Senator Ranker Explains Health Care Reform Legislation

Contributed by State Senator Kevin Ranker

On March 21^st Congress and President Obama accomplished substantive healthcare reform.   The bills have enormous implications for our state as demand for health and long term care services continues to increase. In sum, the legislation will help preserve the state’s insurance safety net, strengthen small businesses and provide important consumer protections. In addition, the legislation augments health reforms we’ve made in Washington State, such as allowing state workers to keep children up to 26 years of age on their policies and banning gender discrimination.   Two bills were used to pass federal reform. They include:

• HR 3590 – The Patient Protection and Affordable Care Act.  This bill has the vast majority of key pieces of reform and was signed into law on March 23, 2010;
• The House also passed HR 4872 – the Health Care Reform Reconciliation Act.  This bill, which the Senate must also approve, contains elements that the House and Senate developed to “reconcile” the differences between the two chambers.

What to expect Within the first year

• Insurance companies will be barred from dropping people from coverage when they get sick (so-called “rescission). Lifetime coverage limits will be eliminated and annual limits are to be restricted.
• Insurers will be barred from excluding children for coverage because of pre-existing conditions.
• Young adults will be able to stay on their parents’ health plans until the age of 26 (instead of being dropped when they turn 19 or finish college.
• The state will receive up to $30 million per year to expand the state high risk pool (WSHIP) and reduce premiums for uninsured people with pre-existing conditions.
• Until 2014, a reinsurance program is created to help companies continue coverage for early retirees between the ages of 55 and 64.
• Medicare drug beneficiaries who fall into the “doughnut hole” coverage gap this year will get a $250 rebate and over next several years, the hole will be eliminated. Currently, the hole starts after $2,700 is spent on drugs and coverage starts again after $6,154 is spent.
• A tax credit becomes available for some small businesses to help cover the cost of buying coverage for workers.  The size of the credit depends on the size of the business, but can range up to 35% of the cost of premiums.

2011

• Medicare provides 10 percent bonus payments to primary care physicians and general surgeons.
• Eliminates cost-sharing for preventive services in Medicare effective January 1, 2011.  Increases Medicare payments for certain preventive services.  Medicare beneficiaries will be able to get a free annual wellness visit and personalized prevention plan service.
• By October, 2011, a new Medicaid program promoting home and community-based instead of nursing home care.
• For decades, Medicare has paid lower rates to states like Washington that provide more efficient and effective care.  HR 4872 would fix this by immediately increasing Medicare payments to Washington physicians and hospitals and then modifying payment rates to bring our states rates up.

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 put in place financial incentives to reduce preventable readmissions.

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 percent from 7.5 percent of income. The threshold remains at 7.5 percent for the elderly through 2016.
• The Medicare payroll tax is raised to 2.35 percent from 1.45 percent 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 group.
• A 2.9 percent excise tax in imposed on the sale of medical devices. Anything generally purchased at the retail level by the public is excluded from the tax.

2014

• State health insurance exchanges for small businesses and individuals open.
• Most people are required to obtain health insurance coverage or pay a fine. Sliding scale tax credits help subsidize premiums for people with incomes between 0 and 400 percent of poverty.
• 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.

2015

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

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.

Source: Reuters, https://www.reuters.com/article/idUSN1914020220100319 Note: the implementation date of some reforms will vary depending on whether HR 4872 passes Federal Health Reform: What’s in it for Washington Program expansions

• Health reform will open access to Medicaid for 411,076 newly eligible Washingtonians by expanding eligibility to non-elderly parents, childless adults, children and pregnant women with income up to 133 percent of the federal poverty level. Source: Urban Institute. The federal government will fully fund the cost of covering these newly eligible individuals for three years and will pay 90 percent of these costs after 2020, compared to the current contribution in Washington of 50.1 percent of costs. In total, Washington could receive $3.9 billion in federal funding during just the first five years of this coverage expansion.

Affordable coverage

• Up to 457,000 Washingtonians will get tax credits to help make health insurance more affordable, bringing $7.4 billion in premium and cost-sharing tax credits into Washington during the first five years of the health insurance Exchange. Source: HealthReform.gov; Senate Finance Committee.
• Family health insurance premiums will be reduced by $1,470 – $2,090 for the same benefits, as compared to what they would be without health reform by 2016. Source: Senate Finance Committee estimate based on CBO.

Small Businesses

• 92,500 Washington small businesses will receive tax credits to help make coverage more affordable. Source: HealthReform.gov. Small businesses make up 77.7 percent of all Washington businesses, yet just 47.5 percent of these small businesses are able to offer health insurance to their employees. Source: Agency for Healthcare Research and Quality.

Our children

• Insurance companies will be prohibited from excluding coverage of pre-existing conditions for the 1.6 million children in Washington, starting this year. Source: U.S. Census Bureau.

Washington’s young adults

• According to the National Conference of State Legislatures, “Young adults often lose their health insurance if covered under a parent or guardian’s policy at age 19 or upon graduation from high school or college.” Source: NCSL. Starting this year, 615,337 young adults in Washington will be able to remain covered by their parent’s insurance policy until age 26. In addition, once the health insurance Exchanges are operational in 2014, 1 million Washingtonians under age 30 will have access to less costly catastrophic-only health insurance plans. Source: U.S. Census Bureau.

Washington seniors

• The “donut hole? will be closed and Medicare benefits for 897,000 Washington seniors will be improved. Source: HealthReform.gov.
• Reduce Medicare premiums for the 692,000 Washington seniors who are not enrolled in Medicare Advantage and will no longer subsidize these private insurance plans. Source: U.S. Senate Finance Committee.

Washington’s uninsured

• 811,000 Washingtonians who are uninsured and 359,000 Washingtonians who purchase health insurance through the individual market will have affordable coverage options. Source: HealthReform.gov.
• As many as 105,019 uninsured Washingtonians who have a pre-existing condition will have immediate access to affordable insurance options. Source: Estimate using Agency for Healthcare Research and Quality (AHRQ), and HealthReform.gov.

Community health centers

• More federal funding will be provided for 232 Community Health Centers in Washington. Source: National Association of Community Health Centers

Source: Democratic Policy Committee Special Report: The Benefits of Health Reform In Washington