22 March 2010

Immediate Provisions of Health Care Reform

One of the political liabilities of the HCR bill is that the most important elements -- the insurance exchanges, subsidized plans, and the expansion of Medicaid -- do not go into effect for several years, indeed until after the next presidential election.  This was, lamentably, a gimmick Congress used to stay beneath an arbitrary cost ceiling imposed by President Obama.  But it is what it is.  So what is in the short-term horizon for health care?  What effects will be seen immediately?

Shamelessly borrowing from a note that Speaker Pelosi (a close personal friend) sent me last night, here are some of the key provisions that go into effect within the next 90 days, 6 months, or year:
  • SMALL BUSINESS TAX CREDITS— Tax credits of up to 35 percent of premiums will be immediately available to firms that choose to offer coverage.   (Beginning in 2014, the small business tax credits will cover 50 percent of premiums.)
  • BEGINS TO CLOSE THE MEDICARE PART D DONUT HOLE—Provides a $250 rebate to Medicare beneficiaries who hit the donut hole in 2010.  Completely closes the donut hole by 2020.
Some much needed investments in Primary Care:
  • COMMUNITY HEALTH CENTERS—Increases funding for Community Health Centers to allow for nearly a doubling of the number of patients seen by the centers over the next 5 years. Effective beginning in fiscal year 2010.
  • INCREASING NUMBER OF PRIMARY CARE DOCTORS—Provides new investment in training programs to increase the number of primary care doctors, nurses, and public health professionals. Effective beginning in fiscal year 2010.
  • INCREASING REIMBURSEMENT FOR PRIMARY CARE SERVICES—Creates a 10% bonus for primary care services provided under medicare.
Some of the insurance regulatory reforms:
  • ENDS RESCISSIONS—Bans health plans from dropping people from coverage when they get sick.
  • NO DISCRIMINATON AGAINST CHILDREN WITH PRE‐EXISTING CONDITIONS—Prohibits health plans from denying coverage to children with pre‐existing conditions. Beginning in 2014, this prohibition would apply to all persons.
  • BANS LIFETIME LIMITS ON COVERAGE—Prohibits health plans from placing lifetime caps on coverage.
  • BANS RESTRICTIVE ANNUAL LIMITS ON COVERAGE—Tightly restricts new plans’ use of annual limits to ensure access to needed care.
  • FREE PREVENTIVE CARE UNDER NEW PRIVATE PLANS—Requires new private plans to cover preventive services with no co‐payments and with preventive services being exempt from deductibles.
  • NEW, INDEPENDENT APPEALS PROCESS—Ensures consumers in new plans have access to an effective internal and external appeals process to appeal decisions by their health insurance plan.
  • ENSURING VALUE FOR PREMIUM PAYMENTS—Requires plans in the individual and small group market to spend 80 percent of premium dollars on medical services, and plans in the large group market to spend 85 percent. Insurers that do not meet these thresholds must provide rebates to policyholders.
  • IMMEDIATE HELP FOR THE UNINSURED UNTIL EXCHANGE IS AVAILABLE (INTERIM HIGH‐RISK POOL)— Provides immediate access to insurance for Americans who are uninsured because of a pre‐existing condition ‐ through a temporary high‐risk pool.
  • EXTENDS COVERAGE FOR YOUNG PEOPLE UP TO 26TH BIRTHDAY THROUGH PARENTS’ INSURANCE – Requires health plans to allow young people up to their 26th birthday to remain on their parents’ insurance policy, at the parents’ choice.
  • PROHIBITING DISCRIMINATION BASED ON SALARY—Prohibits new group health plans from establishing any eligibility rules for health care coverage that have the effect of discriminating in favor of higher wage employees.

Further, despite the disingenuous rhetoric of Rep Paul Ryan, this bill does not in fact cook the books.  The funding is over ten years but the benefits are over six -- that sounds damning, but this graph shows that in fact the revenue collections and offsets rise very much in lockstep with the new expenditures over the next decade:

There's a little pre-paying of spending there, but it's small, and frankly it makes sense to book the revenues before you pay out the benefits, at least to some degree.  Remember, as well, that the deficit savings are projected to increase in the subsequent years, too.

Overall, this is pretty good bang for the buck in the initial years.  I'd still like to see the exchanges start up immediately, but the interim high-risk pools are a nice start (are they subsidized? I'm not sure).  It will definitely give the Dems some good talking points leading up to November, and hopefully will start giving consumers some needed relief.


  1. Always interested to believe what you wish, but, here are the operative sections of the CBO which really take issue with your conclusions:

    The reconciliation proposal and H.R. 3590 would maintain and put into effect a number of policies that might be difficult to sustain over a long period of time. Under current law, payment rates for physicians’ services in Medicare would be reduced by about 21 percent in 2010 and then decline further in subsequent years; the proposal makes no changes to those provisions. At the same time, the legislation includes a number of provisions that would constrain payment rates for other providers of Medicare services. In particular, increases in payment rates for many providers would be held below the rate of inflation (in expectation of ongoing productivity improvements in the delivery of health care). The projected longer-term savings for the legislation also reflect an assumption that the Independent Payment Advisory Board established by H.R. 3590 would be fairly effective in reducing costs beyond the reductions that would be achieved by other aspects of the legislation.
    Under the legislation, CBO expects that Medicare spending would increase significantly more slowly during the next two decades than it has increased during the past two decades (per beneficiary, after adjusting for inflation). It is unclear whether such a reduction in the growth rate of spending could be achieved, and if so, whether it would be accomplished through greater efficiencies in the delivery of health care or through reductions in access to care or the quality of care. The long-term budgetary impact could be quite different if key provisions of the legislation were ultimately changed or not fully implemented.

    Shadow - you might want to read more about the "broken window theory" -- how and why it fails.

  2. Evinx: it amazes me once again - people are forgetting that there are real people out there with no hope of getting health care, who can't afford to get sick and who are either on the brink of losing their house and everything ...isn't it selfish to not want better for these people???


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