Healthcare Reform: A Time to Embrace Change!
At long last, the United States has agreed to a plan for “comprehensive” healthcare coverage…or has it? While there are still those who lobby for or against the approved changes, many are still unsure of what to expect with the new legislation. The following is an attempt to summarize some of the major provisions in the legislation that was passed on March 21, 2010, with a House vote of 219-212 to pass the Senate-passed reform bill, the Patient Protection and Affordable Care Act (H.R. 3590). The Reconciliation Act of 2010 (H.R. 4872) was later voted upon and approved 220-211 to reflect changes sought by the House. These Bills extend healthcare coverage to 32 million Americans representing 95% of legal residents and 92% of all U.S. residents at a cost of $940 billion over 10 years.
It will expand coverage to 32 million persons by 2019 by expanding public programs and offering private sector health insurance reform. Beginning January 1, 2014, all U.S. citizens and legal residents will have to obtain coverage or face a tax penalty. Individuals with employer-based coverage will be able to retain this same coverage. Those without employer plans will be able to obtain coverage through newly formed “health insurance exchanges.” Subsidies will be made available to assist low-income individuals in purchasing these policies; Medicaid will be expanded to provide coverage for those living below a certain economic level. While employers are not required to provide coverage, large employers will be charged a “free rider” assessment if their employees purchase healthcare coverage through the exchange program with federal premium subsidies. Beginning in 2014, all state Medicaid programs must cover individuals who are below 133% of the federal poverty level. States will be given federal funds to pay for the newly expanded population requiring coverage, starting with 100% federal financing for 2014-2017. This will be reduced to 90% starting in 2020 and thereafter. States that already cover this population will be given additional federal assistance.
Beginning in 2011, states must establish health insurance exchanges through which individuals and small businesses can purchase qualified private health insurance coverage. Coverage similar to that provided through the Federal Employee Health Benefit plan will be offered through the exchanges, with oversight by the U.S. Office of Personnel Management. Consumer Operated and Oriented Plans (Co-Ops) will be created as well to foster nonprofit, member-run health insurance cooperatives. No government-run program will be established.
Within 90 days of enactment, this Bill offers temporary mechanisms to provide coverage to individuals with pre-existing conditions and for non–Medicare-eligible retirees over age 55. Within six months of enactment, it will prohibit insurers from setting annual and lifetime limits, from dropping coverage unless clear fraud has been demonstrated, and from excluding coverage to children based on a pre-existing condition. Parents also will be able to include dependent children up to the age of 26 on their own health insurance. Beginning in 2014, health insurers will be prohibited from excluding coverage based on pre-existing conditions for adults, will have limits imposed on premium ratings, and must guarantee insurance coverage for anyone seeking it.
Beginning in 2013, hospitals will have a financial penalty for “excess” readmissions when compared to “expected” levels of readmissions, based on the 30-day readmission measures for heart attack, heart failure, and pneumonia that are currently part of the Medicare pay-for-reporting program. Critical access hospitals and post-acute care providers will be exempt from this. Beginning in 2012, hospitals and physicians can establish voluntary Accountable Care Organizations (ACOs). These ACOs will be responsible for managing the care of certain beneficiaries with a sharing of some of the savings from improved care management. Also beginning in 2012, hospitals will benefit from doing well on measures that are part of the hospital quality reporting program. This initially will be funded with 1% of payments in 2013 and will be allowed to grow over time to 2% in 2017 and beyond.
Other provisions are as follows:
• Beginning in 2015, a 1% penalty will be assessed to hospitals in the top quartile for rates of hospital-acquired conditions.
• In 2011, a Center for Medicare and Medicaid Innovation (CMI) will be created within the Centers for Medicare & Medicaid Services (CMS) to test innovative payment and service delivery models that will hopefully improve quality and reduce program expenditures within certain geographic areas.
• A new independent board will be created that will make binding recommendations on Medicare payment policy and nonbinding recommendations for changes in private payer payments to providers.
• The final Bill failed to address the physician payment issue from Medicare that has recently reduced payment to physicians under Medicare and threatens to do so again unless some permanent change is made in the way current legislation has been written. Fortunately, President Obama recently signed into law another extension of former payments prior to the recent cuts, and this will remain at least for the present.
• Beginning in 2018, the Bill creates an excise tax for insurers of employer-sponsored health plans and sets the threshold for the tax at $10,200 for individual coverage and $27,500 for family coverage.
• Beginning in 2013, a medical device tax will be implemented that will mandate a 2.3% excise tax on medical device manufacturers. Any device that is generally purchased by the public, such as eyeglasses and hearing aids, will be exempt from this tax.
• The Bill also includes an assessment of $67 billion on health insurers beginning in 2014 and an assessment of $33 billion on brand-name pharmaceuticals beginning in 2011.
So, there you have it! While there are still other provisions included in the Bill, I hope that this gives you a general overview of what to expect. While this is a big step toward “universal healthcare coverage” for all Americans, as stated earlier, it still fails to cover all individuals. In addition, unlike other countries that consider healthcare a “right” and include it as a component of the benefits of being a citizen or permanent resident, in our case, it is a “mandate” with nongovernment insurers still playing a major role in our healthcare system. This agreement has arguably become fuel to those who want to continue to fight the Bill’s implementation, stating that the government cannot “mandate” anyone to buy something under the Commerce Provision of our Constitution. They threaten to take their case up to the Supreme Court if so allowed and seek to reverse the Bill’s implementation. Certain states have already passed laws that are aimed at preventing individuals from being mandated to buy health insurance. Since federal law always pre-empts state law, this will remain mostly a political issue and not one to focus on, though it may become an issue for the Courts. While the government does not seem openly concerned at this time over ongoing threats to reverse the Bill, by attempting to placate those who fought against a universal government-run program and opting instead for continuing the major role of private insurers with subsidies to those in need, the government has set itself up for continued controversy based on the above arguments. Since this approach may have been the only way to get the Congressional support necessary to pass the current Bill, it appears to have been unavoidable.
In my belief, it is time to move on and build upon what has already been passed. Perhaps over time additional changes to the Bill will “fine tune” what has been proposed, building upon the strengths already implemented and modifying those aspects that are viewed in need of remedy. Time will tell how well this system will work in its presently structured format. The goal now, however, should be to have a universal, cost-effective, and quality healthcare system that we can all be proud to call “American.” I welcome your comments.
Dr. Gambert is Professor of Medicine and Associate Chair for Clinical Program Development, Co-Director, Division of Gerontology and Geriatric Medicine, Department of Medicine, University of Maryland School of Medicine, Director, Geriatric Medicine, University of Maryland Medical Center and R Adams Cowley Shock Trauma Center, and Professor of Medicine, Division of Gerontology and Geriatric Medicine, Johns Hopkins University School of Medicine, Baltimore, MD.
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