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Impact of health care law
San Diego Union Tribune

How the Affordable Care Act will affect Medicaid, Medicare, hospitals, doctors, insurers and businesses:

MEDICAID (Medi-Cal)

In 2014, the Affordable Care Act expands Medicaid to cover most people under 65 with incomes 133 percent below the federal poverty level. That means individuals earning less than $14,856 a year or $30,636 for a family of four.

Currently, Medicaid provides health benefits to 60 million Americans, mostly women and their children, people with disabilities, and some seniors. The expansion would cover 17 million new people across the country, and about 2 million Californians by 2019, mostly adults. In San Diego County, about 190,000 more people would get coverage.

The federal government will pay 100 percent of the cost of the expansion for the first three years (2014-16) and 90 percent after that. Beneficiaries of the expansion include people who will get Medicaid for the first time, of course, but also community clinics and hospitals that have been treating those people in the past for free or at a reduced rate.

At La Maestra Community Health Centers in San Diego, at least 55 percent of patients have no insurance, CEO Zara Marselian said.

“Although there will still be a percentage of our patients who will not be insured, (the ruling) is still a step in the right direction because some will qualify for programs like Medicaid or the exchange,” Marselian said. “From a health center’s (viewpoint), this is confirmation that we are moving forward in health care reform and that health care belongs in the community where the population resides.”

MEDICARE

About 48.7 million people nationwide were Medicare beneficiaries in 2011, including 4.8 million in California and 400,000 in San Diego County.

The Affordable Care Act includes more than 160 provisions that affect Medicare by cutting costs, increasing revenue, improving some benefits, combating fraud, and researching new programs. Some popular provisions already enacted include closing the Medicare Part D prescription drug “donut hole,” or coverage gap where seniors pay full price for medications, and free preventive care, such as annual wellness checks, and cancer and diabetes screenings.

The law requires Medicare Advantage plans to stop charging higher rates than original Medicare for services such as chemotherapy and skilled nursing care. The cost for Medicare Part B outpatient care already had been adjusted so that higher income seniors — individuals with annual incomes of at least $85,000 and couples with incomes of $170,000 or more — pay higher premiums. By 2019 the number of seniors paying higher rates will have tripled, saving Medicare about $25 billion.

“I think the majority of people on Medicare should be elated by the court’s decision,” said David Weil, manager of the San Diego office of Health Insurance Counseling & Advocacy Program, a statewide nonprofit Medicare advocacy and information organization. “Since the court didn’t try to roll back any improvements, people on Medicare can stop worrying about having to pay back any reduced costs (already received through the law). The expansion of preventive services is an especially positive change for Medicare recipients.”

INSURERS/CONSUMERS

Since 2010, the Affordable Care Act has required insurance companies to add several consumer benefits. Some have also been made California law. They include allowing parents to keep children on family policies until age 26, banning lifetime limits to coverage, preventing insurers from denying children coverage due to a pre-existing condition, banning insurers from dropping people from policies for application errors, and requiring insurers to spend 80 to 85 percent of premiums on health care costs or rebate the difference to policyholders.

For insurance companies, the most significant piece of the law requires that starting in 2014 they must provide coverage to adults with pre-existing medical conditions at no additional cost. This requirement goes hand-in-hand with the individual insurance mandate, which increases the number of healthy people with insurance to help subsidize the higher medical costs of people with pre-existing conditions.

A temporary, federally funded program was launched in 2010, the Pre-Existing Condition Insurance Plan, for people who have been denied coverage because of their medical condition. More than 50,000 people nationwide, including 9,000 Californians, are enrolled in the temporary program.

Patrick Johnston, president of the California Association of Health Plans, said insurers will continue to get ready for full implementation of the law.

“Much remains to be done to get more Californians covered, especially the launching of the California Health Benefit Insurance Exchange,” Johnston said. “Now that the link between the individual mandate and insurance market reforms has been upheld, we all need to address underlying cost drivers that are increasing the cost of care.”

HOSPITALS

The Affordable Care Act affects hospitals in a number of ways to improve quality and cut costs. The law establishes new reporting requirements for nonprofit hospitals and more oversight programs. Medicaid and Medicare will no longer pay costs related to hospital-acquired infections. Medicare is testing programs using per-patient or per-procedure payments to hospitals instead of payments for each service given. A voluntary Accountable Care Organization program encourages groups of hospitals, doctors and other providers to coordinate care for Medicare patients with the incentive of getting a share in any Medicare cost savings. Hospitals will get less federal funding for serving a disproportionate share of Medicare or charity care patients in 2014 when more people have insurance coverage.

“We anticipated the nature of the law taking effect, so things will not be uniquely different,” said Michael Cover, CEO of Palomar Health. “Now that we have clarity of the law, it allows us to move forward with our quality initiatives, infrastructure development and experiments with bundled payments. Potentially, it means we will cover more individuals in the community because those who would otherwise not have been able to get health care, now can. It’s a good thing for hospitals.”

PHYSICIANS

In an effort to address the growing shortage of doctors nationwide, the Affordable Care Act offers education grants and loans to encourage medical school students to go into primary care and a loan forgiveness program for new doctors who agree to work a certain number of years in rural and underserved areas.

Physicians receive incentive payments for participating in quality improvement and reporting programs, which turn into penalties for nonparticipation in future years.

Until 2016, primary care doctors with a large proportion of Medicare patients get a 10 percent payment bonus, as do surgeons in service shortage areas. The law also increases the pay to primary care doctors who take Medicaid (Medi-Cal) patients in 2013 and 2014 — an average increase of about 34 percent. No provisions have been made for extending that increase, however.

Physician groups have generally supported the Affordable Care Act but say the law does not address Medicare and Medicaid payments that they consider too low and a disincentive for doctors to care for those patients.

“We supported elements of this law to begin with and opposed elements of the law,” said Dr. Ted Mazer, communications director for the San Diego County Medical Society. “We’ve waited two years for this decision. Now we can move forward with what works and fix what’s broken.”

BUSINESSES

Companies with fewer than 25 full-time workers may be eligible for a tax credit if they provide health insurance to employees. Starting in 2014, companies with more than 50 employees are mandated to provide affordable insurance to workers or pay a penalty. Companies with more than 50 workers that don’t offer insurance or who offer unaffordable or inadequate insurance to employees may face a tax penalty of $2,000 to $3,000 per employee, minus the first 30 employees.

In San Diego, almost 95 percent of businesses have fewer than 50 employees and would be unaffected. But about 4,250 businesses in the county have at least 50 workers and would need to provide insurance or pay a penalty.

“The initial reaction from many businesses is that they’ll decide to pay the $2,000 penalty versus paying about $300 per employee for insurance every month,” said Bill Hammett of Hammet Health Insurance Services, a past president of the San Diego Association of Health Underwriters. “But I don’t think that’s what they’ll ultimately do that because they care about their employees and they have to stay competitive with other employers.”

He expects the government to raise the penalty if too many businesses opt to use it.

“I think the government will try to drive the behavior they want and raise the penalty from $2,000 to $3,000 and then to $4,000 if they need to,” he said.

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