Key healthcare provisions take effect Jan. 1, just as GOP moves into House

Key parts of the new healthcare law will go into effect on Jan. 1, just before a Republican-controlled House returns to Washington. 

The massive overhaul of healthcare approved by Congress earlier this year will begin to take effect in 2011, though some of the biggest changes prompted by the law — including the mandate that everyone buy insurance, the state insurance exchanges and subsidies to help most Americans buy insurance — don’t kick in until 2014. 

Still, more than 20 provisions of the reform law go into effect in 2011, according to a Kaiser Family Foundation timeline. 

Republicans taking over the House have vowed to repeal the healthcare law, though that will be difficult with President Obama still in the White House for at least two more years. Democrats also still hold a slim majority in the Senate.

As a result, Republicans under Speaker-designate John Boehner (Ohio) are expected to try to withhold funding for the new law, which could impede its implementations. Democrats, however, will fight any efforts at defunding the law aggressively. 

Democrats frontloaded the law with a number of consumer-protection related provisions that they expect will boost support for the overhaul. Among the changes taking effect next year are provisions that could prove popular, including a requirement for healthcare plans that spend less than 80 percent of premiums on healthcare services to provide rebates to customers.

The so-called “donut hole” would also be narrowed, with Medicare beneficiaries receiving a discount on brand-name prescriptions. 

Democrats have touted the healthcare law as the crowning achievement of the two years they were in charge of both Congress and the White House. In a note to supporters on Tuesday, Vice President Joe Biden said 32 million people would have health insurance because of the law. 

But the new law has been far from overwhelmingly popular. Polls show voters have mixed feelings at best, and Republicans running against healthcare won a huge victory in the midterm elections, crushing Democrats at the polls. 

Here’s a complete list of the changes that will go into effect Jan. 1:

Medical-loss ratio requirements: Healthcare plans must provide rebates to customers if they spend less than 80 percent of premiums on health care (85 percent for the large-group market). However, a number of plans have been exempted from the requirements. 

Healthcare plans must begin calculating the ratios next year, with rebates starting in 2012. Also in 2011, so-called “mini med” plans will be required to collect and share data so federal regulators can decide how to apply the medical-loss ratio to the low-value plans going forward.

Closing the donut hole: Medicare beneficiaries will receive a 50 percent discount on brand-name prescriptions, as the government works to close the Medicare Part D “donut” hole. The discount applies to drugs whose manufacturers have signed agreements with the Centers for Medicare and Medicaid Services; those who don’t won’t see their drugs covered by Part D. 

The “donut hole” refers to a gap in Medicare prescription drug coverage included in the 2003 law that created the program.

Below a certain threshold ($2,830 in 2010), Medicare pays 75 percent of drug costs. And for beneficiaries who reach a catastrophic level of spending on drugs ($6,440), Medicare pays for 95 percent of the costs above that threshold. Beneficiaries whose spending falls between those two thresholds — the so-called donut hole — until now had to pay 100 percent of costs in the gap. The new reform law progressively closes the gap, first with $250 rebate checks starting in 2010 and then with a 50 percent discount on brand-name drugs starting next year. By 2020, beneficiaries will get a 75 percent discount, thus completely closing the donut hole.

Primary care bonus: Doctors will get a 10 percent Medicare bonus for primary care services, while general surgeons in health professional shortage areas will also get a 10 percent bump. The temporary bump lasts through Dec. 31, 2015.

Medicare prevention benefits: Cost-sharing for Medicare-covered preventive services earning an “A” or “B” grade from the U.S. Preventive Services Task Force will be eliminated. Medicare deductibles for colorectal cancer screening tests will also be waived, and Medicare coverage will be authorized for a personalized prevention plan.

CLASS Act: A national, voluntary program will allow employees to purchase long-term care insurance. Enrollees who become disabled will be able to get payments to help them in their daily lives after they pay into the program for five years.

Premium threshold freeze: The income threshold for income-related Part B premiums will be frozen at 2010 levels for 2011 through 2019. The Part D premium subsidy will be reduced for individuals earning more than $85,000 and couples earning above $170,000.

Medicare Advantage changes: Payment rates to private Medicare Advantage plans will be gradually reduced in comparison to Medicare fee-for-service (FFS) rates. Payments will be frozen at 2010 levels, and plans cannot impose higher cost-sharing requirements for some benefits than required under the FFS program.

Health home payments: States can allow Medicaid enrollees to designate a home healthcare service as their provider, and states can receive 90 percent federal matching payments for two years for home health-related care.

Chronic disease prevention: States can receive three-year grants to develop comprehensive health lifestyle programs for Medicaid enrollees.

Tax-free spending accounts: Costs for over-the-counter drugs not prescribed by a doctor will not be reimbursed through a health reimbursement account or flexible spending account. They also may not be reimbursed on a tax-free basis through a health savings account or Archer medical savings account.

Quality strategy: The Department of Health and Human Services must report to Congress a strategy to improve healthcare service delivery, patient health outcomes and population health. The plan must be updated each year.

—Julian Pecquet contributed.

This story was posted at 12:29 p.m. and updated at 2:00 p.m.

The new healthcare law requires plans that spend less than 80 percent of premiums on healthcare services to provide rebates to customers. Incorrect information appeared in an earlier version of this story.