The federal government continues to establish the infrastructure framework for the Patient Protection and Affordable Care Act of 2010 (“Obamacare”), and 2013 will be a transitional year. Several new initiatives have been introduced into Congress in 2013 to try and modify the forthcoming health care law.
Patient Protection and Affordable Care Act
The most urgent health care issue facing the 113th Congress is the impact of the upcoming automatic sequestration budget cuts. Provisioned as a measure of the Budget Control Act of 2010, sequestration mandates spending cuts of $1.2 trillion covering a nine year period.[1. http://www.washingtonpost.com/blogs/wonkblog/wp/2012/09/14/the-sequester-explained/ The Washington Post. “The Sequester, Explained.” Suzy Khimm, September 14, 2012.] Implementing the budget cuts would significantly affect Medicare, requiring an annual two percent reduction in provider and insurer payments over the sequester period.
The funding deficit would reduce Medicare spending by $100 billion, including $3 billion in fiscal 2013. In a report issued by Avalere, hospitals would lose a substantial revenue source that could result in a 32 percent reduction in inpatient hospital care.[2. http://thehill.com/images/stories/blogs/healthwatch/avaleretrigger.pdf Avalere Health LLC. “The Budget Control Act and the Impact of Sequestration on the Healthcare Industry.” Avalere Health LLC, November 2011.] The consequences of sequestration would likely affect physicians, home health providers, Medicare Advantage plans and nursing homes.
While discussions continue, Congressional leaders have expressed pessimism that an agreement to avoid the automatic spending cuts can be reached prior to implementation on March 1, 2013.
Other Health Care Initiatives
A variety of provisions within the new healthcare law will begin to take effect in 2013 as state governments and insurance providers work to develop a framework for full compliance. Among the most important elements of the law is the establishment of the Health Insurance Marketplace with an open enrollment date of October 1, 2013.
There are a number of other current Washington health care initiatives including:
- A bi-partisan effort to try and repeal a 2.3 percent excise tax on medical device manufacturers that took effect on January 1, 2013. The tax affects a large number of medical equipment products including surgical instruments, imaging devices, pacemakers and joint replacement apparatus. In cooperation with Congressional Republicans, 16 Democrats have appealed to President Obama to review the tax.[3. http://www.forbes.com/sites/sallypipes/2012/12/25/in-2013-millions-of-americans-face-obamacare-tax-hikes/ Forbes. “In 2013, Millions of Americans Face Obamacare Tax Hikes.” Sally Pipes, December 25, 2012.]
- The Centers for Medicare and Medicaid Services released a fact sheet on February 4, 2013 that clarifies the rules for exemptions related to the individual mandate. The document highlights exceptions for temporary unemployment, certain religious affiliations and chronic low-wage earners.[4. http://www.cms.gov/apps/media/press/factsheet.asp?Counter=4511&intNumPerPage=10&checkDate=&checkKey=&srchType=1&numDays=3500&srchOpt=0&srchData=&keywordType=All&chkNewsType=6&intPage=&showAll=&pYear=&year=&desc=&cboOrder=date Centers for Medicare and Medicaid Services. “Fact Sheet: Individual Shared Responsibility for Health Insurance Coverage and Minimum Essential Coverage Proposed Rules.” CMS Media Relations, January 30, 2013.]
- The Health Insurance Industry Antitrust Enforcement Act of 2013 is designed to discourage anticompetitive activities between health insurance companies and medical malpractice insurance providers. The bill was introduced in the House of Representatives on January 3, 2013 and has been referred to committee.
- The Small Business Health Relief Act of 2013 is intended to help lower health insurance premiums and expand insurance choices for small businesses. The bill was introduced in the Senate on January 22, 2013 and has been referred to committee.
As the details of the Affordable Care Act become increasingly transparent, it is the intention of the federal government to work closely with the appropriate state agencies and insurance providers to ensure full compliance and a smooth transition. Businesses are in the process of seeking advice from their accountants, lawyers and insurance carriers to better understand the ramifications of the law and develop strategies that maximize employee coverage and minimize associated expenses.