Health Reform Blog

Yes, You Can Keep Your Health Plan

The Wall Street Journal published an op-ed today charging that the Affordable Care Act will prevent people from keeping their current health plan and limit their choices.  However, this ignores the realities of health reform.

First, the 150 million Americans with employer-sponsored health insurance—who make up the vast majority of those with private health insurance today—will not see major changes to their coverage.  For this group, the Act does include some important protections and enhancements, such as coverage for young adults up to age 26 and the elimination of annual limits on covered health costs. However, at the end of the day, employer-sponsored insurance will be improved but still look much the same as it does now.

Second, I agree with the WSJ op-ed that the Affordable Care Act’s biggest changes will be for the individual market, but with the opposite conclusion. The fact of the matter is that the individual market does not work well now—it features high prices and not enough choice, and too many Americans are left with poor or no health insurance because of this. The Affordable Care Act establishes minimum standards for health plans; creates transparent and competitive markets from which consumers can buy insurance; and helps those who can’t afford insurance coverage to purchase it. 

A key point to remember is that while the Act makes many changes to the individual market, it specifically allows those who want to keep their current insurance to do so.  Most of the Act’s protections apply only to new policies, allowing people to stick with their current plan if they prefer.  It is true that a few protections apply to all plans, both new and old, but these protections—like limiting the share of premiums that insurers can devote to administrative costs—are designed to help consumers and cut health care costs.

The bottom line is that the Act allows people to keep the insurance they have, while also providing more and better options for all.

Note: This blog also appeared on Whitehouse.gov.

Tax Credits are First Step in Health Insurance Reform for Small Businesses

Today, the Treasury Department is releasing more details on the ways small businesses will benefit from health insurance reform. Rising health care costs have been the biggest concern for small businesses for decades. But as a result of the Affordable Care Act, we are already putting in motion steps that will reform the health insurance system so it works for small businesses, rather than strap them with continually rising costs.

One of the many ways the new law is helping small businesses is through tax credits starting this year. These credits will help small business owners provide health insurance to their workers – by giving back up to 35 percent of the employee premiums they pay starting this year. Just as important, today’s announcement made clear that small businesses may receive state health care tax credits and still qualify for a federal tax credit.  In addition, today’s announcement clarifies that dental and vision coverage qualify for the credit.

With this announcement today, I’m reminded of a woman small business owner I met in New Jersey last summer. She said to me that the day she was able to provide health insurance for her staff was the day she knew she was a success. But rising costs forced her to cut back on the coverage and even put her at risk of not being able to provide coverage at all for her employees. That’s why these tax credits are so important. It will mean she and countless other small business owners across the country can do what she thinks is best for her employees and for her business.

An estimated 4 million small businesses may qualify for a credit, which will provide about $40 billion in tax relief over the next 10 years.  Already, the IRS has sent out millions of postcards to small business owners connecting them with tools to help them to determine their eligibility for a federal tax credits this year.

In 2014, the maximum tax credit will increase from 35 to 50 percent and small business owners will also have the chance to access affordable plans through health insurance exchanges.  These exchanges will be a marketplace where small businesses can pool their risk together and spread it more broadly, while reducing their administrative costs.

It’s important to note that the Affordable Care Act also will help small businesses in other ways.

For example, rules will prohibit insurance companies from dramatically increasing premiums for a small business just because one worker gets sick.  Also, by outlawing discrimination based on pre-existing conditions, the Affordable Care Act will make it easier for small businesses to compete for quality workers, as well as allow more Americans to break out of “job lock” and start their own business.  Read more benefits of the Affordable Care Act for small businesses here.

Overall, the Affordable Care Act will provide entrepreneurs and small business owners with lower costs and more tools to provide health insurance for their employees, whom they often think of as members of their own family.  We owe them nothing less as they work to grow, create jobs, and lead us toward full economic recovery.

Turning up the HEAT on Fraud

As the Affordable Care Act has kicked in over the last few weeks, Americans around the country have been getting some long overdue good news about health care.  While most of us see this historic new law as an opportunity to give all of us more control over our own health care and bring down health care costs, there are others who are trying to use the new law to defraud seniors and try to rip off the system.

Sadly, criminals see health insurance reform an opportunity to launch new schemes. My message to them is this: there has never been a worse time to try to steal Americans' health care dollars.

What these criminals may not know is that the Affordable Care Act is not just about making our health insurance system work better for families.  It's also has some of the strongest anti-health care fraud provisions in American history.

Over the past year and a half, we have made great strides in fighting fraud, working with the Department of Justice and state and local partners to deploy innovative fraud-fighting strategies like our HEAT strike force. 

A new report released today by the Attorney General and I shows that our fraud-fighting efforts are working – in FY 2009 anti-fraud efforts put $2.51 billion back in the Medicare Trust Fund, a $569 million, or 29 percent, increase over FY 2008, and over $441 million in federal Medicaid money was returned to the Treasury, a 28 percent increase from FY 2008.

But criminals aren't quitting yet. In just the past few weeks, in states from Delaware to Wyoming, we're hearing unfortunate examples of schemers promising medical benefits to seniors in exchange for their personal information. These schemes are not only a threat to taxpayer dollars, but are potentially devastating to seniors seeking care.

That is why we're turning up the heat on scam artists who try to defraud taxpayers and exploit consumers. The Affordable Care Act will improve our ability to detect, track and prevent fraud, through enhanced communication and transparency across agencies and geographic regions, and stronger penalties for criminals.

Over the next 10 years, we'll be investing $600 million towards these detection and enforcement efforts – investments that studies have shown pay for themselves many times over. And we'll be working to empower Americans to help us fight fraud by building strong coalitions on the state and local level with law enforcement and seniors groups to educate people about their rights and to enlist them to become fraud fighters too.

As the new law is implemented, we will aggressively work to safeguard our tax dollars and protect our seniors every step of the way.  Fighting fraud, strengthening Medicare and protecting seniors is the core of our mission when it comes to this new law and we will act swiftly and aggressively to both prevent fraud from happening and against those who break the law.

HHS sends Affordable Care Act Implementation Update to Congressional Leaders

Secretary Sebelius sent a letter to leaders of Congress today outlining all the progress that has been made to date when it comes implementing the new Affordable Care Act. She said her main operating principle was to expeditiously implement the law but to work carefully and thoughtfully and ensure we were producing information that helped Americans get their questions answered.

The letter contains a detailed summary of progress to date including some important policies like health coverage for adult children and the ending of the controversial practice of kicking sick people of insurance plans called rescissions, that we have been able to work to deliver earlier than was called for in the legislation.

Read the letter by clicking here.

A Long Overdue Change to Help Young Adults Get Coverage

As families around the country celebrate high school and college graduations this month, they can also cheer another piece of good news: as part of the Affordable Care Act, our Administration is issuing regulations today that will allow young adults to stay on their parents’ health insurance plans until age 26.

This change is long overdue.  For years, getting a diploma also meant losing your health insurance.  And whether you went on to college or not, it was often hard as a young person to find affordable coverage.  Overall, Americans in their twenties were twice as likely to go without health insurance as older Americans.

I saw this firsthand as a mom.  When my sons graduated from college, they both found jobs.  But like a growing number of employers, neither of theirs offered health insurance.  Fortunately, they were both healthy and could afford to buy coverage.  But I often wondered: what if one of them had a preexisting condition like diabetes?  What if our family had fewer resources?

For too many young Americans over the years, the answer to these questions was simply to go without health insurance and hope that you stayed healthy.

Thanks to the rule we’re establishing today, no young American will have to take that risk ever again.  Under this policy, insurers will be required to allow any American under the age of 26 who doesn’t get health insurance through their job to stay on their parents’ plan.  To get more details, you can read this fact sheet or Q&A.

This provision was scheduled to go into effect in September.  But we didn’t want any young person to needlessly go without health insurance this summer.  So over the last few weeks, we’ve reached out to insurance companies and asked them to make this change immediately.  And to their credit, we’ve gotten a terrific response.

So far, every major insurance company – more than 65 in total – and several major self-insured organizations have said they will provide continuous coverage for young adults this summer.  That’s great news for graduating seniors and their families who will get added security in exchange for premiums that are only expected to rise by .7%. 

And it’s not a bad deal for insurance companies or employers either.  Insurers will save the administrative costs that would have added up as they dropped people in May only to sign them back up in September.  And businesses have already been notified that the tax exclusion for employer health benefits will apply to all the young adults who choose to stay on their parents’ plans.

It’s only been seven weeks since President Obama signed the Affordable Care Act, but Americans are already seeing the benefits.  In addition to this new security for young adults, small business owners have been notified about a new tax credit to help them provide health coverage for their employees.

Seniors who have hit the prescription drug donut hole will begin getting $250 rebate checks next month to help them afford their medications.  And we’ve been working closely with states for weeks to develop a new insurance option for uninsured Americans with preexisting conditions.

After years of feeling like they were losing control over their health care, Americans are finally getting a glimpse of a better future.  And in the months to come, we’re going to continue to work diligently with our partners across the country to deliver the promise of this new law and make our health care system work better for the American people.

My Letter to States in Defense of Consumers

A few months back, California residents got the startling news that Anthem Blue Cross, a WellPoint affiliate, announced it was raising its rates for some beneficiaries – as high as 39 percent in some cases. In response, I sent a letter to Anthem calling on the company to publicly justify these hikes. I’m pleased to report that Anthem announced last week it would withdraw its plans for the premium increase in California because the rate hikes were based on unreasonable assumptions.

But Californians are not the only ones who have been hit with out of control insurance premiums. That’s why I wrote a new letter to Governors and State Insurance Commissioners asking every state to re-examine any WellPoint health insurance rate increases, and to make sure they have the strong regulatory tools they need to fight unreasonable increases.

For too long in this country, Americans have been at the mercy of insurance companies, and have ended up paying a steep price. Using faulty assumptions and loopholes, insurers have tried to game the system, and consumers have ended up with one bad deal after another. In recent days and weeks, with the passage of the Affordable Care Act and strong actions by states from Maine to California, the balance of power is starting to shift toward the American people.

Working with my colleagues on the state level, we are sending a message to insurers that it is time to for them to put their customers first. I sent this letter to states to encourage governors and insurance commissioners to follow California’s example and check the math on rate increases being proposed in their states, and to ensure they have the strong regulatory tools they need to fight unreasonable increases.

A copy of my letter to Governors and State Insurance Commissioners is included below:

Dear Governor:

            I am writing to call your attention to the recent withdrawal by Anthem Blue Cross, an affiliate of WellPoint, Inc., of the proposed rate increase of up to 39 percent for many of its California individual market policyholders.  The California Department of Insurance found that the proposed rate increase was based on unreasonably high assumptions about the rate at which medical costs are increasing. 

            In light of this recent finding, I urge that, to the extent you have authority to do so, you re-examine any WellPoint rate increases in your state to determine whether any mistaken assumptions similar to those made in California were made in your state.  Even small errors can mean unaffordable premiums for policyholders.

            I also ask that you review the authority you have under your state law to determine whether you have all of the regulatory tools needed to approve health insurance rates before they take effect.  The ability to require insurers to modify an increase if a proposed rate increase is unjustified has been shown to be effective in many states.  The Affordable Care Act expressly contemplates support for state efforts in rate review, appropriating a total of $250 million to states to assist in meaningful rate review.  We intend to issue guidance on applying for that funding in the near future.

            Experience has shown that, where the prior-approval rate authority does exist, rate increases can be moderated, while still enabling insurers to earn a reasonable profit.  Just last month, for example, a Maine court affirmed the Maine insurance commissioner’s decision to reduce Blue Cross of Maine’s proposed 18-percent rate increase to 10 percent.

            When the Exchanges begin to operate in 2014, individuals and small businesses will be able to make apples-to-apples comparisons, and will have access to meaningful comparative price information.  Insurers will compete on price, and will no longer be competing by segmenting the market, differentiating the product, and selecting out risk.  Under the new system, competition will complement oversight to hold down rate increases.

            In the meantime, however, individual and small business insurance purchasers have little or no bargaining power and limited access to meaningful comparative price information.  That’s why state assistance is so necessary to prevent excessive rate increases.

            I therefore urge you to review WellPoint’s rate filings for mistakes similar to those made in California, if you have the authority to undertake rate review, and, if you do not, to seek authority to prior-approve health insurance rates.  Not only will funding be available to states that have and exercise such authority, but, more importantly, such authority and its exercise will enable state insurance departments to better protect consumers. 

Strengthening Our Health Care Work Force

One of the most common questions we get is about how our health care system will accommodate the 32 million uninsured Americans who are projected to get covered under the Affordable Care Act.  On Tuesday, May 04, HHS Secretary Kathleen Sebelius addressed those concerns in a speech on the future of primary care.

Speaking at a Health Affairs forum, she discussed the unprecedented investments the Obama administration is making to strengthen our health care workforce: from doubling the size of the National Health Service Corps, to helping community health centers serve 23 million additional patients a year, to reducing the unfair imbalance in payments between primary care doctors and specialists.

She also highlighted some examples of the kind of innovative primary care models that will be promoted under the Affordable Care Act like this story about a family she met in Cincinnati:

I was at the Cincinnati Children’s Hospital a couple of weeks ago in their outpatient clinic with a mom and her daughter who had some pretty serious health challenges.  She has had these challenges since birth, and the mother was describing how the care she received had changed in just in the last two years.

They do a lot of home testing now.  She can send the results in, and within 30 minutes, she can get an answer back about whether or not they actually need to come in for a visit, or change the medication, or whether it’s just, “Take a deep breath; this will pass.” 

And she said: “this not only gives my husband and me peace of mind.  But it also saves an extraordinary amount of time for the parents and patients.”

In telling this story, Secretary Sebelius underscored what the Affordable Care Act is all about: giving Americans more control over their health care. As we continue to work to implement this new law, that’s a goal we’ll work towards every day.

Helping Businesses Help Retirees

Whenever I speak with leaders from the business community from all around the country, they all agree on one thing: rising health care costs are making it harder for workers and retirees to get the benefits they deserve.  Increasingly, employers are being forced to choose between staying competitive and honoring the men and women who powered their businesses by providing their retirees with quality benefits.

Americans who retire before they turn 65 and are eligible for Medicare are particularly vulnerable. In 1988, 66 percent of large firms provided health care coverage to their retirees. 20 years later in 2008, the percent of firms offering coverage to retirees plummeted to 31 percent. The lack of coverage from their employer forces many retirees to pay exorbitant premiums or simply go without health insurance.

Fortunately for these Americans, the Affordable Care Act will provide immediate relief.   The new law includes $5 billion in financial assistance for employer health plans that offer coverage to early retirees. This program is temporary and will help bridge the gap until 2014 when health insurance exchanges make it easier for all Americans to access affordable health coverage. Between now and then, this program will provide premium relief for employers, making it easier to give their retirees high-quality, affordable medical coverage.

Employers know this program will help them cover their retirees. Today, John J. Castellani, President of the Business Roundtable said:

While health care costs are the number one cost pressure facing our members, we are committed to providing coverage to our more than 35 million employees, retirees and their families. The Early Retiree Reinsurance Program reduces costs and allows many of our member companies to continue providing this critical coverage.

We’re moving quickly to implement this provision in the new law. Today, President Obama announced the release of new regulations for this program. You can read the regulations here. In June, businesses, unions and state and local governments can begin applying to participate. To learn more about this important effort, check out the fact sheet we issued today.

Thanks to the Affordable Care Act, we are lowering costs for businesses, and ensuring more Americans have the affordable, quality care they need and deserve.

Note: This blog was cross-posted on White House Blog.

Beacon Communities Lead the Charge to Improve Health Outcomes

Across the nation, in communities large and small, health information technology (health IT) innovators are boldly leading the way toward the adoption and meaningful use of electronic health records (EHRs). Today, we awarded $220 million in Beacon Community cooperative agreements to 15 trailblazing community consortiums that will demonstrate how the meaningful use of electronic health records can serve as a critical foundation for achieving measurable improvement in the quality and efficiency of health care in the United States.

Health care providers often suggest that health IT is challenging to implement, and that certain types of communities are better prepared (and funded) to reap its benefits.

The 15 Beacon Communities named today, however, demonstrate the significant diversity among those who have been successful in implementing and using health IT. The areas of diversity represented in the consortiums receiving grants include:

• Geographic – Beacon Communities are located from coast to coast and beyond to Hawaii
• Population Density – Beacon Communities serve both urban and rural populations
• Populations – Beacon programs address health disparities among minority populations, including Native American, African American, and Hispanic, among others

Equally important, these communities are committed to demonstrating tangible outcomes:

• Individual Health Outcomes – Beacon Communities’ outcomes encompass a variety of disease states and treatment approaches, including diabetes, cardiovascular disease, asthma, and chronic obstructive pulmonary disease
• Population Health outcomes – Beacon Communities target varying dimensions of population and public health, from improved immunization and cancer screening rates, to innovations for public health surveillance

Additionally, the Beacon Community Program demonstrates robust collaboration among Federal agencies. Two of the grantees seek to improve Veterans’ care by leveraging the Department of Defense’s and Department of Veteran Affairs’ Virtual Lifetime Electronic Record (VLER) program for active duty, Guard and Reserve, retired military personnel, and eligible separated Veterans.

These diverse partners will provide unique insights into best practices that can be applied to similar communities nationwide, as they strive to build a health IT infrastructure as a critical foundation for health system improvement. In doing so, the Beacon Community program will support the nationwide adoption of health IT by 2015.

I congratulate the Beacon Community awardees and am confident the Beacon Communities will succeed in demonstrating the promise of health IT and facilitating other communities’ adoption and meaningful use of technology