Opponents of the new health care overhaul law are threatening to repeal, defund and kill it in court, but that isn't stopping Washington from implementing a number of important provisions in 2011. While many people will welcome the new benefits, some will face higher costs as a result of the law.
Seniors are affected by several of the provisions. They will get big discounts on prescription drugs and free preventive care, but some in Medicare Advantage plans may lose coveted extra benefits such as vision and dental coverage. Everyone will be able to count calories when dining at chain restaurants or sidling up to vending machines. But forget about using pre-tax income in popular flexible spending accounts to pay for over-the-counter medications, unless you get a prescription.
These changes follow a handful of early benefits that debuted in 2010. Already, adult children are allowed to remain on their parents' policies until the age of 26, for example, and insurers can no longer cancel coverage when people get sick (except in cases of fraud).
The following are nine health law changes to take note of this year.
Will you get an insurance rebate?
Starting this year, health insurers must spend at least 80 percent of their premiums on medical care, or face the possibility of giving rebates to consumers. The rule applies to policies purchased by individuals who don't get coverage through work, and for many policies offered by employers. For policies sold to large employers, insurers must hit an 85 percent spending target. Self-insured employers are exempt from the rule. The goal is to pressure insurers to restrain profits and administrative costs, such as overhead, marketing and executive salaries.
But insurers probably won’t be issuing too many rebates, which would go out in 2012. Of the 75 million people who have insurance that is covered under the rule, the government estimates that 9 million will be eligible for a rebate in 2012. That’s because many insurers reach those target levels now, and the ones that don’t may adjust so they meet the spending limits. Other insurers may drop out of the market.
Under another part of the law, regulators have proposed that beginning July 1 premium increases of 10 percent or more be subject to additional review by states and the federal government. Insurers would have to publicly disclose some of the data supporting their requests – such as how much they’re paying for medical services. The review would determine if the increase is considered unreasonable. Some state regulators have authority to deny an increase, but the law does not grant that power to the federal government. The proposed rule would affect policies sold to individuals and small businesses.
Lower Rx costs for seniors
Prescription drug costs could shrink $700 for a typical Medicare beneficiary in 2011, as the law begins to close the notorious doughnut hole – the gap in prescription coverage when millions of seniors must pay full price at the pharmacy – according to the seniors group AARP. The National Council on Aging estimates the savings could reach $1,800 for some. Starting in January, drug companies will give seniors 50 percent off brand drugs while in the gap, excluding those low-income people who already get subsidies. Generics will also be cheaper. "It's quite significant," said AARP's John Rother. "People stop filling prescriptions when they hit the doughnut hole." The National Council on Aging estimates that about 4 million Medicare beneficiaries will face the gap this year.
It has how many calories?
How many calories are in that Outback Steakhouse's blooming onion? (1,551) Or Pizzeria Uno's individual-size Chicago style deep-dish pizza? (2,310). Beginning soon after the Food and Drug Administration finalizes rules in 2011, chain restaurants with 20 or more locations, and owners of 20 or more vending machines, will have to display calorie information on menus, menu boards and drive-thru signs. Restaurants must also provide diners with a brochure that includes detailed nutritional information, like the fat content of their dishes. Consumer advocate Jeff Cronin of the nonprofit Center for Science in the Public Interest says it will put "eating into context."
Higher Medicare Premiums
Medicare premiums in 2011 will take a bigger bite from wealthier beneficiaries. Since 2007, this group has paid more than the standard premium for Part B, which covers physician and outpatient services. But the income threshold was indexed to prevent inflation from moving more people into the affected group. The health law freezes the threshold at the current level: incomes of $85,000 or above for individuals and $170,000 for couples. With that step, beneficiaries paying higher premiums will rise from 2.4 million in 2011 to 7.8 million in 2019, according to an analysis by the Kaiser Family Foundation. (KHN is part of the foundation.) Their monthly premiums this year will be between $161.50 and $369.10, while the standard premium will be $115.40. Also, premiums for Medicare Part D, which covers prescription drugs, for the first time will be linked to income. The thresholds will be the same as those for Part B and will not be linked to inflation. About 1.2 million beneficiaries will pay the income-related Part D premium this year, rising to 4.2 million beneficiaries in 2019.
Restrictions on medical savings accounts
Consumers with flexible spending accounts (FSAs), in which pre-tax income can be used for medical purchases, can no longer spend the money on over-the-counter drugs, including ones that treat fevers or allergies and acne, unless they have a doctor's prescription. The new restrictions, which lawmakers included in the health overhaul to raise more revenue, also apply to health reimbursement arrangements (HRAs), health savings accounts (HSAs) and Archer medical savings accounts (MSAs). Starting this year, those with HSA or MSA accounts who spend money inappropriately will not only owe taxes on it, but also face a tax penalty of 20 percent, double what it was. For all pre-tax accounts, medical devices such as eyeglasses and crutches, and co-pays and deductibles still qualify for the accounts. Insulin obtained without a prescription is also eligible.
Bolstering seniors' access to primary care
Medicare is bumping up payments for primary care by 10 percent from Jan. 1 through the end of 2015. It's an incentive for doctors and others who specialize in primary care – including nurses, nurse practitioners and physician assistants – to see the swelling numbers of seniors and disabled people covered by the program. Health practitioners will qualify for the bonus only if 60 percent or more of the services they provide are for primary care. General surgeons also will receive an increase if they’re practicing in areas where there are doctor shortages. Experts agree there's a growing shortage of primary care providers, a big problem considering that the health law is expected to expand coverage to 32 million more Americans by 2019. The bonus won't cure the problem, but many see it as a start. "It's significant, but it's not the end all," said Dr. Roland Goertz, president of the American Academy of Family Physicians, emphasizing that the bonus will end in 2015.
Several provisions of the law promote prevention of disease, especially for seniors. Medicare enrollees will be able to get many preventive health services – such as vaccinations and cancer screenings – for free starting in January. Specifically, the law eliminates any cost-sharing such as copayments or deductibles for Medicare-covered preventive services that are recommended (rated A or B by the U.S. Preventive Services Task Force). Also starting in January, Medicare beneficiaries can get a free annual "wellness exam" from their doctors who will set up a "personalized prevention plan" for them. The plan includes a review of the individuals' medical history and a screening schedule for the next decade. The law also eliminates any cost sharing for the "Welcome to Medicare" physical exam, which previously included a 20 percent co-pay. And people working for small employers will get some help. The law authorizes the federal government to issue grants totaling $200 million for companies with fewer than 100 workers that start wellness programs focused on nutrition, smoking cessation, physical fitness and stress management.
Trimming Medicare Advantage
The health law puts the squeeze on private health plans that provide Medicare coverage to about a quarter of beneficiaries. Payment for these Medicare Advantage plans is being restructured. Rates this year will be frozen at 2010 levels and lower rates will be phased in beginning in 2012. Medicare says the reductions are fair because the plans are paid $1,000 more per person on average than the traditional fee-for-service program spends on a typical senior. Dan Mendelson, president and CEO of Avalere Health, a consulting firm based in Washington, says some plans will respond by cutting ancillary benefits, such as vision and dental care. But he calls this "a transition year" and says more significant changes will come in 2012, when in addition to the rate reductions, the government begins offering bonuses to top-performing Advantage plans based on quality measurements.
Fighting hospital infections
About 1.7 million patients pick up life-threatening, but preventable, infections at hospitals, according to a study earlier this year in the Archives of Internal Medicine. In July, Medicaid will say "enough." The federal government – which shares the cost of this program for the poor with states – will stop paying for treatment of some hospital-acquired infections. The Medicare program for the elderly and disabled and many private insurers already ban payments for treating many of these infections.