Characteristics of the US Healthcare Reform and its Administration: The Main Provisions
Characteristics of the US Healthcare Reform and its Administration: The Main Provisions
To solve the above problems, the Government of Democrats, led by US President Obama, in the spring of 2010, prepared a program for reforming the health care system and the corresponding law, “Patient Protection and Affordable Care Act – PPACA”. This law was accepted by the democratic fraction of the US Congress and signed by the President. However, its acceptance met strong opposition from the Republican Party. The main argument of opponents: the United States is a country of free enterprise, and there should not be any government regulation of prices, as this may lead to the nationalization of healthcare and socialism. Another argument of opponents was the objection that the rich and middle class would not have to pay additional taxes to cover the cost of health insurance for the uninsured.
As a result of these more political debates, one of the most important provisions of the law, the duty of every citizen to be insured, has been declared unconstitutional. The question of the possibility of a rule requiring health insurance for every citizen was considered by the US Supreme Court in June 2012, and the result of it was a positive decision. Thus, this rule came into effect in 2013; other provisions of the reform were implemented in 2011, and some of them will be implemented in 2014.
Four main areas of the reform can be distinguished:
- Mandatory insurance for all citizens
- State regulation of insurance contributions and the amount of insurance coverage
- Facilitating the process of selecting an insurance plan for the citizens
- Regulating prices for medical services and improving the quality of care.
Development of the System of Mandatory Insurance for all Citizens
All citizens must have health insurance. A citizen can buy insurance if it costs no more than 8% of his/her annual revenue. If a citizen is uninsured, he/she will have to pay a penalty from 1 to 2,5% of his/her income. If the insurance costs more than 8% of the income and less than 14,400 US dollars per person per year, or less than 29,330 dollars per family of 4 people, the state ensures such citizens through a program of Medicaid. People with incomes from 14,400 to 43,320 US dollars per person per year or 29,330 to 88,200 dollars per family of 4 persons have fiscal subsidies. Young people aged 19 to 26 years previously uninsured can stay within their parents’ insurance plan. Small businesses (25 people or less), if they decide to insure their employees according to group insurance plans, are also provided with tax subsidies. Employers with more than 50 employees have a choice – either compulsory insurance for all the workers or paying an additional tax of 2,000 US dollars per year for each employee. This amount is about one-third of the annual premium for the insurance of one employee. It is the average rate. Employees of small and medium businesses have the right to remain in the employer’s group health insurance plan.
Regulation of Insurance Rates and the Volume of Coverage
- Insurance companies are not allowed to refuse to cover anyone and set larger insurance rates for those at high risk of a disease developing or its availability, so the transition to compulsory risk-free insurance is occurring.
- The insurance plan must cover the necessary medical measures for disease prevention and early diagnosis of diseases, hospital care, drug coverage in outpatient services and long-term care. It means the state establishes the “basic package” of health insurance.
- The state sets limits of 6,000 US dollars a year on “co-payments” of insured for medical care. The state also regulates the income of insurance companies – they have to spend at least 80-85% of the number of funds (collected insurance premiums) to pay the bills for care and no more than 15-20% of the funds they need to remain for administrative costs and profits.
Facilitating the Process of Selecting an Insurance Plan for Citizens
The “exchange” insurance plans are created, so both citizens and employers can competitively select an insurance plan and get advice. These activities will be supported through the Internet and call centers.
The Regulation of Prices for Medical Services and Improving the Quality of Care
The following tools were offered for these purposes:
Today, most employers in the USA have tax deductions for health insurance. It encourages them to form generous deductions for insurance and not to worry about the cost of medical care. On the one hand, this reduces tax revenues to the state budget. Conversely, insurance companies and healthcare providers may form high rates for their services. An additional tax was implemented for companies with the highest insurance premium rates to avoid this situation.
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- Creation of “IPAB – Independent Payment Advisory Board”
Decisions of this council should always be considered in Congress.
- Creation of a commission that will make “CET – Comparative Effectiveness Research”.
The inclusion of health care organizations in the “ACO – Accountable Care Organization” plan. If a medical organization or private medical practitioner enters this program, it must report to the state for the quality and outcomes of care for established indicators (33 indicators). If the values of these indicators are within limits (and the organization was able to save from 2 to 4% of the established rates for services), it will receive from 60 to 70% of the savings as a bonus. It is assumed that savings can be achieved by introducing standards, reducing the duplication of procedures, and integrating patient care. Thus, this model is motivated by healthcare providers to save money on the state programs provided to maintain the high-quality level.
Total funding of reform is supposed to carry out mainly due to the federal budget (90%), and only the remaining 10% will be spent from the states’ budgets. The total planned cost of reform is about 940 billion US dollars over 10 years. Additional sources of funding the system are the tax on the rich – those who receive incomes of more than 200 million dollars a year. Moreover, the basis for the calculation of the tax will not be only waged but also investment income. Despite the enormous cost, this is the only reform that, in 10 years, will reduce the US federal budget deficit by 1 trillion dollars.
Conclusion
Thus, the health care system in the United States has several disadvantages, so the reform was substantial. Experts have conducted calculations according to which the expected effects of the reform on the public are the following: 32 million Americans will be further insured by 2019, older Americans will have an increased amount of drug supply in the outpatient setting, and there will be reducing the size of so-payments for these drugs, as they will be provided with the inclusion of insurance plans in the possibility of screening of diseases. The state will avoid the growth of the federal deficit. It means that the reform was necessary and substantial.
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