Obama Care Provisions

Key provisions of the Patient Protection and Affordable Care Act (PPACA) enacted March 2010 by President Obama were designed to eliminate "the worst practices of the insurance companies", preserve private insurance and health care providers and provide more subsidies to enable the poor to buy insurance. In the first year: Insurance companies were barred from dropping people’s coverage when they got sick, ending the practice of rescission; lifetime coverage limits and restricted annual limits were eliminated; young adults can stay on their parents' health plans until age 26 (many were previously dropped when they turned 19 or finished college); uninsured adults with pre-existing conditions are now allowed to obtain health coverage through a new program for high risk pools (expires in 2014 when new insurance exchanges begin operating); Insurance companies can’t deny group or new individual coverage to children under age 19 due to a pre-existing condition; a temporary reinsurance program to help companies maintain health coverage for early retirees between the ages of 55 and 64 (expires in 2014) was created; it provides a $250 rebate to Medicare drug plan beneficiaries who fell into the Medicare Part D coverage gap (old law required the person to pay 100% of their annual medicine costs when $2,700 was spent and didn’t start again until after $6,154 was spent); the coverage gap eventually closes completely; provided a tax credit for some small businesses providing coverage for workers and a 10% tax on indoor tanning services that use ultraviolet lamps. During 2011 Medicare provided a 10% bonus payment to primary care physicians and general surgeons; covered the full cost of annual wellness visits and personalized prevention plan services for beneficiaries. New health plans were required to cover preventive services with little or no direct cost to patients. A new Medicaid program for the poor went into effect in October that allows states to offer home and community based care for the disabled that might otherwise require institutional care. Payments to insurers offering Medicare Advantage services are frozen at 2010 levels and are to be gradually reduced to bring them more in line with traditional Medicare. Employers were required to disclose the value of health benefits on employees' W-2 tax forms. An annual fee was imposed on pharmaceutical companies according to market share; the fee did not apply to companies with sales of $5 million or less. Effective 2012 physician payment reforms are implemented in Medicare to enhance primary care services and encourage doctors to form "accountable care organizations" to improve quality and efficiency of care. A Medicare incentive program is established for acute care hospitals to improve quality outcomes. The Centers for Medicare and Medicaid Services, which oversees the government programs, begins tracking hospital readmission rates and puts in place financial incentives to reduce preventable readmissions. (Amendments made by Section 9006 of the Act in April 2011 repealed a new tax reporting change to prevent tax evasion by corporations and individuals because the provision was burdensome to small businesses; it was expected to raise $17 billion over 10 years.)

Effective 2013 a national pilot program is established for Medicare on payment bundling to encourage doctors, hospitals and other care providers to better coordinate patient care. The threshold for claiming medical expenses on itemized tax returns is raised to 10% from 7.5% of income; the elderly wait until 2017 for the change. The Federal Insurance Contributions Act tax (FICA) is raised to 2.35% from 1.45% for individuals earning more than $200,000 and married couples with incomes over $250,000 and is imposed on some investment income. A 2.9% excise tax is imposed on the sale of medical devices; generally doesn’t include purchases at the retail level.

Effective 2014 State health insurance exchanges for small businesses and individuals open up. Individuals with income from 133% of the federal poverty level (FPL) to 400% of the FDL will be able to purchase insurance on the exchange with a premium cap for maximum "out-of-pocket", qualify for Medicaid, get tax credits (Section 1401 of PPACA explains the subsidy will be provided as an advance-able, refundable tax credit that provides a government benefit to people even with no tax liability, example: Child Tax Credit). The Congressional Budget Office shows the maximum share of income that enrollees would pay for the "silver" healthcare plan would vary depending on their income relative to the FPL (a Subsidy Calculator gives a specific amount). People will either be on a government or private plan or pay a tax if they don't have health insurance; health plans will no longer be able to exclude people from coverage due to pre-existing conditions and employers with 50 or more workers who do not offer coverage face a fine of $2,000 for each employee if any worker receives subsidized insurance on the exchange (30 employees aren't counted for the fine). Health insurance companies begin paying a fee based on their market share.

Effective 2015 Medicare creates a physician payment program aimed at rewarding quality of care rather than volume of services. Effective 2018 an excise tax on high cost employer-provided plans is imposed (first $27,500 of a family plan and $10,200 for an individual coverage is exempt); higher levels are set for plans covering retirees and people in high risk professions. (Unlike today, age and FPL enable those required to buy insurance to get a reduced rate.) Tomorrow I’ll talk about the Supreme Court’s June 28, 2012 decision and the talk that followed. By the way, 2 cable stations erroneously reported that the Court struck down the law.