Health Care

2010 Reform details

Main articles: Patient Protection and Affordable Care Act and Health Care and Education Reconciliation Act of 2010

Key provisions of the health-care legislation passed in March 2010 are:^[4]

Within one year of enactment (2010-2011)

• Insurance companies barred from dropping people from coverage when they get sick, ending the practice of rescission. Lifetime coverage limits eliminated and annual limits restricted.
• Young adults able to stay on their parents’ health plans until age 26. Many health plans currently drop dependents from coverage when they turn 19 or finish college.
• Uninsured adults with pre-existing conditions will be able to obtain health coverage through a new program that will expire once new insurance exchanges begin operating in 2014.
• Insurance companies cannot deny group or new (non-grandfathered) individual coverage to children under age 19, due to a pre-existing condition.^[30]
• A temporary reinsurance program is created to help companies maintain health coverage for early retirees between the ages of 55 and 64. This also expires in 2014.
• Medicare drug beneficiaries who fall into the “doughnut hole” coverage gap will get a $250 rebate. The bill eventually closes that gap which currently begins after $2,700 is spent on drugs. Coverage starts again after $6,154 is spent.
• A tax credit becomes available for some small businesses to help provide coverage for workers.
• A 10% tax on indoor tanning services that use ultraviolet lamps goes into effect on July 1.

Effective during 2011

• Medicare provides 10% bonus payments to primary care physicians and general surgeons.
• Medicare will cover the full cost of annual wellness visits and personalized prevention plan services for beneficiaries. New health plans will be required to cover preventive services with little or no cost to patients.
• A new program under the Medicaid plan for the poor goes into effect in October that allows states to offer home and community based care for the disabled that might otherwise require institutional care.
• Payments to insurers offering Medicare Advantage services are frozen at 2010 levels. These payments are to be gradually reduced to bring them more in line with traditional Medicare.
• Employers are required to disclose the value of health benefits on employees’ W-2 tax forms.
• An annual fee is imposed on pharmaceutical companies according to market share. The fee does not apply to companies with sales of $5 million or less.

Effective as of 2012

• Physician payment reforms are implemented in Medicare to enhance primary care services and encourage doctors to form “accountable care organizations” to improve quality and efficiency of care.
• An incentive program is established in Medicare for acute care hospitals to improve quality outcomes.
• The Centers for Medicare and Medicaid Services, which oversees the government programs, begin tracking hospital readmission rates and puts in place financial incentives to reduce preventable readmissions.
• Companies will be required to issue 1099 forms to any vendor of services or rental property to which the business has paid more than $600. Form 1099 is also sent to the IRS. Under the existing law, businesses issued the Form 1099 only to individuals who provided services or property to a business. The healthcare law included the same form be issued to corporations as well, and that the form be issued to individuals and corporations that provide property to the business.^[31][32] Only business related payments are reportable, personal payments not.^[33] There is number of exceptions, for example: payments for merchandise, telephone, freight, storage, payments of rent to real estate agents are excepted.^[33] The health care bill mandate aims to collect lost revenue from companies that under-report on their tax returns. The provision is expected to raise $17 billion over 10 years.^[34]

Effective as of 2013

• A national pilot program is established for Medicare on payment bundling to encourage doctors, hospitals and other care providers to better coordinate patient care.
• The threshold for claiming medical expenses on itemized tax returns is raised to 10% from 7.5% of income. The threshold remains at 7.5% for the elderly through 2016.
• The Medicare payroll tax is raised to 2.35% from 1.45% for individuals earning more than $200,000 and married couples with incomes over $250,000. The tax is imposed on some investment income for that income group.
• A 2.9% excise tax is imposed on the sale of medical devices. Anything generally purchased at the retail level by the public is excluded from the tax.

Effective as of 2014

Main article: Patient Protection and Affordable Care Act#Effective by January 1, 2014

• State health insurance exchanges for small businesses and individuals open.
• Individuals with income up to 133% of the federal poverty level qualify for Medicaid coverage.
• Healthcare tax credits become available to help people with incomes up to 400 percent of poverty purchase coverage on the exchange.
• Premium cap for maximum “out-of-pocket” pay will be established for people with incomes up to 400 percent of FPL.^[35][36] Section 1401 of PPACA explains that the subsidy will be provided as a advance-able, refundable tax credit^[37] and gives a formula for it calculation.^[38] Refundable tax credit is a way to provide government benefit to people even with no tax liability^[39] (example: Child Tax Credit). According to White House and Congressional Budget Office the maximum share of income that enrollees would have to pay for the “silver” healthcare plan would vary depending on their income relative to the federal poverty level, as follows:^[40][41] for families with income 133–150% of FPL will be 4-4.7% of income, for families with income 150–200% of FPL will be 4.7-6.5% of income, for families with income 200–250% of FPL will be 6.5-8.4% of income, for families with income 250-300% of FPL will be 8.4-10.2% of income, for families with income from 300-400% of FPL will be 10.2% of income. In 2016,the FPL is projected to equal about $11,800 for a single person and about $24,000 for family of four.^[40] See Subsidy Calculator for specific dollar amount.^[42]
• Most people required to obtain health insurance coverage or pay a tax if they don’t.
• Health plans no longer can exclude people from coverage due to pre-existing conditions.
• Employers with 50 or more workers who do not offer coverage face a fine of $2,000 for each employee if any worker receives subsidized insurance on the exchange. The first 30 employees aren’t counted for the fine.
• Health insurance companies begin paying a fee based on their market share.

Effective 2015

• Medicare creates a physician payment program aimed at rewarding quality of care rather than volume of services.

Effective 2018

• An excise tax on high cost employer-provided plans is imposed. The first $27,500 of a family plan and $10,200 for individual coverage is exempt from the tax. Higher levels are set for plans covering retirees and people in high risk professions.

The second bill has the following which includes the student loan provision

Amending the Senate’s Healthcare Bill

The Reconciliation bill makes several changes to the Patient Protection and Affordable Care Act that was signed into law on March 23, 2010. These changes include the following,^[17]

• Increasing the tax credits to buy insurance
• Eliminates several of the special deals given to senators, such as Ben Nelson’s “Cornhusker Kickback“
• Lowers the penalty for not buying insurance from $750 to $695
• Closes the Medicare Part D “donut hole” by 2020 and gives Seniors a rebate of $250.
• Delays the implementation on taxing “Cadillac health-care plans” until 2018
• Requires doctors who treat Medicare patients be reimbursed at the full rate
• Sets up a Medicare tax on the unearned incomes of families that earn more than $250,000 annually.
• Offer more generous subsidies to lower income groups. Households below 150% of federal poverty level the would pay 2% to 4% of their income on premiums. Health plans would cover 94% of the cost of benefits.^[18] Households with incomes from 150% to 400% of the federal poverty level ($88,200 for a family of four) would pay on a sliding scale from 4% to 9.8% of their income on premiums, rest will be covered by government advanceable, refundable tax credit. Health plans would cover 70% of the cost of the benefits.^[18][19]
• Would increase the penalty to $2,000 for each full time worker in the company, but would exempt the first 30 employees while calculating the penalty. For example, an employer with 53 workers would pay the penalty for 23 workers, or $46,000.^[18]
• Would increase Medicaid payment rates to primary care doctors to match Medicare payment rates, which are higher, in 2013 and 2014.^[18]
• The federal government would pay all of the costs of expanding Medicaid under the reform until 2016, 95% in 2017, 94% in 2018, 93% in 2019, and 90% thereafter. Some states that already insure childless adults under Medicaid would receive more federal money for covering that group through 2018.
• The Medicare patients will receive 50% discount on brand-name drugs would begin in 2011. By 2020, the government would pay to provide up to 75% discount on brand-name and generic drugs, eventually closing the coverage gap.^[18]
• Would extend the ban on lifetime limits and rescission of coverage to all existing health plans within six months after signing into Law.^[18]

Student loan reform

Title II of the reconciliation bill deals with student loan reform. The language is very similar to the Student Aid and Fiscal Responsibility Act that passed the House last year; but with some slight variation. The reform package includes,^[20]

• Ends the process of the federal government giving subsidies to private banks to give out federally insured loans. Instead loans will be administered directly by the Department of Education.^[21]
• Increases the Pell Grant scholarship award.
• For new borrowers of loans starting in 2014, those who qualify will be able to cap the amount they must spend on loan repayment each month to 10% of their discretionary income (current cap is 15%.)^[20]
• Also, for new borrowers after 2014, loans will be eligible to be forgiven to those who make timely payments after 20 years (the current time-frame being 25 years).^[20]
• Will make it easier for parents to take out federal PLUS loans for students.^[22]
• Several billion will be used to fund historically poor and minority schools, as well as increasing community college funding