Health Reform's First Birthday

Babies crawl before they walk.



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The Affordable Care Act (ACA) marks its first birthday this week.  It may not be off to a running start, but it isn’t exactly sitting still either.
 

The most debated provisions, like the individual mandate and the Medicaid expansions, are still three years in the future.

In the first year, ACA’s biggest developmental milestones have affected older Americans, people with mental and physical disabilities, and consumers in general.  Which of these populations is making the most progress?

Medicare recipients and early retirees have taken the most steps forward.   

As of January 1^st, all Medicare Part B recipients are entitled to a free annual physical, with free cancer, cardiovascular, and skeletal screenings, and free flu shots.  150,000 beneficiaries had taken advantage of this through February 23^rd.  This number will grow, to many millions before the end of the year.

Also, over 3.4 million Part D recipients who fall into the donut hole will receive an average savings of over $500 on brand name drugs this year.  Many already received $250 rebate checks last year, and the value of this benefit will increase annually as the donut hole closes over the next several years.

Early retirees are also keeping up.  The law allows employers to keep retirees between the ages of 55 and 65 on their plans, and to get reimbursed for some of the costs. 

As of December 31^st, 5,452 plan sponsors had been approved to participate in the Early Retiree Reinsurance Program (ERRP).  Two states – New York and California – had over 500 participants.  Eight others – Pennsylvania, Illinois, Michigan, Minnesota, Indiana, Massachusetts, Florida, and Texas – had over 200.

An estimated 4.5 million early retirees, spouses, and dependents were included. 

Also, the Federal Government had reimbursed $535 million in costs as of December 31.

There were huge differences in the amount of reimbursements paid, with just a few states claiming most of the money.  Georgia had been reimbursed for almost $52 million, with $35 million in direct reimbursements to the state plan alone.  All participating plans combined in its next door neighbor, my home state Florida, had collected a mere $305,000. 

Plans themselves are responsible for claiming reimbursement for high-cost retirees.  It's hard to imagine that Georgia has so many more than Florida.

People with mental and physical disabilities are struggling to move forward. 

Children with pre-existing conditions won coverage on their parents’ plans as of September, but the ban on denying adults with pre-existing conditions access to regular insurance doesn’t take effect until 2014. ACA established Pre-Existing Condition Insurance Plans (PCIP) all 50 states in the summer of 2010 to provide temporary insurance for these people.  

The Administration hoped that up to 250,000 people would find health insurance through these plans, but only 12,437 had enrolled in PCIP plans as of February 1.  Pennsylvania led the way with over 2,000 enrollees, followed by Texas, Illinois, Ohio, California, North Carolina, and Florida. 

Although the price of the plans (usually between $300 and $500 per month) is significantly lower than traditional individual plans for people with disabilities, it is still proving too high for many underemployed adults.

Consumers in general are taking one backward step for every two forward ones. 

The implementation of consumer protections was the biggest news of the first year.  As of September, as plans are renewed, parents can cover their children up to the age of 26, and insurance can’t be denied to children because of pre-existing conditions.  It also can’t be cancelled when children or adults get sick, and annual and lifetime insurance limits are on their way out.

However, not every consumer protection applies to grandfathered plans.

Also, to assure that low-cost, low-benefit plans would not go out of business abruptly, the Administration has granted hundreds of one-year waivers from the annual limit provisions.  As of late January, 733 waivers were granted for plans covering 2.1 million Americans.

Since then, the number of approved waivers for all reasons has increased to over a thousand, affecting 2.6 million Americans.  In early March, Maine received the first waiver from the most important consumer protection in the ACA, the one mandating that 80% of all premium dollars in individual insurance plans be paid out in benefits.

This year, Maine’s individual plans will only have to pay out 65% in benefits, meaning that they could theoretically make up to a 50% profit on every premium payment.  Several other anti-consumer states are asking for similar waivers to protect insurers.

While loss-ratio waivers demonstrably harm consumers, the Administration has announced that it is moving forward with another consumer protection.  It published a notice in early March to require any insurer proposing to increase rates by more than 10% to provide a breakdown to customers of the reasons for the increase.

Baby steps.  That’s what we’ve learned to expect from the first year of life, and that’s what we’re getting.