Obamacare—Past, Present, and Future, Part 2 November 20, 2012 Health Care Reform, SFMS Member Andrew Calman, Medicaid expansion, Obamacare, PPACA, Patient Protection and Affordable Care Act of 2012 0 By Andy Calman, MD, PhD Note: This article was originally published in the October 2012 issue of San Francisco Medicine. Due to members' request for more information on health care reform and its impact on medicine, SFMS will be publishing a four-part series in the SFMS blog section. Click here to read Part 1 of this 4-part series on Obamacare and its impact on U.S. physicians and patients. Medicaid Expansion and Private Insurance Subsidies The heart of the Obamacare program—and its most costly provision—is an expansion of access to affordable health insurance. This expansion relies on two prongs: a massive expansion of Medicaid for low-income individuals and families, coupled with income-based subsidies for the middle class to purchase private insurance. Under Obamacare, in 2014 Medicaid eligibility will be expanded to cover all individuals and families up to 133% of FPL, including adults without dependent children. Federal funds are provided to the states to cover this expansion. However, several states (not including California) have opted out of this Medicaid expansion, fearing long-term runaway costs. Chief Justice Roberts’s decision provided that such states cannot be excessively penalized from opting out. Although they will forfeit the new federal funds for Medicaid expansion, they will not lose their existing Medicaid matching funds. Federal funds are also provided to bring Medicaid physician reimbursement levels up to 80% of Medicare allowable. However, these funds will only apply to primary care providers, and only for 2016 and 2017. How these millions of new Medicaid patients will find access to care—including specialty care—is a huge open question, especially in the large states like California that reimburse less than the cost of providing care. For working-class and middle-class families earning between 133% and 400% of FPL, Obamacare provides sliding-scale subsidies, in the form of a refundable tax credit, to purchase private insurance policies through the state exchanges. For example, a family of four at 150% of FPL earning $34,575 would pay no more than $115 per month (4 percent of income) for a Silver plan and would receive additional subsidies to reduce out-of-pocket expenses. These provisions will not completely eliminate barriers to care. However, the nonpartisan Congressional Budget Office estimates that under Obamacare, the number of uninsured Americans will be reduced to 20 million people in 2016, a 60% reduction. The majority of the uninsured after 2015 will consist of young, healthy adults and low-income individuals in states that have declined to expand Medicaid. Additionally, undocumented immigrants will not be covered under Obamacare. Substantial reductions in uncompensated emergency room and hospital care under EMTALA can be expected, as the vast majority of Americans will be insured. As a corollary, Federal DSH (Disproportionate Share Hospital) subsidies will be substantially reduced. Employer Subsidies and Penalties For 2014 and 2015, the subsidies for small employers (fewer than twenty-five employees, with average employee salaries under $50,000) will increase to a maximum of 50% of employee premiums. These subsidies phase out with increased numbers of employees and increased average salaries. For example, a small doctor’s office with four employees and an average employee salary of $40,000 would receive a tax credit of 20% of employee premiums. However, large employers (fifty or more employees) would be required to provide coverage for their employees or pay a $2,000 per-employee penalty. After 2014 Beginning in 2015, Medicare physician payment rates will be modified to reflect quality of care, not just volume. The extent to which “quality” will be based on outcomes, use of EHR, low use, patient satisfaction, checking off boxes as in PQRS, or some combination of these, is unclear. This is an area where organized medicine will play a crucial role in advocating for payment methodologies that reflect common sense and real quality (rather than meaningless busywork), rewarding neither overuse nor underuse, and maintaining fairness to physicians. Beginning in 2017, states can apply to HHS for State Innovation Waivers to provide alternative, state-based health delivery models, as long as coverage and affordability are not inferior to Obamacare. Vermont has already announced its intention to pursue a waiver for a state-based single-payer system. Legislation has been introduced to allow waivers to be issued as early as 2014. States operating under waivers would be exempt from the individual mandate and employer penalties and would receive federal funding equivalent to Obamacare. In 2018, all existing insurance plans must provide preventive care without co-pays or deductibles. In 2020, the Medicare doughnut hole is entirely phased out. Dr. Andrew Calman practices ophthalmology at CPMC-St. Luke’s and teaches at CPMC and UCSF. He is past president of the California Academy of Eye Physicians and Surgeons, chair of the SFMS’s Political Action Committee, and served for many years on California’s Medicare Carrier Advisory Committee as well as the National Health Policy Committee of the American Academy of Ophthalmology. Comments are closed.
