Popular Health Reforms Now in Effect

The Patient Protection and Affordable Care Act (PPACA), the federal health care reform law, contains numerous provisions reforming health insurance. A new Center report, Health Care Reform, What’s in It: Rural Individuals and Families, discusses these reforms and their consequences for rural people.

All the reforms discussed below took effect on Sept. 23, 2010.

Bans Denials Due to Pre-existing Conditions
Section 2704 prohibits any health insurance issuer offering group or individual health insurance coverage from imposing “any preexisting condition exclusion” on insurance plans or coverage. No longer will health insurance companies be able to exclude individuals or members of a family from insurance coverage because of their health status or because of a chance chronic disease or condition.

Over one in five non-elderly Americans have a diagnosed pre-existing health condition, making them at risk of health insurance denial absent the new law. This provision becomes effective for adults in 2014. It is effective for children under age 19 on Sept. 23, 2010.

The ban on denials due to pre-existing conditions is bound to help rural residents and families. Rural areas have generally older and lower-income populations, those most susceptible to diagnosed pre-existing conditions. Rural people are less insured through employer-sponsored health insurance and more insured by individual health plans, making pre-existing condition denials more likely due to rules concerning group health plans. The proportion of rural residents with nearly every chronic disease or condition is larger, making pre-existing conditions more common.

The new law also prohibits health insurers from charging higher premiums based on health status. Insurers are still allowed to charge up to three times the normal premium based on age. Given that pre-existing conditions tend to rise steadily with age, this authority may act as a backdoor penalty to many with pre-existing conditions.

No More Dropping People When They Get Sick
Section 2712 prohibits the insurance practice called “rescission,” the act of a health insurance company dropping someone from a health insurance policy or plan for some reason, usually related to the policyholder or the plan enrollee getting sick or injured. This provision prohibits rescinding any group or individual health insurance coverage except when the covered person has “performed an act or practice that constitutes fraud or makes an intentional misrepresentation of material fact.”

Ends Lifetime Health Insurance Benefit Caps
Section 2711 prohibits group health plans and insurers offering group or individual health insurance coverage from establishing “lifetime limits on the dollar value of benefits” or “unreasonable annual limits … on the dollar value of benefits.”

Costs associated with serious illnesses such as cancer can easily outpace annual and lifetime limits. The fact that rural residents have higher rates of nearly all chronic diseases and conditions makes this provision particularly helpful for rural individuals and families.

Provides Health Insurance for Children through Age 26
Section 2714 requires group health plans and insurers offering group or individual health insurance coverage that provide for dependent coverage of children “shall continue to make such coverage available for an adult child until the child turns 26 years of age.”

Young adults are entering a work environment where fewer employers are providing health insurance to employees. This provision will provide young adults the opportunity to get started in this environment without having to worry about the cost and availability of health insurance. This provision will be beneficial to rural young adults due to fewer health insurance options in rural areas.

Free Preventive Care
Section 2713 provides that group health plans and insurers offering group or individual health insurance coverage “shall provide coverage for and shall not impose any cost sharing requirements” (copays, coinsurance or deductibles) for a host of preventive care items. Services such as basic screening tests, immunizations, well-baby and well-child visits, and consultations on smoking cessation, weight loss and nutrition will be covered. This provision will not apply to “grandfathered” plans, generally those health plans that existed on March 23, 2010, the day the law was enacted.

This provision holds great potential for rural people. Many preventive care services are less used by rural residents, contributing to a generally less healthy rural population. Ultimately, our health care system will become stable and sustainable only if people become healthier and reduce health care costs attributable to chronic diseases.

The full report may be found here. Contact Jon Bailey, jonb@cfra.org or 402.687.2103 x 1013 with any questions.