect January 1, 2014.

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Medicaid Eligibility Determination and Enrollment

• Change in how income is counted to align with
  federal income tax rules, which will be used to
  determine eligibility for the exchange subsidies.
• Some income currently counted under Medicaid are
  not counted under income tax rules, making some
  people newly eligible.
• Takes existing disregards into account by
  providing for 5 percentage point add-on.
  Effectively means Medicaid eligibility level will
  be 138 of poverty.
• Extends presumptive eligibility option for
  children and pregnant women to newly eligible
  populations (and existing parents).
• Must have coordinated procedures with exchange.

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Primary Care Physician Rate Increases

• Requires states to increase Medicaid primary care
  physician rates to 100 of Medicare rates in 2013
  and 2014.
• Federal government will pick up 100 of the
  increase in costs.
• States, however, can reduce rates after 2014.

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Extension of CHIP through 2015

• CHIPRA (enacted in 2009) extended CHIP through
  the end of fiscal year 2013.
• Health reform extends CHIP through 2015 by
  providing 40 billion over 2 years.
• 19.147 billion in 2014
• 21.061 billion in 2015
• Should be more than enough funding to allow
  states like California to maintain and expand
  their programs. As noted, MOE.
• CHIP required to use new income counting rules as
  well.
• Requires Secretary to study comparability of CHIP
  to exchange plans by 2015.

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Adjusted Community Rating in 2014

• Starting in 2014, insurers cannot deny coverage
  to anyone based on a pre-existing health
  condition.
• Insurers can no longer vary premiums based on
  health status or pre-existing medical conditions.
• Age can still be 31 and tobacco use at 15 to 1.
• Other factors like gender and industry are no
  longer permitted.

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Essential Benefits Package

• Applies to individual and small group market
  plans.
• Defined by Secretary of Health and Human Services
  but must include at least certain services
• Ambulatory patient services, emergency services,
  hospital care, maternity and newborn care, mental
  health and substance abuse services, prescription
  drugs, rehabilitative and habilitative services
  and devices, lab, preventive and wellness
  services, and pediatric services.
• Comparable to scope of services provided in
  typical employer based plan.
• Pediatric benefits must include vision and
  dental.
• Requires plans to have maximum out-of-pocket
  limits on in-network care. Equal to levels under
  Health Savings Accounts (currently 5,950 for
  individuals and 11,900 for families).

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Exchange Tax Credits for Individuals and Families

• States must set up health insurance exchanges for
  individuals and small businesses (but can expand
  to larger firms) by January 1, 2014.
• New federal tax credits for people to purchase
  exchange plans.
• Generally for those between 133 of the poverty
  line and 400 of poverty but legal immigrants
  with lower incomes subject to 5-year
  Medicaid/CHIP bar would be eligible.

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Subsidy Scale
of Poverty of Family Income Annual Premium Amount for Family of Four (2010)
100 2 441
133 3 886
150 4 1,323
200 6.3 2,778
250 8.05 4,437
300 9.5 6,284
400 9.5 8,379
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Subsidies for Cost-Sharing

• Subsidy eligible are given subsidies to purchase
  at least a plan with an actuarial value of 70.
• Actuarial value is a measure used to compare the
  relative value of benefits. The greater the
  benefits (and the lower the cost-sharing), the
  higher the AV.
• Those with incomes below 250 of poverty get
  higher actuarial values.
• Below 150 of poverty 94
• 150-200 of poverty 87
• 200-250 of poverty 73
• Lower maximum OOP caps as well.

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Small Employer Tax Credits

• Tax credits for small employers that offer health
  coverage.
• Employers must contribute at least 50 of the
  cost.
• Full credit available to firms with 10 or fewer
  workers and average wages of 25,000 or less.
• Credit phases out by size (up to 25) and by wages
  (up to 50,000.
• Credit is 35 for 2010-2013. 50 for 2014 and
  beyond (but only for 2 years and only for
  exchange).
• Credit is 25 and 35 respectively for
  nonprofits.

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