Impacts of ACA Jeopardy on California Health Care Framework

1 Senate Health Committee ACA in Jeopardy: What does it mean for California? Deborah Reidy Kelch, MPPA Wednesday, October 21, 2020 State Capitol, Sacramento, Room 4203 1:30 p.m.

2 Presentation Overview Summary of the ACA Framework Review of California Before the ACA California Implementation ACA Impacts

3 The Strength of the ACA The Affordable Care Act is a comprehensive framework of programs, strategies and funding to advance the following: 1) expand coverage, particularly for low- and moderate-income individuals and those without job-based coverage 2) improve affordability, accessibility, transparency and ease of use for consumers, 3) reduce inequities and prohibit discrimination (e.g., health status, disability, race, gender, sexual orientation, geography), and 4) promote prevention, wellness and quality improvement.

4 The Federal ACA Expands access to and availability of public and private coverage, including financial assistance for low- and moderate-income individuals and families Enacts consumer insurance protections in all markets (individual, small employer and large employer) Promotes comprehensive benefits, prevention and wellness Focuses on improving health care quality and system performance Promotes health workforce development Makes substantive changes to Medicare, including payment reforms and closing gap in the Medicare Part D prescription drug program

5 ACA Coverage Framework Medicaid expansion (Medi-Cal in California) with enhanced federal funds Insurance market reforms for individual, small employer and large employer coverage Establishment of state and federal insurance exchanges Financial assistance for low- and moderate-income families New individual responsibilities re coverage New employer responsibilities re coverage

6 Selected Federal ACA Standards by Plan Type Small employer Large employer ACA Provision Individual Guaranteed availability (aka guaranteed issue) No denials or exclusions for pre-existing conditions No discrimination because of health, claims experience, disability, medical history, etc. No annual or lifetime dollar coverage limits Premium Rating factors limited to benefits, age, geography, and family size (no health factors) Minimum essential health benefits No No Coverage for preventive services with no cost sharing Products marketed and sold by coverage level (bronze, silver, gold, platinum, and catastrophic) No Limits on health plan administrative costs (medical loss ratio) Annual limits on enrollee out-of-pocket limits Young adults stay on parents plan until age 26 Uniform coverage summaries

7 California Before ACA High rates of uninsured hovering around 20% for decades Medi-Cal available only to low-income children, seniors, persons with disabilities, and some low-income parents; complex program eligibility and enrollment rules Dysfunctional individual health insurance market, dubbed the Wild, wild West, with very few rules and minimal state oversight; Californians experienced discrimination, job-lock and disruptions in their health care if they changed jobs or experienced other life changes

8 Fully embraced all aspects of the ACA and addressed some gaps in the ACA; preserved and built on existing consumer protections Comprehensive, multi-year review and comparison of ACA to existing California law; more than a dozen implementing bills California Implementation Continued to revise and adjust policies and processes since 2014 implementation Responded to federal threats e.g., state individual coverage requirement and additional state-supported premiums subsidies for individuals

9 Adopted the ACA expansion of Medi-Cal for low-income adults; CA built on the ACA to extend state funded comprehensive Medi- Cal to low-income, undocumented children and seniors First ACA Exchange in the country Covered California Online marketplace and active purchaser Federal and state financial assistance: Premium tax credits based on income, age and geography and cost sharing subsidies for lower ACA in California Robust outreach / enrollment investments and supports Additional state-based consumer protections for individual and small employer coverage Comprehensive benchmark for essential health benefits Standardized benefits for apples-to-apples comparison Market rules (required product offerings inside and outside of Covered California, additional special enrollment triggers, no tobacco rating, no short-term policies, etc.) State individual coverage requirement and state subsidies

Pre-ACA Individual Market 10 Applying for Coverage Costs Benefits Subject to each health plan s rules and process Rates set by health plans with no rules or oversight Limited benefits and inadequate coverage Denials because of health status or projected health service use Discriminatory rates, higher rates for those who have or may need health care services Annual and lifetime dollar limits on coverage Confusing benefit plans difficult to compare Limited choice of health plans in many regions High premiums, low value Claim denials for specific services because of pre- existing health conditions Confusing and complicated to find and choose coverage No financial assistance Typically high or no limits on out-of-pocket costs

11 Post-ACA Individual Market Applying for Coverage Costs Benefits Covered All applicants accepted Covered California negotiates with health plans to lower rates All policies must cover comprehensive essential health benefits, including mental health and substance use No one denied coverage because of health status or past medical use Federal and state financial assistance helps consumer pay for coverage and care NO annual and lifetime dollar limits on coverage Covered California simplifies shopping for coverage and ensures choice of health plans in every region Consumer out-of-pocket costs are capped and annually adjusted Covered CA standard benefits simplify comparison Health plans cannot limit or coverage because of pre- existing health conditions Health plan rates are subject to rating rules and state review

12 How the ACA Protects People with Pre-existing Conditions COMPREHENSIVE STANDARD* BENEFITS RATING FACTORS LIMITED* NO APPLICANT CAN BE DENIED COVERAGE Health status is no longer a factor in coverage decisions, monthly premiums or benefits * Rating rules and standard benefits apply to individual and small group coverage

13 By 2017, California s uninsured rate dropped from 17% to 7.1 3.7 million adults gained no-cost Medi-Cal coverage through the ACA expansion ACA Impacts on Coverage in California 1.5 million Californians secured individual coverage thru Covered California; 88% receive financial assistance to pay premiums and out-of-pocket costs Under the ACA, more Californians can stay covered when they change jobs, have a change in circumstances or otherwise lose coverage, and get financial help if they qualify

14 The UC Berkeley Labor Center found that health insurance rates in California improved for all racial and ethnic groups, with Latinos experiencing the largest reduction in the rate of uninsured (26.2 percent to 11.6 percent from 2013 to 2017) The rate for low-income Californians (below 200% of the federal poverty level, $25,520 individual) declined from 29 percent to 11 percent by 2017 ACA Impacts on Equity The uninsured rate in the San Joaquin Valley region declined from 18.1 percent to 7.6 percent by 2017 Notably, despite these improvements, the uninsured rates in 2017 remained significantly higher for Latinos (11.6 percent), American Indians and Native Americans (11.1 percent) and Blacks (5.7 percent) than the rate for non-Latino whites (3.9 percent)

15 What s At Stake? As described, the ACA made dramatic changes in virtually all areas of public and private coverage in California. The UC Berkeley Labor Center estimates that California could annually lose $27 billion in federal funds should the federal ACA be repealed or struck down. If that occurs, California stands to lose the historic gains it made in less than a decade, improving access, affordability and quality of health care.

16 Sources California Health Care Foundation, How Many in Your Area are Covered under the ACA? September 2020 Insure the Uninsured Project, The Historical Journey of the Affordable Care Act, October 2020. UC Berkeley Labor Center, California s Health Coverage Gains under the Affordable Care Act: What s at Stake in California v. Texas? September 2020