What’s in the New Health Insurance Reform?

By Arline Bolvin

After decades of struggle and the attention of every president since Roosevelt, Congress has enacted major health insurance reform. To better understand the Patient Protection and Affordable Care Act of 2010 (PPACA) along with the Health Care and Education Affordability Reconciliation Act of 2010 Street Sights spoke to advocates and health care professionals and average insured and uninsured Rhode Islanders. In future editions Street Sights will explore health reform and how it will impact our readers.

The health insurance reforms adopted as part of the Patient Protection and Affordable Care Act (PPACA), and the subsequent reconciliation bill is to be phased-in over the next eight years. The Act preserves the current public—private mix of employer based coverage, Medicare and Medicaid and creates income-based subsidies to make coverage more affordable to low-and middle-income families without employer coverage.

Timeline for Reform: Many major features of reform begin to take effect in 2010. The more substantial provisions will not take effect until Jan. 1, 2014. However, some new protections must be implemented when plans renew after Sept. 23, 2010.

Reform will unfold incrementally. Although some major elements of reform begin in 2010, others will be implemented over the course of several years. In 2014, the most substantial changes – including shared responsibility for coverage, expansion of Medicaid, insurance exchanges, and creation of an essential benefits package – will take effect.

The Uninsured: By 2019 an additional 32 million uninsured will be covered, increasing the proportion of the population with insurance to 94 percent. The number of uninsured – now at 46 million—without health reform would have risen to an estimated 54 million by 2019. Instead that number will fall to 23 million, or about 6 percent of the population.

Reporting Requirements: Beginning January 1, 2011, health plans must report information on their medical loss ratios, or the portion of premium dollars collected that are spent on medical care. Such reports will be made available on the Internet.

New Insurance rules: Insurance companies will be banned from rescinding people’s coverage when they get sick, and from imposing yearly and lifetime caps on coverage.

New payment and delivery approaches: A new Center for Medicare and Medicaid Innovation will test reforms that reward providers for quality of care rather than volume of services. Medicare will increase payment for primary care physicians by 10 percent for primary care services.

High–risk pool: Beginning June 21, 2010, people with preexisting conditions who have been uninsured for at least six months will have access to affordable insurance through a temporary, subsidized high-risk pool, which will help protect them from medical bankruptcy.

Protections for children: Insurers can no longer deny health coverage to children with preexisting conditions or exclude their conditions from coverage.

Coverage for young adults: Parents will be able to keep their children on the health policies until they turn 26. This applies to all plans in the individual market, all new employer plans, and existing employer plans if the young adult is not eligible for employer coverage on his or her own.

Small–business tax credits: For 2010 through 2013, small businesses that purchase insurance for their employees will be eligible for a tax credit, depending on the firm size and their total payroll. Businesses with up to 25 employees and average annual wages of $50,000 will be eligible for a credit; businesses with 10 or fewer employees and average annual wages of less than $25,000 will be eligible for the full credit of 35 percent of the employer contribution.

Preventive Care: All new group and individual health plans will be required to provide free preventive care for proven preventive services. In 2011, Medicare also will provide free preventive care.

Early retirees: A temporary reinsurance program will help offset the costs of expensive premiums for employers providing retiree health benefits.

“Doughnut hole” rebates: Medicare will provide $250 rebates to beneficiaries who hit the Part D prescription drug coverage gap known as the “doughnut hole.”

Annual review of premium increases: Health insurers will be required to submit justification for premium increases to the federal and relevant state governments before they take effect, and to report the share of premiums spent on non-medical costs such as bureaucracy, executive salaries, and marketing and provides consumers a rebate if non-medical costs are too high..

Access to care: Funding will be increased by $11 billion over five years for community health centers and the National Health Services Corps to serve more low-income and uninsured people.

Projections on how many uninsured will be covered vary by two million. The Congressional Budget Office (CBO) or Centers for Medicare and Medicaid Services (CMS) estimate 32 to 34 million respectively with 94% of legal residents insured. It should be no surprise that spending will go up and in fact has been predicted by the CMS Actuary to increase net national health spending by one percent a year over the next ten years.

The 25 million working-age underinsured adults—those whose health care coverage does not protect them adequately from high medical expenses – and the 72 million adults overall who have difficulty paying their medical bills or medical debt will be helped going forward by a standard benefits package. The package will help protect against high medical expenses, and federal premium subsidies will help ensure plan affordability for qualified families.