When Congress passed the Patient Protection and Affordable Care Act this March, it took a health insurance system that was locked in a decades-long spiral of rising costs and shrinking security and set it on a new course. The new law contains a series of long-overdue reforms that will put consumers — not insurance companies — in charge of their health care.
At the Department of Health and Human Services, we're charged with leading the implementation of these reforms. That's why our department has been working around the clock since March with partners in the administration, Congress and across the country to implement the first wave of reforms quickly and effectively. A few months into the job, we can already see a more consumer-friendly health insurance system taking shape.
Thanks to the Affordable Care Act, Americans are already getting relief from sky-high health care costs. Every year, millions of seniors fall into the Medicare Part D "doughnut hole" and have to pay for all their medications out of their pocket. To help these seniors, we began sending $250 rebate checks earlier this month to those who had fallen in this year, the first step to closing the doughnut hole.
Small businesses, which have increasingly been forced to drop health care coverage over the past decade, are also getting some relief: In addition to new tax credits available this year, small businesses will be able to band together in new Small Business Health Options Programs to negotiate better deals for health insurance beginning in 2014. And large employers have gotten help, too, in the form of an early retiree reinsurance program, which will help ease the burden of soaring legacy health costs.
Meanwhile, all Americans are beginning to see the impact of strengthened consumer protections, which are being implemented ahead of schedule through our partnerships with insurance companies. Private insurers have promised to end the practice of rescinding coverage from people when they get sick because of paperwork errors, and 65 of our largest insurance companies have agreed to allow young adults under age 26 to stay on their parents' coverage.
We welcome these steps, but we must continue to hold insurers accountable. I've called on the states to review their laws to ensure that they have the authority to approve health insurance rates before they take effect, and states are currently applying for the first round of Affordable Care Act grants, ultimately totaling $250 million, to help them create and strengthen insurance rate review processes. We are also developing new regulations that will require insurance companies to spend at least 80 percent or 85 percent of premium dollars on medical care.
As these new consumer protections take effect, we know there are some Americans who like the insurance plans they already have. Over the past year, President Barack Obama has made it clear that these people should be able to keep their plans. To make sure that happens, we recently issued a new regulation on "grandfathered" plans that gives important new protections and benefits to Americans while ensuring that insurers have the flexibility to keep offering preferred plans.
These reforms are giving Americans immediate relief while forming the bridge to 2014, when we will see the more far-reaching reforms of the Affordable Care Act come to fruition, including health insurance exchanges that will give Americans the same insurance choices as Members of Congress and tax credits to make coverage affordable.
In leading the administration's efforts to quickly and carefully implement the new law, we are mindful of our responsibility to safeguard taxpayer dollars. The Affordable Care Act takes aggressive steps to eliminate waste, fraud and abuse in our health care system — especially in Medicare, where billions of dollars a year are lost and seniors pay the price.
When this debate began, some believed our health care system had been on the wrong track for so long that the only solution was to tear everything up and start over. President Obama and Congress took a different approach — one that sets a clear direction but builds on the system we have, keeping the parts that work and gradually fixing the parts that don't. It's a common-sense approach, designed to minimize disruption for families and businesses that like their plans, while ultimately giving all Americans more control over their health care.
Over the past few months, we've moved quickly and responsibly to implement these first parts of the Affordable Care Act. We still have a long way to go before Americans can take advantage of the full benefits of the new law. But we can already look back and see how far we have come. And when we look forward, we know we are heading in the right direction.
Kathleen Sebelius is secretary of the Department of Health and Human Services.