1. Health Reform Overview
Prepared by Cornerstone Government Affairs
for the Association of Schools of Public Health
Updated March 30, 2010

2. Disclaimer
• This presentation attempts to provide an early overview of a
large and complex piece of new legislation. It was based on
Congressional and non-Congressional sources which are listed
at the end. While every attempt was made to ensure
accuracy, we are not responsible for statements which may be
in error. As clarifications or additional information become
available, a revised version of this presentation will be
distributed.
– Cornerstone Government Affairs (March 30, 2010)

3. Patient Protection and Affordable
Care Act (HR 3590, P.L. 111-148)
• Approved by House of Representatives on
Sunday, March 21st
• Passed by a margin of 219-212
– All 178 Republicans and 34 Democrats voted “no”

4. Reconciliation Act (HR 4872)
• House and Senate passed Reconciliation Act of
2010 containing fixes to reform legislation on
Thursday, March 25th
• House passed HR 4872 by a margin of 220-207
• Senate passes bill 56-43, with 3 Democrats
voting “no”

5. Health Reform Overview
• Covers an additional 32 million people, mostly
through premium subsidies and expansion of
Medicaid
• Costs approximately $938 billion over 10 years
according to CBO
– Will reduce federal deficits by $143 billion over
that period
– Will reduce deficits by $1.2 trillion over the
following decade
– Does NOT include the Medicare “doc fix” which is
estimated to cost over $200 billion over 10 years.

6. Immediate Effects
• Insurance companies can no longer drop
people from coverage after getting sick
• Bars insurance companies from discriminating
against children under the age of 19 with pre-
existing conditions
• Young adults can stay on parents plan until
the age of 26
• Creates high-risk pool for adults with pre-
existing conditions without coverage

7. Immediate Effects
• Temporary reinsurance program created to
cover early retirees aged 55-64 (expires in
2014)
• $250 rebate given to seniors who fall into
Medicare Part D “doughnut hole”
• Tax credits become available for small
businesses to cover employees
• 10% tax is levied for tanning services

8. Individual Mandate
• Requires all U.S. citizens to have health
insurance
• Exemptions granted for financial hardship,
religious objections, American Indians, those
without coverage for less than three months
• Penalties take effect beginning in January
2014

9. Individual Mandate
• Penalty is the greater of $695 per year (up to
three times that amount for a family) or 2.5%
of household income
• Penalty phased in accordingly:
– $95 in 2014 (or 1% taxable income)
– $325 in 2015 (or 2% taxable income)
– $695 in 2016 (or 2.5% taxable income)

10. Employer Requirements
• Business with fewer than 50 employees exempt from
any penalty
• Employer with more than 200 employees must enroll
each in a health insurance plan
• Employers with more than 50 employees that offer
coverage and have one full-time employee receiving
a premium tax credit must pay the lesser of $3,000
for each employee receiving a premium credit or
$2,000 per employee
• Effective January 2014

11. Expansion of Medicaid
• Expands Medicaid to cover all individuals
under the age of 65 up to 133% of the federal
poverty level (FPL)
• States will receive 100% of funds for newly
eligible enrollees from federal government
from 2014-2016
– 95% in 2017, 94% in 2018, 93% in 2019, 90% in
2020 and thereafter

12. Childrens Health Insurance Program
• States must maintain eligibility levels for CHIP
through Sept. 30, 2019
• Between 2014 and 2019 states will receive
23% increase in CHIP federal match

13. Premium and Cost-sharing
Subsidies
• Limits availability of premium credits and cost-
sharing to legal US citizens purchasing in
newly-created national exchange
• Those between 133-400% FPL (about $88K for
family of four) are eligible for premium credits
• Cost-sharing subsidies available for those
making 100-400% FPL

14. Premium Subsidies
• Credits are calculated on sliding scale
• Begin at 2% of income for those at 100% FPL
• Credits cap at 9.8% of income for those at
300-400% FPL
• Subsidies available beginning in January 2014

15. Limiting Out-of-Pocket Costs
• Out of pocket maximums ($5,950 for
individuals, $11,900 for families) reduced to
one third for those with income between 100-
200% FPL
• Reduced to one half for those earning
between 200-300% FPL
• Reduced to two thirds for those earning
between 300-400% FPL

16. Small Business Tax Credits
• Tax credits provided for small businesses with
fewer than 25 employees providing health
insurance for workers with average income
less than $50K
• 2010-2013, federal government provides tax
credit up to 35% of employer’s contribution if
employer pays 50% of premium cost
• 2014 and beyond, government provides tax
credit of up to 50% of employer’s contribution
if purchasing through the National Exchange

17. Small Business Tax Credits
• Tax-exempt small businesses eligible for tax
credits up to 25% of employer’s contribution
towards insurance premium
• Credits phased out as firm size and employee
wages increase
• Full credits available to businesses with fewer
than 10 employees earning an average of less
than $25K

18. Insurance Exchanges
• Create state-based insurance exchanges called the
American Health Benefit Exchanges and Small
Businesses Health Options Programs
• Exchange only available to small businesses with
fewer than 100 employees. Businesses with more
than 100 employees are eligible after 2017
• Only legal U.S. citizens able to purchase in exchanges
• Exchanges open in 2014
• Federal support also offered for non-profit member
run insurance cooperatives

19. Benefits Within National Exchange
• Qualified health plans offered in National
Exchange must provide essential health
benefits which include cost sharing limits
• Deductibles in small group market cannot
exceed $2,000 for an individual and $4,000 for
a family
• Out-of-pocket requirements cannot exceed
those in HSA ($5,950 for individual and
$11,900 for family)

20. Benefits Within National Exchange
• Coverage offered at four levels with actuarial
value values defining how much insurers pay
• Bronze plan provides essential health benefits
and covers 60% of the benefit costs of the
plan
• Silver – 70%
• Gold – 80%
• Platinum – 90%

21. Disproportionate Share Hospital
(DSH) Allotments
• Starting in 2014, DSH payments reduced by 75%, but
payments are increased based on rates of uninsured and
amount of uncompensated care provided
• Aggregate DSH allotments reduced by:
– $500 million in 2014
– $600 million in 2015
– $600 million in 2016
– $1.8 billion in 2017
– $5 billion in 2018
– $5.6 billion in 2019
– $4 billion in 2020

22. Health Care Innovation
• Creates a new Center for Medicare and
Medicaid Innovation at CMS to develop and
test innovative payment and delivery models
• Accountable Care Organizations (ACOs),
medical home models are eligible for receiving
funds
• Integrated delivery systems must achieve high
quality of care and achieve savings
• Pilot projects begin in 2012

23. Rural Protections
• Extends floor on geographic adjustments to
Medicare fee schedule to increase provider
fees in rural areas
• Boosts bonus payments for ground and air
emergency services in rural areas
• Expands eligibility and length of Rural
Community Hospital Demonstration Program
for two years
• Extends outpatient hold harmless provision

24. Medicare Advantage Changes
• Medicare Advantage (MA) plans in high-cost
areas will receive 95% of Medicare fee-for-
service rates
• MA plans in lower-cost areas will see payments
rise up to an additional 15% more than FFS rates
• Phase in payment changes over three year period
beginning in 2011
• Bonuses given to MA plans receiving 4 or more
start in current 5-star ranking system beginning
in 2012

25. Fixing Medicare Part D “Doughnut Hole”
• Seniors exceeding Part D coverage will receive
a $250 rebate in 2010
• Beginning in 2011, seniors receive 50%
discount on brand-name drugs and biologics
purchased when entering the coverage gap.
• 50% of discount funded by pharmaceutical
companies
• Discount increases to 75% after 2011 and will
apply to generics

26. Elimination of Pre-existing Conditions
• Discrimination against children under the age of 19
with pre-existing conditions eliminated immediately
• Creates in 2010 a high-risk pool for those adults with
pre-existing conditions to receive federal subsidies
• High-risk pool eliminated in 2014 when insurers can
no longer discriminate against individuals with pre-
existing conditions
• Bans gender rating, eliminating higher premium
costs for women in the individual market

27. Prevention and Wellness
• Creates a National Prevention, Health Promotion, and
Public Health Council to coordinate prevention and
wellness practices on federal level
• Establishes new mandatory spending in the form of a
Prevention and Public Health Fund
– $500 million in FY 10
– $750 million in FY 11
– $1 billion in FY 12
– $1.25 billion in FY 13
– $1.5 billion in FY 14
– $2 billion in FY 15 and each year thereafter

28. Prevention and PH Fund Uses
• “For programs authorized by the Public Health
Service Act, for prevention, wellness, and public
health activities including prevention research and
health screenings, such as the Community
Transformation grant program, the Education and
Outreach Campaign for Preventive Benefits, and
immunization programs” (Section 4002)
• The fund is directly appropriated by this legislation,
not just authorized.

29. Prevention and Wellness
• Expands role of Community Health Centers to
implement wellness programs for Medicare
beneficiaries
• Expands scope of Community and Clinical
Preventive Services Task Forces
• Creates grant program for school-based
health centers
• Expands oral health programs

30. Prevention and Wellness
• Establishes community transformation grant
program for State and local government agencies
• Establishes demonstration program to provide
recommended vaccines to more children,
adolescents, and adults.
• Reauthorizes section 317 immunization program
• Establishes labeling requirements for
restaurants, retail food establishments, and
vending machines

31. Prevention and Wellness
• Mandates the Secretary of HHS collect data on
health disparities
• Incentivizes employer-based wellness programs
• Provides epidemiology and laboratory capacity
grants for responding to public health
emergencies
• Funds a childhood obesity program
• Fully covers proven preventive services and
eliminates cost-sharing for preventive services in
Medicare and Medicaid

32. Health Care Workforce
• Creates a National Healthcare Workforce
Commission to disseminate information on health
care workforce supply and demand, as well as
training and retention best practices
• Establishes National Center for Workforce Analysis
• Creates competitive health care workforce
development grant program under HRSA to shore
up workforce and state and local levels

33. Health Care Workforce
• Establishes loan repayment program for pediatric
specialists who commit to work in underserved areas
• Creates a public health workforce recruitment and
retention program offering loan repayments in
exchange for service at a state, local, or tribal health
department
• Expands Public Health Service Corps
• Provides mid-career training for public health
workers
• Loan repayment offered for allied health
professionals employed at public health agencies

34. Health Care Workforce
• Increases funding for National Health Service
Corps
• Expands nurse retention and student loan
programs
• Establishes Regular Corps and a Ready
Reserve Corps for service in time of national
emergency
• Creates grant programs to grow numbers of
primary care, geriatric, oral health, and
psychiatric workforce

35. Health Care Workforce
• Authorizes advanced nursing education grants
for midwifery
• Expands loan repayment programs for people
from disadvantaged backgrounds
• Establishes a grant program aimed at
promoting innovations in interdisciplinary
care training
• Establishes a new state grant program for
early childhood home visitation under HRSA

36. Increased Transparency
• Physician-owned hospitals that do not have a
provider agreement will not be able to
participate in Medicare
• Drug, device, biological and medical supply
manufacturers must report gifts to physicians,
medical practices, or teaching hospitals
• Physicians providing imaging services must
offer in writing an alternative provider for that
same service

37. Increased Transparency
• Establishes Patient-Centered Outcome
Research Institute to compile comparative
clinical outcomes research
• Secretary will establish procedures for
monitoring and screening CHIP, Medicaid, and
Medicare providers

38. Making Medicines Affordable for
Children in Underserved Communities
• Expands scope of existing 340B drug discount
program
• Allows more Americans to have greater access
to cheaper medicines

39. Revenue Provisions
• Tax on “Cadillac Plans” that cost $10,200 annually for
an individual, $27,500 for families effective January
1, 2018
• Limits Flexible Spending Account contributions to
$2,500 annually effective in 2013
• Levies excise taxes on Pharmaceutical manufacturers
beginning in 2011 in the amount of $2.5 billion
annually. Manufacturers pay based on market share
• Levies excise tax on device manufacturers in the
amount of $2 billion from 2011 – 2017, and $3 billion
annually thereafter. A 2.3% sales tax on devices is
also enacted effective in 2013

40. Revenue Provisions
• Includes additional 0.9% Hospital Insurance
tax on earned income for households earning
over $200K for individuals and $250K for
jointly-filing couples
• Includes a 3.8% Unearned Income Medicare
Contribution to unearned income including
interest, dividends, annuities, royalties, and
rents for households earning over $200K for
individuals and $250K for jointly-filing couples

41. Sources and Additional Info
Democratic Policy Committee:
http://dpc.senate.gov/dpcdoc-sen_health_care_bill.cfm
http://dpc.senate.gov/dpcdoc-sen_health_care_bill_archive.cfm
Kaiser Family Foundation, “Focus on Health Reform: Summary of New Health Reform Law”:
http://www.kff.org/healthreform/upload/finalhcr.pdf
Cornerstone Government Affairs Public Health and Workforce Side-by-side:
http://www.cgagroup.com/_healthcarefiles/HR_Side-by-side.pdf
House Ways and Means Committee:
http://waysandmeans.house.gov/press/PRArticle.aspx?NewsID=10416
Department of Health and Human Services
http://www.healthreform.gov/
White House Reform Plan:
http://www.whitehouse.gov/health-care-meeting/proposal