Ellis_J Capstone Week 2

Many thought managed care organizations were the answer to the rising costs of health care, despite those opinions health care costs continue to rise. Technological advances in medicine, the rising number of specialist physicians, and the economic downfall in 2008 have all helped to contribute to the rising costs of health care. Millions of Americans cannot afford any kind of health insurance and many of the uninsured are children. Health care reform has been on the table for many years with no plan being absolutely successful. Health care has long been an issue among many Americans. Health care reform has its good points, bad points, mandates, and arguments. Is the Patient Protection and Affordable Health Care Act (2010) constitutional?

The first idea of health care reform dates as far back as 1912 when Theodore Roosevelt runs for president. President Roosevelt’s Bull Moose Party stood for many ideals including a plan to insure the growing and industrialized communities. But Mr. Roosevelt lost the race so the plan was not initiated.

  • 1929 Baylor hospital in Texas developed a group health plan where teachers paid .50 cents a month that would cover no more than 21 days in a hospital per year. That plan became Blue Cross.
  • 1935 Americans continue to fight to pay for health care during the Great Depression. President Franklin D. Roosevelt is in favor of building a national health insurance system, but pushes for Social Security instead.
  • 1945 President Harry Truman calls for the creation of a national insurance program for those persons that pay voluntary fees.
  • 1960 President Lyndon B. Johnson implemented a health care program that had failed to be passed for so many decades before. Medicare and Medicaid became laws.
  • 1971 Sen. Edward M. Kennedy proposes a government run health plan that is to be financed by payroll taxes.
  • 1974 President Richard M. Nixon introduces a plan to cover all Americans with private insurers. Employers now must cover employees. Federal monies (subsidies) are set aside to help people buy insurance. The Watergate scandal interferes.
  • 1976 President Jimmy Carter wants a compulsory national health care plan. The economic recession knocks this plan to the back burner.
  • 1986 COBRA passes through Congress and President Ronald Reagan signs it into law. COBRA requires employers to allow former employees to remain on the company’s health care plan for 18 months after exiting the job and the former employee will pay the costs.
  • 1988 Medicare is expanded to cover prescription drugs and catastrophic care. Older Americans protested paying taxes to finance this coverage. Congress revokes the expansion a year later.
  • 1992 Democratic primaries ensure help to uninsured Americans. President George H.W. Bush pushes for tax breaks to help people afford health insurance.
  • 1993 First Lady Hillary Rodham Clinton develops a 1,300 page plan for universal health care coverage. Businesses are mandated to cover employees. Republicans oppose the plan and Congress is divided by lobbyists from businesses and the health care industry. The plan is denied of Senatorial voting.
  • 2003 President Gorge W. Bush sways Congress to once again add prescription coverage to Medicare beneficiaries. “The U.S. Census reports in 2007 that 45.7 million Americans are without health insurance” (Auerbach, 2011).
  • 2008 Hillary Rodham Clinton implements another plan to require everyone to have health care coverage as she runs as the Democratic presidential nominee. Barack Obama defeats Mrs. Clinton ad develops a lesser comprehensive health care plan.
  • 2009 Democrats control Congress. President Obama and Congress spend the next year arguing over the details of his proposed plan. Obama’s plan will require companies (those other than small businesses) to cover employees. The individual mandate is introduced so every citizen has health insurance coverage or pay a fine. Insurance companies now are required to accept persons with pre-existing conditions. Assistance is available to those that cannot afford insurance.
  • 2010 March 23 the Patient Protection and Affordable Health Act is signed into law, 30 million Americans now have a plan designed to cover them.

Once again health care reform is in the spotlight in 2012. As many Americans are reeling in from the recent economic downfall and financial crisis of 2008, many are still unemployed and uninsured. As President Bush enacted TARP (Troubled Asset Relief Program) which bailed out the failing banking industry, Barack Obama’s team administered it. Initiated by George Bush and implemented by Barack Obama stimulus programs were out into place that helped the auto industry, causing economic hardship on Americans as we paid higher taxes that were transformed into government loan monies given to General Motors and Chrysler Corporations. Higher taxes were imposed on businesses as well as citizens, forcing businesses to downsize and even close their doors, leaving many Americans jobless.

Defining the Patient Protection and Affordable Care Act is somewhat as challenging as is the inception of health care reform in recent years. In March of 2012 the Supreme Court heard arguments as to whether the Patient Protection and Affordable Care Act (PPACA) is constitutional. Many agree that PPACA is constitutional, many think parts of the Act aren’t. The PPACA was passed in the Senate by a vote of 60-39. The PPACA met approval through the House in March of 2010 with a vote of 219-212 after a year of bipartisan debate. Individual mandates, employer mandated, and Medicare payments issues were heard over 3 days of hearings in the Supreme Court, but a final ruling will not be made until June of 2012.

There is good news for those persons that already have health insurance. The detailed policies already written and in use are called “grandfathered plans”. Grandfathered plans are those plans existing before March 23, 2010 that have not made any type of significant changes or reduction of benefits. If any health insurance plan looses its grandfathered status, the plan must meet new provisions as outlined by the PPACA.

Each of the fifty states regulates its own insurance benefits. New regulations give each insured person protections and will apply across the country, only few exceptions have been made. Changes for the good that have come out of the PPACA include:

1)Insurers can’t impose a lifetime cap on benefits. Simply put, you cannot “max out” health coverage when you need it most.

2)Annual insurance benefits will be phased out yearly, and will be completely erased in 2014. Annual limits on essential benefit plans are limited to $750,000 for the years 2010 through 2011. Years 2011 to 212 the essential benefit limit is increased to $1.25 million. The final increase for 2012 to 2013 be $2 million dollars. Come January 1, 2014 the annual limits on essential coverage will be erased.

3) Independent appeals will now give a consumer a way to dispute benefit decisions if they are not happy with the original decision.

4)Insurance companies cannot indiscriminately cancel your coverage if you get sick.

5)Preventative care including testing and screenings is now available with no out-of-pocket expenses for the patient.

As with any type of contract or policy there is fine print. Fraudulent actions or claims can give rise to company’s cancelling policies. Appeals, preventative care with no out-of-pocket expenses, and benefit limits will not apply to most grandfathered plans.

New coverage of children will ease parent’s minds as children with pre-existing conditions will not be denied. Any child under the age of 19 cannot be denied because coverage because of a pre-existing condition. Any ongoing or new treatments for existing conditions will not be excluded. From now (2012) until 2014 insurance carriers can charge higher premiums for those children with pre-existing conditions, therefore getting coverage for them may be unattainable. States have laws that may restrict getting new coverage through open enrollment periods for children’s pre-existing conditions. In recent years children covered under their parent’s policy were dropped at age 23, an extension of this age has been given to age 26 under the PPACA. If parents have health insurance through their employers cannot charge a higher or different premium for adult children.

Pre-existing conditions used to be difficult detail in the insurance industry. Under the new PPACA, the new Pre-existing Condition Insurance Plan (PCIP) offers health coverage to persons with conditions that have been uninsured for a minimum of six months. Persons must have been previously denied coverage because of the pre-existing condition. Premiums on the PCIP will vary by age not the person’s health condition. The PCIP costs vary by state and will include comprehensive coverage with no out-of-pocket expenses of preventative treatment and care. Premiums for the PCIP may not be affordable for individuals because they are not income based. New websites, pamphlets, and toll free information lines have been employed to help consumers find health care coverage.

Formed in 1965 Medicare is a leading health care program for older Americans age 65 years and older and few with certain disabilities. Medicare is federally funded through taxpayer dollars, and “some 36 million Americans are covered by traditional Medicare and 11 million more are enrolled in private Medicare Advantage Plans” (Guest, n.d.). Medicare Part D will see the biggest change under the PPACA. Currently there is a coverage gap (donut hole) in Medicare Part D coverage. The donut hole is the confusing controversial prescription drug coverage part of Medicare Part D that has many elderly people often sitting with no medication because of the hole in the coverage. Medicare beneficiaries enrolled in Part D in 2010 paid a deductible of $310.00 as well as a copayment of 25% on medications. The Part D plan pays approximately 75% of the cost of medications until the combined payment amount (deductible and copayments) reaches $2,840. This is where the donut hole comes in, Part D does not cover any out-of-pocket any out-of-pocket medication expenses until they reach $4,550. At this point the gap is closed and Part D coverage picks up most costs of the prescription medication. In 2011 if you have Part D and you have paid full price for medications you got a 50% discount o brand name drugs and a 7% discount on generic drugs. The discounts are scheduled to increase yearly until 2020 when the donut hole will be completely eliminated. Beneficiaries of Traditional Medicare no longer pay out-of-pocket expenses for preventative testing and screenings. Preventative services include annual physical exams, colonoscopies, mammograms and immunizations. Advantages have been made available for providers as well. Currently the Medicare system has a set fee schedule that usually pays less for services than what private insurers pay. Providers will get a 10% bonus as being a primary care provider, granted that they accept Medicare patients. Medicare fraud is an ongoing problem in health care, new rules and resources will be implemented to ensure providers do not submit fraudulent claims.

Changes for small business employers are slated to begin under the PPACA. Generally small businesses are defined as having fewer than 25 employees. PPACA will provide a tax break for those businesses. If an employer employs fewer than 25 full time employees with annual wages under $50,000 and he (employer) contributes more than 50% of the employees premium costs, the business receives a tax credit up to 35% of contributed payments on his employees health insurance. This tax credit is available through 2013 only. For the upcoming tax years 2014 and 2015 the tax credit will increase to 50%. For 2012 through 2013 a full tax credit is available to employers with 10 or fewer employees with annual wages less than $25,000. Bit by bit the tax credits will decrease because of workforce and wage increases. If I own a small business with 10 full time employees and I pay an average annual wage of $25,000 and my part of the EGHP (Employer Group Health Plan) is $70,000, I will be eligible for a tax credit of $24,500 until 2013. The tax credit will increase to $35,000 in 2014. Businesses that employ 50 or fewer employees can opt out from paying tax penalties that PPACA imposes on employers that do not provide health insurance benefits. A difference in 50 or more full time employees causes the employer to not have to extend health insurance benefits to its employees. If large businesses choose not to extend health benefits, it is mandated to pay $2,000 for every full time employee that purchases health coverage through state insurance companies that the PPACA will provide. Although the first 30 employees will be exempt from this payment. More choices of insurance companies will be available to purchase coverage through in 2014. SHOP Exchanges (Small Business Health Options Programs) are required to be in use by 2014 by every state. SHOP Exchanges is a new program in which small businesses with less than 100 employees can “pool” together to purchase insurance. Currently 100 employees are required to join this program, but individual states can possibly change the employee limit to under 50 employees by the year 2016. “The Congressional Budget Office has estimated that the exchanges would reduce premiums in the small-group market somewhere between 1- and 4%” (Hallinan, 2005).

While change is good in all aspects of life certain changes in the health care act are not. Inevitably there are two things in this world that are for certain: taxes and death. The PPACA of 2010 was finally passed after decades of proposed changes in the finances of health care payments. As many Americans struggle to find a way to pay for their own medical expenses, so did Congress. Finally a solution to fund health care reform was found, to raise our taxes. Will every taxpayer feel the effects of the PPACA? Yes, the PPACA will raise taxes that we all will see. The PPACA will require every U.S. citizen to attain some type of health insurance coverage even minimal or state sponsored coverage. For those individuals that do not obtain minimal essential health care coverage, they will be subject to penalty. The individual mandate is what has been the arguing factor in the Supreme Court. Starting in January of 2016 every person must have insurance or face a penalty of “2.5% of household income for the tax year over the threshold amount of income required for income tax return filing for that taxpayer under Sec. 6012 (a)(10; or $695 per uninsured adult in the household” (Beavers, 2010). The penalty for children under 18 years of age will be half that of the adult fee. Total penalties per household shall not exceed 300% of the penalties per adult. All members of Indian tribes and taxpayers that fall below the requirement of income tax filing amounts are exempt from the penalty. However, like most tax penalties or unpaid taxes nonpayment of these penalties is not subject to criminal penalties.

Employer penalties will be imposed for those that do not provide employee health coverage. If one full time employee is known by the employer to be enrolled in health coverage that the employee bought through a state exchange of which the premium tax credit is paid to the employee. For this penalty one-twelfth of $2,000 will be multiplied by the number of full time employees over 30.

Excise taxes will be imposed on high cost employer sponsored health plans. Excise taxes commonly known as “Cadillac taxes” will be enforced on insurers if the total value of the employer sponsored health plan coverage per employee surpasses the threshold amount. The tax will equal 40% of the total value that surpasses the threshold amount. In 2018 the amount of the threshold is %10,200 for individuals covered and for families it will be $27,500 worth of coverage. After 2018 threshold amounts will be adjusted for inflation, age, and gender differences. There are many more taxes that have been introduced, raised and added in order to fund the PPACA.

The future of health care under the health care reform bill will offer some tweaks to the health insurance delivery model but will fail to deliver meaningful reform to cut health care costs. In a few short months the Supreme Court will decide if the health care reform bill and its mandates are constitutional. Should we all be tests of the new Federal powers or have our freedoms of liberty? How much government is too much government? Originally the United States Constitution created a blueprint of the U.S. Government to outline the level of supervisory position our government shall have. Within the Constitution, amendments and clauses have changed regulations as to how much strength or force they (government) can have on citizens. We the people do have rights under the Constitution as to partially govern ourselves. The 5th Amendment of the U.S. Constitution is the Due Process Clause, which is a promise that simply put says: everyone must be treated equal and fairly in our legal systems. Meaning that we the people have rights to our own voices being heard on issues such as life, liberty, and the pursuit of happiness. As you notice healthcare is not mentioned, but by no means, is not a right of the American people. As come the freedom of quality health care, the right to govern the trade of health care and health related payments is in part an amendment itself. The Federal government can ban activities such as not having health insurance. Other so called activities related to health care could be that we choose to smoke tobacco, don’t lose weight or exercise, and don’t have health insurance coverage. Does the U.S. government have (that much) control on the people so as to limit or not limit any part of our daily lives? This shall be the law of the land that we are not controlled so much as to lose freedoms and liberties previously granted by the U.S. Constitution. The act is constitutional, but a work in progress. We will not know for sure how this health care reform will change the presentation of health care in the U.S., until it is fully enacted and possibly amended so as to make all parts of the PPACA constitutional.