Health Care

The new health care bill signed into law on March 23, 2010, will make medical care both more available and more affordable.  U.S. Rep. Spratt (D-SC) voted for passage, to put insurance within reach of 32 million more people, raising coverage to 95% of all Americans.

For the latest information, please visit www.healthcare.gov

“We have the best medical care system in the world,” said Spratt, “but it is also the world’s most expensive, and care is not readily available to millions of Americans who need it. The rising cost is not sustainable, not only in household and business budgets, but in the federal budget as well,” Spratt added. “The challenge is to expand coverage while containing cost.”

If impact on the deficit is the measure, this legislation meets the challenge. According to the Congressional Budget Office (CBO), the cost containment, revenue, and other saving measures in the new law will lower deficits by $143 billion over the next ten years and by $1.2 trillion over the following ten years.

Most of the new law will take time to implement, and many changes will not be operative until January 1, 2014. However, the following benefits will come within months:

18 IMMEDIATE BENEFITS YOU'LL SEE RIGHT AWAY

Small Business Tax Credits. Offers tax credits to small businesses to make employee coverage more affordable. Tax credits of up to 35 percent of premiums will be immediately available to firms that choose to offer coverage. Effective beginning for calendar year 2010 (Beginning in 2014, the small business tax credits will cover 50 percent of premiums).

Begins To Close The Medicare Part D Donut Hole. Provides a $250 rebate to Medicare beneficiaries who hit the donut hole in 2010. Effective for calendar year 2010 (Beginning in 2011, institutes a 50% discount on brand?name drugs in the donut hole; also completely closes the donut hole by 2020).

Free Preventive Care Under Medicare. Eliminates co?payments for preventive services and exempts preventive services from deductibles under the Medicare program. Effective beginning January 1, 2011.

Help For Early Retirees. Creates a temporary re?insurance program (until the Exchanges are available) to help offset the costs of expensive health claims for employers that provide health benefits for retirees age 55?64. Effective 90 days after enactment

Ends Rescissions. Bans insurance companies from dropping people from coverage when they get sick. Effective 6 months after enactment.

No Discrimination Against Children With Pre?Existing Conditions. Prohibits health insurers from denying coverage to children with pre?existing conditions. Effective 6 months after enactment (Beginning in 2014, this prohibition would apply to all persons).

Bans Lifetime Limits On Coverage. Prohibits health insurance companies from placing lifetime caps on coverage. Effective 6 months after enactment.

Bans Restrictive Annual Limits On Coverage. Tightly restricts new plans’ use of annual limits to ensure access to needed care. These tight restrictions will be defined by HHS. Effective 6 months after enactment (Beginning in 2014, the use of any annual limits would be prohibited for all plans).

Free Preventive Care Under New Private Plans. Requires new private plans to cover preventive services with no co?payments and with preventive services being exempt from deductibles. Effective 6 months after enactment (Beginning in 2018, this requirement applies to all plans).

New, Independent Appeals Process. Ensures consumers in new plans have access to an effective internal and external appeals process to appeal decisions by their health insurance plan. Effective 6 months after enactment.

Ensuring Value For Premium Payments. Requires plans in the individual and small group market to spend 80 percent of premium dollars on medical services, and plans in the large group market to spend 85 percent. Insurers that do not meet these thresholds must provide rebates to policyholders. Effective on January 1, 2011.

Immediate Help For The Uninsured Until Exchange Is Available (Interim High?Risk Pool). Provides immediate access to insurance for Americans who are uninsured because of a pre?existing condition ? through a temporary high?risk pool. Effective 90 days after enactment.

Extends Coverage For Young People Up To 26th Birthday Through Parents’ Insurance. Requires health plans to allow young people up to their 26th birthday to remain on their parents’ insurance policy, at the parents’ choice. Effective 6 months after enactment.

Community Health Centers. Increases funding for Community Health Centers to allow for nearly a doubling of the number of patients seen by the centers over the next 5 years. Effective beginning in fiscal year 2010.

Increasing Number Of Primary Care Doctors. Provides new investment in training programs to increase the number of primary care doctors, nurses, and public health professionals. Effective beginning in fiscal year 2010.

Prohibiting Discrimination Based On Salary. Prohibits new group health plans from establishing any eligibility rules for health care coverage that have the effect of discriminating in favor of higher wage employees. Effective 6 months after enactment.

Health Insurance Consumer Information. Provides aid to states in establishing offices of health insurance consumer assistance in order to help individuals with the filing of complaints and appeals. Effective beginning in FY 2010.

Creates New, Voluntary, Public Long?Term Care Insurance Program. Creates a long?term care insurance program to be financed by voluntary payroll deductions to provide benefits to adults who become functionally disabled. Effective on January 1, 2011.
 
OTHER HIGHLIGHTS
 
Health Insurance Exchanges
To lower premiums, the new law creates a state-based Health Insurance Exchange, where a variety of competing plans equal in value would be offered.  The object is to create a large risk pool and to offer individuals and small businesses the benefit of group rates, resulting from more competition and less administration. Individuals without coverage could have access to the Exchange after 2013, and small businesses could phase into coverage over time.

CBO estimates that 30 million Americans will take advantage of the Exchange.  But CBO also estimates that some 165 million will continue to be insured by plans their employer provides. CBO expects systemic changes in cost resulting from the increase in competition and from the reduction in cost shifting, due to uncompensated care, which last year ran over $42 billion.

Individuals
Individuals under the age of 65, making less than 133% of the poverty level ($18,310 for a family of 3 in 2019), will be eligible for a “benchmark benefits” plan under an expanded Medicaid program. Dependent children will remain covered by CHIP.

Individuals and families earning between 133% and 400% of the poverty level will be eligible for premium credits on a sliding scale related to income. The credits and cost-sharing subsidies will be usable to purchase plans in the Insurance Exchange.

Small Businesses
Business firms with twenty-five or fewer employees would not be required to offer coverage, but they would qualify for tax credits that could offset up to 50% of the cost of coverage.

Firms with fewer than fifty employees would not be required to offer health insurance. But they could do so by buying insurance in the Exchange at large group rates. By setting the exemption at 50 or fewer employees, the vast majority of all small businesses are excluded.

Larger business firms with more than 50 employees can offer employees a “free choice voucher” equal in value to what the employer would have paid for the employees’ coverage. The voucher would be used to offset the premium cost of the plan in which the employee enrolls.

Individuals and families not otherwise covered would have access to the Exchange, and most could claim the benefit of “premium credits,” subsidies based on income, extending up to 400% of the poverty level. The Exchange would simplify administration and intensify competition, and individuals who now fend for themselves in the insurance markets would enjoy both advantages.

Premiums
The insurance market has become increasingly concentrated. In all but three states, two insurance plans account for more than 50% of enrollment. This is part of the reason that health insurance premiums have doubled over the last ten years. Competition in the Insurance Exchange has to help.  If it does not, the new law calls for premium review when the rate of increase in premiums is greater than a set percentage of medical inflation.

Slowing premium growth by 1.5 percentage points annually would help businesses, households, and individuals. By 2020, the average family would save $2,300.
 
CHANGING INSURANCE UNDERWRITING RULES

While extending coverage, the new law also changes health insurance underwriting rules.  Here in a nutshell are the changes to the underwriting rules.

Health insurance companies -

• Must take all comers.
• Will not be allowed to exclude coverage for pre-existing conditions.
• Will not be allowed to run-up premiums following a major illness. 
• Will not be allowed to rescind policies except in cases of fraud.
• Will be required to meet medical loss ratios of 85%.
• Will be required to allow dependent children on their parents’ policy through age 26.
• Will be restricted from applying annual or lifetime limits.
  

 
FOR THE 5TH DISTRICT

The U.S. Department of Health and Human Services applied these new provisions to the Fifth District of South Carolina, and found that the new law will:

• Improve coverage for 412,000 residents with health insurance.
• Give tax credits and other assistance to up to 195,000 families and 12,300 small businesses to help them afford coverage.
• Improve Medicare for 119,000 beneficiaries, including closing the donut hole.
• Extend coverage to 75,500 uninsured residents.
• Guarantee that 15,100 residents with pre-existing conditions can obtain coverage.
• Protect 700 families from bankruptcy due to unaffordable health care costs.
• Allow 56,000 young adults to obtain coverage on their parents' insurance plans.
• Provide millions of dollars in new funding for 27 community health centers.
• Reduce the cost of uncompensated care for hospitals and other health care providers by $45 million annually.
  

 
DEFICIT REDUCTION
 
The new law will not add to the deficit.  “Congress cleared the way for health care reform in the Budget Resolution,” said Spratt, “and from the outset, we stipulated that reform had to be deficit-neutral.  The House, the Senate, and the President have abided by this principle.”

The health care legislation has been scored by Congressional Budget Office. CBO is neutral and non-partisan, and its reputation for honest estimating is a matter of record.

Under the law, CBO found that the ten-year cost of all the changes in insurance coverage amount to $788 billion.  But the new law also includes spending reductions, savings, and new revenues, which total $931 billion. When $931 billion is netted against $788 billion, the result is a net saving, which reduces deficits over the next ten years by $143 billion.

What about the following ten years, when health-care reforms have been fully implemented? CBO estimates that the legislation will save around one-half of one-percent of GDP over the second ten years.  That may sound minimal, but cumulative GDP between 2020 and 2029 amounts to $272 trillion dollars. One-half percent of that amount equals is around $1.2 trillion.

Roughly half of the $931 billion in spending reductions, savings, and revenue comes from steps such as equalizing spending on Medicare Advantage with spending on traditional fee-for-service Medicare, and from a deduction of .75% in providers’ annual inflationary update. In addition, the new law contains fees and tax increases that mostly apply to taxpayers making more than $250,000.  
 
WELLNESS AND PREVENTION
 
In addition to the changes in insurance coverage and underwriting rules, a good part of the new law deals with Preventive Care and Wellness. The new law authorizes substantial sums over ten years for such things as childhood obesity and workplace wellness. For example, employers will be permitted to offer premium discounts or cost-sharing waivers for participation in wellness programs.
 
ABORTION
 
The new law is subject to the Hyde Amendment, which prevents federal funds from being spent on abortion. The new law adds to that another bar. It prohibits abortion coverage from being required as part of the essential health benefits package.
 
CONCLUSION
 
“In a law of this complexity, it is easy to find fault,” said Spratt, “but I think the more people learn about these health care reforms, the more they will like the new law.”

Over 350 organizations have endorsed the new law, including AARP, the American Medical Association, the American Nurses Association, and the American Hospital Association.