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What is Health Care Reform?
Table of Contents
- Summary of health care reform
- New York's role in implementing health care reform
- Changes that are effective now
- Ways New York is affected differently than other states
Summary of Health Care Reform
Federal health reform uses a "building blocks" approach that starts with the health insurance system we currently have in place in the United States. Health reform builds upon our current health insurance system to provide more people with access to health insurance coverage, establish legal protections for consumers, and set up mechanisms for consumers to shop knowledgeably for insurance.
Health reform includes the following key steps:
- Expand Medicaid to allow more people at the lowest income levels to qualify for coverage.
- Encourage employers to offer health insurance.
- Provide credits to purchase private health insurance coverage to moderate income Americans who do not qualify for Medicaid.
- Streamline the purchase of health insurance through the establishment of the Health Insurance Exchange.
- Strengthen consumer protections and require transparency.
- Impose protections to guard against unreasonable rate increases.
- Encourage primary and preventive care.
- Require most Americans to purchase health insurance.
New York's role in implementing health care reform
States, including New York, have a role in health reform. For example, states have the option to set up their own health insurance exchange. For the most part, federal health reform establishes a "floor, not ceiling," allowing states to provide protections greater than those established under federal law. This is good news for New York, which already provides strong consumer protections, such as open enrollment and community rating that ensures access to health insurance coverage without regard to age, sex, health status and occupation. New York will work in partnership with the federal government to implement the federal law and coordinate it with New York law. States also provided input to the U.S. Department of Health and Human Services in developing guidance in a number of areas including consumer assistance and the review and disclosure of premium rate adjustments.
In 2011, the New York State Legislature passed and Governor Cuomo signed A8460/S5800, which updates the State's Insurance and Public Health Laws with the federal health care reform law's provisions regarding health insurance policies and contracts.
Changes that are effective now
- Help For Uninsured Americans With Pre-Existing Conditions Until Exchange Is Available (Pre-Existing Condition Insurance Plan)
- The health care reform law provides funding to assist uninsured individuals with pre-existing conditions through development of temporary high risk pools. When this program is operating, such individuals should be able to access coverage without pre-existing condition waiting period restrictions. New York currently does not allow insurers to deny coverage to people with pre-existing conditions, but they are permitted to impose a waiting period for the pre-existing condition. New York has applied to the U.S. Department of Health and Human Services for federal funding for this plan, which is the Pre-Existing Condition Insurance Plan. For more information on this program, visit the Pre-Existing Condition Insurance Plan page.
- Help For Early Retirees
- The health care reform law creates a temporary reinsurance program (until the Exchanges are available) which provides assistance to employers and sponsors of multi-employer plans to help offset the costs of claims for early retirees age 55 and older who are not eligible for Medicare. Program participants must use any payments received under the program to improve plan benefits or reduce premiums. For more information on this program, visit the Benefits of Health Care Reform for Early Retirees page.
- Small Business Tax Credits
- The health care reform law provides tax credits to small businesses to make employee coverage more affordable. Tax credits of up to 35 percent of employer contributions to premiums will be available to firms that choose to offer coverage. (Beginning in 2014, the small business tax credits will cover 50 percent of premiums.) For more information on the tax credits, visit the Benefits of Health Care Reform for Small Businesses page.
- Medicare Part D Donut Hole Rebate Checks
- Starting in mid-June a tax free, one-time $250 rebate check will automatically be sent to Medicare Part D enrollees who reach the coverage gap (also called the "donut hole") in 2010 and are not receiving Medicare Extra Help. There are no forms to fill out in order to receive this check. Medicare enrollees should be careful not to give out any personal information to anyone who calls them about the rebate check. More information about the rebate check is available in the Closing the Prescription Drug Coverage Gap brochure. (PDF, 4MB, 2pg.)
- Web Portal
- The U.S. Department of Health and Human Services (HHS) has developed a website through which individuals and small businesses can identify affordable health insurance coverage options. The website, www.HealthCare.gov, provides information on:
- Health insurance coverage
- Pre-Existing Condition Insurance Plan
- Small group coverage, including reinsurance for early retirees, tax credits, and other information.
Additional information on the web portal is available in the Fact Sheet on Establishing the Web Portal Called For in The Affordable Care Act - U.S. Department of Health & Human Services (HHS).
- Consumer Protections
- The health care reform law includes many changes that will protect people with private health insurance. These changes apply to health insurance plans that have plan years starting on or after September 23, 2010. Since health care reform allows people to keep their current health insurance plan if they like it, some of these changes do not apply to plans that were available when the health care reform law passed on March 23, 2010. Plans that were available before this date are called "grandfathered plans." (More information on grandfathered plans is available in the HealthReform.gov Fact Sheet: Keeping the Health Plan You Have: The Affordable Care Act and "Grandfathered" Health Plans and the HealthReform.gov Questions and Answers: Keeping the Health Plan You Have: The Affordable Care Act and "Grandfathered" Health Plans page.
The following consumer protections apply to all new health insurance plans and grandfathered plans that have plan years starting on or after September 23, 2010.
- Children Up To Age 26 Can Stay On Their Parents' Insurance
- Health care reform law allows adult children to remain on their parents' insurance policies until their 26th birthday, at the parents' choice. Financial dependency, student status, marital status, employment and residency can no longer be used to determine a child's eligibility for coverage on his or her parent's health insurance policy. This change applies to all new policies sold after September 23, 2010, and to existing policies on the policy's renewal date. (In many cases, policies' plan years begin on January 1,making this the policy's renewal date.) Additional information on the dependent coverage extension is available on the U.S. Department of Health and Human Services website.
- Lifetime Limits On Coverage are Banned
- The law prohibits health insurance companies from placing lifetime caps on the total amount of insurance coverage that an individual or family can receive. These caps can cause serious problems for people with chronic illnesses or diseases that are expensive to treat.
- Rescissions are Banned
- This provision bans insurance companies from dropping people from health insurance coverage after they get sick due to an unintentional mistake on their paperwork.
The following consumer protections apply to all new health insurance plans that have plan years starting on or after September 23, 2010. (These protections apply to grandfathered plans that have plan years starting on or after this date, except plans that offer individual coverage.)
- No Discrimination Against Children With Pre-Existing Conditions
- The law prohibits health plans in all markets from denying coverage or requiring waiting periods for children under age 19 with pre-existing conditions. A pre-existing condition is a health condition where treatment was recommended or received in the six months before a person applies for new health insurance coverage. (Beginning in 2014, this prohibition will apply to all people.)
- Annual Limits on Insurance Coverage are Regulated
- The law greatly restricts insurance companies from placing annual limits on the amount spent on health care. This will help ensure access to needed care. These restrictions are defined by the U.S. Department of Health and Human Services and are currently under review. (Beginning in 2014, the use of any annual limits would be prohibited for all new plans and grandfathered group health plans.)
The following consumer protections apply to all new health insurance plans that have plan years starting on or after September 23, 2010. (These do not apply to grandfathered plans.)
- No Cost-Sharing for Preventive Care
- Health insurance plans are required to cover preventive services without applying copayments, co-insurance or deductibles to these services. In other words, there would be no cost to people with health insurance for the use of preventive care services. The goal is to encourage the use of preventive care to reduce illness and health care costs. (New York currently requires coverage of well-child visits and immunizations for children up to the age of 19 without costs from copayments, deductibles, or co-insurance.) For more information on the preventive care services that will be covered without cost-sharing, visit the HealthCare.gov Preventive Services page.
- Appeals Processes are Guaranteed
- Health insurance policies sold to groups and individuals must have appeals processes for consumers to appeal coverage determinations. (New York law currently requires HMOs and insurers to provide appeals processes.)
- Choice of Primary Care Provider is Guaranteed
- Health insurance policies sold to groups and individuals that provide for designation of a primary care provider must allow the choice of any participating primary care provider who is available to accept patients.
- Direct Access for OB/GYN Services is Guaranteed
- Health insurance policies sold to groups and individuals may not require authorization or referral for a female patient to receive obstetric or gynecological care from a provider in the plan's network. Health insurance policies must also accept authorizations from obstetricians or gynecologists as the authorization of a primary care provider. (New York law currently requires direct access for OB/GYN services.)
- Discrimination Based On Salary is Banned
- The law prohibits new group health plans from establishing eligibility rules for health care coverage that discriminate in favor of higher wage employees.
Ways in which health reform affects New York differently than other states
Federal health reform establishes significant nationwide consumer protections in commercial health insurance markets. A number of key consumer health insurance protections already in place in New York have been adopted as a part of federal reform. As a result, New York will go through less transition than many states with respect to these reforms. These include:
- Guaranteed Issue
- Guaranteed issue means that health insurance companies must issue a health insurance policy to anyone who applies for it. Specifically, no insurer can reject an individual or business based on age, sex, occupation or health status. Therefore, people seeking insurance are "guaranteed" to have a policy "issued" to them. New York has already enacted guaranteed issuance in our individual and small group markets.
- Adjusted Community Rating
- New York has pure community rating, which means that in the individual and small group market, people are charged the same health insurance premiums regardless of age, sex, health status or occupation. Federal health reform introduces "adjusted community rating," which would permit limited differences in rating based on age and tobacco use. It is our understanding that because New York's standards exceed federal standards, New York can maintain its current requirements.
- New York's individual health insurance market, which guarantees comprehensive benefits and takes all applicants without regard to age, sex, health status or occupation, is currently more expensive than the individual markets in states that reject or charge higher prices to those who are sick. So, although access is not as big of a problem for individual consumers in New York, affordability is a bigger problem in New York than it may be in states that allow denials of coverage based on health status. Because New York is a high cost, high premium state, the subsidies to purchase health insurance described above will be instrumental to make health insurance in New York more affordable.
- Pre-existing Condition Waiting Periods
- A "pre-existing condition" is a health condition where treatment was recommended or received in the six months before a person applies for new health insurance coverage. Although New York does not allow insurers to deny coverage to those with pre-existing conditions, it is currently permissible for insurers to impose pre-existing condition waiting periods. Pre-existing condition waiting periods ensure that people do not wait until they have a health condition or are sick before they purchase health insurance coverage (just as you cannot wait to buy home insurance until your house is burning). Such waiting periods cause insured people to wait up to twelve months after buying a health insurance policy to have coverage for the specific condition that is pre-existing, although they will have coverage in place for all other conditions. There are protections in place that limit what may be considered a pre-existing condition. Protections also exist that reduce waiting periods when people with pre-existing conditions switch their health insurance. Under federal health care reform, New York will need to eliminate these waiting periods for children in 2010 and for adults by no later than 2014.
- Coverage Extension to Age 26
- Federal health reform requires insurers to provide coverage to adult children as dependents on their parents' policy up to their 26th birthday. This provision takes effect in September 2010, but many insurers have opted to implement this coverage extension early. New York has a law allowing children to stay on their parents' plan until age 29, but under different terms than the federal health reform law. New York Law extends the availability of health insurance coverage to young adults through the age of 29 to assist young adults who do not have access to employer-sponsored health insurance. This law is sometimes referred to as the "Age 29" law, because it allows young adults to continue or obtain coverage under a parent's policy through the age of 29. The law provides two distinct ways in which coverage may be extended: a "young adult option" and a "make available" option. More information on this law is available on the New York State Department of Financial Services website.
- New rules from the U.S. Department of Health and Human Services are being reviewed to determine how this "Age 29" law in New York State will interact with the provision in health care reform that allows young adults to stay on their parents' health insurance policy until age 26. More information on this new coverage for children up to age 26 through health care reform is available on the U.S. Department of Health and Human Services website and this fact sheet.
- Ensures Value For Premium Payments
- Health care reform law requires plans in the individual and small group markets to spend 80 cents of every premium dollar on medical services, and plans in the large group market to spend 85 cents of every dollar. Insurers that do not meet these thresholds must refund to policyholders the difference between the amount insurers are required to spend on medical services and what they actually spent. Currently in New York, plans in the individual and small group markets are required to spend 82 cents of every premium dollar on medical services and plans in the large group market are required to spend 85 cents of every premium dollar on medical services.
- No Copayments For Preventive Care Under New Private Plans
- Federal health reform requires new private plans to cover preventive services and does not permit an insurer to apply copayments or deductibles to these services. In other words, there would be no cost to people with health insurance for the use of preventive care services. The goal is to encourage the use of preventive care to reduce illness and health care costs. NY Law currently requires coverage of well-child visits and immunizations for children up to the age of 19 without costs from copayments, deductibles, or co-insurance.
Additional information on how health care reform will affect New York State is available through these sources:
- Health Care Reform and New York
- Federal Health Care Reform: Implications for New York (PDF)