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Premium Rebates, Coverage Labels, Reduced Medicare Drug Costs Highlight 2012 Health Law Changes

Two years after its passage, the sweeping health care overhaul remains deeply controversial, with both political parties trying to use it to their advantage in the upcoming elections. As GOP lawmakers constantly deride “Obamacare” and threaten to repeal it, it’s easy to forget that implementation marches on, and a number of notable changes will take effect for consumers this year. 

They will, that is, unless the Supreme Court strikes down some or all of the law, including the requirement that nearly everyone have health insurance beginning in 2014. If that happens, all bets are off. Provisions that have already taken effect — such as allowing adult children to remain on their parents’ health plans until age 26 and the 50 percent discount on brand-name drugs for seniors who reach the so-called donut hole in their prescription drug plans — could be rolled back, and provisions for 2012 cancelled. The court will hear arguments in the case later this month and a decision is expected this summer.

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Premium Rebates, Coverage Labels, Reduced Medicare Drug Costs Highlight 2012 Health Law Changes

If the law stands, here are the major new provisions that will affect consumers this year:

Free Contraception Coverage

Starting in August, the Obama administration’s new rules on contraceptive coverage that have generated such controversy take effect. That means that women in a new health plan or in an existing one that has changed its benefits enough to not be considered grandfathered under the law will be able to receive contraceptives without an out-of-pocket charge. In addition, these plans will have to provide a variety of basic women’s health services, including well-woman visits; screening for gestational diabetes; HPV testing; counseling for sexually transmitted infections; counseling and screening for HIV; and screening and counseling for interpersonal and domestic violence.

Religious employers such as churches are exempt from the new requirement. Colleges, hospitals and other employers that are affiliated with religious institutions are not exempt, but employees at those institutions will receive free contraceptive services from their employer’s insurer.

Religiously affiliated employers have a one-year grace period to implement this change, so some employees may not receive the free benefit until August 2013.

Rebates For Consumers

Under the health-care overhaul, insurers have to spend at least 80 to 85 percent of premium revenues on medical claims and quality improvement or else rebate the difference to policyholders. In most group plans, that would mean the employer.

How much consumers can expect to receive remains an open question. An analysis by the National Association of Insurance Commissioners based on 2010 data estimated that insurers would have returned $2 billion to consumers had the provision been in force then. The analysis said rebates would have gone to 53 percent of people in individual plans, 23 percent in small-group plans and 15 percent of large-group plan members.

In December, the Obama administration estimated that 9 million Americans might receive rebates totaling up to $1.4 billion, also based on 2010 data. The administration says some reports show insurers have been moderating their premium increases to avoid having to pay rebates. But other policy experts aren’t so sure.

“My guess is that rebates will be higher [than the NAIC estimate] in 2011,” says Timothy Jost, a law professor at Washington and Lee University who helped prepare the NAIC report. “Insurers seem to have raised their premiums based on projected increases in utilization that never occurred.”

Clearer Descriptions

Beginning in September, at the start of the open enrollment season, all health plans will have to provide concise, consistent plan information aimed at allowing consumers to easily understand their benefits and compare plans.

Every plan will be required to give people a short summary of coverage and a uniform glossary of terms. It will also have to provide examples of how much the plan would cover if someone had a baby or was managing Type 2 diabetes — two common situations that should make it easier for people to compare plans.

“This is a big deal,” says Jennifer Tolbert, director of state health reform at the Kaiser Family Foundation. “Some of the materials people get explaining their health plan benefits are extraordinarily confusing, and this should make it clearer.” (Kaiser Health News is an editorially independent project of the Foundation.)

Shrinking Doughnut Hole

The health care overhaul is slowly eliminating the doughnut hole. This is the break in Medicare prescription drug benefits that, in a standard plan, begins after total drug spending by the beneficiary and the health plan exceeds $2,930 and continues until the beneficiary has hit the $4,700 out-of-pocket limit.

Last year, Medicare beneficiaries with high drug costs got a 50 percent discount on brand-name drugs once they reached the doughnut hole. This year, they’ll see a 14 percent discount on generic drugs as well.

Drug costs will continue to diminish in coming years, until in 2020 the doughnut hole no longer exists and Medicare beneficiaries with drug plans will simply be responsible for 25 percent of their drug costs.

‘Accountable Care’

Last December, the administration announced that 32 health-care organizations would participate in a three-year Pioneer Accountable Care Organization program aimed at providing better, coordinated care for 860,000 Medicare beneficiaries. Providers — including hospitals, clinics and physician groups — that work together to improve beneficiaries’ health and to bring costs down will share in the savings that they achieve.

Although Medicare beneficiaries may not realize that their health-care provider is participating in the program, they may start to notice changes in their care this year, says Debra Ness, president of the National Partnership for Women and Families. She leads the Campaign for Better Care, a coalition of organizations focusing on improving health-care delivery.

“For some of these folks, it may start to feel like they have a team working with them, or like their primary-care provider is developing an individualized care plan,” she says. “Compared to what happens now, it could feel like a pretty big change.”

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