A project of the George Washington University's Hirsh Health Law and Policy Program and the Robert Wood Johnson Foundation

Reform Overview

Summary of the Health Reform Legislation

 

The intent of the Patient Protection and Affordable Care Act (P.L. 111-148), as amended by the Reconciliation Act of 2010 (P.L. 111-152) (collectively referred to as the health reform law) is to expand health insurance coverage while also reforming the health care delivery system to improve quality and value. It also includes provisions to eliminate disparities in health care, strengthen public health and health care access, invest in the expansion and improvement of the health care workforce, and encourage consumer and patient wellness in both the community and the workplace.  According to the Congressional Budget Office, the law will increase coverage to about 94 percent of Americans, while slowing the rate of growth in federal health expenditures by $124 billion over the next decade.[1]

Over the coming months, Health Reform GPS will publish topical entries devoted to hundreds of provisions of the Health Reform Act.  This introduction summarizes the changes that will be translated from law to action.

Immediate Reforms

Many of the most significant reforms will not take effect until 2014, but the Health Reform Act includes an array of provisions that will be implemented in the near-term and that are designed to take immediate steps to improve access and population health while helping vulnerable groups.

Two key provisions will assist children and young adults. Insurers will no longer be able to deny or limit coverage to children because of pre-existing conditions, and they will be required to allow parents to keep their children on their family insurance policies until they reach age 26.

Two other measures will help Americans with especially high health care costs. Adults who cannot get insurance because of a pre-existing condition may be able to get coverage through a new program to create one or more high-risk pools.  Designed to assist individuals until insurance market reforms are in place, the program is funded at five billion dollars over the next six years. Those who have insurance will no longer be at risk of having their benefits cease because they have reached a lifetime coverage cap.

Other immediate reforms include a temporary reinsurance program for businesses to help subsidize high-cost retirees age 55-64 who are not yet eligible for Medicare, the creation of internet resources to simplify buying insurance, a review of premium increases by the Secretary of Health and Human Services and state regulators, and new tax credits for small businesses to help offset the cost of providing coverage to their employees.

A new $12.9 billion Prevention and Public Health Fund assures immediate investments in community wellness and health promotion, while an $11 billion commitment to the expansion of community health centers promises to double health center capacity in the nation’s most medically underserved communities.

Click here for a more detailed look at Immediate Reforms.

Health Insurance

The health reform law introduces major changes to the insurance market, beginning in 2014.  Insurers will no longer be able to discriminate based on health status or gender, cap benefits, or rescind coverage retroactively. Plans will be standardized into four tiers based on their value so that purchasers can easily compare plans. Small businesses and people who do not get insurance from their employer will be able to buy insurance through new state health insurance exchanges.

All insurers that participate in new state health insurance exchanges will be required to provide a package of “essential benefits” in order to assure that the comparisons are “apples-to-apples” and that important benefits are not omitted.   The law requires that insurers and health benefit plans offered by employers cover mental health and addiction services on an equal footing with other medical coverage. Insurers will also be required to offer specified wellness and preventive services at no out-of-pocket cost to patients.  The health reform law will maintain current laws that prohibit the use of federal funds to pay for the cost of abortion coverage other than in cases of rape, incest, and procedures needed to save the life of the mother, but individuals who purchase coverage through a state exchange will be able to buy additional coverage for other abortion services with their own funds (unless prohibited by state law).

In this new market, all individuals will be required to carry insurance or pay a tax. Those who are enrolled in federal programs such as Medicare, Medicaid, the Children’s Health Insurance Program (CHIP), TriCare, the federal employee health benefits plan, veteran’s health care, or the Indian Health Service (IHS) are considered to be insured. Individuals and families earning less than 400 percent of the federal poverty level will be given tax credits to subsidize insurance premiums, and may also be eligible for help with out-of-pocket costs. (People earning below 133 percent of the federal poverty level will be eligible for Medicaid coverage.) The health reform law also provides a process to exempt individuals from the health insurance requirement if the cost of coverage exceeds a certain percentage of their income. Undocumented immigrants, however, will be barred from buying coverage through the exchanges and from receiving tax credits.

Employers with more than 50 employees that do not offer coverage will pay an assessment for each employee who relies on tax credits to buy insurance through a state exchange.

Click here for a more detailed look at Health Insurance.

Medicare

The health reform law phases in full coverage of prescription drugs under Medicare Part D, eliminating the current gap in coverage known as the “donut hole.” It also expands coverage of preventive services and eliminates copayments and deductibles for these services.  In addition, the new law expands Medicare coverage for individuals who are exposed to environmental hazards.

Click here for a more detailed look at Medicare.

Medicaid and CHIP

The health reform law expands Medicaid to reach all non-elderly low income persons with incomes less than 133 percent of the federal poverty level ($24,352 for a family of three in 2010). States have the option of providing more modest benefits to the “expansion” population.  Other Medicaid reforms include new coverage of primary and preventive services and improved provider payments for primary health care.  The federal government will provide increased funding to states to help offset the cost of the coverage expansions and higher provider payments.

The law also extends the Children’s Health Insurance Program (CHIP) reauthorization an additional two years, through September 30, 2015, gives additional federal support to states, and provides additional resources for outreach and enrollment. CHIP is designed to provide health insurance coverage to low-income children whose family incomes are too high to qualify for Medicaid.

Click here for a more detailed look at Medicaid and SCHIP.

Health Care Quality and Value

A core purpose of the health reform law is to advance reforms in health care delivery through innovations in payment, technology, and other tools that have been shown to improve quality and reduce unnecessary or harmful spending. The primary policy engine for accomplishing health system change is the expanded authority given to the Secretary of Health and Human Services to undertake major pilot programs in health care delivery and organization that can be “scaled up” as evidence of their impact emerges.  The law also establishes two new research bodies to recommend new approaches: the Center for Medicare and Medicaid Innovation and the Patient-Centered Outcomes Research Institute. The law also contains provisions to speed access to new treatments.

Click here for a more detailed look at Health Care Quality and Value.

Health Care Fraud and Abuse

The health reform law strengthens anti-fraud and abuse safeguards throughout the health care system and expands integrity programs for Medicare, Medicaid, and CHIP.

Click here for a more detailed look at Health Care Fraud and Abuse.

Public Health, Health Care Infrastructure, and Health Disparities

The health reform law provides several new enhancements to public health programs, community health services, and the health care workforce, while taking steps to reduce health disparities. It creates a new council within HHS to develop a national prevention and health promotion strategy and sustained funding sources for programs to pursue these objectives. A Prevention and Public Health Fund will help support the cost of public health improvement across a range of key areas. Nutrition labeling will be required in restaurants, and efforts to collect vital statistics on diseases including diabetes and heart disease would be expanded. The health reform law also invests in public health and wellness by increasing access to dental health prevention services, investing in school-based health services, and providing incentives to employers to develop wellness program and incentives for employees to participate in those programs.  It also promotes expanded maternal and child health services, abstinence education, and reproductive health classes when combined with abstinence education.

The health reform law permanently authorizes and expands Community Health Centers and the National Health Services Corp while investing in a doubling of health center capacity.  The law also strengthens the Indian Health Service. Through federal programs and grants to states, the health reform law will help expand the nation’s health workforce, from physicians and nurses to public health professionals, through scholarships and loan repayment assistance. The law also aims to improve the diversity of the health workforce in order to assure care that is appropriate for the entire population.

A new emphasis on the collection of information about health and health care disparities will allow the nation to better measure progress. In addition, the law restructures and elevates the Office of Minority Health inside HHS and improves data collection on race, ethnicity, sex, primary language, and disability status.

Click here for a more detailed look at Public Health, Health Care Infrastructure, and Health Disparities.

Tax Changes

The health reform law also changes the tax treatment of health insurance coverage to encourage individuals and employers to choose lower cost health insurance plans by imposing a surtax on “high-cost” health insurance plans.  The law also limits the amount that can be set aside by individuals in tax-preferred accounts, known as cafeteria plans, and by increases penalties for early withdrawals or withdrawals for non-health purposes from Health Savings Accounts or Medical Savings Accounts.

Click here for a more detailed look at Tax Changes.

Long-Term Care

In order to provide for those who need long-term care, the health reform law creates new Medicaid options to promote community-based care and protect spouses of those with serious illness from becoming impoverished. It also creates a voluntary long-term care insurance program, the Community Living Assistance Services and Support or CLASS Act.

Click here for a more detailed look at Long-Term Care.


[1] Letter from Douglas W. Elmendorf, Director, Congressional Budget Office, to the Honorable Nancy Pelosi, Speaker, U.S. House of Representatives, on the budgetary effects of the Patient Protection and Affordable Care Act as amended by the Reconciliation Act of 2010.  (Mar. 20, 2010). http://cbo.gov/doc.cfm?index=11379 (Accessed April 14, 2010).