One Month Later: Making Health Insurance Reform a Reality

Just over a month ago, President Obama signed the Affordable Care Act into law. This landmark legislation gives the American people the control over their own health insurance they need and deserve -- by holding insurance companies accountable, bringing down costs and giving all Americans more insurance choices.

The day of that signing the President made one thing clear – he expects his Administration to deliver the benefits of reform to the American people as effectively and expeditiously as possible.  As the President said, “we need to get this right.”   Over the last month, we’ve begun doing that.  We’ve made significant progress in implementing the new law and making reform a reality for millions of Americans.  

Here’s what we’ve done:

We’ve Held Insurance Companies Accountable
Effective September 23, the Affordable Care Act prohibits some of the worst insurance company practices, including the practice of rescinding coverage from policyholders when they become sick and need it most.  After media accounts indicated that an insurance company actively worked to rescind health care coverage for women diagnosed with breast cancer, the Administration called on this company to end this practice and immediately comply with the new law. Two days ago, the insurance industry announced they will immediately follow the new rules and not wait for the new law to make it illegal. We’re glad to hear that the insurance companies are now doing the right thing -– and we intend to hold them to their word.

We’ve Helped Small Businesses Lower Costs
Across the country, small businesses are struggling to provide their employees with affordable, quality health benefits. Rising costs have forced many small businesses to charge their employees more for care, or eliminate benefits altogether.

The Affordable Care Act provides tax credits to small employers that purchase health insurance for employees. An estimated 4 million small businesses nationwide could qualify for the tax credit, which will provide a total $40 billion in relief for small firms over the next 10 years. Small businesses can take advantage of the tax credit immediately and the Internal Revenue Service has begun delivering postcards to more than four million small businesses and tax-exempt organizations to make them aware of the tax credit. Learn more about the tax credits here.

We’ve Expanded Coverage for Young Adults
In the past, college graduations were a time to celebrate and a time to worry. For many young adults, graduating from college meant losing health insurance coverage.

This year, the Affordable Care Act will allow many young adults to stay on their parents’ health care plan until age 26. This provision takes effect on September 23, 2010. Under the new law, some young adults graduating from college this spring could risk losing their health insurance before the provision takes effect, only to be added back onto their parents’ policy the next time their parents’ plan comes up for renewal on or after September 23rd.  On April 19, Secretary Sebelius called on insurance companies to begin covering young adults voluntarily before the September 23 implementation date. 65 insurance plans, including some of the largest carriers in the country have agreed to do so. This will help ensure many Americans graduating from college this spring can stay on their parents’ health insurance plan.

On April 27, the Internal Revenue Service released new guidance specifically stating that children can be covered tax-free on their parents' health insurance policy. This new guidance provides important information to businesses and includes information on incentives the Affordable Care Act provides for employers to immediately extend health insurance coverage to young adults.

We’ve Provided Relief for Americans with Pre-Existing Conditions
Before reform, parents across America worried how they would provide coverage to their children if they had a pre-existing condition. Through no fault of their own, these children were locked out of the insurance marketplace.

This year, provisions in the Affordable Care Act prohibiting health insurers from excluding coverage of children because of preexisting conditions take effect. When questions were raised about whether insurers would work to avoid covering children with pre-existing conditions, Secretary Sebelius called on the nation’s health insurance companies to provide coverage to these vulnerable Americans. On March 29, health insurance companies agreed to ensure children with pre-existing conditions were not denied coverage.

Adults with pre-existing conditions also suffered under the old insurance industry rules that allowed insurance companies to charge sky-high rates or deny coverage altogether. 

Discrimination based on pre-existing conditions will be banned in 2014.  In the meantime, a new temporary high risk pool program will provide immediate relief. The high risk pool program will offer affordable health insurance coverage to people who are uninsured because of pre-existing conditions. States may choose whether and how they participate in the program, which is funded entirely by the Federal government. If a state chooses not to participate, eligible residents of the state will be able to obtain insurance through a federal high risk pool.

Plans are underway to create the national and state high-risk pools by July 1st.  In early  April, the Department of Health and Human Services asked states to declare how they intend to participate in the program by April 30, 2010. We anticipate that many states will decide to offer their citizens the national high risk pool, but regardless of whether or how a state participates, all Americans who meet the eligibility criteria will have the opportunity to join a high risk pool.

We’re Protecting Your Premium Dollars
For too long, insurance companies could spend your premium dollars on things like CEO salaries, advertising and overhead – instead of improving care and improving patient health.

A new policy in the Affordable Care Act – called the medical loss ratio -- creates new incentives for insurance companies to be more efficient, and ensure that consumer premiums are being used for medical care, not excessive and unnecessary administrative costs. 

The law requires large group plans to spend 85 percent of your premium dollars (80 percent in the small group market) on medical care.  It also calls for the National Association of Insurance Commissioners (NAIC) to establish uniform definitions and methods for calculating the medical loss ratio. While the law calls for NAIC to deliver recommendations on how to do this by December, 2010, Secretary Sebelius called on NAIC to deliver its recommendations by June 1, 2010. NAIC has agreed to the accelerated timeline.

Throughout our work to implement this legislation, we’ve made communicating with you one of our top priorities. From town hall meetings with President Obama, to webcasts with Secretary Sebelius and blog posts here on the White House blog, we have worked to answer your questions about this important new law. In the weeks ahead, we’ll be expanding our public education campaign and doing more to ensure you have the facts about reform.

Nancy-Ann DeParle is Director of the White House Office of Health Reform