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Major Health Reform Changes Effective in 2011

Philip Moeller

Last year marked the first full year the health reform law was in effect. The pace of implementing the law was doubtless affected by widespread opposition and a looming Supreme Court challenge. Nonetheless, looking at major provisions of the law that were implemented in 2011, it's clear that U.S. healthcare rules and practices have been forever changed. Even total repeal, judged unlikely, would not reverse many of the changes already set in motion.

Minimum medical loss ratio for insurers. Health insurers must spend at least 85 percent of their premium dollars on healthcare (80 percent for smaller group plans) or rebate shortfalls to consumers. Any rebates incurred in 2011 must be paid during 2012. As of late June, the U.S. Department of Health and Human Services (HHS) reported that insurers have provided $1.1 billion in rebate relief to nearly 13 million Americans in 2012, with the rebates averaging more than $150 per family. There is a government health insurer tool that provides medical loss ratio information by state and insurer. Under the law, HHS reports, consumers are to receive rebates by August 1 each year in one of these ways:

--A rebate check in the mail.

--A lump-sum reimbursement to the same account that was used to pay the premium if it was paid by credit card or debit card.

--A direct reduction in their future premiums.

--Their employer providing one of the above rebate methods, or applying the rebate in a manner that benefits its employees.

Free preventive care for seniors. Health reform expanded the already considerable list of free preventive services for Medicare beneficiaries. According to the HHS, more than 32 million Medicare users received one or more of these free services during 2011, and 18 million used at least one during the first seven months of 2012.

Closing the Medicare drug coverage gap ("doughnut hole"). Subsidies for both brand and generic prescription drugs are offered once a person enters what's called the coverage gap or Medicare doughnut hole. In 2012, the gap begins after the person and their Medicare plan have spent $2,930 on covered drugs, and extends until out-of-pocket spending reaches $4,700. Inside the gap, seniors get 50 percent discounts on branded drugs and Medicare pays 14 percent of the price of generic drugs. By 2020, the coverage gap will be closed. HHS reported last month that 5.4 million seniors had saved more than $4.1 billion on drugs so far because of the health reform law.

Center for Medicare and Medicaid Innovation. Associating government with innovation may be an oxymoron. Still, in the slow-moving world of healthcare change, one of health reform's greatest impacts may turn out to be its efforts to jump start the kinds of changes that critics say are essential to simultaneously improve care and reduce costs. While much of its work makes headlines only in medical journals, consumers increasingly will be affected by the many demonstrations and test programs being implemented by the center. During its first year, HHS said in an early 2012 report, the center introduced 16 programs with nearly $3 billion in spending authority, involving more than 50,000 healthcare providers in Medicare and Medicaid programs around the country.

Funding for health insurance exchanges. Consumers will not be able to buy health policies from state insurance exchanges until 2014, and many questions remain about the form or even existence of the exchanges. Many states have decided to stay on the sidelines until after the November elections, and a third have not accepted funds to help set up an exchange. However, the law says the exchanges must be up and running in little more than a year, whether states set them up themselves or opt to have the federal government do it for them. To help states get ready for the exchanges, the government already has provided some $1.8 billion in planning and development grants.

Next up: Major Health Reform Changes Effective in 2012

Twitter: @PhilMoeller

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