Health Reform Benefits in 2011

It’s the new year, and that means new benefits from the Affordable Care Act (also known as the health reform law.) Seniors enrolled in Medicare’s prescription drug plan (Medicare Part D) will spend out of pocket. Currently, when a people with Part D have used $2,830 of their drug benefit, they are required to pay the entire cost until they reach a certain threshold. This is called the Part D coverage gap, or the “doughnut hole”. With the ACA, pharmaceutical companies are required to provide consumers with a 50% discount on all non-generic drugs while they’re in the coverage gap, and a 7% discount on generic prescription drugs. Although seniors will be paying less for their medications while in the coverage gap, the full price will be applied, getting them through the gap more quickly. By 2020 the coverage gap will go away entirely (see the AARP for further explanation).

Also effective January 1^st is the implementation of the minimum medical loss ratio. We wrote about this previously; it requires that insurers spend at least 80% of the premiums they collect on medical care, instead of on advertising or paying their employees.

Doctors will soon find it easier to care for patients relying solely on Medicare. Although most physicians continue to accept Medicare, some primary care physicians find it quite hard to provide their patients with necessary services on the rates they are paid. Starting January 1^st, Medicare payments for primary care and general surgeons in shortage areas will rise by 10%. Unfortunately, this increase will only last through 2015, at which point Congress will likely have to address the issue again.

Also effective January 1, seniors on Medicare will no longer have to pay copays for some preventive services. This will be limited to services that have been rated “A” or “B” by the United States Preventive Services Task Force. These are services that, based on available evidence, are likely to provide either moderate or substantial benefit, either by improving well-being or preventing death. This includes screening for elevated blood pressure, cervical cancer, cholesterol, colon cancer, vision testing in children, counseling for tobacco abuse, screening for osteoporosis, and many other services. Although there is disagreement among different experts regarding breast cancer screening, the ACA also covers mammograms for all women over 40, although the USPSTF no longer recommends routine mammograms for women under age 50.

Another small change you’ll notice is nutritional labeling for all food sold at chain restaurants and in vending machines. We already have nutritional labeling in New York City. There is no evidence that knowing how many calories are in the meals bought at chain restaurants changes behavior, or even that people understand what the numbers mean, but for some people knowing the information is valuable (starts in March).

We can also expect some smaller programs aimed at sparking innovative approaches to improve the way we deliver health care. The Center for Medicare and Medicaid Innovation will design and implement multiple small projects by consulting with stakeholders, including medical providers, insurers, and patients, to improve the quality of medical care by streamlining what is often a fragmented system. The goal is to find new models of health care delivery that will improve care and save money. For more information see the CMS innovations site. Another smaller project will give increased Federal support for 2 years to patient-centered medical homes (also known as health homes).

In Graduate Medical Education, Teaching Health Centers (where residents, or doctors-in-training who have finished medical school) will be funded as residency sites for 5 years. Residency slots will be redistributed to favor primary care training. These changes will occur in July.

Some other behind-the-scenes changes include grants to help Medicaid enrollees develop healthier lifestyles, as well as grants to small employers to develop similar wellness programs. States will receive grants to start planning their insurance “markets”, also known as the American Health Benefit Exchanges and the Small Business Health Options Program Exchanges. Enrollment in the Exchanges is planned for 2014.

Cost-saving measures include no longer paying hospitals for certain preventable infections acquired in hospitals; restructuring Medicare Advantage programs so that they are no longer subsidized at the expense of other Medicare beneficiaries (currently Medicare Advantage plan members receive extra benefits when compared with traditional Medicare beneficiaries, due to a 13% increased payment to the plans compared to those on traditional Medicare; the subsidy will decrease to 1% on average, but it will vary from state to state. See the Wall Street Journal for more information. Those with tax-free health savings accounts will only be able to over-the-counter drugs covered if prescribed by a physician. Individuals earning over $85,000 per year (couples earning more than $170,000) will continue to pay premiums for Part B coverage, but instead of having this threshold increase yearly it remains frozen. This will only affect about 5% of Americans. Similarly, about 3% of Part D enrollees will be subject to a new premium for this drug benefit program. These changes are in effect on January 1^st.

Several other provisions include changes to long-term care, an optional disability insurance program, and several other items. For a full explanation see the Kaiser Family Foundation or www.healthcare.gov

The vast majority of Americans will see many benefits from these changes. A small percentage will benefit, but also will have to pay more for some of their benefits; some may end up saving money despite this increased cost due to full coverage of preventive services.