March 29, 2010

Healthcare Reform offers consumers very little change for several years

The President's signing of sweeping health reform legislation last week includes a $1 trillion commitment of federal funding to bring access to health care coverage to roughly 32 million currently uninsured Americans.

The legislation includes changes that our industry has been proposing for several years, such as guaranteed coverage, discontinued use of ratings based on health status or gender and an individual mandate.

Using a reconciliation process, H.R. 4872 must still be debated and voted on by the Senate. Assuming the Senate passes this bill with no changes, the health reform package will be complete.

A summary of major changes includes; 

  • Health plans are required to cover all regardless of their health status (guarantee issue), which means an end to disqualification for pre-existing conditions. (2014)
  • Beginning in 2014, individuals will be required to obtain health insurance or pay a penalty for not acquiring coverage. Also, beginning in 2014, large employers will be required to provide insurance to employees or pay a significant penalty.
  • States must organize "exchanges" where individuals and small businesses can purchase insurance if their employer does not provide it. Requirements for a minimum set of benefits are outlined in the legislation, including provisions for preventive care and mental health services. Subsidies are provided to help low- and moderate-income individuals, as well as small businesses, buy insurance.
  • Medicaid eligibility will expand to a broader range of income levels reaching an additional 16 million individuals across the country. The Senate bill also requires states to establish state enrollment websites to promote seamless enrollment and to coordinate with state insurance exchanges.
  • Medicare Advantage plan payments for 2011 are frozen at 2010 levels.
  • The federal government will implement a new system for commercial premium rate review immediately.
  • New taxes will be levied on investment income, high-cost or "Cadillac" health plans, medical device companies, pharmaceutical companies and health plans, among others.
There are some immediate changes. For instance the reconciliation bill contains provisions for cessation of coverage denials for children with pre-existing conditions and an extension to age 26 for dependent children to be covered on their parents' insurance policies. Most of the more far-reaching provisions of the legislation, such as guarantee issue and the creation of insurances exchanges, will not take effect until 2014.

There will be challenges, as well. The legislation does little to address cost-containment issues - underlying medical costs - and this is critical to managing the overall cost of health care.  Although we won't see many immediate changes, preparing for the changes to come and adjusting to new market rules will require patience by everyone involved. Implementation of the new legislation and transitioning to new rules will be complicated.

Look for more Health Care Reform updates and visit for a comparison of all major insurance company benefit plans and premium rates in your state.