Health Insurance Reform Now Law

On March 23, President Barack Obama signed into law the new healthcare reform legislation titled the Affordable Health Care for America Act.

The landmark bill, passed by the House by a vote of 219 to 212, will provide coverage to an estimated 30 million people who currently lack it. The measure will require most Americans to have health insurance coverage, will add 16 million people to the Medicaid rolls, and will subsidize private coverage for low- and middle-income people. According to the non-partisan Congressional Budget Office, the bill will cost the government approximately $938 billion over 10 years, but it also is estimated to reduce the federal deficit by $138 billion over a decade.

The big changes in the law — those that could affect tens of millions of people — won’t take effect until at least 2014. Those include insurance marketplaces called “exchanges,” rules requiring insurers to accept all applicants, even those with health problems, and an expansion of state Medicaid programs.

However, those items that do go into effect the first year include:*

New help for some uninsured: People with a medical condition that has left them uninsurable may be able to enroll in a new federally subsidized insurance program that is to be established within 90 days.The legislation appropriates $5 billion for this, although that may not be enough to cover all who apply; it’s not clear how much consumers would pay as their share of the cost. Currently, about 200,000 people are covered in similar state programs.

Discounts and free care in Medicare: The approximately 4 million Medicare beneficiaries who hit the so-called “doughnut hole” in the program’s drug plan will get a $250 rebate this year. Next year, their cost of drugs in the coverage gap will go down by 50 percent. Preventive care, such as some types of cancer screening, will be free of co-payments or deductibles starting this year.

Coverage of kids: Parents will be allowed to keep their children on their health insurance plan until age 26, unless the child is eligible for coverage through a job. Insurance plans cannot exclude pre-existing medical conditions from coverage for children under age 19, although insurers could still reject those children outright for coverage in the individual market until 2014.

Tax credits for businesses: Businesses with fewer than 25 employees and average wages of less than $50,000 could qualify for a tax credit of up to 35 percent of the cost of their premiums.

Changes to insurance: All existing insurance plans will be barred from imposing lifetime caps on coverage.Restrictions also will be placed on annual limits on coverage. Insurers can no longer cancel insurance retroactively for things other than outright fraud.

Government oversight: Insurers must report how much they spend on medical care versus administrative costs, a step that later will be followed by tighter government review of premium increases.