by Jane Noble Aug.13.2012
The American healthcare system is vast and complex and it feels complicated because it simply is.
Few people understand all its intricate workings and so often, the language used to describe it is convoluted, pretentious and stuffed with jargon. With new reforms being introduced, there is now even more information to assimilate. Times of change are exciting, but are also very unnerving as we struggle to re-imagine our healthcare system. Without a crystal ball, not even the experts can accurately predict the long-term future, but a good starting point is to know what changes are already in effect and what is still to come.
On March 23rd 2010, the new healthcare reform law, known as the Patient Protection and Affordable Care Act (ACA), also dubbed ObamaCare, was passed. It is over 2,000 pages long! With President Obama’s recent re-election, the discussion has shifted from what happens if the Act survives, to what happens now its future seems secure. What are the implications of this new law for consumers in general and seniors in particular?
Here is an attempt to simplify not all, but some of the key elements of the new law as it affects the consumer. It is by no means comprehensive since comprehensive would indeed mean 2,000 plus pages but an attempt to summarize the main points in straightforward language.
INSURANCE FOR ALL
The first big change is that everyone will now have to buy insurance. By 2014 all American citizens must be insured (with a few exceptions) and those who aren’t will have to pay a tax. The tax starts at $95 or 1% of income, whichever is greater, in the first year and tops out at $695 or 2.5% of income in 2016. It will continue to increase after that with cost of living adjustments.
The ACA will offer subsidies for those who have trouble affording insurance and will increase taxes on those with high incomes to help fund Medicare. There are two ways that taxes will be increased.
- Taxes on the wealthy will be increased by 0.9% to 2.35% for all individuals earning over $200,000 and all married couples earning more than $250,000.
- Beginning in 2013, individuals will only be able to deduct unreimbursed medical expenses from their taxes if those expenses are higher than 10% of income. The previous figure was 7.5% of income. I f you are 65 or over, you are allowed to keep the original 7.5% until 2016.
By 2014 every state must have a Health Insurance Exchange – this is like a state run market place for buying insurance. In the same way as the owner of a mall decides on the stores, the Exchange will decide which insurance companies it will offer. Consumers will be able to shop around for insurance, a bit like booking on-line travel.
PROTECTING THE CONSUMER
New regulations on insurance aimed at protecting consumers are some of the most noticeable changes of health care reform. The consumer protections include:
- Insurers cannot deny coverage because of pre-existing conditions
- The waiting period for new insurance can be no longer than 90 days
- Insurers may not reexamine and cancel policies once a policyholder gets sick
- Insurers may not require co-pays or deductibles for preventative services
- Deductibles may be no higher than $2,000 per person, $4,000 per family
- Insurers may not institute either annual or lifetime limits
- Parents may maintain coverage for adult, dependent children up to age 26
- An appeal process is in place so policyholders may now appeal if they think their plans are not up to snuff
- States must develop a board to review insurance plans
WELLNESS & PREVENTION
In terms of Medicare beneficiaries, perhaps the biggest change is that as of January 2011, preventative services no longer require a co-pay or a deductible. These services can include colonoscopies for older adults, annual check ups, mammograms, pap smears, flu shots and screenings for some diseases like diabetes and cancer. Medicare patients will have access to a comprehensive health risk assessment and a free personalized prevention plan to help them and their doctors continue to focus on wellness instead of illness.
The ACA plans to bring transparency to food and nutrition. Beginning in 2014 , food vendors and restaurants with more than 20 locations must post the calorie value of their food on all menus. No more kidding yourself that burger is slimming! They must also make information about saturated fats, sodium and cholesterol available on request.
A greater emphasis on wellness in our society will ultimately make people healthier, nip costly chronic conditions in the bud and hopefully result in less need for expensive acute care.
THE PRESCRIPTION DRUG “DOUGHNUT HOLE”
The “doughnut hole” exists because Medicare covers 75% of annual prescription costs up to $2,700 and pays 95% of prescription costs over $6,154. So there is a gap in the middle where Medicare pays nothing and the individual has to pay entirely out of pocket.
This has been a huge problem for many low- and middle-income families and seniors. Starting in January 2011, pharmaceutical companies are required to provide a 50% discount on brand-name drugs for those in the coverage gap and federal subsidies will do the same for generic prescriptions. Over the next several years the ACA plans to close the “doughnut hole” by reducing patient out-of-pocket expenses for drugs from 100% in 2010 to 25% in 2020.
NEW MEDICARE PROGRAMS
Along the same lines of increasing short term spending with the goal of improving the health of the American population and so decrease long term spending down the road, Medicare is establishing several new programs.
Bundled Payments: Starting in 2013 there is a pilot program to charge one lump sum for a course of treatment rather than traditional fee for service payments.
Independence at Home Demonstration Project: An experimental program to pay teams of doctors and nurses to provide primary care to some underserved beneficiaries in their homes.
Federal Coordinated Health Care Office: This office will identify “dual eligibles” – patients who are eligible for both Medicare and Medicaid – and coordinate their care between the two programs.
Center for Medicare & Medicaid Services (CMS): Established in 2010, this office designs and tests new delivery and payment systems for federal insurance programs with the aim of decreasing costs and improving quality.
HEALTH INFORMATION TECHNOLOGY
The health reform bill calls for technology to reduce costs, improve medical care and set up a Center for Medicare and Medicaid innovation to test payment and service models. Here at Amada, we realized early on the vital role technology would play in servicing our clients and keeping families in touch. So we developed our own proprietary software Transparent and it has revolutionized the in-home care experience.
Health information technology is the underlying framework for a streamlined, efficient and improved health care system.