The law puts in place comprehensive health insurance reforms that will roll out over four years and beyond, with most changes taking place by 2014. The adjustments are many, and the public has questions as they attempt to decipher the nuances of each item, and how it affects themselves and their families. Health insurance agencies will make the most changes to their systems, but the public needs to understand these adjustments and be clear on their new coverage parameters.
Starting January 1 of this year, there are the key components to understand about the reform, many that affect seniors in particular.
Seniors who reach the coverage gap or "donut hole" will receive a 50 percent discount when buying Medicare Part D covered brand-name prescription drugs. Over the next ten years, seniors will receive additional savings on brand-name and generic drugs until the coverage gap is closed in 2020. The law now also provides certain free preventive services, such as annual wellness visits and personalized prevention plans, for seniors on Medicare.
The law will also impact many insurance company policies. To ensure premium dollars are spent primarily on health care, the new law requires that at least 85% of all premium dollars collected by insurance companies for large employer plans are spent on health care services and health care quality improvement. For plans sold to individuals and small employers, at least 80% of the premium must be spent on benefits and quality improvement. If insurance companies do not meet these goals because their administrative costs or profits are too high, they must provide rebates to consumers.
Today, Medicare pays Medicare Advantage insurance companies over $1,000 more per person on average than is spent per person in Original Medicare. This results in increased premiums for all Medicare beneficiaries, including the 77% of beneficiaries who are not currently enrolled in a Medicare Advantage plan. The new law eliminates this discrepancy. People enrolled in a Medicare Advantage plan will still receive all guaranteed Medicare benefits, and the law provides bonus payments to Medicare Advantage plans that provide high quality care.
The law also establishes a new Center for Medicare & Medicaid Innovation that will begin testing new ways of delivering care to patients. These new methods are expected to improve the quality of care and reduce the rate of growth in costs for Medicare, Medicaid, and the Children's Health Insurance Program (CHIP). The Innovation Center will rigorously and rapidly assess the progress of its programs and work with providers and other payers to replicate successful innovations in communities across the country. It will test models that include establishing "open innovation communities" that will serve as information clearinghouses for best practices of health care delivery reform. These communities will act as testing grounds for new practices, yielding innovative ideas and lessons, and fostering ongoing exchange on shared challenges.
As the year progresses, funding will be available for other operations of this new law. Right now, The Independent Payment Advisory Board begins operations to develop and submit proposals to Congress and the President aimed at extending the life of the Medicare Trust Fund. The Board is expected to focus on ways to target waste in the system, and recommend ways to reduce costs, improve health outcomes for patients, and expand access to high-quality care. Funding will become available October 2011.
Also in October, the new Community First Choice Option allows States to offer home and community based services to disabled individuals through Medicaid rather than institutional care in nursing homes.
AARP Senior Vice President Cheryl Matheis states:
"Americans of all ages still have questions about the law and what it means for their families. As part of our ongoing effort to answer those questions, we want to give everyone access to clear, objective information about the new benefits and responsibilities these changes will bring. Whether it's helping a college age child sign up for insurance or knowing what preventive services are available, Americans are looking for reliable information."
Prior to 2011, many changes were already in process. In a key July 1 initiative, a pre-existing condition insurance plan provided new coverage options to individuals who have been uninsured for at least six months because of a pre-existing condition. States now have the option of running this new program in their state. If a state chooses not to do so, a plan will be established by the Department of Health and Human Services in that state. This program serves as a bridge to 2014, when all discrimination against pre-existing conditions will be prohibited.
In addition the law provides for an easy-to-use website where consumers can compare health insurance coverage options and pick the coverage that works for them. Go to www.healthcare.gov to find out more about how all of these changes affect you, your families and loved ones.
Read the entire 907 pages of the Act here.