Breaking Down Federal Health Care Reform

For The Commonwealth of Massachusetts

JOINT COMMITTEE ON PUBLIC HEALTH
Chairman Jeffrey Sànchez

SUMMARY
The final health insurance reform legislation (the Senate bill as improved by the Reconciliation Bill) that the House
passed on March 21st follows in Massachusetts footsteps to provide access to quality, affordable health care to 94
percent of all Americans. Health care reform sends a clear message that any proposal to reduce health care
spending and improve the quality of our health care system must include initiatives that support preventative
health policies and eliminate disparities in not only health care access, but access to healthy communities. Please
see the following summary to understand what this legislation means for the voters, businesses, schools and
community organizations in your district.

Insurance coverage for Individuals:

 Requires individuals to carry qualifying health insurance, or face a federal tax penalty of 2.5% of income or $695,
whichever is greater. (Effective 2014)
 Individuals would purchase insurance through insurance exchanges or receive it through their employer.

If you are a business:

 Small businesses would be able to purchase insurance for their employees in separate exchanges.
(Effective 2014)
 Creates a reinsurance program to incentivize employers to continue health coverage for their retirees aged 55-64,
until the insurance exchanges are created. (Effective 90 days after enactment)
 Requires employers to provide a reasonable break time and a suitable place, other than a bathroom, for an
employee to express breast milk for her nursing child. Excludes an employer with less than 50 employees if such
requirements would impose an undue hardship. (Effective Date Not Specified)

Changes to MassHealth:
 Additional federal assistance to pay for MassHealth. (Effective 2014)
 Enhances federal Medicaid matching funds to states who offer the recommended preventative services from the
U.S. Preventative Services Task Force. Increases the FMAP for such services and vaccines for Medicaid. (Effective
January 1, 2011)
 Require Medicaid coverage for tobacco cessation services for pregnant women. (Effective October 1, 2010)
 Improves Medicaid payments for primary care.
 6% increase in federal reimbursement for community based attendance services & support
(Effective October 1, 2010)
Changes to Medicare:
 Restructuring payments to promote bundling, pay-for-performance and Accountable Care Organizations. (Effective
January 1, 2011)
 Improves Medicare payments for primary care. (Effective January 1, 2011)
 Allocate $10 million per year for five years to continue the Aging and Disability Resource Center Initiatives (Funds
appropriated for fiscal years 2010 through 2014)
 Medicare will now provide an annual wellness visit that includes a risk assessment and a 5-10 year personalized
prevention plan with no co-payment or deductible.

Measures to address Waste, Fraud and Abuse:

 Creates new penalties for submitting false data on applications, false claims for payment, or for obstructing audits or
investigations related to Medicare or Medicaid. (Effective dates vary)
 Provides $700 million over the next decade in new funds to fight fraud. (Effective dates vary)
 The Congressional Budget Office estimates that every $1 invested to fight fraud yields approximately $1.75 in
savings.

Mandates:
 Insurers must meet minimum coverage requirements (Effective 2014)
 Insurers cannot:
 Discriminate based on pre-existing conditions (Children effective this year, everyone else 2014)
 Drop coverage because of a new condition. (Effective 6 months after enactment)
 Charge a copayment or deductable for preventative services. (Effective 6 months after enactment)
 Implement life-time caps or restrictive annual limits. (Effective 6 months after enactment)
 Require an individual or family to pay more than $5,950 or $11,900 in out-of-pocket expenses. (Effective 2014)
 Out-of-pocket caps for individuals and families earning between 100%-400% of Federal Poverty Level are
even lower:
o Individuals: $1,983-$3,987
o Family: $3,967-$7,973
 Vary premiums based on age by more than a 3:1 ratio. (Effective January 1, 2014)
 Factor gender in setting insurance rates. (Effective January 1, 2014)
 Insurers would be required to maintain a medical loss ratio of 80-85% or greater, depending on market size.
(Effective 2011)

Quality Improvements:
 Requires the development of a national quality improvement strategy to improve the delivery of health care and
patient health outcomes. (Effective 2011)
 Establishes value‐based purchasing to provide incentive payments to hospitals that meet certain quality standards.
The final bill also provides for increased bonus payments of 5 to 10 percent for Medicare Advantage plans that
demonstrate high quality of care. (Effective 2014)
Federal Revenue Provisions:
 Tax penalty for individuals without qualifying insurance. (Effective 2014)
 Tax penalty for large employers whose employees buy individual plans in an exchange. (Effective 2014)
 0.9% increase on earnings over $200k to go to Medicare Part A. (Effective January 1, 2013)
 3.8% tax on unearned income over $200k to go to Medicare Part A. (Effective January 1, 2013)
 10% tax on tanning services. (Effective January 1, 2010)
 Imposes billions of dollars of annual fees to the pharmaceutical manufacturer sector. (Effective 2012)
 Imposes an excise tax of 2.3% on the sale of any taxable medical device. (Effective for sales after December 31, 2012)
 Imposes billions of dollars of annual fees to the health insurance sector. (Effective 2014)
 Imposes on insurers a 40% excise tax on the difference between a high-cost health plan and the threshold amount
set by this legislation. (Effective January 1, 2018)

Establishment of New Government Agencies:

 Creates the National Prevention Health Promotion and Public Health Council to develop a national preventative
health campaign and coordinate prevention and wellness initiatives at the Federal level. (Effective upon enactment)
 The new Prevention and Public Health Fund will support these efforts.
(Funded at $500 Million in 2010 - $2 Billion in 2015 and each subsequent fiscal year)
 Establishes seven new offices of minority health within Health and Human Services agencies.
(Effective upon enactment)
 Creates a non-profit patient centered outcome research institute to advance comparative effectiveness research.
(Effective upon enactment)
 Create the State Balancing Incentive Program to provide enhanced federal matching payments to eligible states to
increase the proportion of non-institutionally-based long-term care services. (Effective October 1, 2011 through
September 30, 2015)

Special Populations:
 Disabilities:
 Makes appropriations for FY2010-FY2014 to expand state aging and disability resource centers.
 Children:
 Children may be claimed as medical dependants until age 26. (Effective 6 months after enactment)
 Children cannot be denied coverage because of pre-existing conditions.
(Effective 6 months after enactment)
 Seniors:
 Closing the Medicare Part D Donut Hole—immediate $250 rebate; 50% discount on brand names next year; fully
closed by 2020.

Long Term Care

 Establishes a voluntary insurance program that provides an average of $50 per day to purchase community living
assistance services and supports. (Effective 2011)
 Financed through payroll deductions. Working adults are automatically enrolled, unless they choose to opt-out.
Tax Credits/Grants:
 Tax Credits
 Tax credits available to purchase health insurance in an exchange for individuals and families earning 100-400%
of the Federal Poverty Level ($10,830-$44,320 individual / $22,050-$88,200 family of 4). (Effective 2014)
 Small Business Tax Credits –35% of premiums this year, 50% beginning in 2014 (Effective 2010)
 Grants
 State demonstration grants available to develop, implement and evaluate alternatives to current tort litigations.
(Grants appropriated for 5 years beginning in fiscal year 2011)
 Grants to states to carry out initiatives to provide incentives to Medicaid (MassHealth) beneficiaries who
participate in programs to lower health risk and demonstrate changes in health risk and outcomes. (Effective
January 1, 2011 or when program criteria are developed, whichever is first.)
 Competitive grants to community based organizations and state and local agencies for community-based
preventive and wellness activities. (Funds appropriated for 5 years beginning in 2010) Grants available for:
 increasing healthy food options, physical activity opportunities and wellness curricula in schools;
 creating the infrastructure to increase access to nutritious foods and healthy living;
 increasing access to physical activity;
 increasing access to smoking cessation;
 improving social and emotional wellness;
 enhancing safety in a community;
 addressing chronic disease priority area identified by the grantee;
 worksite wellness programming and incentives;
 working to highlight healthy options at restaurants and other food venues;
 prioritizing strategies to reduce racial and ethnic disparities, including social, economic, and geographic
determinants of health; and
 addressing special populations needs in both urban and rural areas
 Workplace wellness grants and technical assistance available to businesses with fewer than 100 employees to
provide their employees with access to a new wellness initiative at work. (Funds appropriated $200,000,000 for
the period of fiscal years 2011 through 2015.)
 Grants available to state or local health departments and Indian tribes to carry out pilot programs to provide
public health community interventions, screenings, and clinical referrals for individuals who are between 55 and
64 years of age. (Effective January 1, 2011).
 Grants to assist public health agencies inclusive of states and academic centers that assist state and eligible local
and tribal health departments in improving surveillance for, and response to, infectious diseases and other
conditions of public health importance. ($190M annually from 2010 through 2013).

Disparities:
 $11B in mandatory funding for community health centers, which would double the amount of patients who could be
served at such facilities. (Effective fiscal year 2011)
 $1.5B in mandatory funding to support primary care provider training who commit to practice in underserved
communities. (Effective dates vary)
Prevention/Wellness:
 Requires that employers offer their employees premium discounts, cost-sharing requirement waivers, or other
rewards for participating in a wellness program and meeting certain health-related standards. Employers must offer
an alternative standard for individuals for whom it is unreasonably difficult or inadvisable to meet the standard.
(Effective 2014).
 Requires menu labeling for chain restaurants and vending machines (proposed regulations issued within one year of
enactment)
 Creates 10 State pilot programs which will apply either premium discounts, waivers of cost-sharing requirements, or
other benefits, of up to 30% of the cost of coverage, for participating in a wellness program and meeting certain
health-related standards in the individual market
(Pilots will be established by July 2014 to be expanded by 2017 if effective).

PREPARED BY THE JOINT COMMITTEE ON PUBLIC HEALTH

MARCH 26, 2010