Heath Care Reform: How Insurance Coverage is Expanded
Federal Health Reform Expansions of Insurance Coverage
Once fully implemented, the Patient Protection and Affordable Care Act
(PPACA) will provide access to insurance coverage for more than 30 million of
the nation’s 46 million uninsured. In California, it is estimated that 6.5
million, or 80 percent, of the state’s 8.2 million uninsured will gain access to
Federal reform mandates that everyone purchase health insurance or have it
through employers. The individual mandate, as it is known, and most coverage
expansions start in 2014.
More than two-thirds of the newly insured Californians would be covered
through the private insurance market, with most of the rest enrolling in
Medi-Cal. The vast majority of those who will not be covered are undocumented
immigrants, who are not eligible for any of the bill’s coverage expansions.
Expanded access to private insurance will be achieved through significant
market reforms. These include ending health plan abuses that deny patients
coverage, such as refusing to offer policies to people with pre-existing medical
conditions or taking away insurance from patients who get very sick. The reforms
also create health insurance exchanges to help individuals and small businesses
purchase affordable coverage. Medi-Cal eligibility expansions will cover an
additional 1.5 million to 2 million previously uninsured Californians by 2014.
Private Insurance Market Changes that Increase Access to Insurance Covering
Effective in June 2010, insurers must allow parents to keep kids up to 26
years old on their policies.
Beginning this summer, the federal government will fund high-risk insurance
pools to provide coverage to people who are unable to get health insurance in
the private market because they have pre-existing medical conditions. As allowed
under the health reform bill, California has decided to operate its own
high-risk pool, in conjunction with the state’s Major Risk Medical Insurance
Program (MRMIP), instead of leaving it to the federal government.
Ending Rescissions, Lifetime Limits on Coverage
Federal health reform prohibits insurers from canceling policies for patients
once they become very sick unless they can prove the patients committed fraud
when signing up for coverage. For many years, private insurers systematically
rescinded coverage for patients who needed extensive medical treatment to reduce
costs and boost profits.
The reform bill also prohibits health plans from imposing annual or lifetime
limits on an individual’s coverage.
Health Insurance Exchanges
The main route for most individuals to purchase coverage will be through
state-run health insurance exchanges. In the exchanges, plans will offer a
variety of standardized health insurance options and levels of coverage.
Individuals accessing the exchange will be able to compare plans based on price
and provider networks.
Subsidies and Tax Credits
Uninsured individuals with incomes 133 percent to 400 percent of the Federal
Poverty Level (roughly $29,000-$88,000 a year for a family of four) will receive
sliding scale tax credits to help them purchase coverage through the exchange.
The UCLA Center for Health Policy Research estimates that 2.3 million
Californians, or about 40 percent of the state’s uninsured, will use the
The Role of Employers
There is no employer mandate to provide coverage. Employers with less than 50
employees can receive a tax credit for workers who earn less than $50,000 a
year. Larger employers will face a fine if any of their employees access tax
credits to purchase coverage through the exchange.
Federal reform also calls for states to set up Small Business Health Options
Program (SHOP) Exchanges, which will be similar to health insurance exchanges,
to provide coverage options for small businesses.
Coverage Through Medi-Cal, Healthy Families and Medicare
Medi-Cal Expansion and Maintenance
By 2014, the reform bill will require the Medi-Cal program to cover everyone
up to 133 percent of the Federal Poverty Level. In addition, for the first time,
Medi-Cal will cover single adults without children. The individual mandate will
also boost Medi-Cal rolls because it will force people who currently qualify but
don’t participate in the program to sign up.
For the years 2010-2014, the reform bill places a “maintenance of effort”
(MOE) restriction on states. This means California cannot reduce the eligibility
and benefits for – or otherwise substantially cut – the Medi-Cal program for the
next four years, without losing federal funding.
While there is no specific expansion of eligibility in the Healthy Families
Program, there is an MOE requirement that lasts from now until 2019. This
prevents California from making any cuts, reducing eligibility or eliminating
the program. The MOE requirement protects health care for 1 million children
currently enrolled in Healthy Families.
Reinsurance Program for Employees Ages 55-65
From June 2010 until January 2014, Medicare will have a reinsurance program
for employees aged 55-64. Under this program, Medicare will pay some of the
costs associated with employers providing coverage to people in this age range.
This will help employers to purchase affordable coverage for older workers.
CMA applauds the steps that the federal government is taking to expand access
to insurance coverage. Patients with coverage are more likely to receive needed
preventative care and stay healthy. However, access to coverage is not access to
care. CMA is concerned about the health care system’s ability to absorb all of
the newly insured persons who will need treatment. California’s two insurance
regulators, the Department of Managed Health Care (DMHC) and the Department of
Insurance (DOI), must strictly enforce laws governing plan provider networks.
Without an adequate supply of physicians, patients would face delays in
getting care and be forced to turn to costly and overcrowded emergency rooms in
greater numbers. Gaining access to care is already a problem for many patients
served by Medi-Cal.
Rates need to be raised so more physicians can afford to treat Medi-Cal
patients and access can be improved. The reform bill boosts Medi-Cal rates to
the same level as Medicare, but only for primary care providers and only for two
years. The increase needs to be wider spread and sustained for access to care to
Next Steps for Lawmakers
- Implement the federal high-risk pool for California.
- Establish the California Health Insurance Exchange, and consider whether
to combine the individual exchange with the SHOP Exchange.
- Complete an inventory of all programs designed to serve the indigent or
uninsurable. Calculate budget savings and reinvest them in health care
- Consider enhancements to state law, such as an employer mandate, that
could help Californians afford coverage.
- Raise Medi-Cal reimbursement rates so more doctors can afford to
participate in the program.
- Work with federal regulators on implementation.
For more information, call CMA’s Member Help Line at 800.786.4CMA • Rev. 6.18.10