Health Reform Implementation: What Happens When

The Health Care and Education Affordability Act of 2010 to be voted on by the House this weekend will establish more health care system reforms than can be described in one post. I won’t even try. Interested readers should see instead the Kaiser Health Reform Gateway summary. Kaiser’s summary is long and full of details (which is good), but not everyone wants all that information. In fact, I can tell from the questions I’m getting from friends, family, and journalists, that there is great interest in understanding when parts of the Act would be implemented, never mind the nitty-gritty details of how. Though that information is in the Kaiser summary too, it isn’t easy to extract. Somebody should do something about that. I nominate me. So, …

Below is a time-line that includes some (and far from all) elements of the reform package, in chronological order of proposed implementation date/year. I list ones that are of interest to me or I believe will be of great interest to the majority of readers. One thing to note is how many reforms would be implemented this year or next. Quite a few high-profile and important ones would come on line before the 2010 mid-term elections.

Imagine health reform passes and consider a debate in October between 2010 mid-term election candidates. The one proposing to repeal health reform would be faced with the problem of explaining to Medicare beneficiaries that they will lose donut hole coverage, to small businesses that they will lose tax credits, to the medically uninsurable that they will lose access to expanded high risk pools, to all consumers that they will lose protection from low loss ratios, be unable to cover their children on their policies up to age 26, and will no longer benefit from elimination of lifetime coverage limits, threats of insurer-determined loss of coverage, or pre-existing condition exclusions for children.

All those benefits will be in place before the mid-term elections and early enough to affect the campaign. They’re popular reforms and important consumer protections. Threatening their removal strikes me as a very tough sell.

Health Reform Implementation Schedule

(source: Kaiser Health Reform Gateway summary, many details omitted, assumes enactment in March 2010)

Immediately upon enactment or for tax year 2010

  • Medicare Part D donut hole begins to close ($250 rebate in 2010, coinsurance rate reduces from 100% to 25% by 2020).
  • Small business tax credits.
  • Loss ratio/premium rate increase reviews with consumer rebates if minimums not met (loss ratio minimums: 85% for plans in the large group market and 80% for plans in the individual and small group markets).
  • Comparative effectiveness research funding.

June 2010

  • Temporary high risk pool (until 2014) to provide health coverage to individuals with pre-existing medical conditions ($5 billion in appropriations for funding; maximum cost-sharing limited to $5,950/individual and $11,900/family in 2010).

September 2010

  • Require dependent coverage option for children up to age 26 for all individual and group policies.
  • Prohibit individual and group health plans from placing lifetime limits on the dollar value of coverage.
  • Prohibit insurers from rescinding coverage except in cases of fraud.
  • Prohibit pre-existing condition exclusions for children.


  • Phase-in of lower Medicare Advantage payment rates.
  • Eliminate cost sharing for preventive services under Medicare and Medicaid.


  • Quality-based payments under Medicare to accountable care organizations (ACOs).


  • Increase Medicare tax (to 2.35% on earnings over $200,000 for individual taxpayers and $250,000 for married couples filing jointly and impose a 3.8% tax on unearned income for higher-income taxpayers).
  • Elimination of employer Part D retirement drugs subsidy.
  • Medicare bundled payment pilot program.


  • Expand Medicaid to individuals and families with incomes up to 133% of the federal poverty level with increased federal payments to states.
  • Create state-based insurance exchanges and exchange premium and cost sharing credits for individuals and families with incomes up to 400% of poverty.
  • Individual mandate penalties begin (phased in from $95 in 2014 to 2.5% of taxable income in 2016).
  • Employer mandate penalties begin (for employers with 50+ employees that do not offer coverage: $2,000 per full-time employee, excluding the first 30 employees from the assessment; for employers with more than 50 employees that offer coverage but have at least one full-time employee receiving a premium tax credit: the lesser of $3,000 for each employee receiving a premium credit or $750 for each full-time employee).
  • Medicare Payment Advisory Board begins to submit recommendations for Medicare payment reductions if spending exceeds determined thresholds.


  • Excise tax on insurers (40% tax on plans with aggregate values above $10,200 for individual coverage and $27,500 for family coverage, indexed to CPI-U).

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