For decades, American leaders worked to pass comprehensive health care reform to lower skyrocketing costs and improve quality in our health care system. In March, those efforts came to fruition when the president signed the groundbreaking Patient Protection and Affordable Care Act into law. And now, the reforms we worked so hard to pass are becoming a reality for millions of Americans.
Nearly every day, we hear stories from folks back home who will be helped by this new law. Billie Jo Meglen from my home state of Montana is just one example.
Billie Jo is a retired resident of Helena, Montana's capital city and my hometown. Like seniors all across America, she worked hard all her life, and unfortunately, like many seniors all across America, Billie Jo fell victim to the Medicare prescription drug doughnut hole.
The "doughnut hole" is a gap in Medicare Part D insurance coverage in which seniors are forced to pay the full cost of their prescription medications out of their own pockets. For too many seniors living on a fixed income, entering the doughnut hole has meant they are forced to forgo other necessities to pay for costly prescriptions. And if they can't cover the cost, many seniors are forced to skip doses of medications they need or take only half the recommended dose.
After just recently hitting the doughnut hole this year, Billie Jo has already paid more than $2,000 out of her own pocket to cover the costs of the medicines she needs.
But now, thanks to health care reform, seniors in Montana and across the country will no longer be forced to choose between buying groceries and buying medicine, because the new health care reform law will close the doughnut hole once and for all.
Already, the Centers for Medicare and Medicaid Services has begun mailing rebate checks for $250 to seniors who have hit the doughnut hole this year. So far, rebate checks have been mailed to 80,000 seniors in the doughnut hole, and another estimated 4 million seniors will receive checks by the end of this year.
Beginning next year, seniors will receive even more help at the pharmacy counter with a 50 percent discount on all brand-name drugs and biologics purchased in the doughnut hole. The health care reform law will close the hole by 2020.
Closing the doughnut hole and strengthening Medicare for seniors like Billie Jo is just one of the many reasons we worked so hard to pass health care reform. These $250 rebate checks for seniors are one of the first of many new benefits for all Americans.
Already, small businesses are now eligible for tax credits to cover up to 35 percent of premium costs when they provide health insurance for their employees.
Within the next few months, the law will require insurance companies to allow children to remain covered by their parents' insurance up to age 26, and in anticipation, several insurance companies have begun to do so already. This provision is critical, given how many young people are struggling to find work in this tough economy.
Additionally, this year insurance plans will no longer be permitted to deny coverage to children because of pre-existing conditions. Adults will receive this same protection by 2014, when the law is fully phased in.
In the meantime, the Department of Health and Human Services is working with states to set up high-risk pools where adults who have been denied coverage because of pre-existing conditions, such as cancer, heart disease or diabetes, can obtain coverage this year.
This year, the new law also will prohibit insurance companies from limiting the amount of care patients can receive in their lifetimes and ensure patients are not restricted from getting the care they need annually as well. Likewise, insurance companies will no longer be able to drop coverage for Americans when they get sick and need it most.
Beginning next year, the health care reform law will require insurance companies to disclose the percentage of their profits that goes toward providing benefits and the percentage that goes toward overhead costs such as executive salaries. Companies that fail to devote at least 80 percent to patient benefits will be required to issue rebate checks in the amount of the difference to their customers. And insurance companies will have to pay a greater tax when they pay their executives exorbitant salaries.
Beginning in 2014, when the law is fully phased in, Americans and small businesses will be able to access one-stop shopping for coverage in health insurance exchanges online, over the phone and at designated locations in their communities. In exchanges, information about premium costs, out-of-pocket costs and benefits will be clear and transparent so consumers can easily understand the coverage they are buying.
To ensure transparency and accountability, insurance companies will be required to provide every customer with an outline of their coverage that is simple and easy to understand. This will force insurance companies to compete on price and quality rather than their ability to select the healthiest individuals or hide benefit restrictions.
In fact, Congress is so confident that exchanges will drive down costs and produce high-quality insurance plans that we will shop in exchanges as well. That's right, Members of Congress will purchase our health insurance plans in the same exchanges as the rest of Americans.
In addition to consumer protections, Americans and small businesses buying insurance in the exchanges will also be eligible for billions in tax credits. The health care reform law will provide more than $450 billion in tax credits for middle-class Americans and more than $37 billion in tax credits for small businesses to buy health insurance over the next 10 years.
This new law is fully paid for and won't add a dime to the national debt. In fact, cost reduction measures in the law will reduce the federal deficit by more than $140 billion within the next 10 years and will continue to bring down our national debt over the following decades — which, in today's economic climate, is more important than ever.
Already we have begun to see the benefits of the health care reform law — groundbreaking legislation designed to protect consumers from harmful insurance company practices, lower skyrocketing health care costs, improve quality in our health care system and strengthen Medicare for years to come.
Still, there is much work left to be done, and I will continue working with my partners in Congress and the administration to implement health care reform so all Montanans and Americans can feel the tremendous benefits this law has created for them.
Sen. Max Baucus (D-Mont.) is chairman of the Finance Committee.