`Ellis_J Capstone Week 3

As the 20th century came to a close, many thought that managed care organizations were the answer to the rising costs of health care. Despite the struggle, planning and monies put toward managed care organizations, health care costs continue to rise beyond the reach of managed care. Technological advances in medicine, the rising number of specialist physicians, and the economic downfall in 2008 all contributed to the ever increasing costs of health care. Millions of Americans found that they could not afford any type of health insurance. Sadly, a large percentage of the uninsured are children. Health care reform has been on the table for many years with no plan showing indefinite promise of success. Reforming health care has good points and bad points. It faces governmental mandates and raises heated arguments. We look to the latest offering, the Patient Protection and Affordable Care Act (2010) and wonder, “is it constitutional”?

Health Care Plan History – 1912 - 2012

The first idea of health care reform dates as far back as 1912 when Theodore Roosevelt ran for president. His Bull Moose Party backed a plan to insure the growing and industrialized communities of the United States. But Mr. Roosevelt lost the presidential race so the plan was not initiated.

·  One of the most widely used plans today, Blue Cross, was developed in 1929 at Baylor hospital in Texas where a group health plan was offered to teachers at $.50 a month. This limited plan covered no more than 21 days in a hospital per year.

·  As Americans continue to fight to pay for health care during the Great Depression, in 1935 President Franklin D. Roosevelt favors building a national health insurance system. The idea is lost as the President pushes for Social Security instead.

·  President Harry Truman calls for the creation of a voluntary national insurance program.

·  A health care program is finally implemented by President Lyndon Johnson in 1960.

Medicare and Medicaid became Federal Acts.

·  Paying for health care is a problem. In 1971 Senator Edward Kennedy introduces a government run health plan which would be financed by payroll taxes.

·  Ideally employers are to cover their employees. In 1974 President Nixon introduces a plan to cover all Americans through private insurers and federal monies are set aside as subsidies to help citizens purchase insurance. Unfortunately the Watergate scandal interferes and the plan is not brought forward.

·  The economic recession of 1976 prevents President Carter’s plan for a national health care system from being put into use.

·  Congress passes the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) and it is signed into law by President Reagan. 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 costs will be paid by the former employee.

·  Catastrophic care and prescription drugs are covered at last by Medicare in 1988 however the expansion is revoked by congress a year later.

·  A 1,300 page plan for universal health care coverage is developed by Hillary Clinton in 1993 wherein businesses must cover the health care costs of their employees (government mandates). The plan is lost in the senate due to opposition of not only businesses, but the health care industry as well.

·  In 2003 President Gorge W. Bush influences Congress to once again add prescription coverage to Medicare benefits.

·  A point of contention in the 2008 presidential race between Hillary Clinton and Barack Obama is comprehensive health care plans. After Obama defeats Ms. Clinton, his plan is put forward. It is less comprehensive than Ms. Clinton’s plan.

·  President Obama and Congress argue over the details of his proposed health care plan which requires companies (those other than small businesses) to cover employees. The individual mandate is introduced so every citizen has health insurance coverage or they must pay a fine. Insurance companies now are required to accept persons with pre-existing conditions. Assistance is available to those that cannot afford insurance. In March of 2010, the Patient Protection and Affordable Health Act is signed into law. The hundred year battle to insure American citizens is over.

Health Care Plans - Today

Once again health care reform is in the spotlight.” The U.S. Census reports in 2007 that 45.7 million Americans are without health insurance” (Auerbach, 2011). As many Americans are reeling 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 which were put into place for the auto industry, caused economic hardship on Americans in the form of higher taxes which 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. Losing the employee group health plan that so many depended on for so many years has driven many Americans to seek emergency care for little things, while not being able to pay for physician office visits and medications, or premiums and deductibles on health insurance plans.

Defining the Patient Protection and Affordable Care Act is nearly 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. While many agree that PPACA is constitutional, many think parts of the Act aren’t. The idea of the PPACA being unconstitutional comes from the individual mandates. We are already mandated in most aspects of our daily lives, but can the government require us to purchase health care insurance? 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. Democratic President Barack Obama introduced the health reform bill to both houses of government. Both parties of government have to agree on the logistics on the PPACA, if not they must agree on some of its included mandates. This was the problem for the PPACA. Both parties agreed to most of the plan, but parts of it were questionable. Individual mandates, employer mandates, 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 which have not made any type of significant changes or reduction of benefits. If any health insurance plan loses its grandfather status, the plan must meet new provisions as outlined by the PPACA.

How the PPACA Works

Each of the fifty states regulates its own insurance benefits. New regulations give each insured person protections and will apply across the country. A very 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 2012 the essential benefit limit is increased to $1.25 million. The final increase for 2012 to 2013 will 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.

The Downside of PPACA

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 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, they cannot charge a higher or different premium for adult children.

Pre-existing conditions used to be difficult details 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 coverage gap within the standard benefit of prescription drug coverage of Medicare Part D, that has left many elderly people without medications 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 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 on 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 being a primary care provider, as long as they accept Medicare patients. In the past, Medicare fraud has been an ongoing problem in health care. New rules and resources will be implemented to ensure that providers do not submit fraudulent claims.

Changes for small business employers (less than 25 employees) are slated to begin under the PPACA in the form of a tax break. If an employer employs fewer than 25 full time employees with annual wages under $50,000 and contributes more than 50% of the employee’s premium costs, the business receives a tax credit up to 35% of contributed payments for the employee’s 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, for example, a small business owner with 10 full time employees pays an average annual wage of $25,000 and the business owner’s part of the EGHP (Employer Group Health Plan) is $70,000, the owner 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 a large business chooses 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 provided by the PPACA. 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).