Health Care Gains Start Soon — Bigger Ones Later

[Warph]

Health Care Gains Start Soon — Bigger Ones Later
Ricardo Alonso-zaldivar, Associated Press Writer
– Mon Mar 22, 7:39 pm ET

WASHINGTON – The first changes under the new health care law will be easy to see and not long in coming: There'll be $250 rebate checks for seniors in the Medicare drug coverage gap, and young adults moving from college to work will be able to stay on their parents' plans until they turn 26.

But the peace of mind the president promised — the antidote for health care insecurity, whether you favored or opposed his overhaul — is still a ways beyond the horizon, starting only in 2014. Insurers then will be barred from turning down people with medical problems, and the government will provide tax credits to help millions of working families buy coverage they can't afford now.

Health care overhaul will bring real change, but it's going to happen slowly.

President Barack Obama plans to sign the main legislation Tuesday in the White House East Room after a bitterly divided House approved it Sunday night. That will cap a turbulent, yearlong quest by the president and congressional Democrats to remake the nation's health care system, fully one-sixth of the U.S. economy.

Obama's signature will start the Senate considering a package of changes the House also has approved. But the main overhaul will already be officially on the books.

Still, if Obama wants to actually preside over the expansion of coverage to more than 30 million people, he'll first have to persuade a majority of Americans to re-elect him in 2012.

"For people who have the greatest need, a number of things will start quickly and make a difference," said DeAnn Friedholm of Consumers Union. For others, 2014 may seem like a long way away. "Some people may be frustrated that it's going to be several years, but that is the reality of what it takes to make these significant changes," she added.

The main reason that Obama's plan phases in slowly boils down to cost. The Medicare cuts and tax increases to finance the bill start early; the subsidies to help people purchase coverage come later. That combination keeps the cost of the overhaul under $1 trillion in its first decade, as Obama promised. Republicans call it an accounting gimmick — but in past years they also resorted to it.

Here's a look at some of the major impacts for consumers:

• COMING SOON:

Roughly a third of people in their 20s are uninsured, so allowing young adults to remain on their parents' plans until 26 would be a significant new option for families.

Adult children would not be able to stay on a parental plan if they had access to employer coverage of their own. But they could get married and still be covered. (Grandkids, however, would not qualify.) Regulations will clarify to what degree young adults have to be financially dependent on their parents.

Other reforms starting this year would prevent insurers from canceling the policies of people who get sick, from denying coverage to children with medical problems, and from putting lifetime dollar limits on a policy.

These changes will spread risks more broadly, but they're also likely to nudge insurance premiums somewhat higher.

Obama's plan also includes an important new program for the most vulnerable: uninsured people who can't get coverage because of major medical problems. It's intended to provide an umbrella of protection until the broad expansion of coverage takes effect in 2014.

The government will pump money into high-risk insurance pools in the states, making coverage available for people in frail health who have been uninsured for at least six months. The premiums could still be a stretch, but for people who need continuing medical attention, it could make a dramatic difference.

"For people who have not been able to get anything, who have expensive chronic illnesses or other conditions, it could be a lifesaver," said Friedholm.

There is a catch, however. The $5 billion Obama has allocated for the program is unlikely to last until 2014. In fact, government experts have projected it could run out next year.

Among seniors, the plan will create both winners and losers. On the plus side, it gradually closes the dreaded "doughnut hole" prescription coverage gap, improves preventive care and puts a new emphasis on trying to keep seniors struggling with chronic diseases in better overall health.

But it also cuts funding for popular private insurance plans offered through the Medicare Advantage program. About one-quarter of seniors have signed up for the plans, which generally offer lower out-of-pocket costs. That's been possible because the government pays the plans about 13 percent more than it costs to cover seniors in traditional Medicare. As the payments are scaled back, it could trigger an exodus from Medicare Advantage.

"It's not all black and white; sometimes it's gray," said James Firman, president of the National Council on the Aging. "Overall we think this plan is very good, and will provide some significant benefits for seniors. There will be some pain among some people in Medicare Advantage plans."

The prescription coverage gap will be totally closed in 2020. At that point, seniors will be responsible for 25 percent of the cost of their medications until Medicare's catastrophic coverage kicks in, dropping their copayments to 5 percent.

• COMING LATER:

The real transformation of America's health insurance system won't take place until 2014.

Four breathtaking changes will happen simultaneously:

• Insurers will be required to take all applicants. They won't be able to turn down people in poor health, or charge them more.

• States will set up new insurance supermarkets for small businesses and people buying their own coverage, pooling together to get the kind of purchasing clout government workers have now.

• Most Americans will be required to carry health insurance, either through an employer, a government program or by buying their own. Those who refuse will face fines from the IRS.

• Tax credits to help pay for premiums will start flowing to middle-class working families, and Medicaid will be expanded to cover more low income people. Households making up to four times the poverty level — about $88,000 for a family of four_ will be eligible for assistance. But the most generous aid — including help with copayments and deductibles — will be for those on the lower-to-middle rungs of the income scale.

When all is said and done, the majority of working-age Americans and their families will still have employer-sponsored coverage, as they do now. But the number of uninsured will drop by more than half. Illegal immigrants would account for more than one-third of the remaining 23 million people without coverage.

Cost could be the Achilles' heel of the whole effort.

"I hope it is not repealed, because we do need to extend coverage to most of our population," said Gail Wilensky, who ran Medicare for President George H.W. Bush and remains a leading health care adviser to Republicans. "But it could well be substantially modified. It expands coverage, but it does very little to take on two other major issues: improving quality and leveling the rate of growth in spending."


Health Care Reform Bill 101: What does it mean for seniors?
by Peter Grier Peter Grier – Mon Mar 22, 6:06 pm ET
Washington – Many senior citizens worry about the effect that the health care reform bill may have on them. After all, they generally use the health care system more than do younger people. And those living on fixed incomes may have little leeway in their budgets to help if their health costs rise.

Would the healthcare reform legislation that President Obama plans to sign into law on Tuesday affect seniors in any direct way?

The short answer is "yes."

Healthcare 101: What the bill means to you

The longer answer is that some seniors may lose Medicare benefits they now enjoy. Many others will gain from an enhancement of Medicare's prescription-drug program.

Here are some specifics on these changes:

Medicare cuts:
Under the healthcare reform bill, government payments to Medicare Advantage – plans that are run by private insurers such as Humana and are an alternative to traditional Medicare – will be cut by $132 billion over 10 years. (Those plans currently get somewhat more per person from the government than traditional Medicare does.)

Medicare Advantage plans often offer extra benefits that seniors in traditional Medicare don't get. It is possible that these extras will be dropped as Medicare Advantage plans feel a budget squeeze.

In most areas of the United States, this reduction will be phased in over three years, beginning in 2011, although in some places it will take longer.

The bill does not contain cuts to traditional Medicare benefits. However, Medicare payments for home healthcare would be reduced by $40 billion between now and 2019. And certain payments to hospitals would be cut by $22 billion over that same period.

Medicare enhancements:
*The bill would bolster the existing Medicare prescription-drug benefit by addressing part of its "doughnut hole" problem.  Right now, after a senior has spent $2,700 on drugs in a year, coverage stops until that same person has spent $6,154 on drugs, when it starts up again.
Hence the "doughnut hole" nickname.

*Beginning in 2010, people who fall into this hole will get $250 from the government to help. Thereafter, according to the bill, the US will gradually increase the percentage of drug costs it pays within this gap. By 2020, the US will pay 75 percent of senior drug costs between $2,700 and $6,154.

*Medicare will also begin to pick up the tab for annual wellness visits.


Medicare payment advisory board Healthcare reform legislation also establishes what it terms an Independent Payment Advisory Board, made up of 15 members, that would submit legislative proposals to reduce per capita Medicare spending if that spending grows too fast.

"Too fast" is defined as exceeding the growth rate of Consumer Price Index measures for a five-year period that ends in 2013.

If that happens, beginning in 2014, this board will submit proposals to Congress and the president for consideration.

Some critics have charged that this board will be the leading edge of Medicare reductions. Legislative wording in the healthcare reform bill prohibits the board from submitting any idea that would ration care, raise taxes, or change benefits.

[Warph]

Timeline: How health Care Reform Will Affect You

Sources: House Ways and Means, Energy and Commerce, and Education and Labor committees; Kaiser Family Foundation

(CNN) -- President Obama signed sweeping health care reform into law today. The Senate must now pass a package of changes that will reconcile the differences between Senate and House bills. If those changes are worked out, here is how health care reforms will affect you:

Within the first year:

• Young adults will be able stay on their parents' insurance until their 27th birthday.

• Seniors will get a $250 rebate to help fill the "doughnut hole" in Medicare prescription drug coverage, which falls between the $2,700 initial limit and when catastrophic coverage kicks in at $6,154.

• Insurers will be barred from imposing exclusions on children with pre-existing conditions. Pools will cover those with pre-existing health conditions until health care coverage exchanges are operational.

• Insurers will not be able to rescind policies to avoid paying medical bills when a person becomes ill.

• Lifetime limits on benefits and restrictive annual limits will be prohibited.

• New plans must provide coverage for preventive services without co-pays. All plans must comply by 2018.

• A temporary reinsurance program will help offset costs of coverage for companies that provide early retiree health benefits for those ages 55 to 64.

• New plans will be required to implement an appeals process for coverage determinations and claims.

• Adoption tax credit and assistance exclusion will increase by $1,000. The bill makes the credit refundable and extends it through 2011.

• A 10 percent tax will be imposed on amounts paid for indoor tanning services on or after July 1.

• Businesses with fewer than 50 employees will get tax credits covering 35 percent of their health care premiums, increasing to 50 percent by 2014.

2011

• Medicare will provide free annual wellness visits and personalized prevention plans. New plans will be required to cover preventive services with no co-pay.

• States can offer home- and community-based services to the disabled through Medicaid rather than institutional care beginning October 1.

• A 50 percent discount will be provided on brand-name drugs for Prescription Drug Plan or Medicare Advantage enrollees. Additional discounts on brand-name and generic drugs will be phased in to completely close the "doughnut hole" by 2020.

• Additional tax for health savings account withdrawals before age 65 for nonqualified medical expenses will increase from 10 percent to 20 percent. Additional tax for Archer medical savings account withdrawals not used for qualified medical expenses will increase from 15 percent to 20 percent.

• A plan to provide a vehicle for small businesses to offer tax-free benefits will be created. This would ease the small employer's administrative burden of sponsoring a cafeteria plan.

• The Medicare payroll tax will increase from 1.45 percent to 2.35 percent for individuals earning more than $200,000 and married filing jointly above $250,000.

2013

• Health plans must implement uniform standards for electronic exchange of health information to reduce paperwork and administrative costs.

• Contributions to flexible savings accounts will be limited to $2,500 per year, indexed by the Consumer Price Index in subsequent years.

• The Employer Medicare Part D subsidy deduction will be eliminated. Employers will lose the tax deduction for subsidizing prescription drug plans for Medicare Part D-eligible retirees.

• There will be increases to the income threshold from 7.5 percent to 10 percent of adjusted gross income. Those older than 65 can claim the 7.5 percent deduction through 2016.

• The hospital insurance tax will increase 0.9 percentage points for those earning more than $200,000 ($250,000 for married filing jointly), and it includes net investment income.

• A 2.9 percent excise tax on the first sale of medical devices will be established. Excepted are eyeglasses, contact lenses, hearing aids or other items for individual use.

2014

• Citizens will be required to have acceptable coverage or pay a penalty of $95 in 2014, $325 in 2015, $695 (or up to 2.5 percent of income) in 2016. Families will pay half the amount for children, up to a cap of $2,250 per family. After 2016, penalties are indexed to Consumer Price Index.

• Workers who are exempt from individual responsibility for coverage but don't qualify for tax credits can take their employer contribution and join an exchange plan.

• Companies with 50 or more employees must offer coverage to employees or pay a $2,000 penalty per employee after their first 30 if at least one of their employees receives a tax credit. Waiting periods before insurance takes effect is limited to 90 days. Employers who offer coverage but whose employees receive tax credits will pay $3,000 for each worker receiving a tax credit.

• Insurers can no longer refuse to sell or renew policies because of an individual's health status. Health plans can no longer exclude coverage for pre-existing conditions. Insurers can't charge higher rates because of heath status, gender or other factors.

• Health plans will be prohibited from imposing annual limits on coverage.

• Health insurance exchanges will open in each state to individuals and small employers to comparison shop for standardized health packages.

• Credits will be available through exchanges for those whose income is above Medicaid eligibility and below 400 percent of poverty level who are not eligible for or offered other acceptable coverage.

• Medicaid eligibility will increase to 133 percent of poverty for all nonelderly individuals to ensure that people obtain affordable health care in the most efficient and appropriate manner. States will receive increased federal funding to cover these new populations.

• An annual health insurance provider fee will be Imposed across the health insurance sector according to insurers' market share to companies whose total premiums exceed $25 million.

2018

• 2018 Taxing "Cadillac" plans: An excise tax will be imposed on high-cost, employer-provided health plans beyond $27,500 for family coverage and $10,200 for single coverage; it will increase to $30,950 for families and $11,850 for individuals, retirees and employees in high-risk professions.

http://www.cnn.com/2010/POLITICS/03/23/health.care.timeline/index.html?section=cnn_latest