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The Check’s (Almost) In The Mail

May 27th, 2010

As Americans start to understand the concrete benefits contained in the Patient Protection and Affordable Care Act (PPACA), public attitudes about the new law will become more favorable. That at least is what the Obama administration is counting on. The administration has worked to quickly begin some of those benefits – such as a ban on unjustified coverage rescissions and continued coverage of young adults under their parents’ policies – and today Secretary of Health and Human Services Secretary Kathleen Sebelius continued that pattern: She announced that the first $250 rebate checks for seniors who fall into the Medicare drug benefit coverage gap know as the “doughnut hole” will go out on June 10, ahead of expectations.

The rebate checks are a down payment on the eventual elimination of the doughnut hole, which in 2010 generally occurs between $2,830 and $6,440 of total drug costs. Beginning next year, seniors who fall into the doughnut hole will receive 50 percent discounts on brand-name prescriptions and smaller discounts on generic drugs, and the gap will be fully closed by 2020.

Speaking at a news conference, Sebelius discussed various aspects of implementing PPACA. Implementing the new law will be the focus of the June issue of Health Affairs, which will be released June 8 at a Washington D.C. briefing.

Sebelius said she met earlier today with several leading insurance company CEOs. The Secretary, a former Kansas state insurance commissioner, noted that she had previously called upon her former colleagues at the state level to reject unreasonable premium increases. She said she reminded the insurance CEOs that PPACA also gives the federal government new tools, such as the right to review rate increases and the ability to enforce new “medical loss ratio” requirements that require insurers to spend 80-85 percent of premium dollars on medical expenses (though exactly what expenses will qualify is still being determined).

“We had a lot of discussion that I think was very good about the fact – and it was a term that several of the insurers used, that I didn’t use – that rates are now at a ‘crisis point,’ that they are looking at a market where more and more people are dropping coverage because of the increase in price. Looking forward, what we talked about is the corridor between now and 2014, when we have new options for a number of people, particularly in the small group and individual market,” Sebelius said.

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