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Healthcare Reform

The Facts About Healthcare Reform

The Patient Protection and Affordable Care Act was signed into law March 23, 2010. With this sweeping healthcare reform legislation, the US is undertaking a major overhaul of the healthcare system that will affect everyone — from insurance companies and healthcare providers to individuals and employers. We must prepare for the substantial changes in the way healthcare is obtained, delivered, paid for and regulated.

This summary outlines the key elements of the Patient Protection and Affordable Care Act (the Act), how the federal government will pay for the increased healthcare spending, and a timeline for when major provisions will take effect.

What does the legislation do?

The primary goals of the Act are to:

  1. Expand coverage to an estimated 32 million Americans without health insurance
  2. Reform the delivery system to improve quality
  3. Lower the overall costs of providing healthcare

To accomplish the goal of expanding coverage, the legislation mandates all Americans maintain a minimum level of health coverage. It expands Medicaid coverage and provides federal subsidies to assist low-income individuals in obtaining health insurance. The legislation also implements insurance market reforms, including a ban on exclusions for preexisting conditions, premium rate restrictions, extension of dependent coverage through age 26, and mandatory coverage of preventive services.

The Act establishes insurance exchanges through which individuals and small employers can shop for health insurance. It also mandates, for the first time, that employers with 50 or more full-time employees provide certain minimum benefits or pay penalty fees. Employers will need to analyze the cost implications of proposed changes to their benefit plans, payroll taxes, administrative functions and other compliance obligations.

Healthcare cost reductions stem from cuts to Medicare and Medicaid payments, provisions to reduce fraud, waste, and abuse in those public programs, and other delivery reforms. These reforms present both challenges and opportunities for healthcare industry sectors as they analyze the impact of increased patient volume, reimbursement cuts, changes in relationships between hospitals and other providers, and modifications to their administrative operations and cost structures.

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