Sebelius Begins Implementing Health Reform, Pushes Back Against State Claims Of Gov Takeover

Yesterday, during a speech at the National Press Club, Health and Human Services Secretary Kathleen Sebelius laid out the path forward for implementing the new health care law. The Secretary promised that HHS would serve as a “help desk” for Americans confused about the new legislation and would guide seniors and small businesses in taking advantage of the immediate benefits from reform.

Already, the IRS has compiled a fact sheet about which companies are now eligible for the new tax credit and “starting on June 15th, seniors who have hit the prescription drug donut hole will get a $250 rebate check to help them afford their medicines this year.” Here are some of the things HHS is doing/has yet to do to implement the new measure:

– Allow states to apply for Medicaid expansion funds: States can already states can apply for federal funding to expand their Medicaid programs to cover low-income people earning up to 133% of the federal poverty line ($14,404 for an individual and $29,326.50 for a family of four). This benefits states like Maine, Washington, Minnesota and a handful of others that already offer expanded coverage for low-income people but pay for it out of their own pocket.

– Establish high-risk pools: HHS has already asked states to decide whether they will participate in a new high-risk health-insurance pool, build on an existing program (if they have one), establish a separate state-based high risk pool with federal funding or do nothing at all, in which case the federal government would come in and administer the program.


– Define medical-loss ratio: Secretary has to define what constitutes direct medical care so that insurers can begin meeting the new medical-loss ratio requirements. The new law “requires that insurers spend at least 80% of customers’ premiums on medical care in the individual insurance market, and 85% in the employer/group market.”

– Establish which benefits insurers can set annual limits for: Insurers can place annual or lifetime limits per beneficiary limits on non essential benefits and can establish limits on the dollar value of essential benefits only as the Secretary shall determine. So, the Secretary has to define essential benefits and decide which benefits can be restricted this year.

– Issue regulations to protect children from pre-existing condition ban: Since the law only protects children who are already enrolled in a health care plan, the Secretary have to issue regulations that prevent insurers from denying coverage to newly enrolled children.

– Define the rules for 26 yr olds to stay on their parents’ policy: The Secretary has to establish guidelines for this provision, which goes into effect on September 23. Some potential challenges/questions: Will there be a special enrollment period for new dependent children? How will dependents be defined? Will insurers be able to jack up rates once adult dependents join the policy?

– More protections for seniors in Medicare Advantage: CMS has issued new guidelines that will protect seniors and people with disabilities from discriminatory cost sharing. They’ll also be to better compare plans in 2011.

Sebelius also push back against the growing number of states that are now suing the administration over the constitutionality of reform by arguing that reform is “actually a very state friendly bill.” “Many of the key reforms will be carried out by the states,” she said. “That’s why states will have the option to oversee the development of the insurance exchanges, regulations, and consumer protections”:

It’s true that part of the law makes health care coverage a partnership between the states and the federal government. That expansion starts in 2014. For the following three years, the federal government picks up the entire bill. After that, the states start paying up a share, which rises to ten percent by 2020. So there will be some new costs. But those costs are balanced by new benefits, including less spending on uncompensated care, savings from reduced insurance paperwork, more resources to cover children, and more money to crack down on fraud and abuse.

Sebelius also said that those suing the government over reform were doing so to advance their political careers and reminded everyone that implementation would have its challenges. “There will be twists and turns. It will not be easy,” Sebelius concluded.