Catholic Health World

Reform law changes health care landscape

By JEFF TIEMAN

CHA and ministry leaders said the new coverage options created by comprehensive health reform legislation are a big step toward realizing the first principle set forth in CHA's vision for U.S. health care: that health care be available and accessible to everyone, paying special attention to the poor and vulnerable.

Starting immediately, it is illegal for insurance companies to deny coverage to a child. By July, adults whose preexisting conditions have made coverage unavailable or unaffordable will be eligible for coverage subsidies in a high-risk plan. That financial aid will continue until 2014, when insurers will be prohibited from rejecting applicants on the basis of preexisting conditions.

By this October, financially dependent young adults up to age 26 will be eligible for coverage under their parents' health insurance, and many plans will be under a new prohibition against lifetime limits on medical coverage.

By 2014, state-based exchanges will offer insurance options to those who do not get coverage from an employer or other source. That same year, a mandate for individual coverage takes effect. Federal tax credits will help eligible individuals and families with incomes between 133 percent and 400 percent of the federal poverty level to purchase insurance through the exchanges.

Small businesses will also receive subsidies to help offset the cost of covering their workers. There is no employer mandate in the law, but employers with more than 50 workers will be assessed a fee of $2,000 per full-time employee if the company does not offer coverage and if it has at least one employee who receives a premium subsidy through an exchange.

Medicaid will be expanded to cover the most vulnerable people, those with incomes under 133 percent of federal poverty level. (The federal poverty level is $29,000 for a family of four.) The "doughnut hole" in Medicare will be phased out so that seniors no longer see major gaps in coverage for their prescription drug expenses.

The law also changes the landscape for health care providers.

Work ahead
Sr. Laura Wolf, OSF, president of Franciscan Sisters of Christian Charity HealthCare Ministry in Manitowoc, Wis., said that while the law will help precipitate many important changes in health care delivery, the transition will present challenges for safety net providers.

"How are we going to operate already fragile institutions with this major change occurring?" Sr. Wolf asked. "It is a little bit like we are back at the founding of Catholic health care. Implementing this law will cause us to go into more community-based medicine, more clinics, fewer acute care institutions."

One point of controversy around the law has been the degree to which it will cost or save the system money over the long term. According to the nonpartisan Congressional Budget Office, reform will reduce the federal deficit by approximately $124 billion over the first 10 years, and more than $1 trillion in the following 10 years.

CBO estimates the law will cost $940 billion over 10 years, but that amount is fully paid for by provisions including taxes and tougher anti-fraud efforts to cut waste in Medicare and Medicaid. A modest increase in excise taxes combined with an increase in the Medicare hospital insurance tax are projected to extend the solvency of the Medicare trust fund by nine years.

New revenues will come from charging a "Cadillac" tax on health insurance plans valued at more than $10,200 for individuals and $27,500 for families (effective in 2018). An additional

3.8 percent tax on unearned income and an increase in Medicare payroll tax rates for affluent individuals also will be imposed. The increases only apply to individuals making more than $200,000 a year and couples making more than $250,000 a year.

Wayne Lerner, president and chief executive of Holy Cross Hospital in Chicago, and a member of CHA's health reform initiatives committee, predicts health reform will reshape and improve health delivery.

"We are at the beginning of a brand new chapter of health care delivery systems," Lerner said. "This law will lead down the road to a more managed approach to population health, encourage more organizations to work with complementary organizations, help align incentives between doctors and hospitals and lay the groundwork for a pay-for-performance system. It takes us a couple steps forward on rationalizing policy in delivery."

Hospital pay-for-performance measures will attempt to improve care and save money by rewarding quality instead of quantity. Medicare and Medicaid disproportionate share payments, which compensate hospitals that deliver care to large numbers of uninsured people, will be reduced as coverage is expanded and uncompensated care declines.

Lerner and others point out that the regulations to be written in coming months will put the law into practical effect, and the specifics of those regulations will be crucially important.

CHA Chairwoman Colleen Scanlon said that CHA and member ministry organizations will carefully monitor and comment on the regulations as they are developed. "We are still trying to fully understand everything this law means for health care ministries across the country," she said. "We will be spending a great deal of time now looking at the regulations and rulemaking that will bring this to full life, assuring a more just health care system and protecting the sanctity of life."

While the law represents major progress in the decades-long fight to create a fair and sustainable health system, there is still work to be done, ministry experts agreed. Even once reform is fully implemented, there could still be as many as 16 million uninsured people in the U.S. — many of them undocumented immigrants — and the health care provider community will need to continually assess how the law is working and where it needs to be improved, ministry leaders said.

For resources describing the law, visit CHA's advocacy website.

Copyright © 2010 by the Catholic Health Association of the United States
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