Healthcare Reform’s 10 Year Timeline for Roll-out
Many of the provisions included in the healthcare reform legislation passed recently will take place not immediately, but along a 10-year timeline through 2020. Here’s a glimpse of how that timeline rolls out:
2010
- Adults with pre-existing conditions who have been uninsured for at least six months can enroll in a temporary high risk health insurance pool and receive subsidized premiums–beginning three months after the bill’s passage. (The pools expire when exchanges are implemented in 2014.)
- All health insurance plans are to offer dependent coverage for children through age 26; insurers are prohibited from denying coverage to children because of pre existing health problems.
- Insurance companies can no longer put lifetime dollar limits on coverage and cancel policies–except in cases of fraud.
- Tax credits will be provided to help small businesses with 25 employees or fewer to get and keep coverage for these employees.
- The Medicare “doughnut hole,” in which beneficiaries had to pay full cost of their prescription drugs, begins narrowing by providing a $250 rebate this year to those in the gap, which starts this year after they have spent $2,830. The doughnut hole fully closes by 2020.
- Indoor tanning has a 10% sales tax.
2011
- For Medicare beneficiaries reaching the Medicare doughnut hole, prescription coverage will be available with a 50% discount on brand name drugs.
- A 10% Medicare bonus will be provided to primary care physicians and general surgeons practicing in underserved areas, such as inner cities and rural communities.
- Medicare Advantage plans would begin to have their payments frozen—and then lowered in 2012. The plans would have to spend at least 85 cents out of every dollar on medical costs, while leaving 15 cents for plan operations, including overhead and salaries. Reductions would be phased in over the next three to seven years.
- A voluntary long term care insurance program would be made available to provide a modest cash benefit for assisting disabled individuals to stay in their homes or cover nursing home costs. Benefits would start five years after people begin paying a fee for coverage.
- Funding for community health centers would be increased to provide care for many low income and uninsured people.
- Employers would be required to report the value of healthcare benefits on employees’ W 2 tax statements.
- Pharmaceutical manufacturers will have a $2.3 billion annual fee that will increase over time.
2012
- Nonprofit insurance co ops would be created to compete with commercial insurers. Hospitals, physicians, and payers would be encouraged to band together in “accountable care organizations.”
- Hospitals with high rates of preventable readmissions would face reduced Medicare payments.
2013
- Individuals making $200,000 a year or couples making $250,000 would have a higher Medicare payroll tax of 2.35%—up from the current 1.45%. A new tax of 3.8% on unearned income, such as dividends and interest, is also added.
- Medical expense contributions to tax sheltered flexible spending accounts (FSAs) are limited to $2,500 a year—indexed for inflation. In addition, the thresholds for claiming itemized tax deduction for medical expenses rise from 7.5% to 10% of income. People age 65 or older can still deduct medical expenses above 7.5% of income through 2016.
- Medicare device makers would have a 2.3% sales tax on medical devices; devices such as eyeglasses, contact lenses, and hearing aids would be exempt.
2014
- New state health insurance exchanges would be created. Income based tax credits will be available for many consumers in the exchanges. The sliding scale credits phase out for households that are four times above the federal poverty level (about $88,000 for a family of four).
- Medicaid would be expanded to cover low income individuals up to 133% of the federal poverty level—about $28,300 for a family of four.
- Insurers would be prohibited from denying coverage to people with pre existing conditions, or charge higher rates to those with poor or chronic health conditions. Premiums (with limitations) can only vary by age, place of residence, family size, and tobacco use.
- Insurers will be required to cover maternity care as they do other medical procedures
- All legal residents would be required to have health insurance—except in cases of financial hardship—or pay a fine to the IRS. The individual penalty starts at $95 each in 2014—rising to $695 in 2016. Family penalties are capped at $2,250; penalties will be indexed for inflation after 2016.
- Employers with more than 50 workers would be penalized if any of their workers get coverage through the exchange and receive a tax credit. The penalty is $2,000 times the total number of workers employed at the company. However, employers get to deduct the first 30 workers.
2018
- A tax would be imposed on employer sponsored health insurance worth more than $10,200 for individual coverage, and $27,500 for a family plan. The tax is 40% of the value of the plan above the thresholds, indexed for inflation.
2020
- Doughnut hole coverage gap in Medicare prescription benefit is phased out. Seniors continue to pay the standard 25% of their drug costs until they reach the threshold for Medicare catastrophic coverage.
Courtsey of Janice Simmons, for HealthLeaders Media, March 23, 2010
Getting Health Care Reform Right
The year was 1992 and politicians were touting managed care as the solution to the country’s double-digit healthcare inflation. Managed care was described as the magic bullet that would ensure quality healthcare, access and affordability for millions of Americans.
Fast forward 17 years and it’s clear that managed care was not the panacea that everyone hoped it would be. Our nation’s politicians are once again looking for that magic bullet to solve an ever-increasing list of problems with our healthcare system, including a record number of uninsured Americans and spiraling costs. We are being told that this time, healthcare reform will ensure quality healthcare, access and affordability. This latest push for reform didn’t start with President Obama taking office. Throughout the race for the White House, it was one of the hottest and most widely debated of issues.
There’s no question that Americans want healthcare reform. This fact was supported by a Service Employees International Union (SEIU) commissioned healthcare poll. According to that poll, conducted by Lake Research Partners, both Democrats and Republicans said that healthcare is this county’s top domestic issue and the second most important issue overall. (The war was identified as the number one overall issue.) Of those polled nationally, a vast majority (71 percent of Republican voters and 88 percent of Democratic voters) agreed with the statement, “We need to move beyond piecemeal reform because our healthcare system needs to be fundamentally overhauled.”
While Americans are anxious to see real reforms from our elected leaders, there appears to be no well-defined or comprehensive resolution on the horizon. Instead, what we are hearing about from our representatives in Washington are packages that contain a compilation of compromises and financial guesswork.
Personally, I find it perplexing that Congress is even considering moving forward with legislation that carries such an enormous price tag while this country continues to deal with the worst economic downturn since the depression, a ballooning deficit, a credit crunch, and two ongoing wars. Frankly, in more than 20 years in organized medicine, I have rarely met a member of Congress or a legislative staff member who truly understood the economics of our healthcare system.
Those who do understand the economics of healthcare know that a system that provides every man, woman and child unlimited and unfettered access to medical care is, ultimately, unsustainable. This fact is not being discussed by our federal legislators, however. Instead, they are minimizing all publicity relating to the financial limitations that will be inherent in any universal healthcare proposal. These same politicians know that to mention the idea of healthcare rationing would be a poison pill for any legislation and would create a public uproar. So they choose not to explain how they plan to cut costs and improve quality while insuring an additional 47 million Americans. Cleary, something has to give.
There are multiple healthcare reform bills currently under consideration, although H.R. 3200 is the bill that seems to be gaining the most acceptance at this time. This bill has an exorbitant price tag and falls significantly short of the president’s goal of insuring 97 percent of our population. The AARP initially speculated that healthcare reform would cost $600 million. Recent reports estimate a $1.5 trillion price tag over 10 years. According to GOP leader Mitch McConnell, “Every proposal we’ve seen would cost a fortune by any standard.” Even with this excessive expenditure, the Congressional Budget Office estimates that roughly 15 million to 20 million people will remain uninsured at the end of the decade. Regardless of the cost and the inability to achieve universal coverage, President Obama claims that this investment is critical in order to fix our dysfunctional healthcare system. The president has also said that healthcare reform will not increase the federal deficit. That comment begs the question, “How, then, are we going to pay for it?”
The methods of paying for healthcare reform are still very sketchy, but Congress is considering multiple mechanisms, including: an income tax surcharge for single people and households (Congress will set the thresholds for the tax), certain cuts in Medicare and Medicaid, and financial penalties on individuals and employers who don’t obtain coverage. According to House Speaker Nancy Pelosi, “Many members think that there’s more to be squeezed from hospitals, pharmaceutical companies, and docs.” In other words, Congress plans to reduce the promised levels of reimbursement to these groups after gaining their support.
We should look at the three-year history of the Massachusetts universal healthcare project to gain insight into what we face nationally when it comes to healthcare reform. Massachusetts has unexpectedly incurred a 70 percent increase in costs over three years for insuring the previously uninsured population. It has been determined that once the state provided health insurance to the uninsured, utilization skyrocketed. This increase is being balanced by a reduction in payments to hospitals. In fact, Boston Medical Center has filed a lawsuit against the state because its reimbursement has been reduced to 64 cents on the dollar for low-income patients. The lesson here is that we should anticipate an increase in utilization and a corresponding increase in costs. One must wonder whether our politicians have factored these possible outcomes into their budgets.
As I began to write this article, I had the opportunity to read the results of a July Gallup poll in USA Today. It revealed that the American public is losing trust in the way the president is handling healthcare reform. A majority of those polled (50 percent to 44 percent) stated they disapproved of how the president is handling healthcare reform. Perhaps it’s time for both Democrats and Republicans to educate themselves further and refine their positions before proposing changes that will no doubt have long-term, far-reaching, and possibly irreversible consequences for the American people.
The American Society of Anesthesiologists made the following comments about the leading proposal before Congress, H.R. 3200 (Please see the ASA’s talking points on this bill below).
- It would be unsustainable for the medical specialty of anesthesiology to operate within a public plan option based on Medicare payment rates.
- Payment levels for anesthesia services provided through the new “public health insurance option” must be fixed.
Contrary to the political spin coming from Washington, every healthcare reform proposal under consideration appears to come up short. Any suggestion that one of these bills will fix the system is simply fiction. In the government’s haste to pass legislation, I fear that our leaders will fall short on the promise of universal coverage, will exceed all estimates on cost, and ultimately will do very little to address quality.
Whether you agree or disagree with the idea of universal healthcare, everyone should agree that change is coming. Every one of us has a stake in the outcome of this debate, especially those who currently have health insurance. It’s imperative that physicians remain part of the debate. There will never be a better opportunity to help shape the future of the delivery of healthcare in this country. There has never been a more important time to support your political action committee, NYAPAC.
Stuart A. Hayman, MS serves as executive director of the New York State Society of Anesthesiologists (NYSSA). He has graciously agreed to share his recent article published in Sphere with my blog members.
