Healthcare reform: What it means,
why it matters
The Affordable Care Act has made headlines ever since President Obama signed the law in 2010. The act brings significant changes to the healthcare landscape—some are in effect now, while others will be phased in over the next several years. Probably most important, the law seeks to increase the number of people with health insurance, make coverage more affordable, establish health insurance marketplaces and protect consumers from insurance industry abuses.
These changes also are expected to improve the nation's economic health. The United States now spends a larger percentage of its gross domestic product on healthcare compared with many other peer countries, according to the Organization for Economic Cooperation and Development. The act contains a number of provisions designed to get these high healthcare costs under control, relieving some of the financial strain on communities and families. Reining in healthcare costs will also allow employers to invest in staff, infrastructure and other much-needed improvements, instead of scrambling to keep up with rising insurance premiums.
Several of the act's consumer protections are already in place. For example, young people are allowed to stay on their parents' health insurance until age 26; lifetime limits on the dollar value of essential health benefits have been eliminated; and insurance companies are not allowed to deny children coverage due to pre-existing conditions.
An ounce of prevention ...
Many Americans are benefiting from the act's emphasis on prevention, particularly the new no-cost preventive services. The services are available to people in non-grandfathered insurance plans (grandfathered plans are those that existed before March 23, 2010, and have not since reduced benefits, significantly increased cost sharing or significantly lowered the employer's contribution to the premium) or in plans that have been issued or changed in certain ways since September 2010.
Preventive care now available to many adults without a copay, coinsurance or deductible, includes colonoscopies, cholesterol screening, mammograms and blood pressure screening.Starting this August, additional women's preventive services will be covered with no cost-sharing.
The law also holds insurance companies accountable for how they use our premium dollars. The companies are now required to spend 85 percent of fully insured large group plan premiums on medical care and quality improvement, or else pay rebates to consumers. Insurers will have to publicly report how much they keep as profit or spend on expenses, such as advertising and sales. The first rebates will be issued in August.
There's more to come
Other consumer protections are on the horizon. Beginning in 2014, no one will be denied insurance coverage due to a pre-existing condition, and annual dollar limits on essential health benefits will be abolished.
The arrival of healthcare exchanges in 2014 will usher in a new era of healthcare purchasing. Exchanges are marketplaces where people can shop for health insurance. Each state will create its own exchange, or the federal government will create one for them or with them.
Exchanges will initially only sell insurance to individuals and businesses with generally fewer than 100 employees, although states may choose to allow large employers to insure their employees through the exchanges starting in 2017. Many low- and moderate-income individuals purchasing insurance through the exchanges will receive subsidies, or "premium tax credits," to help them pay for coverage. In general, subsidies are not available to people with access to employer-sponsored insurance unless the employee's share of the self-only premium is greater than 9.5 percent of the employee's income. Large employers who do not offer insurance or who have employees receiving subsidies in the exchange will pay a penalty, although the penalty will be far lower than the average plan premium.
The advent of exchanges is significant even for those with employer-sponsored coverage. State exchanges could use their bargaining power to offer high-quality plans at low cost, which could help control the cost of insurance outside the exchanges.
The availability of subsidies in the exchanges is expected to help reduce the number of uninsured Americans, as will the 2014 requirement that most people have health insurance or else pay a penalty that starts at $95. The government explains that this requirement, called the "individual mandate," will "help offset the costs of caring for uninsured Americans."
While expanding healthcare coverage is a positive step in human terms, it is expected to save money, too. The U.S. Supreme Court is likely to rule on the constitutionality of the individual mandate by this fall.
In addition to providing consumer protections and reducing the ranks of e the uninsured, the act envisions changes in healthcare delivery. It encourages a shift away from the fee-for-service model in which providers are paid for every test and procedure, whether the patient needs them or not. Instead, the act rewards high-quality efficient care that puts the patient's needs—not the bottom line—at the center of healthcare decision-making.
There have been many rumors spread about the Affordable Care Act, including the false idea that the law is too complicated to understand. If you hear a shocking claim about healthcare reform, see if there are facts to back it. Stay informed about the act's effects on you at home and at the bargaining table, and monitor your state's exchange progress.
Reprinted from American Teacher , May/June 2012 issue