Immediate Impacts of Health Reform

Health reform was signed into law on March 23. With its passage comes a flood of questions about how it will affect rural Americans. This is the first in a new series of articles dedicated to helping you understand what the new law means for your family, business and community.

To say this new law is huge is the understatement of the year. It covers health insurance regulation, disease prevention, responsibilities of individuals and their employers regarding health insurance, affordability, ensuring an adequate health care work force – the list goes on and on.

Some parts of the new law take effect this year, while other parts will take a few years to get up and running. In this article we will give an overview of some of the provisions that take effect this year, and will dedicate space in future months to details about provisions that will happen in years to come.

Statistically, most Americans have health insurance through their employers, though this number is substantially less in rural areas because we are more heavily employed by small businesses or self-employed.

For people who already have insurance, the reform bill includes these provisions that will take effect in September:

  • Bans lifetime caps on insurance coverage and heavily regulates annual limits until 2014 when they will be prohibited.
  • Prohibits health insurance plans from denying coverage to children with pre-existing conditions.
  • Requires new insurance plans to cover preventative services at no cost to consumers.
  • Bans health plans from dropping people’s coverage when they get sick (also known as rescission).

For small business owners, the bill includes a tax credit starting in 2010 for up to 35 percent of the cost of their health insurance premiums if they have fewer than 25 full-time employees and if their average wage is less than $50,000.

For seniors on Medicare, the new law eliminates co-payments for preventative services, effective in 2011. It also begins to close the Medicare Part D “donut hole,” a problem that can cost seniors with substantial prescription drug needs thousands of dollars. In 2010 seniors who fall into the donut hole will receive a $250 rebate, and starting in 2011 drugs for seniors in the donut hole will be eligible for a 50 percent discount. The donut hole will disappear completely by 2020.

For people without insurance, the new law extends the ability for parents to keep their children on their health insurance plan until their 26th birthday. In June of 2010 a temporary high-risk pool will provide immediate access to insurance for Americans who are uninsured because of a pre-existing condition. This high-risk pool will continue until 2014, when discrimination against people with pre-existing conditions will be banned.

Rural communities will benefit from the $11 billion (over 5 years) in increased funding for Community Health Centers, which will likely double the number of patients in that time. There is new funding this year for training programs to increase the number of primary care doctors, nurses and public health professionals in underserved areas.

New insurance plans will include an independent appeals process to deal with complaints and appeals from consumers, because many of us have had to haggle with an insurance company over a claim. If all this sounds complicated, there is also aid to states to establish an office of health insurance consumer assistance to help consumers file complaints and appeals.

Salaries and perks for the heads of insurance companies have received a lot of media attention as one reason insurance premiums keep increasing. Effective January 1, 2011, insurance companies will have to spend 80 percent of premiums on medical services for the individual and small group market, and 85 percent of premiums on medical services for the large group market. Insurers who don’t meet these standards must provide rebates to policyholders.

These are just a few of the provisions included in the health reform bill, and in future issues we will tackle other issues in more detail. In the meantime, feel free to contact the Center for Rural Affairs office with specific questions, and we will do our best to point you in the right direction to find answers.

Contact: Steph Larsen, 402.687.2103 x 1014 or StephL@cfra.org to learn more.