Affordable Care Act ruling introduces sweeping changes to health care system
Publish Date: 9/12/2012
The U.S. Supreme Court ruling to uphold the Patient Protection and Affordable Care Act, except for a key provision that would have penalized states that did not expand eligibility for their Medicaid programs, has set the groundwork for extending insurance coverage to millions of uninsured Americans. Chief Justice John G. Roberts Jr. upheld the individual mandate, which requires all Americans to have or purchase health insurance beginning in 2014 or be penalized.
The court limited the Medicaid expansion provision, originally estimated to cover approximately 16 million additional uninsured low-income Americans, by giving states the decision-making power to accept federal funds or opt out of the expansion. In addition to the Medicaid expansion and individual mandate, the broad sweeping and complex legislation offers a number of changes that will widely affect the U.S. health care system.
With the future of the law still under debate, its long-term effect is difficult to gauge, since many details have yet to be finalized and many features of the Affordable Care Act wont go into full effect until 2014. Below are some of the key provisions that will introduce significant change to the current health care system.
The Medicaid expansion component of the law is designed to extend eligibility to individuals earning less than 133% of the poverty level. Beginning in 2014, the federal government will pay the complete cost of newly eligible Medicaid beneficiaries, and states will be required to pay 10% by 2020 and thereafter.1
The court ruling, which declared that the federal government cannot impose a threat to remove existing Medicaid funding from states that choose not to participate, gives states the power to decide whether to move forward with the expansion.
The risk in a state that chooses not to expand Medicaid is that the current funding for hospitals for charity care thats coming from the federal government disappears over the next four or so years, said Craig Jeffries, Esq., AORN public policy consultant. Hospitals will have the obligation to continue to treat those charity cases but the safety net that they were hoping for, meaning Medicaid expansion, may not happen.
While it remains to be seen how many states will opt out of Medicaid expansion, many are expected to commit to partial or gradual expansion. After the election and the rhetoric simmers down, well move into a mode where many states negotiate with the federal government the shape and scope of their Medicaid expansion program, said Jeffries. Many states try to fine-tune their state Medicaid program to their culture and population needs.
Health insurance exchanges
The Affordable Care Act requires all states to establish health insurance exchanges, marketplaces that offer a variety of health care plans for uninsured individuals and small businesses to compare and purchase private coverage. States can either build their own health insurance exchanges or have the federal government build the exchanges for them.
Health insurance exchanges are a very innovative change thats part of the infrastructure change for health care reform, said Jeffries. States that create their own health insurance exchange have the ability to make decisions about its shape, the benefit design, the provider capacity, about eligibility, and enrollment.
The individual mandate, which requires Americans who can afford basic health coverage to purchase health insurance by 2014 or else pay a fee, is seen as a means to offset costs of caring for the uninsured and to create an incentive to buy health insurance. In 2014, the penalty will be $285 per family or 1% of income, whichever is greater, with the penalty increasing in 2016 to $2,085 per family or 2.5% of income.2
Greater access to coverage
Under the Affordable Care Act, millions of young adults up to age 26 have gained coverage under their parents health insurance and will continue to be covered. In addition, children under the age of 19 can no longer be denied coverage because of pre-existing conditions. In fact, beginning in 2014, it will be illegal for any health insurance plan to use pre-existing conditions to exclude, limit, or set unrealistic rates on coverage.2 The law has also established national high-risk pools for individuals with pre-existing conditions to apply for health insurance in the near term. New health insurance plans will also be required to provide certain preventative services at no cost to consumers, including mammograms, immunizations, and colonoscopies.
Insurance companies, plans
Effective August 1, 2012, insurance companies that did not spend a minimum of 85% of 2011 premium dollars for large group plans (more than 50 employees) on medical care must refund the difference through refund checks or discounted future premiums.3
Lifetime insurance maximum payouts have been eliminated and annual coverage limits will eventually be prohibited. By October 1, 2012, health insurance plans must begin adopting rules for secure electronic exchange of health information.3 Effective in 2014, small business owners with more than 50 full-time employees must provide health insurance coverage or they will be fined.2
Impact on health care providers
With approximately 30 million uninsured Americans estimated to receive increased access to comprehensive health coverage under the law, the impact on the nursing profession is seen as both a challenge and an opportunity. The influx of newly insured Americans can be seen as added pressure on workforce needs, particularly in the primary care system, and the need for more nurse practitioners and for nurses to take on expanded roles should increase.
The additional coverage should also start to shift more patients from using emergency care for health needs to using primary health care and preventative services. With insurance coverage, individuals can seek care earlier to obtain preventative and maintenance treatment, as opposed to waiting to seek emergency care, resulting in more favorable outcomes and reduced costs.
The law should also help to reduce uncompensated care, known as charity care, which is typically provided to uninsured individuals at advanced stages of illness with the costs incurred by the medical institution. However, safety net hospital funds will be cut, and by 2018, extra federal Medicaid payments hospitals receive for treating uninsured individuals will be cut by nearly half.2 Thus, the greatest effect of the law may be felt by safety net hospitals and facilities that serve the poorest populations and depend on Medicaid funds.
The law also carves out new provisions for how health care is delivered. The law changes the reimbursement model from fee-for-service to bundled payment for episode-based care.4 The new coordinated care model, where a variety of health care providers may treat an individual for the same or related condition over a certain time period, reimburses health care providers by an overall sum rather than per each individual treatment or procedure.
The Affordable Care Act provides nurses with the opportunity to "lead and contribute to the redesign of health care delivery models focused on wellness and prevention."4 With anticipated increased demands for primary health care services and a new emphasis on coordinated care, nurses will play an instrumental role in ensuring quality care throughout the full spectrum of patient care. With many components of the law still in flux at the state level, nurses can provide valuable input and should make efforts to have a seat at the table for influencing state policy makers to implement the best changes for improved health care delivery.
1. Will the Supreme Courts ruling affect the health care workforce? Robert Wood Johnson Foundation. http://www.rwjf.org/humancapital/product.jsp?id=74612. Accessed August 3, 2012.
2. What the health care ruling means to you. CNN. http://www.cnn.com/2012/06/28/politics/supreme-court-health-effects/index.html. Accessed August 3, 2012.
3. What healthcare reform means to you. Dominican Today. http://www.dominicantoday.com/dr/=opinion/2012/7/31/44577/What-healthcarereform-means-to-you. Accessed August 3, 2012.
4. Five ways the Affordable Care Act could change nursing. Emerging Nurse Leader. http://www.emergingrnleader.com/5-ways-the-affortable-care-act-could-changenursing/. Accessed August 3, 2012.