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Major Provisions and Immediate Effects of Health Care Reform

By Jessica DeMartino, PhD, NCCN Policy Fellow

While the process has been long and challenging, President Obama has succeeded in meeting one of his top domestic priorities – health care reform. It is projected that this reform will extend health benefits to 32 million uninsured Americans at a cost of $938 billion over the next 10 years (estimates from the Congressional Budget Office). Health care reform was completed on Tuesday, March 30, 2010 with President Obama signing the budget reconciliation bill into law. The reconciliation process became necessary after the Democrats lost the Senate seat formerly held by the late Edward M. Kennedy and the subsequent inability to overcome a Republican filibuster in the Senate. Under Senate reconciliation rules, only 51 votes are needed to pass a budget reconciliation bill.

On Sunday, March 21, 2010, the House of Representatives passed the Senate-approved health care reform bill along with a budget reconciliation package. Without the “fixes” proposed by House Democrats in the budget reconciliation bill, the House would not have agreed to pass the Senate-approved health care reform bill. On Tuesday, March 23, 2010, President Obama signed the Senate health care reform bill into law. The Senate then needed to approve the budget reconciliation package. Senate Republicans forced two minor provisions involving student loan funding to be stripped from the bill – changes that required the House to take up the bill a second time but had no effect on the broader health care bill that took effect Tuesday. The Senate approved the modified budget reconciliation bill and subsequently, the House also approved the reconciliation bill and sent it to President Obama to sign and enact.

Some major changes in the reconciliation package included:

  • An adjustment in the tax on “Cadillac” health plans. It would now apply only to the portion of plans above $10,200 a year for individuals and $27,500 for families (from $8,500 and $23,000, respectively). The tax will not go into effect until 2018.
  • Subsidies will be more generous for low- and moderate-income Americans to buy health insurance.
  • The Medicare Part D coverage gap called the “doughnut hole” will be closed by 2020. In 2010, seniors who reach the gap will receive a $250 rebate.
  • Starting in 2013 individuals with earned income above $200,000 and couples with earned income above $250,000 will pay a 3.8% Medicare payroll tax on investment income.

Many of the provisions of the health care reform bill will not be enacted until 2014. Some immediate effects include:

  • Dependent children will be allowed to remain on their parents’ health insurance up to age 26.
  • Existing insurance plans will be barred from imposing lifetime caps on coverage.
  • Insurers will be prevented from canceling insurance retroactively, except for fraud.
  • Insurance plans cannot exclude coverage for pre-existing medical conditions for children under age 19.
  • Steps will be taken to fix the “doughnut hole”; in the first year, those who hit the “doughnut hole” will receive a $250 rebate. Next year, the cost of drugs in the “doughnut hole” will go down by 50 percent.
  • Prevention care will be available to Medicare beneficiaries without co-payments or deductibles beginning in 2010.
  • People with medical conditions that make them uninsurable may be able to get coverage through a federally subsidized health insurance program, to be established within 90 days. The legislation limits spending for this program to $5 billion.

Of special interest to the cancer community is the provision of the health care reform bill that will require coverage for routine patient care costs for those with cancer and life-threatening illnesses who are enrolled in clinical trials. The clinical trials coverage provision applies to private insurance plans and the Federal Employees Health Benefits Program.

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