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Newsletters: What Health Care Reform Means to HomePEN Consumers
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What Health Care Reform Means to HomePEN Consumers

Frances Culp, M.A.

In March 2010, health care reform became a reality when President Obama signed two bills into law: the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010. Together, these bills represent the most significant changes to the health care system since Medicare and Medicaid were established in 1965.

The American system of health care is greatly varied, with its mixture of public and private insurance providers and ways in which people connect to and access health insurance coverage. Insured individuals gain coverage through governmental programs (e.g., Medicare) or rely on the private system through their employer or individual coverage. These bills do not change this; the variability remains. Instead, these bills increase access to health care for many of the approximately 46 million uninsured Americans by closing a number of gaps in the system. By 2019, it is estimated that an additional 32 million Americans will have health insurance (92 percent of the population).

 

The Changes

It is the responsibility of the federal government to interpret the policies and provide exact regulations to the players involved (states, insurance companies, businesses, etc.). This article will explore what we know thus far, with a focus on changes most relevant to Oley members presented in a timeline. It is not meant to be comprehensive; its scope does not include all of the regulatory changes to employers and health care providers.

90 Days after Enactment (July 2010):

1. National High-Risk Health Insurance Pool to be established. Health and Human Services (HHS) has communicated with all states their responsibility to have a functioning high-risk health insurance pool. The states may accept federal funding to start a new pool, build upon an existing pool, or decline funding, allowing the federal government to operate the pool. Most states have some version of a high-risk pool that accepts individuals who have been denied private health insurance coverage due to a pre-existing condition.1 Not all are well functioning; many are not accepting new enrollees. The new programs are meant to be an effective alternative for those who are shut out of the private insurance market. Subsidies will be provided to offset the cost of the premiums; however, enrollees must have been uninsured for at least six months before they can join the new pools. The benefit requirements have yet to be established. In 2014, when private insurers are no longer able to deny individuals who are considered high-risk, these high-risk pools will be disbanded.

2. New consumer Web site. HHS is developing a Web site that will begin on a limited basis in July; eventually it will include information about health insurance options available in each state, premium prices, and Medicaid eligibility, as well as other information.

6 Months after Enactment (September 23, 2010):

These new laws represent changes to some of the more odious practices of the private health insurance market. For existing plans, some of these changes (such as the provision for dependent health insurance, number 4 below) will not take effect for the consumer until the current plan year expires and the new plan year begins. The laws:

1. Bar insurers from denying people coverage when they get sick. Insurers may not retroactively cancel approved individual health insurance policies after the policyholder gets sick and files large medical claims (known as rescission) unless the insurer can show that the person lied or knowingly omitted information on his or her application, in which case the insurer can still cancel the policy.

2. Bar insurers from denying coverage to children (up to 18) due to pre-existing conditions. Adults with pre-existing conditions do not receive the same protection until 2014.

3. Bar insurers from imposing lifetime caps on coverage and regulate annual limits. Currently, some plans impose lifetime limits and some have annual limits, both of which allow insurers to stop paying claims at a certain point.

4. Require insurers to allow young adults to stay on parents’ policies until their 26th birthday. This change will allow dependents to remain enrolled through, or to rejoin, a parental insurance policy as a dependent up to age 26, easing young adults through this transition time. Many young adults, especially those with health problems, struggle to find health insurance and quite a few end up uninsured for some period of time before they can find a job that offers health insurance.2 Parents will also have an opportunity to rejoin a plan or join a different plan that offers better dependent coverage. In a show of good faith, a number of large insurers, including Blue Cross/Blue Shield, Aetna and others, have agreed to start this coverage for young adult dependents before the required deadline (September 23, 2010).

5. Establish appeal mechanisms, including appeals to independent review organizations, for all plans, including large group plans. (This may not apply to existing or grandfathered” plans, which will be exempt from certain consumer protections.)

Within 1 Year:

1. The laws provide for a $250 rebate to Medicare prescription drug plan beneficiaries in the Part D Doughnut Hole.” Health care reform will incrementally close this Doughnut Hole” by reducing beneficiary responsibility for the gap from 100 percent to 25 percent by 2018. The first step in this process provides a $250 rebate to Medicare beneficiaries who reach the Part D coverage gap.

2011:

1. The laws provide for a 50 percent discount on brand-name drugs for Medicare prescription drug plan beneficiaries in the Part D Doughnut Hole.  The next step in closing the Doughnut Hole.”

2014:

1. Health benefit exchanges. Each state must create a health benefit exchange operated by either a governmental agency or a nonprofit organization, through which individuals or small businesses can purchase health insurance.3 If a state has not taken adequate steps toward creating an exchange by January 1, 2013, the federal government will establish the exchange for that state. States may create one exchange for individuals and one exchange for small businesses, or combine the two. Citizens, legal immigrants, and employers with one hundred or fewer employees may purchase coverage through the exchange. (Larger employers may purchase coverage through exchanges by 2017.) Insurance plans in the exchanges will be required to offer benefits that meet a minimum set of standards (as yet to be defined). Insurers will offer four levels of coverage that vary by premiums, out-of-pocket costs, and benefits beyond the minimum requirements, plus a catastrophic plan.

2. Requirement begins for most people to have health insurance. Individuals who do not obtain coverage will be required to pay an annual financial penalty. Penalties will be phased in between 2014 and 2016. The penalty for individuals will start at $95, or up to 1 percent of household income, whichever is greater, and rise to $695, or 2.5 percent of household income (up to a maximum of $2,085 per family) by 2016.

3. Premium tax credits must be provided for families and individuals earning between 133 percent and 400 percent Federal Poverty Level (FPL) to purchase health insurance.4 These tax credits will be offered on a sliding-scale basis and will limit the cost of the insurance premiums to between 2 percent of income for people with incomes up to 133 percent of FPL, and 9 percent of income for people with incomes between 300 and 400 percent of FPL. Cost-sharing subsidies will also be available to people with incomes between 133 and 400 percent of FPL to limit out-of-pocket spending.

4. Insurance companies will be barred from denying coverage to anyone with pre-existing conditions. Insurance companies will be required to accept all individuals regardless of their medical history and health status.

5. Medicaid eligibility will be expanded to 133 percent of FPL. Health care reform will expand Medicaid to all individuals under age 65 with incomes up to 133 percent of the FPL. Under the current law, FPL limits for Medicaid eligibility vary by state and adults under age 65 without dependent children are not eligible for the program in all states.

6. Adjusted community rating takes effect, requiring insurers to end the practice of charging different premium rates for men and women.

7. Out-of-pocket limits will be capped for individuals with income up to 400 percent of FPL. This rule is designed to keep out-of-pocket limits within health savings account requirements, and ultimately, to prevent medical bankruptcy.

2018:

1. The laws impose a 40 percent excise tax on high-end insurance policies (aka Cadillac Plans”). This tax will be paid by the insurer providing the plan.

 

The Debate

There was much disagreement about health care reform, with arguments advanced for no changes to the system, to dismantling and replacing the existing system with a national health system (like Canada or Britain), and everything in between. In the end, the system is largely intact with much tinkering around the edges.

While Oley members are likely expert in the health care system with which we interact, we are just as vulnerable, if not more so, to the possibility of losing coverage. With the current system, we are all one job loss, one college graduation, one divorce away from losing our insurance. This is untenable for those of us who rely on expensive health care to keep us alive. Paying out of pocket for HPN on even a short-term basis is simply impossible.

The health reform changes, while imperfect from a number of perspectives, at the very least represent an attempt to make the connections to health insurance stronger for all of us. This is not universal coverage, so there will still be individuals who for the short or long term have no access to health insurance. But many of the holes in the system will be plugged over the next few years.

Most notably for Oley Foundation members, who often have a lifetime of health problems and multiple diagnoses, health insurers no longer will be able to refuse or deny coverage when we most need it.

Frances Culp has been HPN dependent due to malabsorption since 2005 and deals with a number of chronic health problems due to cancer treatment as a young child. She has a master’s degree in Health Advocacy from Sarah Lawrence College and works as a Health Planner for the San Francisco Department of Public Health.

For more information, refer to the Kaiser Family Foundation’s Web site. The Kaiser Family Foundation is an excellent non-partisan source of health policy information (www.kff.org).

Fran Culp with her puppy, Patsy Cline.

 

Notes

1. A pre-existing condition is a condition, disease, illness, or injury for which medical advice, diagnosis, care, or treatment was received or recommended within a specified time period prior to enrolling in a health plan, or for which a reasonably prudent person would have sought medical attention. Insurers are known for defining this term widely, denying applicants for something as serious as cancer or heart disease, or as relatively minor as asthma or hay fever. At this time, insurers may use pre-existing conditions(s) as grounds for denial for individual health plans only; health status is not considered for group insurance (typically through an employer).

2. A study by the Commonwealth Fund found that 45 percent of young adults 19–29 went without health insurance for some period of time in the last year.

3. The high-risk pools will be phased out at this time, since by this time insurers must accept children and adults regardless of their medical situation/history. These exchanges will offer a new route to coverage for many.

4. Premium tax credits will be available even if you have no tax liability (i.e., they are refundable”) and will allow you to receive assistance when you purchase insurance (i.e., they are advanceable”; you do not have to pay the premium out of pocket and wait until you file your income tax return to be reimbursed).

The FPL is an income amount set by the federal government each year that defines the poverty line for all Americans. It is used widely in all states to determine eligibility for various public programs. In 2010, the FPL for a family of one is $10,830/year (133 percent is $14,403.90 and 400 percent is
$43,320).

LifelineLetter, May/June 2010

This website is an educational resource. It is not intended to provide medical advice or recommend a course of treatment. You should discuss all issues, ideas, suggestions, etc. with your clinician prior to use. Clinicians in a relevant field have reviewed the medical information; however, the Oley Foundation does not guarantee the accuracy of the information presented, and is not liable if information is incorrect or incomplete. If you have questions please contact Oley staff.

 

Updated in 2015 with a generous grant from Shire, Inc. 

 

This website was updated in 2015 with a generous grant from Shire, Inc. This website is an educational resource. It is not intended to provide medical advice or recommend a course of treatment. You should discuss all issues, ideas, suggestions, etc. with your clinician prior to use. Clinicians in a relevant field have reviewed the medical information; however, the Oley Foundation does not guarantee the accuracy of the information presented, and is not liable if information is incorrect or incomplete. If you have questions please contact Oley staff.
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