Yesterday was an important day for fixing our broken health insurance system, as a number of key provisions of last year’s health care reform legislation enacted by President Obama and the Democratic Congress went into effect on January 1. Unfortunately, health care reform is under political attack, so write a letter to the editor at your local newspaper about the importance of the new health care reforms that have just taken effect.
As we’ve outlined previously, the health insurance system in the U.S. is broken – it covers too few people, costs far too much, gets inadequate results, and is rife with anti-consumer practices by health insurance companies. The Democrats’ historic health care reform legislation, however, started addressing these problems by curbing abusive health insurance industry practices, expanding affordable coverage to 32 million more Americans, and finding common sense ways to begin reducing health care costs.
Under the legislation enacted last year, health care reform is phased in between 2010 and 2014. You can find all of the provisions that went into effect on January 1, 2011 here, but the four most important are:
* Requiring Health Insurance Companies to Spend Your Premiums on Providing Benefits: Health insurance companies describe the amount of your premiums that they spend on providing health care to you as their “medical loss ratio.” In other words, if your insurer spends 70 cents on every dollar on health care, and the remaining 30 cents goes towards advertising, marketing, and profits, the medical loss ratio is 70%. While medical loss ratios for health insurance used to average 90%, it has slipped in recent years, with some companies in the individual market having ratios as low as 60%. The health insurance reform legislation halts this trend by requiring that 85% of premiums for large plans, and 80% for medium and small-sized plans, go toward providing health care, rather than marketing and profits.
* Closing the Medicare Doughnut Hole: Under the Medicare prescription drug coverage program, which was established in 2005, millions of Americans are required to pay monthly premiums all year around, but lose coverage after incurring $2,700 on prescription expenses in a year. Coverage does not restart until the senior has spent $6,154. For seniors on fixed or limited incomes faced with significant prescription drug needs, this doughnut hole in coverage can pose a significant economic burden. Yesterday, a major step was taken toward closing this doughnut hole, as drug companies are now required to provide a 50% discount on the cost of drugs while seniors are in the doughnut hole. That discount will continue until 2020, when the doughnut hole will be entirely eliminated.
* Medicare Preventive Services Coverage: In an effort to improve health and reduce long term health care costs, Medicare co-pays have now been eliminated for preventive services identified by the U.S. Preventive Services Task Force, including diabetes and cancer screenings, tobacco use cessation counseling, and healthy diet counseling. Deductibles for colorectal cancer screening have also been eliminated.
* Saving Taxpayer Money: One of the steps in the health care reform legislation to save taxpayer money is to end the unnecessary subsidy to privately run Medicare Advantage insurance plans, which receive 14% more taxpayer money than similar Medicare plans run by the government. This subsidy begins to be eliminated this year.
The benefits of health care reform will, of course, only be achieved if last year’s legislation is fully implemented and funded over the next few years. Unfortunately, many leading Republicans continue to attack health care reform and are threatening to either repeal it or defund it. Therefore, it is critical that progressive supporters of health care reform make their support known publicly.
As a step toward doing so, we recommend writing a letter to your local newspaper thanking the Democrats for making health insurance companies spend your premiums on providing you benefits, closing the Medicare doughnut hole, eliminating co-pays for preventive services, and saving taxpayer money. Here are the House and Senate roll calls on the health care reform vote – if you congresspeople voted for reform, thank them in your letter (h/t to reader Mark M. from Ohio for this suggestion).