health care policies week 5

Chapter 9:

Health Reform in the United

States

Chapter Overview

• Chapter 9 discusses the history of health

reform in the United States and details the key

provisions of the Affordable Care Act (ACA)

• Chapter 9 focuses on:

– Previous attempts at national health reform

– Why health reform is difficulty to achieve

– The passage and provisions of the Affordable

Care Act

Health Reform

• There have been numerous health reform

attempts in the U.S.

– Prior to 2010, all attempts at national health reform

to crate universal or near-universal coverage have

failed

– Some successes at the state level

Health Reform –

Difficulty of Reform in the U.S.

• Individualistic culture

• Dislike of big government

• Lack of consensus

• Federal system rules and structure make it difficult to achieve major reform

• States generally home to social welfare issues

• Powerful interest groups against national health reform

• Path dependency

Health Reform – Key Failed Attempts

at National Health Reform

• 1912 Progressive Party candidate Teddy Roosevelt supported social insurance platform that included health insurance

• 1915 American Association for Labor Legislation proposal for working class health insurance

• President Truman supported national health reform upon taking office, won re-election on national health insurance platform in 1948

• President Nixon initial health reform proposal in 1969 and revised proposal in 1972

• President Clinton Health Security Act in 1993

The Affordable Care Act (ACA)

• Why did the Affordable Care Act pass when so

many prior attempts had failed?

– Commitment and leadership

– Learned lessons from past failures

– Political pragmatism

The Affordable Care Act (ACA)

• Individual Mandate: most people have to purchase health insurance or pay a penalty starting in 2014

– Exemptions for certain populations and based on affordability

• Controversy

– Too much government interference in private lives?

– Constitutional?

The Affordable Care Act (ACA)

• State Health Insurance Exchanges

– American Health Benefit Exchanges for

individuals

– Small Business Health Options program for small

businesses

– Must offer essential health benefits (Abortion

compromise)

– Four cost levels for plans based on actuarial value

The Affordable Care Act (ACA):

Premium and Cost Sharing Subsidies

• Premium tax credits available for individuals who

purchase insurance in an exchange and have income

between 133%–400% of poverty

• Cost sharing subsidies available for individuals who

purchase insurance in an exchange and have income

up to 250% of poverty

• To quality, must be a US citizen or legal resident,

not eligible for any type of public insurance, and not

have access to employer-sponsored insurance

The Affordable Care Act (ACA):

Employer Mandate

• In 2014, employers with 50 or more employees

must provide affordable health insurance or

pay a penalty

– Insurance is affordable if it has an actuarial value

of at least 60% or is not more than 9.5% of an

employee’s income

– Penalty is per employee after first 30 employees

The Affordable Care Act (ACA)

• Private Insurance Market Changes

– No pre-existing condition exclusion

– Dependent coverage to age 26

– Preventive services without cost sharing

– Prohibitions against lifetime and annual coverage limits

– No rescission without fraud

– New appeals process

– Premium rate reviews

The Affordable Care Act (ACA)

• Private Insurance Market Changes, cont.

– Guaranteed issue and renewability

– Rate variation limits

– Essential health benefits

– Wellness plans

• Some plans may be grandfathered in and not

subject to all of these changes

The Affordable Care Act (ACA):

Financing health reform

• Changes to Medicare provider reimbursement

• Changes to Medicare Advantage reimbursement

• Medicare Part A increases for high earners

• Changes in Medicare Part D subsidies

• Changes in Medicare employer subsidy

The Affordable Care Act (ACA):

Financing health reform

• Changes in Disproportionate Share payments

• Increase Medicaid prescription drug rebate paid by manufacturers

• Income tax code changes

• Health industry fees

• Tax on high cost health insurance plans