Health care reform in the United States

Recent Health care reform in the United States has been enacted via two bills: the Patient Protection and Affordable Care Act (known as the "Senate bill"), which became law on March 23, 2010^[1][2] and was shortly thereafter amended by the Health Care and Education Reconciliation Act of 2010 (H.R. 4872) (which became law on March 30). No Republicans supported either bill.^[3]

Reuters and CNN summarized the March 2010 reforms and the year in which they take effect.^[4][5]

History of national reform efforts

Here is a summary of reform achievements at the national level. For failed efforts, State based efforts, native tribes services and more details generally, see the main article History of health care reform in the United States.

• 1965 President Lyndon Johnson enacted legislation which introduced Medicare, covering both hospital and general medical insurance for senior citizens paid for by a Federal employment tax over the working life of the retiree, and Medicaid permitted the Federal government to part fund a program for the poor, with the program managed and co-financed by the individual states.^[6][7]

• 1985 The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) amended the Employee Retirement Income Security Act of 1974 (ERISA) to give some employees the ability to continue health insurance coverage after leaving employment.^[8]

• 1997 The State Children's Health Insurance Program, or SCHIP, was established by the federal government in 1997 to provide health insurance to children in families at or below 200 percent of the federal poverty line.^[9]

• 2010 The Patient Protection and Affordable Care Act is enacted by President Obama providing for the phased introduction over 4 years of a comprehensive system of mandated health insurance with reforms designed to eliminating "some of the worst practices of the insurance companies" - pre-condition screening and premium loadings, policy recinds on technicalities when illness seems, lifetime and annual coverage caps, and sets a minimum ratio of direct health care spend to premium income. Price competition bolstered by the creation of three standard insurance coverage levels to enable like-for-like comparisons by consumers, and a web based health insurance exchange where consumers can compare prices and purchase plans. System preserves private insurance and private health care providers and provides more subsidies to enable the poor to buy insurance.

Key reform drivers for the 2010 reforms

• Extend health insurance coverage

In 2007 some 15.3% of the population, or 45.7 million people had been without any form of health insurance.^[10][11] The health-care legislation signed into law in March 2010, is estimated to result in an estimated 32 million additional citizens being insured by 2019 than would otherwise have been the case, but would still leave and estimated 23 million without coverage.^[12] Prior to the passage of the 2010 legislation, the average family was reckoned to pay an additional $1,000 per year in insurance premiums to cover the uninsured.^[13] More than 44,800 excess deaths annually were thought to be associated with lack of insurance.^[14][15] More broadly, a 1997 analysis estimated the number of people in the United States—insured and uninsured—who die per year because of lack of medical care was nearly 100,000.^[16] According to the Institute of Medicine of the United States National Academies, the United States is the "only wealthy, industrialized nation that does not ensure that all citizens have coverage".^[17] A 2009 Harvard study published in the American Journal of Public Health found more than 44,800 excess deaths annually in the United States associated with lack of insurance.^[14][18] More broadly, a 1997 analysis estimated the number of people in the United States—insured and uninsured—who die per year because of lack of medical care was nearly 100,000.^[16]

• Address insurance company abuses

Instead of providing health security, the health insurance industry had, since the 1970s began to compete not on service and price but by becoming good risk differentiators, seeking to insure only those with good or normal health profiles and excluding those considered to be or to become unhealthy and therefore less profitable. According to a study from Cambridge Hospital, Harvard Law School and Ohio University, 62% of all 2007 personal bankruptcies in the United States were due to an inability to pay medical costs.^[19] Many of these people forced into bankruptcy had medical insurance but the effect of caps, exclusions, and inability to fund or continue COBRA coverage was behind many of these bankruptices. Medical impoverishment is almost unheard of in wealthy countries other than the US either because the state covers everyone or everyone is obliged to by law to have insurance.^[20]

• Make health insurance more effective

By forcing insurers to cover more of a persons health care costs by excluding lifetime and annual caps, cover first dollar costs for screenings and immunizations and preventing exclusions for necessary care. Ensure that no more than 15% of insurance premiums were swallowed up in insurance company overheads. Some insurance or health benefit schemes were considered wholly inadequate.^[21]

• Reduce the defict

Reducing the defict was another driver in health care reform. The reform legislation that passed was estimated by the Congressional Budget Office to reduce the deficit by $138 billion over ten years.^[22]

Political positions of the main parties

The main political opposition to the passing of health care reform legislation in 2010 came from the Republican party and similar groupings on the right of American politics such as the Tea party movement. In the most tightly contested vote for the final passage of the bill prior to reconciliation, not a single republican in the House or Senate voted in favor of the bill.^[23] This opposition was broadly based on objections to rises in taxation, especially of the so-called "Cadillac insurance plans" and the corollary increase in government spending on affordability subsidies. The GOP also objected to a new Health Insurance Rate Authority that would determine whether rate increases were "unreasonable" and to enforced rebates or premium reductions, and to any proposal that might have allowed government funds to subsidize abortion.^[24] At a more soundbite level, the opposition declared the law to be a "government takeover of health care" though the government did not take propose taking over either the management of the health care system, which largely remains in private hands, nor was their ultimately legislation for a public insurer competitor, though one version of an original draft prepared in the House of Representatives did call for a so-called "public option" (a public insurer as one extra choice for consumers, competing against private insurers. Some Republicans have contested the constitutionality of the clause in the final legislation requiring people to purchase insurance. Both the government and the insurance industry have argued that this is a necessary prerequisite to achieve universality and equity for other insurance payers and to prevent people buying insurance only in time of need. The government argues that is covered under the commerce clause whereas detractors argue this is wrong. This matter is still before the courts now that the legislation has passed.

On the other side, the President gave, in his State of the Union Address held just before the final passage of the bill, his reasons for taking on the issue of health care. He said it was because of the stories that he had heard from Americans with pre-existing conditions whose lives depend on getting insurance coverage; stories of patients being denied coverage, and of families with insurance who are just one illness away from financial ruin. He said that the approach being taken would protect every American from the worst practices of the insurance industry. He said it would give small businesses and uninsured Americans a chance to choose an affordable health care plan in a competitive market. He claimed that if they did nothing, millions of Americans would lose their health care this year and the deficit would grow. He said that premiums would up and patients would be denied the care they need, and that small business owners would continue to drop coverage altogether. He said he would not walk away from those Americans. And he urged others in congress not to do so either. He claimed that doctors and nurses in the health care system, that know the system best, consider this (legislation) a vast improvement over the status quo. He challenged anyone, from either party, with a better plan that would bring down premiums, bring down the deficit, cover the uninsured, strengthen Medicare for seniors, and stop insurance company abuses, to let him know, because he was eager to see it.^[25]

Public policy debate

Lobbying

According to President Obama, America's health insurance industry has spent hundreds of millions of dollars to block the introduction of public medical insurance and stall other proposed legislation.^[26] There are six registered health care lobbyists for every member of Congress.^[27] The campaign against health care reform has been waged in part through substantial donations to key politicians. The single largest recipient of health industry political donations and chairman of the Senate Committee on Finance that drafted Senate health care legislation is Senator Max Baucus (D-MT).^[28] A single health insurance company, Aetna, has contributed more than $110,000 to one legislator, Senator Joe Lieberman (ID-CT), in 2009.^[29]

Health reform and the 2008 presidential election

2010 Reform details

Key provisions of the health-care legislation passed in March 2010 are:^[4]

Within one year of enactment (2010-2011)

• Insurance companies barred from dropping people from coverage when they get sick, ending the practice of rescission. Lifetime coverage limits eliminated and annual limits restricted.
• Young adults able to stay on their parents' health plans until age 26. Many health plans currently drop dependents from coverage when they turn 19 or finish college.
• Uninsured adults with pre-existing conditions will be able to obtain health coverage through a new program that will expire once new insurance exchanges begin operating in 2014.
• Insurance companies cannot deny group or new (non-grandfathered) individual coverage to children under age 19, due to a pre-existing condition.^[30]
• A temporary reinsurance program is created to help companies maintain health coverage for early retirees between the ages of 55 and 64. This also expires in 2014.
• Medicare drug beneficiaries who fall into the "doughnut hole" coverage gap will get a $250 rebate. The bill eventually closes that gap which currently begins after $2,700 is spent on drugs. Coverage starts again after $6,154 is spent.
• A tax credit becomes available for some small businesses to help provide coverage for workers.
• A 10% tax on indoor tanning services that use ultraviolet lamps goes into effect on July 1.

Effective during 2011

• Medicare provides 10% bonus payments to primary care physicians and general surgeons.
• Medicare will cover the full cost of annual wellness visits and personalized prevention plan services for beneficiaries. New health plans will be required to cover preventive services with little or no cost to patients.
• A new program under the Medicaid plan for the poor goes into effect in October that allows states to offer home and community based care for the disabled that might otherwise require institutional care.
• Payments to insurers offering Medicare Advantage services are frozen at 2010 levels. These payments are to be gradually reduced to bring them more in line with traditional Medicare.
• Employers are required to disclose the value of health benefits on employees' W-2 tax forms.
• An annual fee is imposed on pharmaceutical companies according to market share. The fee does not apply to companies with sales of $5 million or less.

Effective as of 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 puts in place financial incentives to reduce preventable readmissions.
• Companies will be required to issue 1099 forms to any vendor of services or rental property to which the business has paid more than $600. Form 1099 is also sent to the IRS. Under the existing law, businesses issued the Form 1099 only to individuals who provided services or property to a business. The healthcare law included the same form be issued to corporations as well, and that the form be issued to individuals and corporations that provide property to the business.^[31][32] Only business related payments are reportable, personal payments not.^[33] There is number of exceptions, for example: payments for merchandise, telephone, freight, storage, payments of rent to real estate agents are excepted.^[33] The health care bill mandate aims to collect lost revenue from companies that under-report on their tax returns. The provision is expected to raise $17 billion over 10 years.^[34]

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

Effective as of 2014

• State health insurance exchanges for small businesses and individuals open.
• Individuals with income up to 133% of the federal poverty level qualify for Medicaid coverage.
• Healthcare tax credits become available to help people with incomes up to 400 percent of poverty purchase coverage on the exchange.
• Premium cap for maximum "out-of-pocket" pay will be established for people with incomes up to 400 percent of FPL.^[35][36] Section 1401 of PPACA explains that the subsidy will be provided as a advanceble, refundable tax credit^[37] and gives a formula for it calculation.^[38] Refundable tax credit is a way to provide government benefit to people even with no tax liability^[39] (example: Child Tax Credit). According to White House and Congressional Budget Office the maximum share of income that enrollees would have to pay for the "silver" healthcare plan would vary depending on their income relative to the federal poverty level, as follows:^[40][41] for families with income 133–150% of FPL will be 4-4.7% of income, for families with income 150–200% of FPL will be 4.7-6.5% of income, for families with income 200–250% of FPL will be 6.5-8.4% of income, for families with income 250-300% of FPL will be 8.4-10.2% of income, for families with income from 300-400% of FPL will be 10.2% of income. In 2016,the FPL is projected to equal about $11,800 for a single person and about $24,000 for family of four.^[40] See Subsidy Calculator for specific dollar amount.^[42]
• Most people required to obtain health insurance coverage or pay a tax if they don't.
• 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.

Effective 2015

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

Effective 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.

Legal challenges

Main article: Patient Protection and Affordable Care Act: Legal challenges

As Congressional approval neared, opponents of health care reform shifted from parliamentary and procedural opposition to challenge the constitutionality of the legislation. The Virginia General Assembly passed the Virginia Health Care Freedom Act before Congress completed action on its bill. Governor Robert F. McDonnell signed that law on March 24, prior to House approval of the reconciliation bill.^[43] The Virginia law prohibits any individual from being required to purchase health insurance. On March 17, 2010, Virginia Attorney General Ken Cuccinelli sent Speaker Pelosi a letter threatening constitutional challenge to the enactment of the bill if the House used a self-implementing rule and deemed the Senate bill to pass.^[44] On March 23, 2010, Cuccinelli filed Commonwealth v. Sebelius in the Federal District Court for the Eastern District of Virginia challenging the Constitutionality of the insurance requirement.^[45] Also on March 23, 2010, the Attorney General of Florida, together with the States of South Carolina, Nebraska, Texas, Utah, Louisiana, Alabama, Michigan, Colorado, Pennsylvania, Washington, Idaho and South Dakota filed a joint law suit in a Florida district court also challenging the new law.^[46]

Some Constitutional law professors and commentators in the press have opined that the lawsuits and state laws are unlikely to succeed.^{[47][48][49][50]} However, other Constitutional law professors and other legal experts maintain that the health insurance mandate (the requirement that individuals purchase insurance, or face a penalty) is, in fact, unconstitutional.^[51][52]

On August 2, 2010, District Court Judge Henry Hudson, presiding over Virginia's lawsuit challenging the Obama administration's health care reform package, denied the Justice Department's attempt to have that lawsuit dismissed, stating that Virginia's case raises Constitutional issues - mainly whether Congress has the right under the Commerce Clause to regulate and tax a person's decision not to participate in interstate commerce.^[53]

See also

• McCarran–Ferguson Act United States federal law that exempts health insurance companies from the federal anti-trust legislation that applies to most businesses.
• United States National Health Care Act
• Health care compared - tabular comparisons of the U.S., Canada, and other countries not shown above.
• Health care reform
• Health economics
• Health insurance exchange
• Health policy analysis
• Health care politics
• List of healthcare reform advocacy groups in the United States
• National health insurance
• Medicare Sustainable Growth Rate
• 2010 Barack Obama speech "Fighting for Health Insurance Reform"

Further reading

Books

• Christensen, Clayton Hwang MD, Jason, Grossman MD, Jerome, The Innovator's Prescription, McGraw Hill, 2009. ISBN 978-0-07-159208-6
• Mahar, Maggie, Money-Driven Medicine: The Real Reason Health Care Costs So Much, Harper/Collins, 2006. ISBN 978-0-06-076533-0
• Starr, Paul, The Social Transformation of American Medicine, Basic Books, 1982. ISBN 0-465-07934-2
• Malhotra, Umang, Solving the American Healthcare Crisis, iUniverse, 2010. ISBN 978-1-4401-8018-7
• Reid, T.R. (2009). The Healing of America: A Global Quest for Better, Cheaper and Fairer Health Care. Penquin Books. ISBN 978-1594202346. 

Articles and links

• Comparing Health Care Plans: A Guide to Reform Proposals, Committee for a Responsible Federal Budget
• Doctors support universal health care: survey, Reuters, March 31, 2008 (first reported in Annals of Internal Medicine).
• Health Care Reform Chronology 2010 - 2018, from Aon Corporation
• Health Care Cost Survey Reveals High-Performing Companies Gain Health Dividend (2009) from Towers Perrin
• Hidden costs, value lost: uninsurance in America. Institute of Medicine Committee on the Consequences of Uninsurance. Washington, DC: National Academies Press, 2003.
• Paying More, Getting Less from Dollars & Sense
• Reducing Costs While Improving the U.S. Health Care System: The Health Care Reform Pyramid by Deloitte, January 2009
• Sick Around the World: Can the U.S. learn anything from the rest of the world about how to run a health care system? from Frontline, PBS.
• Barack Obama - Town Hall Transcript - August 11, 2009
• Charlie Rose Show - Interview with Mayo Clinic President & CEO Denis Cortese
• The New Yorker-Atul Gawande-The Cost Conundrum-June 2009
• GAO-U.S. Financial Condition and Fiscal Future Briefing-2008
• President Obama Remarks by the President to a Joint Session of Congress on Health Care September 9, 2009

References

External links

• HealthReform.gov official government site
• Health Insurance Reform Reality Check official White House rumor control site
• Health Care from WhiteHouse.gov

Directory

• Health care reform in the United States at the Open Directory Project

News media

• Health Care in America from CNN
• Health Care Hub from C-Span
• Health Care Reform & YouTube from Governing Dynamo, includes nearly all White House videos on health care reform
• Health Care Reform collected news coverage from The New York Times
• Prescriptions for Change collected news coverage from NPR
• Healthcare Reform collected news coverage from Reuters
• Health-Care Reform 2009 collected news coverage from The Washington Post
• In Search of Health Care Reform interactive overview
• In Historic Vote, House Approves Landmark Healthcare Reform Bill - video report by Democracy Now!
• Health Systems and reform, a special program of the World Association for Medical Law

Financial information

• Congressional Budget Office official government site
• Estimated Impact of Health Care Reform Proposals from the Centers for Medicare and Medicaid Services
• Office of Management and Budget official government site
• Comparison of House and Senate Health Care bills from Committee for a Responsible Federal Budget group
• Interactive and Sharable Graphs Comparing the Health Care Bills
• Kaiser Family Foundation: Health Reform Subsidy Calculator—Premium Assistance for Coverage in Exchanges/Gateways

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