New Law on the Block | What the healthcare overhaul does
The Patient Protection and Affordable Care Act and the Healthcare and Education Reconciliation Act of 2010, otherwise known together as the new healthcare law, are long and convoluted documents, as many bills are. But there are many important parts of the bill. Most importantly, it will increase the number of Americans with health insurance dramatically. Evaluations of the bill estimate that it will extend coverage to 32 million currently uninsured Americans. A second significant stipulation of the bill is that it will end the practice of denying coverage for people based on pre-existing conditions or illnesses. Not only did pre-existing conditions restrict people who needed coverage most from having access to treatment, but sometimes pre-existing conditions were fairly ridiculous-such as the case of a healthy, teenage girl being denied coverage on the basis of having used acne medication. Thirdly, the bill will eliminate health insurance providers’ limits on lifetime coverage.
The healthcare law will extend coverage by creating exchanges that individuals can buy into. The exchange would be a health insurance marketplace with lots of insurance providers competing against one another to draw customers. Because there would be lots of people (every citizen is supposed to buy health insurance and there are over 30 million uninsured), the group of buyers will be large enough to strike a balance between sick and healthy individuals. This open competition would also help regulate the price of insurance because if one insurer is more affordable than another, customers will switch to the cheaper one. People can still avoid buying health insurance; however, they will pay penalties to the government for not having coverage. The government will also provide rebates, tax deductions, and subsidies to individuals and small businesses who will have to sign up for healthcare which are all intended to offset the personal costs of paying for it. It is expected this system of rewards and penalties will extend coverage among Americans not qualifying for Medicare from the current 83% insured figure to 94%. The exchanges would have an open enrollment period on an annual basis during which anyone would be able to sign up for an insurance plan.
In addition to extending coverage to the uninsured, the law takes significant steps toward improving the standard of healthcare. Insurance companies would not only charge more for non-group insurance, but it also often provided less coverage. This meant that individuals were paying more to receive less. Now there is a base level of provisions called “essential health benefits” which are determined by the Health and Human Services department and would require insurance companies to offer a minimum standard of insurance coverage to everyone. That standard is one that most employer based plans already provide but includes items such as maternity care, prescription drugs, and mental health and substance abuse treatment. People insured through non-group plans may see increases, but many will qualify for federal subsidies, lowering middle- to moderate-income families costs on average 60%. While improving the standards of healthcare, the law also regulates the actuarial value of plans. The law has set 60% as the base actuarial value for certain more standard health services. This means that health insurance plans must pay at least 60% of the costs for these specified services for all policyholders. This ensures that the insurance companies do not just increase the cost of copayments, or the portion of the doctor’s fees that the person getting medical care has to pay.
An additional measure that will facilitate better healthcare is ending discrimination in health insurance plans. Previously, health insurers were allowed to discriminate against women. For instance, some insurers considered a Caesarian section procedure as a pre-existing condition, and thus used it as a basis for denying coverage. Having been a victim of domestic violence also could count as a pre-existing condition. Both of these were acceptable reasons to deny coverage that disproportionately—almost exclusively—affected women. Additionally, many women who were part of non-group plans were charged significantly higher premiums than men for the same amount of health insurance coverage. This even applied to women who did not have maternity care included on their plan. This practice, called “gender rating” is no longer allowed as it is a form of discrimination based on sex. The healthcare law ensures that health insurance providers can no longer discriminate on any basis prohibited by the federal law, which includes race, sex, and age.
The healthcare overhaul will not necessarily change your health care. If you are content with your plan, you will be able to keep the insurance you have. However in this case if you were non-group your benefits would not improve to meet the new standards for basic care and actuarial value. People who remain self-insured on policies from before implementation of reform would be exempt from all of those changes if they had continuous coverage.
The Secretary of Health and Human Services is also going to use technology to make some things in healthcare more efficient. HHS will create a set of standards to be updated regularly for electronic administrative transactions. This will encompass provisions such as electronically transferring funds, managing claims and verifying eligibility. It is expected that these provisions will reduce administrative costs for all parties, thus helping reduce healthcare costs across the board. This will also help the insurance companies keep in line with a new regulation intended to keep down administrative costs. Starting in 2011, 80-85% of the amount of premiums must be spent on medical services, rather than the bureaucratic costs of running insurance. Rebates will be issued in cases where the insurer does not meet the threshold.
These components of the law are aimed toward reigning in healthcare costs, which have been continuously rising. However, many critics of the law do not think it does enough to cut healthcare costs. Further legislation or other measures may be necessary to address that pressing issue.
The healthcare law will extend coverage by creating exchanges that individuals can buy into. The exchange would be a health insurance marketplace with lots of insurance providers competing against one another to draw customers. Because there would be lots of people (every citizen is supposed to buy health insurance and there are over 30 million uninsured), the group of buyers will be large enough to strike a balance between sick and healthy individuals. This open competition would also help regulate the price of insurance because if one insurer is more affordable than another, customers will switch to the cheaper one. People can still avoid buying health insurance; however, they will pay penalties to the government for not having coverage. The government will also provide rebates, tax deductions, and subsidies to individuals and small businesses who will have to sign up for healthcare which are all intended to offset the personal costs of paying for it. It is expected this system of rewards and penalties will extend coverage among Americans not qualifying for Medicare from the current 83% insured figure to 94%. The exchanges would have an open enrollment period on an annual basis during which anyone would be able to sign up for an insurance plan.
In addition to extending coverage to the uninsured, the law takes significant steps toward improving the standard of healthcare. Insurance companies would not only charge more for non-group insurance, but it also often provided less coverage. This meant that individuals were paying more to receive less. Now there is a base level of provisions called “essential health benefits” which are determined by the Health and Human Services department and would require insurance companies to offer a minimum standard of insurance coverage to everyone. That standard is one that most employer based plans already provide but includes items such as maternity care, prescription drugs, and mental health and substance abuse treatment. People insured through non-group plans may see increases, but many will qualify for federal subsidies, lowering middle- to moderate-income families costs on average 60%. While improving the standards of healthcare, the law also regulates the actuarial value of plans. The law has set 60% as the base actuarial value for certain more standard health services. This means that health insurance plans must pay at least 60% of the costs for these specified services for all policyholders. This ensures that the insurance companies do not just increase the cost of copayments, or the portion of the doctor’s fees that the person getting medical care has to pay.
An additional measure that will facilitate better healthcare is ending discrimination in health insurance plans. Previously, health insurers were allowed to discriminate against women. For instance, some insurers considered a Caesarian section procedure as a pre-existing condition, and thus used it as a basis for denying coverage. Having been a victim of domestic violence also could count as a pre-existing condition. Both of these were acceptable reasons to deny coverage that disproportionately—almost exclusively—affected women. Additionally, many women who were part of non-group plans were charged significantly higher premiums than men for the same amount of health insurance coverage. This even applied to women who did not have maternity care included on their plan. This practice, called “gender rating” is no longer allowed as it is a form of discrimination based on sex. The healthcare law ensures that health insurance providers can no longer discriminate on any basis prohibited by the federal law, which includes race, sex, and age.
The healthcare overhaul will not necessarily change your health care. If you are content with your plan, you will be able to keep the insurance you have. However in this case if you were non-group your benefits would not improve to meet the new standards for basic care and actuarial value. People who remain self-insured on policies from before implementation of reform would be exempt from all of those changes if they had continuous coverage.
The Secretary of Health and Human Services is also going to use technology to make some things in healthcare more efficient. HHS will create a set of standards to be updated regularly for electronic administrative transactions. This will encompass provisions such as electronically transferring funds, managing claims and verifying eligibility. It is expected that these provisions will reduce administrative costs for all parties, thus helping reduce healthcare costs across the board. This will also help the insurance companies keep in line with a new regulation intended to keep down administrative costs. Starting in 2011, 80-85% of the amount of premiums must be spent on medical services, rather than the bureaucratic costs of running insurance. Rebates will be issued in cases where the insurer does not meet the threshold.
These components of the law are aimed toward reigning in healthcare costs, which have been continuously rising. However, many critics of the law do not think it does enough to cut healthcare costs. Further legislation or other measures may be necessary to address that pressing issue.
