The basics of the Affordable Care Act

Editor's note: This is the first in a periodic series of articles by Illinois Issues on health care. 

By Jamey Dunn
The fate of some of the the most integral components of federal heath care reform are in the hands of the United States Supreme Court, but many Americans are unaware of aspects of the law that are already in effect.

President Barack Obama signed the Affordable Care Act into law two years ago. Since 2010, provisions of the plan have rolled out across the country:

2010 

• Tax credits became available for small business and nonprofit organizations that contribute to the cots of their employee’s health insurance. According to the Chicago-based Campaign for Better Health Care, 159,900 Illinois businesses are eligible for the credit. A Pre-existing Condition Insurance Plan (PCIP) was created. According to the Obama administration, the plan is meant to serve as a “bridge” to 2014, when in insurance companies will no longer be able to deny coverage to adults because of a pre-existing condition. In 2011, almost 2,000 Illinoisans had enrolled in PCIP. Individuals must be uninsured for at least six months before they can qualify for coverage under the plan. 

•  Children can stay on their parents' insurance up to age 26 if they are unemployed or do not have access to insurance through their jobs. An Illinois law that went into effect in June 2009 allows unmarried dependents to remain on their parents plan until they turn 26. The federal law allows married residents under 26 to remain on their parents’ insurance as well. Under the state law, Illinois veterans qualify up to age 30. 

• Children under 19 years old cannot be denied coverage due to a pre-existing condition. New insurance plans must cover some wellness and preventative procedures, such as cholesterol tests, without charging a copay or deductible. According to the campaign for Better Health Care, almost 2.4 million Illinoisans with private insurance received free preventative services as of 2011.

• Insurance plans that offer obstetrical or gynecological coverage must allow women to see any OB-GYN within the plan’s network of doctors without requiring a referral. 

• Insurance companies are no longer allowed to rescind coverage unless fraud is committed. In the past, insurance companies had taken away coverage for basic mistakes made on forms and other minor errors, sometimes leaving chronically ill patients without coverage. According to the Illinois Department of Insurance, Illinois had the most rescissions per capita in the country prior to the new rule. 

• Lifetime caps on medical coverage costs where eliminated. Annual caps will be phased out in 2014. Caps can lead to patients with serious illnesses, such as multiple sclerosis or cancer, paying for costly treatments out of pocket or missing out on care. An appeals process must be in place for patients seeking to contest claims denied by insurance companies. 

 2011 

• Medicare Part D patients who reach the so called doughnut hole, a point in coverage where they must purchase their prescription medicines out of pocket, get a 50 percent discount on Medicare Part D covered brand-name prescription drugs. Medicare is a federal program that provides health care services to people over 65. The affordable Care Act seeks to close the doughnut hole by 2020. In Illinois, more than 144,000 people received the discount last year. The average savings was $667 per person, and Illinois had a total savings of $96,216,548 according to the Campaign for Better Health Care. 

• Medicare patients receive free preventative services, such as cancer screenings. More than 1.3 million Medicare patients in Illinois received such services in 2011. 

• Large employers’ group plans must spend 85 percent of the premiums they collect on health care services or improving health care quality. Plans for individuals and smaller employers must spend 80 percent of premiums on care. Companies that fail to meet these thresholds because their overhead costs or profits are too large will be required to give a rebate to customers. 

•  The Community Care Transitions Program was created to help high-risk Medicare patients access care after a recent hospitalization. The program is intended to keep such patients from needing to be readmitted because of a back slide in health due to a lack of care once they head home. 

2012 

• The Department of Health and Human Services is required to collect, analyze and report on demographic data in an effort to address health care disparities across racial, ethnic and socio-economic divides. 

Some provisions of the Affordable Care Act only apply to individual plans purchased before March 23, 2010, or group plans created before that date. See the federal website created to explain health care reform, healthcare.gov, for more information.

Despite all these and other provisions, the bulk of the plan goes into effect in 2014. Health care advocates in Illinois estimate that 20 percent to 40 percent of Americans are unaware that any of the Affordable Care Act has been implemented so far.

Some of the most controversial pieces are facing a constitutional challenge. The mandate that after 2014, most Americans must purchase health insurance or face a financial penalty collected by the Internal Revenue Service is the focus of most of the legal challenges. Under the mandate, those who cannot afford insurance would receive subsidies to purchase it or be put on Medicaid, a joint state and federal program that provides health care to the poor.

The mandate is meant to keep people from gaming the other changes to the rules. If insurance companies cannot turn away people with pre-existing conditions, people could wait until they got sick to get insurance. If there were no healthy people in the pool of the insured to balance the costs of caring for the sick, premiums would skyrocket. The theory goes that if everyone buys insurance, the cost of insuring those with chronic illness would be paid for with the premiums of those who are relatively well and who are not seeking much health care. In turn, the healthy insured would have coverage when the time came that they might need it. The Obama administration argues that the requirement falls under the government’s power to regulate commerce and levy taxes.

But 26 states and sued over the mandate, and new requirements that would be put on states. The U.S. Supreme Court will decide whether the mandate goes too far, punishing Americans for failing to purchase a product. The court will also decide if Congress overstepped its power by requiring states to accept new Medicaid provisions and a vast expansion to remain in the program. If the court strikes down any one part of the law, it must determine whether the other pieces would stand alone. The U.S. Supreme Court is scheduled to hear arguments on the case beginning on March 26. The court has planned for six hours of hearings over three days. A ruling is expected this summer.

As the court weighs the issue, many states are dragging their feet on implementing other pieces of the reform. States are reluctant to create health insurance exchanges, online marketplaces where customers can comparison shop for insurance, until the court has ruled.

Mayra Alvarez, director of Public Health Policy in the Office of Health Reform at the U.S. Department of Health and Human Services, said that states need to have exchanges in place by the fall of 2013 to meet requirement that they go online January 1, 2014. She said new rules the administration issued this month would allow states great flexibility in creating their exchanges and the option to partner with the federal government to run a hybrid exchange. States who are not ready by the deadline could use such a plan until they have their own exchanges up and running. Residents in states that do not create their own exchange would be able to access a federal exchange. “A federally facilitated exchange will be up and running in 2014,” she said. “The state may run a component, and the federal government may run a component.”

Illinois has received $6.2 million in federal grants for planning and implementation of its exchange. The state has begun the process, but advocates do not expect lawmakers to vote on the core aspects of the exchange until after the primary election at the earliest, or next fall, after the U.S. Supreme Court has ruled, at the latest.