Earlier this year, Congress passed and the President signed landmark health insurance reform legislation, the Patient Protection and Affordable Care Act (P.L. 111-148) and the Health Care and Education Reconciliation Act (P.L. 111-152), and Americans are already experiencing the benefits. Senate Democrats are committed to implementing health reform that brings down the cost of coverage, holds insurance companies accountable, and provides Americans with the insurance security they deserve. Following is an overview of several provisions of the new law that have taken effect or will take effect soon.
Coverage for adult children. The Patient Protection and Affordable Care Act allows young adults to stay on their parents’ health insurance plan until age 26. Before passage of the new law, many plans removed young adults from their parents’ policies at age 19 or upon graduation from high school or college. [National Conference of State Legislatures, 4/10] Thirty percent of young adults age 19 through 29 are uninsured, the highest rate of any age group. While this provision is effective for policies and plan years beginning on or after September 23, 2010, more than 65 insurance companies have voluntarily agreed to provide coverage to young adults before the deadline. [The White House, 5/10/10] The Departments of Health and Human Services, Labor and Treasury have issued regulations to implement this coverage extension.
Coverage for children with pre-existing conditions. The Patient Protection and Affordable Care Act prohibits health insurers from excluding coverage of pre-existing conditions for children, effective for policies and plan years beginning on or after September 23, 2010, and applying to all employer-sponsored plans and all new plans in the individual market. The Administration indicates it will soon issue regulations to implement this critical protection for children with pre-existing conditions, and Secretary Sebelius reports that health insurance companies have agreed to ensure that children with pre-existing conditions are not denied coverage. [HHS, 5/10/10]
Coverage for adults with pre-existing conditions. The Patient Protection and Affordable Care Act provides access to quality, affordable health insurance for as many as 5.6 million uninsured Americans who are unable to obtain health insurance because of a pre-existing condition. [staff estimate using AHRQ, 4/09 and HealthReform.gov, accessed 3/20/10] As many as 57 million Americans under age 65 have a pre-existing condition that could lead to a coverage denial under old insurance market rules. [Families USA, 5/10] The law creates a high-risk pool program, effective July 1, 2010, which will operate until state-based health insurance Exchanges are running and discrimination based on pre-existing conditions is banned, in 2014. The Administration is working with states to determine the best implementation strategy, and as of May 3, 2010, 30 states have indicated their intent to operate their own high-risk pool and 18 states have indicated a preference for a federal fall-back high-risk pool. [HHS, 5/3/10] States in the former category were sent an application on May 10, 2010.
Helping businesses help early retirees. The Patient Protection and Affordable Care Act created a $5 billion re-insurance program for employer health plans that provide coverage to retirees who are not yet eligible for Medicare, to help protect access to coverage while reducing costs for employers and retirees. This temporary program will provide financial assistance until 2014, when health insurance Exchanges will make it easier for early retirees to access affordable health insurance options. Early retirees are at particular risk of becoming uninsured, or of being forced to pay exorbitant premium costs until they become eligible for Medicare, and the percentage of large firms offering retiree coverage has dropped precipitously, from 66 percent in 1988 to just 31 percent in 2008. [The White House, 5/4/10] On May 5, 2010, the Department Health and Human Services issued regulations indicating the program will begin on June 1, 2010, in advance of the June 21, 2010 effective date required by law. [Federal Register, 5/5/10; The White House, 5/4/10]
Ending coverage rescissions. The Patient Protection and Affordable Care Act prohibits insurers from rescinding health coverage when a beneficiary becomes ill, as a way of avoiding paying that person’s health care bills, because Americans deserve the security of knowing they can rely on their health insurance when they need it most. This provision is scheduled to take effect for policies or plan years beginning on or after September 23, 2010, and apply to all new and existing plans. However, on April 28, 2010, America’s Health Insurance Plans announced it would implement the new policy this May. [AHIP letter, 4/28/10]
Health insurance tax credits for small businesses. The Patient Protection and Affordable Care Act provides tax credits for up to 35 percent of premium costs for small businesses that offer coverage to their employees. Effective this year, the full credit is available to firms with 10 or fewer employees and average annual wages of $25,000, while firms with up to 25 employees and average annual wages of up to $50,000 will also be eligible for a credit. Beginning in 2014, tax credits are available for up to 50 percent of premium costs. In April, the Internal Revenue Service began mailing postcards to more than four million small businesses and tax-exempt organizations that may be eligible for the credit, and provided answers to frequently asked questions about the credit. [IRS, 4/19/10; 5/5/10]
Making prescription medication more affordable for seniors. The Patient Protection and Affordable Care Act provides a $250 rebate check to Medicare beneficiaries who hit the ‘donut hole,’ or gap, in their prescription drug coverage this year. The Administration plans to issue the first checks on June 15, 2010, and additional checks will be mailed approximately every six weeks through the end of the year. [HHS, 5/10/10] The Centers for Medicare & Medicaid Services estimates that four million Medicare beneficiaries will receive a check in 2010, and the Administration intends to increase its efforts to prevent fraud and scams associated with the mailing of these checks to seniors. [HHS, 5/10/10]
Ensuring value for premium payments. The Patient Protection and Affordable Care Act establishes standards for insurance overhead and requires public disclosure to ensure that enrollees receive value for their premium dollars, requiring plans in the individual and small group market to spend 80 percent of premium dollars on clinical services and quality activities, and 85 percent for plans in the large group market. The insurance industry refers to such thresholds as ‘medical loss ratios.’ All health insurance plans, with the exception of self-insured plans, that do not meet these thresholds will provide rebate to their policyholders, effective January 1, 2011. Part of this provision requires the National Association of Insurance Commissioners (NAIC) to submit uniform definitions and methods for calculating these ‘medical loss ratios’ for Secretarial review by December 31, 2010. However, NAIC has agreed to submit its recommendations by June 1, 2010, well in advance of the statutory deadline. [HHS, 5/10/10]
Making comparable information on insurance options publicly available. The Patient Protection and Affordable Care Act enables creation of a new web portal to facilitate informed consumer choice of health insurance options by July 1, 2010. The Administration indicates the website will evolve over time and, by October 2010, will include pricing information on insurance available to individuals and small businesses. The Department of Health and Human Services issued regulations and other information about the web portal on April 30, 2010. [HHS, 4/30/10; 4/30/10]