What federal health insurance reform means for you

Maine has set the stage for implementation

By Ramona du Houx

May 23rd, 2010 

President Obama in Portland, Maine   photo by R.du Houx
President Obama in Portland, Maine photo by R.du Houx
Since President Barack Obama successfully signed health-care reform legislation into law last in March, some people are wondering what the insurance reform means for them. Last April the president paid a visit to Maine, in part to help explain some of the benefits. He reminded the audience that pursuing an agenda that makes America stronger has roots in the founding of our democracy. Fighting for those principles makes the country healthier.

“What this fight has taught us about ourselves and about this country is, it’s so much bigger than any one issue. It has reminded us that change is never easy but is always possible,” said the president. “It reminds us that in the United States of America, we still have the power to shape our own destiny. It has reminded us that we, as a people, don’t shrink from a challenge.”

The law begins to take away the elevated status of insurance companies — a status where they have been essentially operating without being regulated. For decades they have been taking advantage of American citizens, costing people their livelihoods and sometimes their lives.

“There will be a tremendous impact,” said Governor John Baldacci. “In this first year alone, we will see coverage of preexisting conditions, help for the elderly for prescription drugs, students being able to stay on their family policy, and tax credits for business.”

Since the Dirigo Health Reform Act was established in 2003, measures that reflect the president’s reform have already been established in Maine. Dirigo’s programs and policies can be credited for be decreasing the number of people who were uninsured and underinsured during a time when those numbers increased across the nation. In 2008, the national unissued rate was at 15 percent, while Maine’s uninsured rate decreased to 9 percent.

“We have taken aggressive steps to improve the access to quality, affordable health care, and now we have important federal support,” said the governor. “In fact, many aspects of the new federal health-care reform mirror what we have done in Maine. We are in a strong position to implement many of the reforms.”

These steps position the state to “hit the ground running,” said Trish Riley, director of the Office of Health Policy and Finance.

Some measures the state has already taken:

• Maine has insurance regulations and transparency much like that envisioned in the national law.
• MaineCare has already expanded coverage of most low-income people to 133 percent of poverty.
• The Dirigo Health Agency conducts many of the activities envisioned as a federal exchange, such as contracting with insurance companies, negotiating rates, determining eligibility, and administering subsidies.
• Maine has restructured and consolidated its public-health services to create a public-health infrastructure that can implement the prevention and public-health goals of national reform.

“We’ve laid a strong foundation in Maine, which will make it easier to transition into the new federal law’s provisions,” said Riley. “It’s huge for Maine. A half a million people should be eligible for tax credits or tax rebates.”

The state only has 1.3 million citizens.

Congressman Mike Michaud said, “The final package the president signed into law gives patients and doctors more control over health decisions — not insurance companies — and ends practices like denying coverage for preexisting conditions and dropping patients when they become sick. It also provides valuable tax credits to individuals and small businesses, to help them purchase health insurance. And it will set up insurance exchanges that will provide small businesses and families additional choices and the purchasing power that only big businesses currently enjoy.”

Companies eligible for new health-care tax credits have received a postcard from the federal government explaining the credits and encouraging them to take advantage of the tax cut.

“This is the biggest health-care tax cut in history,” said Congresswoman Chellie Pingree. “And it’s important for Maine businesses to know it’s out there and they can start taking advantage of it immediately.”

The tax credit is available to companies that provide health insurance for their employees, with 25 or fewer employees, with an average wage of $50,000 or less. Companies with 10 or fewer employees and an average wage of $25,000 or less get the maximum credit — 35 percent of what the employer is paying for insurance coverage. The maximum credit rises to 50 percent in 2014.

The majority of Maine’s businesses have fewer than 50 employees, which makes them eligible for tax credits.

“There are 46,000 companies in Maine,” said Pingree; “37,000 meet the criteria for the tax credit and 23,000 of them are in line for the maximum credit if they offer health insurance. This is going to make it a little easier for companies already offering insurance to afford it and will allow more businesses to start providing health-care coverage for their workers.”

The tax credits are available beginning with this tax year.

Only 2,000 companies, out of the 46,000 will have to comply with the health-insurance mandate. Out of that sector only seventy could face sanctions if they do not offer coverage.

“And within the federal law, there are several incentives to help them provide coverage,” said Riley.

To merge the state’s health-insurance reforms with the national law reforms, the governor established the Health Reform Implementation Steering Committee, with an executive order.

“The new federal law gives support to additional ways to expand coverage and contain costs. We need to proceed with a full analysis of the law and identify steps to go forward,” said Baldacci.

The Steering Committee will use the existing infrastructure of the Governor’s Office of Health Policy and Finance, State health officials, the Advisory Council on Health Systems Development, and others, to begin to prepare the changes in policy and law necessary for the federal law reform to be implemented over the next three years.

The Steering Committee will also work with the Joint Select Committee on Implementation, created by the Maine Legislature this session, and with stakeholders, and local, federal, and tribal governments.

Some specific issues the Steering Committee is charged with reviewing as soon as possible are the ability to access federal funds to maximize affordable coverage options and plan for the creation of a state health exchange.

Maine already has expanded health care coverage under Medicaid, which is known as MaineCare. States that have already expanded coverage will receive enhanced match rates under the new law. Currently, for every dollar spent by the Medicaid program in Maine, 63 cents comes from the federal government. Under the new federal law, that should go up to 90 cents. Congressman Michaud fought for this provision in the bill.

“The increase made the bill fair for the people of Maine. I wouldn’t sign on to the bill until I was assured this was going to be part of the final package,” said Michaud.

That reimbursement should help the state, come budget time, but that all depends on the federal implementation rules. A major job of the steering committee and the legislative panel will be to analyze those rules and their fiscal impact.

The Steering Committee will meet over the summer and fall, so its recommendations will be ready when the new Legislature takes office in December.

Changes under the federal health reform law and a timetable of implementation

SMALL BUSINESS TAX CREDITS — Offers tax credits to small businesses to make employee coverage more affordable. Tax credits of up to 35 percent of premiums will be immediately available to firms that choose to offer coverage. Effective beginning with calendar year 2010. (Beginning in 2014, the small business tax credits will cover 50 percent of premiums.)

END OF RESCISSIONS — Bans health plans from dropping people from coverage when they get sick. Effective now.

NO DISCRIMINATION AGAINST CHILDREN WITH PREEXISTING CONDITIONS — Prohibits health plans from denying coverage to children with preexisting conditions. Effective six months after enactment. (Beginning in 2014, this prohibition will apply to everyone.)

IMMEDIATE HELP FOR THE UNINSURED UNTIL EXCHANGE IS AVAILABLE (INTERIM HIGH-RISK POOL) — Provides immediate access to insurance for Americans who are uninsured because of a preexisting condition — through a temporary high-risk pool. Effective 90 days after enactment.

RELIEF FOR SENIORS FOR EXPENSIVE PRESCRIPTIONS — Under the Bush administration a new program came into being, which for millions of seniors has made prescriptions more expensive. The program’s problem has been termed the “donut hole.” President Obama’s health-care law begins to close the Medicare Part-D donut hole. It provides a $250 rebate to Medicare beneficiaries who hit the donut hole in 2010. This provision is effective now. (Beginning in 2011, the law institutes a 50 percent discount on brand-name drugs in the donut hole; the donut hole will be completely closed by 2020.)

FREE PREVENTIVE CARE UNDER MEDICARE — Eliminates copayments for preventive services and exempts preventive services from deductibles under the Medicare program. Effective beginning January 1, 2011.

FREE PREVENTIVE CARE UNDER NEW PRIVATE PLANS —Requires new private plans to cover preventive services with no copayments and with preventive services being exempt from deductibles. Effective six months after enactment. (Beginning in 2018, this requirement applies to all plans.)

EXTENDS COVERAGE FOR YOUNG PEOPLE UP TO 26TH BIRTHDAY THROUGH PARENTS’ INSURANCE — Requires health plans to allow young people up to their 26th birthday to remain on their parents’ insurance policy. Effective now.

COMMUNITY HEALTH CENTERS — Increases funding for Community Health Centers to allow for nearly a doubling of the number of patients seen by the centers over the next five years. Effective beginning in fiscal year 2010.

INCREASING NUMBER OF PRIMARY CARE DOCTORS — Provides new investment in training programs to increase the number of primary care doctors, nurses, and public health professionals. Effective beginning in fiscal year 2010.

BANS LIFETIME LIMITS ON COVERAGE — Prohibits health plans from placing lifetime caps on coverage. Effective six months after enactment.

BANS RESTRICTIVE ANNUAL LIMITS ON COVERAGE —Tightly restricts new plans’ use of annual limits to ensure access to needed care. Effective six months after enactment. (Beginning in 2014, the use of any annual limits would be prohibited for all plans.)

Information supplied by Congressman Mike Michaud’s office.
For the complete text of President Obama’s speech go to www.maineinsights.com