The Top Ten Health Policy Stories of 2010, Part 2

Last week, I reviewed five of my top ten health policy stories of the year.  Here are the other five, all of which involved matters that will have a major impact on our day-to-day lives in the coming years.

5.  The Enactment of CLASS.  Private long term care insurance has been on the policy agenda since the 1980s.  Seniors realized that the cost of long term care could bankrupt them, so they began protecting their assets by transferring them to their children.  The state and federal governments were left to pay the tab, and went looking for help.

Private long term care insurance products were developed as a solution.  However, not enough people bought them.  When they were young, people didn’t think they would need the insurance, but once they got into their 60s and 70s, the premiums were too high.  This year, the federal government took action. 

Tucked into the pages of the health reform legislation is a new government-sponsored long term care insurance program starting in 2012, called CLASS, aimed at making long term care insurance more common and more affordable.  It will probably take a generation or more before its benefits are fully realized, meaning that this was a vote for our children and grandchildren.  Passing it knowing they won’t be around to get the credit for it was a class act on the part of the members of Congress.

4. The Closing of the Medicare Donut Hole.  The Medicare Donut Hole was more like a black hole for the seniors who fell into it each year.  As of 2010, consumers paid the first $310 in drug costs, and were reimbursed for 75% of their drug costs between $310 and $2,830.  Then they entered the donut hole, where they were completely responsible for approximately the next $3,600 in costs.  Finally, once their out-of-pocket drug costs in a year hit $4,550, their prescription benefits kicked in again and paid 95% of whatever remained. 

This was confusing and expensive, and it came to embody the worst of our confusing system of insurance reimbursements for over two million people trapped in the donut hole each year.

Reform legislation is closing the Donut Hole over the next ten years.  When the first $250 rebate checks arrived this year, Medicare beneficiaries could see the light again. 

3.  The Enactment of Consumer Protections in Health Reform.  By now, we’re all familiar with the new consumer protections we have.  Insurers can’t deny coverage for pre-existing conditions, they can’t drop people who become sick, and they can’t cap annual and lifetime benefits.    Several are already in effect.  Others are on their way.

Some states are arguing that they don’t have the authority to enforce them, and that could present a problem for consumers in the short term.  However, these provisions are so popular that it is likely that if states don’t enforce them, Congress will probably take further steps to ensure they do.

2.  The Comeback of Government Regulation in the Private Health Insurance Market.  For the past thirty years, the mantras of government have been “protect the free marketplace” and “less regulation, not more.” 

First, opponents of health reform argued for a freer marketplace to bring down insurance costs.  Then proponents argued that if the federal government could provide insurance at a lower cost than the private sector, it should be allowed to compete in that market. 

When the public option died, however, the alternative was to establish a more regulated, less-free market.

When Congress set minimum loss ratios (of 80 for individual policies and 85 for most group policies, meaning that insurers must pay out 80 to 85 cents in benefits for every dollar they collect in premiums), this was a very traditional, back to the 1970s, regulatory response to a problem.  Private insurers won’t have to compete directly with the government, but they will have to meet standards the government sets.

And number 1, the Passage of Any Health Reform at All.  We forget how much in doubt this was after the election of Senator Scott Brown in Massachusetts.   When Brown won in an upset, it looked for several weeks like there would be no bill at all.  Finally, President Obama and Congressional Democratic leaders hammered out a compromise that could pass with simple majority votes using the budget reconciliation process, and the most significant health care legislation since Medicare and Medicaid was signed into law in late March.  In the true spirit of representative government, the final compromises left no one completely happy, setting the stage for more health policy debate in the future.

Happy New Year!  Thank you for helping me launch Our Health Policy Matters over the past two months.  I’ll kick off 2011 next week by making some predictions about some upcoming health policy debates.