On Sunday, March 21st, 2010 the United States House of Representatives passed the Patient Protection and Affordable Care Act which was originally passed by the Senate on December 24, 2009. Healthcare reform has been the top legislative priority of President Barack Obama since taking office in January of 2009 and its passage marks the most significant healthcare legislation since the creation of Medicare in 1965. President Obama signed the bill into law on March 23, 2010.
The historic legislation followed a series of compromises by the majority leadership of both chambers of Congress. While many of the reforms will be implemented immediately, many of the most substantive components of the legislation will be rolled out incrementally over the next decade. Ultimately, an additional 32 million Americans will have health insurance that did not before.
Here is a timeline of when the various components of reform will take effect:
2010-Immediately…
- All health insurance plans are prohibited from denying coverage to children with pre-existing health problems or conditions;
- All health insurance plans are required to offer coverage to dependent children through the age of 26;
- Small businesses with 25 employees or fewer will be offered tax credits to help get and keep coverage for their employees;
- The gap in prescription drug coverage for Medicare recipients known as the “doughnut hole” which begins after $2,830 is spent, will be slowly phased out. In 2010, seniors entering the “doughnut hole” will be eligible for a $250 rebate to help pay for the cost of drugs.
- Indoor tanning is subject to a 10% sales tax.
2010-Within three months of bill becoming law…
- Adults who have been uninsured for at least six months and have pre-existing conditions can enroll in a temporary high-risk insurance pool. Those enrolled will receive subsidized premiums making health care more affordable. The pools expire when health insurance exchanges are implemented in 2014.
2011
- Medicare beneficiaries reaching the “doughnut hole” will receive a 50% discount on brand name drugs.
- Medicare will begin offering a 10% bonus to primary care physicians and general surgeons practicing in underserved areas such as inner cities and rural communities.
- Privately administered Medicare Advantage plans would have their payments frozen (payments will be lowered in 2012). 85 cents of every dollar received for administering the Medicare program will have to be spent on medical costs leaving 15 cents out of every dollar for operations.
A limited long-term care insurance program will be made available to provide modest cash benefits for nursing home costs and assisting the disabled. Benefits begin after the fees for coverage have been paid for five years. - Funding for federally qualified community health centers will be increased.
- Employers begin reporting the value of any healthcare benefits provided on their employees’ W-2 tax statements.
- Pharmaceutical manufacturers will be assessed a $2.3 billion annual fee which will increase in subsequent years.
2012
- Nonprofit insurance cooperatives would be created to compete with commercial insurers in the marketplace.
- Hospitals, physicians, and insurers would be encouraged to collectively form “accountable care organizations.”
- Medicare payments to hospitals with high rates of preventable readmissions would be reduced.
2013
- Medicare payroll tax would increase from the current 1.45% to 2.35% for individuals earning $200,000 a year and couples who earn $250,000 a year.
Unearned income such as dividends and interest would be taxed at 3.8%. - The threshold for claiming itemized tax deductions for medical expenses rises from 7.5% of income to 10% of income. People who are 65 years of age or older can continue to deduct medical expenses up to 7.5% of income through 2016.
Contributions to tax sheltered flexible spending accounts (FSA’s) are limited to $2,500 a year-indexed for inflation. - A 2.3% sales tax on medical devices for Medicare device makers will be introduced, however, eyeglasses, contact lenses, and hearing aids would be exempt.
2014
- All legal residents of the United States would be required to have health insurance except in cases of financial hardship. Penalties, to be paid to the Internal Revenue Service, would be assessed for those who do not have health insurance. Individual penalties start at $95 in 2014 and rise to $695 in 2016. Family penalties will be capped at $2,250. After 2016, penalties will be indexed to inflation.
- State health insurance exchanges will be created that will allow individuals and businesses to shop and compare health insurance plans. Tax credits will be available for households up to 400% of the federal poverty level.
- Medicaid would cover low-income individuals and families up to 133% of the federal poverty level.
- Denying insurance coverage or charging higher rates based on pre-existing or chronic conditions will be prohibited. Higher premiums (with limitations) can be charged only for age, place of residence, family size, and tobacco use.
Maternity care will be treated by insurers in the same manner as other medical procedures. - Employers with more than 50 employees will be required to provide health insurance. Employers will be penalized $2,000 per employee if any of their employees procure insurance through an exchange and receive a tax credit. Employers who are penalized may deduct the first 30 workers from the assessment.
- Health insurance companies that collect $25 million or more annually in premiums will be subject to an excise tax based on market share. The industry-wide tax will equal $8 billion in 2014, $11.3 billion in 2015, 2016, and 2017, and $14.3 billion in 2018. The excise tax will be indexed to inflation thereafter.
2018
- A tax will be imposed on employer sponsored health insurance worth more than $10,200 for individual coverage, and $27,500 for family plans. The tax is 40% of the value of the plan above the thresholds, indexed for inflation.
2020
- The Medicare “doughnut hole” is eliminated. Seniors will pay the standard 25% of drug costs until the threshold for Medicare catastrophic coverage is reached (currently $4,450).
Consistent with months of community dialogue stimulated by the GFHC in early 2009 that culminated in the GFHC Board of Directors’ adoption of an official Resolution on Universal Access to Health Care on June 15, 2009, the passage of health reform is a significant national step forward toward achieving the Coalition’s goal of 100% access to health care of a basic and essential nature for all Genesee County residents.