What Health Care Reform Means
by David Ping

In March of 2010, Congress passed and President Obama signed into law historic legislation that will forever change the way health care is delivered in this country. There has been much speculation since the legislation passed as to what is actually included in the plan, the timing of when certain aspects of reform will take place, and how the plan can be funded.

What’s Included and When It Takes Effect
Health Care reform will be implemented between now and 2018, with the majority of the changes occurring in 2014. In September of 2010, the law will provide help for families with children, people with pre-existing conditions, senior citizens and small businesses. For families, that aid comes in two ways. Starting in September, adult children up to age 26 can stay on the insurance policy of their parents if they cannot get insurance elsewhere. This will help to provide insurance for young adults who are in their first jobs that might not pay very well or that do not have health care benefits. Insurance companies will also no longer be able to deny coverage to families that have children with pre-existing conditions.

Adults who have been denied coverage in the past also get some early help in this law. They will be able to join a high risk insurance pool and cannot be denied coverage in this group. For senior citizens, prescription drug coverage is changing to eliminate what is referred to as the “doughnut hole.” Medicare recipients will have reduced prescription drug costs as a result. Finally, small businesses will start to become eligible for subsidies to help provide insurance coverage for their employees. Companies that have 25 or fewer employees and that pay for at least 50% of the cost of health insurance for their employees are eligible to receive tax credits of up to 30% of the cost of the insurance. In theory, this will make health care more affordable and more people should have health care coverage. The tax credits are also scheduled to grow to 50% by 2014, providing additional relief for small businesses.

Starting in 2012, hospitals will no longer be paid if a patient comes back into the hospital for the same illness within 30 days of their last hospital stay. In order to prepare for this change, hospitals are adding services including visiting patients in their homes to make sure they stay healthy. Hospitals and health care professionals will also start getting paid differently, with Medicare making one bundled payment to the hospital for all of the care of the patient, and the hospital paying the doctors and others for the care they provide out of that single payment.

In 2013, primary care physicians—family practice and general internal medicine physicians, for instance—will begin getting additional payments from Medicare and Medicaid when they see patients. This increase, practically the first over the past ten years, should help to bring more physicians into primary care.

The last major change occurs in 2014, when over 95% of the population will be mandated to have insurance coverage. 2014 is also the year when employers are mandated to provide coverage or face penalties for failing to do so. There will be five levels of health plans available at this time, ranging from a catastrophic plan that provides little coverage to a platinum plan that covers 90% of an individual’s health costs. Employers with more than 25 employees will be fined if they do not provide certain coverage levels. The fines are relatively low—about $2,000 per employee.

One major misconception about health reform that must be addressed: that people will need to change their physicians and that the plan will dictate the physician you need to see. Individuals will continue to be able to see their current provider and will not necessarily have to seek new ones.

Who Pays for Reform
Reform is paid for from a variety of sources including increased taxes and decreased expenses. Increased taxes include will account for about $450 billion and range from taxes on high cost health plans and tanning salons as well as other “health-related” taxes. The expense reductions total about $500 billion and consist largely of reductions in payments to hospitals and physicians. These payment reductions will occur starting in 2011. Unfortunately for health care providers, there is a three-year gap between reductions in payments and the date when providers receive additional revenue because more individuals must be covered under health reform. For the Health Quest Hospitals in the mid-Hudson (Northern Dutchess Hospital, Vassar Brothers Medical Center and Putnam Hospital Center) this means a $10–15 million reduction in payments for the next ten years. All providers will be challenged to get through the next three years.

The Impact of Reform
Clearly, health care reform has the potential to improve coverage and the overall wellness of the country. A few years ago after Massachusetts passed a heath care reform law that is very similar to the health reform now the law of the land, the state saw a 7% increase in visits to primary care offices and a 3% increase in visits to emergency departments. If this experience is repeated locally, patients will wait longer to see physicians. New physicians will need to be recruited to the area to ensure that adequate access for care will be available. Alternative sites for primary care like immediate care or urgent care centers might also be required to provide access to patients.

Lastly, there are two Congressional elections and one Presidential election between now and 2014 when the major changes in health reform are scheduled to take place. Depending on the results of the elections, reform might look different in the future than it does now.

David Ping is Vice President of Strategic Planning and Business Development at Health Quest, the parent company of Northern Dutchess, Vassar, and Putnam hospitals. He also oversees Health Quest’s physician recruiting, community education, and clinical laboratory services.