Breaking it Down: The Health Care Law and Cost Control

For too long, too many hard working Americans paid the price for policies that handed free rein to insurance companies and put barriers between patients and their doctors. The Affordable Care Act gives families the security they deserve. The new health care law forces insurance companies to play by the rules, prohibiting them from dropping your coverage if you get sick, billing you into bankruptcy because of an annual or lifetime limit, or, soon, discriminating against anyone with a pre-existing condition. 

The new law also includes a number of key provisions designed to help make health care more affordable – and help address the drivers of health care costs. The new health care law is already making a difference. Many Americans are seeing lower costs, and health care spending growth in 2009 and 2010 decreased to record lows.

Here are more ways the law helps control costs for families and small businesses:

1. The law’s small business tax credit has lowered health insurance costs for small business owners. On average, small businesses have paid about 18 percent more than large firms for the same health insurance policy.  If you have up to 25 employees, pay average annual wages below $50,000, and provide health insurance, you may qualify for a small business tax credit of up to 35 percent (up to 25 percent for non-profits) to offset the cost of your insurance. This will bring down the cost of providing insurance.
2. Holding insurance companies accountable for how they spend your premium dollars.  In 2011, if health insurers don’t spend at least 80 percent of your premium dollar on medical care and quality improvements rather than advertising, overhead and bonuses for executives, they will have to provide you a rebate for that excessive overhead.  The first rebates will be made in the summer of 2012. 
3. Preventing insurance companies from raising rates with no accountability or transparency.  In every State and for the first time ever, insurance companies are required to publicly justify their actions if they want to raise rates by 10 percent or more. These efforts are paying off.  In the last quarter of 2011 alone, States reported that premium increases dropped by 4.5 percent. And, in States like Nevada, premiums actually declined. 
4. Recommended preventive benefits without deductibles or copayments. Millions of Americans with Medicare and private insurance have seen their out-pocket costs go down to zero for recommended preventive care like flu shots or cancer screenings now covered with no cost sharing under the law. This puts more money back into people’s pockets, while making sure they get the preventive care they need.