CRS Issue Statement on Health Care Reform Page: 2 of 5
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CRS Issue Statement on Health Care Reform
O n March 23, 2010, President Obama signed health reform legislation into law-the
Patient Protection and Affordable Care Act (PPACA, P.L. 111-148), some provisions of
which were amended by the Health Care and Education Reconciliation Act of 2010 (P.L.
Regarding private health insurance, PPACA will be fully implemented in 2014, when most
individuals, large employers, and health plans are to meet certain coverage requirements. PPACA
will restructure the private health insurance market, particularly for individuals purchasing
coverage on their own (who may qualify for premium credits) and small businesses, partly by
supporting states' creation of "American Health Benefit Exchanges" through which eligible
individuals and small businesses can access private insurers' plans. Private health insurance
provisions that take effect prior to 2014 (including some this year) include the following: ending
lifetime and unreasonable annual limits on benefits, prohibiting rescissions of health insurance
policies, requiring coverage of preventive services and immunizations, extending dependant
coverage up to age 26, capping insurance companies' non-medical administrative expenditures,
guaranteeing coverage for preexisting health conditions for enrollees under age 19, and providing
assistance for those who are uninsured because of a preexisting condition.
PPACA raises revenues to pay for expanded health insurance coverage by imposing excise taxes
and fees on industries in the health care sector, limiting tax-advantaged health accounts, and
increasing the Medicare payroll tax on upper-income households and adding an additional tax on
net investment income on upper-income households. The new laws will also eliminate the
deduction for expenses allocable to the Medicare Part D subsidy.
PPACA makes numerous changes to the Medicare program that will impact provider
reimbursements, provide incentives to increase the quality and efficiency of care, and enhance
certain Medicare benefits. For instance, major savings are expected from constraining Medicare's
annual payment increases for certain providers, basing payment rates in the Medicare Advantage
program on average bids, reducing payments to hospitals that serve a large number of low-
income patients, and creating an independent Medicare Advisory Board to make changes in
Medicare payment rates. Other provisions in PPACA address more systemic issues such as
increasing the efficiency and quality of Medicare services, and strengthening program integrity.
For example, PPACA requires the establishment of a national, voluntary pilot program that
bundles payments for physician, hospital and post-acute care services with the goal of improving
patient care and reducing spending. Another provision adjusts payments to hospitals for
readmissions related to certain potentially preventable conditions. Additionally, PPACA increases
funding for anti-fraud activities, and subjects providers and suppliers to enhanced screening
before allowing them to participate in the Medicare program. PPACA also improves some
benefits provided to Medicare beneficiaries. For instance, Medicare prescription drug program
enrollees will receive a 50% discount off the price of brand name drugs during the coverage gap
(the "doughnut hole") starting in 2011, and the coverage gap will be phased out by 2020. Other
provisions expand assistance for some low-income beneficiaries enrolled in the Medicare drug
program, and eliminate beneficiary copayments for certain preventive care services.
Beginning in 2014, or sooner at state option, nonelderly, non-pregnant individuals with income
below 133% of the federal poverty level (FPL) will be newly eligible for Medicaid. From 2014 to
2016, the federal government will cover 100% of the Medicaid costs of these newly eligible
individuals, with the percentage dropping to 90% (with states covering the difference) by 2020.
This change represents the most significant expansion of Medicaid eligibility in many years. In
addition, the health reform law adds new mandatory benefits to Medicaid, including, for example,
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CRS Issue Statement on Health Care Reform, report, April 6, 2010; Washington D.C.. (digital.library.unt.edu/ark:/67531/metadc811400/m1/2/: accessed November 17, 2018), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.