AAOS Now

Published 5/1/2010
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A. Alex Jahangir, MD; Manish K. Sethi, MD; Adrian Thomas, MD; Alok D. Sharan, MD; Ryan M. Nunley, MD; the Washington Health Policy Fellows

Redefining health care in America

An AAOS Washington Health Policy Series on the healthcare reform legislation

On March 23, 2010, President Barack Obama signed the “Patient Protection and Affordable Care Act.” Passage was not guaranteed in the House and the bill was approved only after some late negotiations by a vote of 219 to 212; 34 Democrats voted against the measure and no Republicans voted for it.

A week later, the president signed a reconciliation bill—the House of Representative’s “fix” to the original Senate bill. Together, these two pieces of legislation created the first comprehensive healthcare reform in the United States since the passage of the Social Security Act and the creation of Medicare during the administration of President Lyndon B. Johnson. This article highlights some of the key points of the Obama healthcare legislation and lays the foundation for further analysis, which will be presented in a series of articles during the coming months.

Key provisions
By 2014, this newly passed healthcare legislation will expand health insurance coverage to 32 million currently uninsured Americans at an estimated cost of $940 billion over 10 years. According to the Congressional Budget Office, this would result in 95 percent of legal U.S. residents maintaining health insurance coverage by 2019.

The legislation requires that most Americans acquire health insurance and would provide subsidies to make health insurance affordable; it is estimated that nearly 24 million people would take advantage of the newly created state health insurance exchanges to obtain coverage. Furthermore, this legislation would levy fines of up to $695 per person (up to a maximum of $2,085 per family) or 2.5 percent of household income (whichever is greater) for individuals who do not carry health insurance. Large companies (more than 50 employees) that do not provide health insurance could be assessed a fine of $2,000 per employee.

Although most of the items of this legislation will not go into effect until 2014, the following portions will be enacted within the next 6 months:

  • insurers will be prohibited from dropping coverage if patients get sick or denying coverage to children younger than age 19 with pre-existing conditions
  • children younger than age 26 will be able to remain on their parents’ insurance policies
  • insurance companies will be barred from instituting caps on coverage

The healthcare legislation will be financed in part by imposing an additional 3.8 percent Medicare payroll tax on families making more than $250,000, beginning in 2013. Additionally, in 2018, a 40 percent tax will be assessed on “Cadillac” insurance plans (those plans with coverage valued at more than $10,200 for individuals and $27,500 for families). Furthermore, Medicare payments to private health plans that enroll beneficiaries in their Medicare Advantage programs will be reduced by $136 billion.

Finally, the legislation includes some additional items not directly related to healthcare reform such as new requirements for nutrition labeling on restaurant menus, a tax on tanning salons, and some major reforms of the college student loan program, transferring the management of these programs from private companies to the federal government.

Making sense of it
The passage and implementation of this healthcare reform bill has been highly controversial. A great deal of information is included in the more than 2,400 pages of legislation, and the debate ranged from basic questions of universal coverage to those on federal funding for abortion. The legislation raises some truly important questions that affect each of us as orthopaedic surgeons.

Over the next several months, in a series of articles in AAOS Now, we—the AAOS Washington Health Policy Fellows—will delve deeper into the contents of this legislation and attempt to present an honest, unbiased analysis of the healthcare reform bill, and its impact on orthopaedic surgeons. We will attempt to address the following questions:

  • Who will be covered?
  • When will this expanded coverage begin?
  • What will be the cost of this legislation?
  • How will it be financed?
  • What are the new insurance requirements for both individuals and corporations?
  • What other provisions not directly related to insurance reform are in this bill?

Additionally, we will analyze this bill, specifically looking at it through the eyes of orthopaedic surgeons and attempting to define the obligations we will have as providers, the effect on physician reimbursement, the impact on quality reporting, the effect on the cost of providing health care—including an analysis of the effect of legislation on the cost of implants and the effect on medical liability. We will also discuss what measures are being taken to repeal or change this legislation, including the reaction of individual states and the possible litigation that may result. Finally, we will discuss the AAOS position on healthcare reform and compare the AAOS priorities with the legislation that has become law. We hope that this series will be informative and beneficial to our fellow orthopaedic surgeons, and we invite any commentary or questions as we report our analysis.

The Washington Health Policy Fellows include A. Alex Jahangir, MD; Manish K. Sethi, MD; Adrian Thomas, MD; Alok D. Sharan, MD; Ryan M. Nunley, MD; Taruna Madhav, MD; Aaron Covey, MD; James Genuario, MD, MS; John H. Flint, MD; Sharat K. Kusuma, MD; Samir Mehta, MD; and Anil Ranawat, MD. Send your comments and questions to aaoscomm@aaos.org

What it means to orthopaedics
The following are among the immediate orthopaedic-related effects of Patient Protection and Affordable Care Act. For a more complete summary, see the March 26, 2010
special edition of Advocacy Now.

  • Creates a state demonstration program to evaluate medical liability alternatives, although these alternatives cannot be used to test caps
  • Adds a requirement to the Medicare in-office ancillary exception that requires the referring physician to inform the patient in writing that the individual may obtain the specified service elsewhere
  • Authorizes an additional $1.6 million in 2010 for the Medicare gainsharing demonstration and extends the project through Sept. 30, 2011, with a corresponding delay in the final report to Congress until Sept. 30, 2012
  • Gradually increases the utilization assumption rates for advanced imaging services from 65 percent to 75 percent
  • Restores payment for DXA scans (bone density tests) in 2010 and 2011 and reimburses at 70 percent of the 2006 payment rate
  • Establishes a National Health Care Workforce Commission with initial appointments to be made no later than Sept. 30, 2010
  • As of July 1, 2010, requires that durable medical equipment or home health services be ordered by a Medicare eligible professional or physician enrolled in the Medicare program

References:

  1. Inglehart JK: Historic passage: Reform at last. N Eng J Med online posted March 24, 2010. Accessed April 6, 2010.
  2. Aaron HJ, Reischauer RD: The war isn’t over. N Eng J Med online posted March 24, 2010. Accessed April 6, 2010.