The New Year marks the first time many Americans will benefit from provisions in 2010’s federal health care reform law. The first round of major changes includes the end of lifetime coverage limits, pre-existing condition requirements for children, and more for millions of Americans.
But January also ushers in a new batch of lawmakers to Washington, D.C., and states across the country. It’s a group that could — and includes many who have promised to — have considerable influence over the parts of the sprawling law that are scheduled to take effect in the years ahead.
Combined, these circumstances should make 2011 a busy, if not pivotal year for the Patient Protection and Affordable Care Act.
The law took effect on March 23, 2010, and required health insurance plans beginning on or after Sept. 23 to include some immediate changes. But because most health plans follow a calendar year cycle, many Americans will notice the adjustments for the first time this month.
Notable among those changes is the ban on lifetime coverage limits and the beginning of the end for annual coverage limits. Insurers may no longer cap the amount of money spent on an individual’s health care over that person’s lifetime, and beginning this year the annual cost cap may be no lower than $750,000 — a number that will climb until annual limits are eliminated in 2014. In addition, anyone under age 19 can no longer be denied coverage because of pre-existing conditions, and those up to age 26 may remain on their parents’ health plans.
Insurers are also prohibited from retroactively rescinding coverage except in the case of fraud or an “intentional misrepresentation of a material fact” on a policy application, explained Nashville-based employee benefits attorney Curtis Fisher. Those misrepresentations could include intentionally omitting a health condition or claiming a dependent who is not the applicant’s child.
“Everyone has heard the horror stories where an individual claims that they incorrectly filled out their insurance application and the insurer cancels their coverage or refuses to cover an expensive procedure or treatment,” Fisher said. “After PPACA, it will be a much higher standard.”
New this year for those who use health savings, health reimbursement or flexible spending accounts is a ban on using the pre-tax dollars in those accounts for over-the-counter drugs. The requirement, seen as a revenue generator to help balance new government spending under the law, means many workers will have to rethink the amount of money they contribute to those plans this year.
After 2014, the year the bulk of the law will be effective, the PPACA is expected to provide health coverage to about 32 million uninsured Americans, including hundreds of thousands of Tennesseans, through the expansion of the Medicaid program, the creation of new health insurance exchanges, and provisions like those described above.
Until then, federal and state governments might try to alter, repeal or dodge some of the yet-to-be implemented pieces of the law. Paul Keckley, the Nashville-based leader of Deloitte’s Health Solutions group, said that will be a major storyline for health care reform in 2011.
On the federal front, Keckley expects the “repeal and replace” cry that helped Republicans win seats necessary to take control of the House of Representatives will come up short. Given public support for many of the law’s provisions and Democratic control of the Senate and White House, repealing the law would be virtually impossible, he said. But Republicans will be able to steer the House agenda, make key committee appointments and control the budgeting process.
“What they can do is cherry-pick various pieces of the law and either debilitate elements of the law or slow appointments, restrict funding, challenge various provisions — it’s a whole range of political drama,” he said.
Another drama could play out on the state level, with governors suggesting their own alternative plans to PPACA provisions or asking that their states be exempted from parts of the law. Currently, a slate of 20 states and the National Federation of Independent Business are challenging the constitutionality of the law’s requirement that in 2014 every American must purchase a health insurance policy or face a penalty. Their lawsuit is expected to reach the U.S. Supreme Court.
“You’re going to see a lot of judicial challenges, a lot of states seeking waivers to be in compliance with the law … and you’re going to see insurance companies really managing to a whole new set of rules,” said Keckley, who noted that the government is not even “past first base” on writing a lot of the rules and regulations required by the law.
“There are more than 1,000 references in the law to ‘the secretary shall,’ and we’re just now getting to the first set of those,” he said.