Health Reform: What You Need to Know Right Now

Find out how health-care reform will impact people with arthritis this year.

By Liza Berger

4/13/10 The new health-care reform legislation, signed into law late last month, introduces major changes to the current system that likely will affect many of the 46 million people with some form of arthritis – including 300,000 children with juvenile arthritis – across the country. While many of the provisions won’t take effect for several years, others go into play in 2010, some starting just a few months from now. Below is a brief summary of some of those key items and how they may affect you. 

Gradually closing the Medicare Part D doughnut hole

The “doughnut hole” is jargon for the lapse in Medicare prescription, or Part D, coverage when beneficiaries, who have been paying a portion of their medication costs through copays, hit the annual limit ($2,830 in 2010) in medication expenses. After that, recipients are responsible for all drug costs until their out-of-pocket expenses reach $4,550 (the limit in 2010), the catastrophic coverage point at which the program will kick in 95 percent of costs until the end of the year.

Everyone on Medicare, such as disabled people less than 65, is eligible for Medicare Part D and, therefore, potentially subject to a coverage gap.

Effective this year, the Medicare Part D drug program will provide a $250 rebate to Medicare beneficiaries who hit the doughnut hole. Next year there will be a 50 percent discount on brand name drugs for those who reach the doughnut hole. By 2020 beneficiaries will receive discounts of 75 percent on brand name and generic drugs.   

The gap in coverage has been an important advocacy issue for the Arthritis Foundation since so many people with arthritis fall into the doughnut hole. Those on biologic therapies, which can cost anywhere from $20,000 to $50,000 a year, easily reach this threshold, says Amy Melnick, Vice President, Advocacy for the Arthritis Foundation.

“Closing the doughnut hole obviously is a provision that older people with arthritis care about,” she says.

Regarding the provision: “Does it get rid of all the challenges? No,” she says. “It would have been great to have [the doughnut hole closed] sooner, but it will be gradual relief.” 

In 2007, the number of people taking biologics grew faster than any other drug class, increasing by 7.3 percent during 2006, according to Drug Trend Report 2008; Predictions Five Insights that will Shape Healthcare, Volume 10. Currently, many people discontinue use of their biologic medications because they cannot absorb the 100-percent cost of the medications when they reach the doughnut hole.

Allowing adult children to stay on their parents’ health insurance policies up to the age of 26

As the economy continues to stagnate, it is harder for college graduates to find full-time jobs. That could mean a sizeable population living without health insurance. This provision, which will take effect in less than six months, will allow adult children to stay on their parents’ plans longer than most plans currently allow. (Some states have passed legislation requiring insurers to offer parents the option of covering children into their 20s.)

This could be particularly beneficial for young adults with the pre-existing condition of juvenile arthritis who must take powerful drugs for their disease, according to rheumatologist Nathan Wei, MD, of the Arthritis and Osteoporosis Center of Maryland in Frederick. Dr. Wei, whose college-age son has juvenile arthritis, is pleased that his child will not have to leave the family plan, which is helping pay for his expensive biologic medications. Currently, Dr. Wei pays a $70 per month co-pay for the drugs, which cost $1,500 a month.   

“Once he leaves college it’s highly unlikely that without this new health-care reform bill he would have been able to secure a job with health care that would pay for his pre-existing condition,” Dr. Wei says of his son.

 Prohibiting health insurers from denying coverage to children with pre-existing conditions 

This provision could have a major impact on the nearly 300,000 children who have a form of juvenile arthritis. It will take effect six months after the law’s enactment. The provision will apply to all people, including adults with pre-existing conditions, starting in 2014. 

“It will help parents of children with juvenile arthritis [forced] to stay at a dead-end job or being concerned when their plan changes because of pre-existing conditions,” Melnick says.  

It certainly will have implications for those who are taking arthritis medications. Between 1997 and 2003, spending on arthritis medications more than doubled when the average income did not increase, according to the May 2007 issue of Arthritis & Rheumatism.  

“It’s an expensive condition,” notes Meg Doherty, a nurse practitioner and CEO of Norwell Visiting Nurse and Hospice in Massachusetts.  

As result of the passing of the law, “those children [with juvenile arthritis] cannot be discriminated against by insurance companies, which is a great thing,” she says. “Within [four] years, adults with pre-existing conditions cannot be discriminated against either … It’s a huge, huge thing for people with chronic disabilities.” 

Her company handles 550 patients a day. Approximately one-third are 85 and older and have osteoarthritis.  

Banning insurance companies from dropping people from coverage when they get sick 

This provision, which takes effect in six months, may be one of the most significant provisions for the first year of the law’s implementation. Arthritis is a common cause of disability that can afflict people at any time of life. Those who develop it easily can rack up thousands of dollars in bills from diagnostic testing and drug treatments. 

A couple of statistics from the Centers for Disease Control and Prevention: 

• Each year, arthritis results in 992,100 hospitalizations and 44 million outpatient visits.
• Arthritis and related conditions in 2003 cost the U.S. economy nearly $128 billion per year in medical care and indirect expenses, including lost wages and productivity.

 Knowing they are not at risk of losing their health insurance likely will provide peace of mind for many who fight arthritis on a daily basis.

Forbidding restrictive annual limits on coverage 

Starting in 2014, the law will prohibit insurance companies from placing annual limits – or caps – on coverage. Until then, Kathleen Sebelius, the secretary of the Department of Health and Human Services will determine annual limits starting six months after the law’s enactment.  

This means that initially insurance companies will be able to place financial caps on annual coverage, but Sebelius can tighten the rules regarding these thresholds. Then in four years, they will not be allowed to impose annual caps.    

Because of the high cost of biologics, such a provision is good news for those with inflammatory forms of arthritis who can swiftly meet the annual maximums, experts say.

Prohibiting individual and group health plans from placing lifetime limits on coverage 

Whether it’s $1 million, $2 million or another amount, many insurance policies have a cap on what they will pay for coverage over a person’s lifetime.  

Effective six months after the law’s enactment, companies no longer will be able to impose such a limit. It’s worth knowing that it can only take some major surgeries such as transplant operations to meet the lifetime cap, offers Eric Rackow, MD, president and CEO of SeniorBridge, a care management company that helps people with the challenges of complex chronic illness, such as arthritis.   

“Let’s say you have liver disease and need a liver transplant, you can use up your lifetime cap very quickly,” he explains.

The same scenario could be true for someone with severe rheumatoid arthritis who has to take expensive biologic medications, he adds.  

“Depending on your policy, [if] you had a severe exacerbation [of arthritis], you might exceed the limit in a year or over your lifetime,” he says.

Providing a temporary high-risk pool for uninsured beneficiaries until state-based exchanges become available 

This pool, which will go into effect in less than three months, is a way station of sorts for people with pre-existing conditions until the insurance exchanges become available. The state-based American Health Benefit Exchanges and Small Business Health Options Program (SHOP) Exchanges are not set to start until Jan. 1, 2014. (These will allow individuals and small businesses with up to 100 employees to purchase qualified coverage.) The provision will affect approximately 45 million Americans who are without health insurance. Arthritis can be a debilitating disease, resulting in the inability to hold a full-time job. This can mean the loss of health insurance.  

Those who can join the temporary pool have been uninsured for six months, are not eligible for Medicaid and not on Medicare. They also are not receiving employer-sponsored insurance.  

“It means that people, including those with arthritis, who have been unable to get health care coverage in any other way, will be able to get health coverage this year,” explains Bill Erwin, communications director for the Alliance for Health Reform based in Washington, D.C.  

He notes that premiums for beneficiaries in the pool are projected to be lower than premiums in existing state high-risk pools. Annual out-of-pocket costs will be capped at $5,950 for individuals and $11,900 for families.  

This provision has major implications for those with arthritis, adds Joel J. Ohman, an independent certified financial planner from www.HealthInsuranceProviders.com.  

“If they are on a plan and want to switch, the precondition will at best allow them to be approved. Their treatments for arthritis either will not covered right away or at all,” Ohman says. 

Authorizing the Food and Drug Administration to approve generic versions of biologic drugs 

This provision sets the course to allow for the manufacturing of cheaper, generic biologic medications.  

Generic biologics, also called follow-on biologics, refer to certain products produced through biotechnology processes that are essentially “copies” of the original product. While current biological therapies have proven effective at reducing the pain and inhibiting the progression of joint damage for those with chronic and debilitating disease, because of their cost and availability access to these therapies either is limited or non-existent.     

This provision also grants biologics manufacturers 12 years of exclusive use before generics can be developed.  

The Arthritis Foundation has strongly advocated for follow-on biologics legislation that would allow the Food and Drug Administation (FDA) to approve safe and effective follow-on biologics. 

“The innovation of biological therapies has transformed the treatment and care of many different forms of arthritis, including rheumatoid arthritis, ankylosing spondylitis, psoriatic arthritis, and juvenile arthritis,” according to an April 2009 policy statement on follow-on biologics from the Arthritis Foundation. “The current biological therapies profoundly reduce the pain and inhibit the progression of joint damage for these chronic and debilitating diseases, which affect an estimated 4 million people in the U.S.” 

This provision in the health care law marks a major step forward, says Melnick.  

“It’s not something immediate,” she says. “It gives the FDA the authority to set up a regulatory pathway to allow manufacturers to make generic biologics. We’ll let the scientists figure it out, but we know if it is possible to make generic biologics, it will provide a lower cost alternative to people with inflammatory arthritis, in particular.”   

Creating a process for reviewing increases in health plan premiums and require plans to justify increases. 

Effective in less than six months, this provision should empower consumers who don’t have recourse when their premiums begin to skyrocket. And statistics indicate it is a growing problem.  

Employer-sponsored health insurance premiums have more than doubled in the last nine years. That is a rate six times faster than cumulative wage increases, the Kaiser Family Foundation reports. High premiums make health insurance unaffordable for many who have it. 

This provision also requires states to report on trends in premium increases and recommend whether certain plans should be excluded from the upcoming exchanges based on unjustified premium increases.

Also this year, health plans are required to report the proportion of premium dollars spent on clinical services, quality and other costs. 

 

Other provisions soon to take effect to know about: 

• Establishing an Internet Web site to help residents identify health coverage options. This is set to take effect on July 1. Also, developing a standard format for presenting information on coverage options. This is effective in less than 60 days.
• Creating a grant program to support the delivery of evidence-based and community-based prevention and wellness services aimed at reducing chronic disease rates. Funds will be appropriated for five years beginning this fiscal year. (Both osteoarthritis and rheumatoid arthritis are chronic conditions.)

The law calls for the establishment next year of the National Prevention, Health Promotion and Public Health Council to coordinate federal prevention, wellness and public health activities. A national strategy on improving the nation’s health is due one year following the law’s enactment.  The Arthritis Foundation will be working with this Council to prioritize arthritis, adds Melnick.

 

For more information…

Health Care Reform: A Q&A With Amy Melnick, Vice President, Public Policy, Arthritis Foundation

Find out the Arthritis Foundation’s perspective on the Health Reform law, including, highlights of the provisions that affect people with arthritis, what remains to be accomplished from the Arthritis Prevention, Control and Cure Act (H.R. 1210/S. 984), and what is next for the Arthritis Foundation’s advocacy efforts in the area health care.