25 terms you should know to understand the health care debate
25 terms you should know to understand the health care debate
With COVID-19 dominating most of the 2020 news cycle, another important topic has been health care, and how accessible it really is.
The United States has one of the highest costs of health care in the world, in 2017 spending about $3.5 trillion or an average of about $11,000 per person. Costs have grown to 18% of GDP from 5% of GDP in 1960. That means millions of Americans go without medical insurance or face medical expenses they cannot pay, making health care one of the most critical issues of our time. The pandemic has also affected health care coverage, as about 5.4 million employees lost their coverage in the first three months of the pandemic alone. The number has increased as more Americans lost their jobs and employer-based health insurance as COVID-19 progressed. Uninsured Americans tend to be adult males who are low-income and have less than a high school education.
Aimed at making health care more accessible and equitable, the Affordable Care Act is one of the most recognizable legacies of President Barack Obama and a high-profile target of Republicans and President Donald Trump. However, this bill is not perfect, and many American politicians, such as Bernie Sanders, have called for a more expansive, universal health care bill, especially in the midst of a global pandemic. Canada and Scandinavian countries have universal health care already, but it is an idea that meets with stiff resistance in the United States. Norway’s universal health care system began in 1912. Of Americans with health-care coverage in 2019, employer-based insurance was most common at 56%, followed by Medicaid at about 19%, and Medicare at about 17%.
Looking ahead to the presidential election, debates have been revived over what is best for the American people: a public option, a mixed solution of private and public-funded plans, or a more private system left more to market forces and less to the government? It is a question that has often been asked of both President Donald Trump and former Vice President Joe Biden, and has already come up during the presidential debate series that kicked off Sept. 29. Keep reading to learn 25 key terms that help you better understand the complexities of health care.
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Single-payer health care
Under a single-payer system, a government-run agency would finance health care for all, typically through taxes. Supporters say it would help cover uninsured and underinsured Americans, control costs, and make health care a right, not a privilege. Opponents argue that single-payer health care would stifle innovation by leaving pharmaceutical companies, device makers, and others with less money for research, give the government too much control, and limit treatments to the most cost-effective.
With a public option, the government would provide health insurance for people to purchase that would perform like a private plan. Supporters say such a plan would be cheaper because it would not be run for profit, its size would give it bargaining power with providers, and it would allow buyers to move or change jobs without losing or changing their health insurance. Opponents argue that health care providers would be reimbursed at low rates and may even reject patients using a public option plan. Private insurance companies say a public option might put them out of business, in effect leading to a single-payer system.
A pre-existing condition is a medical illness or injury that existed or was treated before a person joins a new health care plan. It might be chronic or long-term, such as diabetes, epilepsy, COPD, cancer, or sleep apnea. Before the Affordable Care Act took effect in 2010, insurance companies could deny coverage or offer coverage at inflated rates for those who had pre-existing conditions.
Everyone has access to health care under universal coverage. Some 32 countries have universal coverage, including Canada and Norway. A single-payer system would be one form of universal coverage.
An age band rating sets a range in which insurers can charge more to older consumers than to younger people. Before the Affordable Care Act (ACA), most states allowed a 5 to 1 ratio, meaning insurers could charge seniors as much as five times what they charged younger patients in premiums. Under the ACA, the ratio was capped at 3 to 1.
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Affordable Care Act
The Affordable Care Act is a health care reform law that took effect in 2010. Its key feature is private individual market health insurance plans sold in health insurance exchanges. These plans are run not by the government but offered by major health insurance companies that comply with the law’s various requirements. Designed to make health care more affordable and accessible, the act provided tax credits and subsidies, expanded Medicaid coverage, required all insurance plans to cover a number of treatments, eliminated lifetime and annual coverage limits, and allowed children to stay on their parents plans longer. An expanded version of the Patient Protection and Affordable Care Act Enhancement Act was up for a vote on June 29, 2020. With the updates come more money allocated towards grants and insurance affordability programs as well as expanded Medicaid funding.
The risk-corridor program was established under the ACA as a safety net in the first three years of the health insurance exchanges. Plans with higher-than-expected medical claims could recoup some losses, while those with lower-than-expected costs would pay into the program. Congress in 2014 required that the program be budget neutral, and a giant shortfall followed. Health insurers have sued to recover their expected payments that amount to more than $12 billion, but the federal government has said it is limited by Congress on what it can pay. The U.S. Supreme Court plans to take up three consolidated risk corridor cases in its next term starting in October.
A health-care cooperative is a nonprofit, member-owned medical insurance plan designed to provide affordable health insurance and increase competition and choice. Nearly two dozen co-ops were created under the Affordable Care Act. However, all but a handful have closed. Some were unable to handle the size of the risk pools or unable to compete with private insurers, while others encountered more or less enrollment than expected.
[Pictured: U.S. House Speaker Nancy Pelosi (D-CA) holds a news conference about health care legislation and the Affordable Care Act.]
Self-insured health plans are likely to be found in large companies at which the employer collects premiums from employees and pays their medical claims. The plans might be self-administered or contracted out to a third party.
Medicare is a federal health insurance program for people 65 and older and for certain younger people with disabilities. Medicare Part A is hospital insurance, usually premium-free, covering inpatient stays, nursing care, and some home care. Medicare Part B, which charges a monthly premium, is medical insurance that covers certain doctors’ services, outpatient care, medical supplies, and preventive services. Medicare does not cover long-term care, such as assisted living or nursing homes, most dental care, dentures, hearing aids, and eye exams for prescribing glasses.
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Medicare Part D
Medicare Part D is an option for prescription drug coverage available to Medicare recipients. It charges monthly fees and premiums, may have deductibles, and may charge copayments.
Family and Medical Leave Act
The federal Family and Medical Leave Act guarantees up to 12 weeks of job-protected leave when employees need to take time off due to serious illness or disability, to have or adopt a child, or to care for a family member. But it does not guarantee that employees who use the act will get paid. Only California, New Jersey, Rhode Island, New York, Washington, and the District of Columbia have paid family leave programs.
Health insurance exchange
A health insurance exchange is a marketplace to shop for health insurance. Private insurance companies list their health plans, and consumers can comparison shop. They are for people who do not obtain health insurance through an employer or a government-run program like Medicare or Medicaid. The exchanges were developed by the government under the Affordable Care Act.
Premium tax credit
Under the Affordable Care Act, government subsidies such as the premium tax credit are available to help people cover health insurance costs. Eligibility is based on income, capped at 400 percent of the federal poverty level. The credit is available only to those buying health insurance through their state’s government-run health insurance exchange. In an update to the Affordable Care Act, proposed to the U.S. House for a vote on June 29, 2020, the premium tax credit may be raised for commercial health insurance.
So-called Cadillac health insurance is a high-cost plan with little or no out-of-pocket expenses. A Cadillac tax, already delayed by Congress but due to take effect in 2022, will levy a 40% tax on the portion of employer-sponsored health insurance premiums above a certain level. The goal is to make high-end health coverage less attractive, based on the view that employees over-use plans with little cost-sharing. The Congressional Budget Office estimated that about 15% of covered workers participate in plans likely to be affected. Employers are likely to respond with higher deductibles, co-pays and out-of-pocket maximums.
[Pictured: Director of the Congressional Budget Office Douglas Elmendorf.]
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The term donut hole applies to a gap in Medicare prescription drug coverage. After a patient has spent a certain amount on covered drugs, the patient must pay all costs out-of-pocket up to a yearly limit. Once the yearly limit is met, the coverage gap ends and the plan helps pay for covered drugs again.
A Medicaid buy-in would give people the option to purchase a plan similar to Medicaid. It would be aimed at those who could not afford private coverage. A buy-in program exists in most states for people with disabilities, allowing them to keep their health care coverage if they start or resume working.
Children’s Health Insurance Program
The Children's Health Insurance Program (CHIP) is designed to provide coverage to children in families that earn too much money to qualify for Medicaid. Eligibility requirements vary by state. Coverage includes routine checkups, immunizations, doctor visits, prescriptions, hospital care, and emergency services. Some states charge co-payments or premiums but they are limited to 5% of family income.
COBRA (Consolidated Omnibus Budget Reconciliation Act) is a federal law that allows workers to keep their health coverage temporarily after their employment ends. Under COBRA coverage, consumers pay 100% of the premiums, including the share their employers paid.
Medicare for All
Medicare for All is a political proposal that could mean a government-run, single-payer health care system, or a system allowing Americans to buy into Medicare at age 50, also called Medicare for More. It differs from the Affordable Care Act, which left private insurers paramount.
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Individual mandate penalty
Under the Republican-backed Tax Cuts and Jobs Act of 2017, the individual mandate penalty of the Affordable Care Act was repealed. The mandate required all Americans to maintain health insurance coverage unless they were eligible for an exemption, and the IRS levied a penalty on those without coverage. The individual mandate remains in effect, but there is no longer a federal penalty for non-compliance. Massachusetts, New Jersey, Vermont, and the District of Columbia have imposed their own mandates and penalties.
Under the Affordable Care Act, the government’s health insurance program for low-income residents was to be expanded to cover people with incomes no higher than 138% of the federal poverty level. But the U.S. Supreme Court ruled that compliance with that part of the ACA was optional. As a result, some states have strict eligibility criteria because they did not expand Medicaid coverage, while others have implemented broader coverage. Medicaid is sometimes called a single-payer system, but it is jointly funded by the federal government and each state government. Increased Medicaid funding is up for a vote as a part of larger updates to the expanded Patient Protection and Affordable Care Act Enhancement Act bill. Members of the U.S. House were set to vote on the bill June 29.
People who are underinsured are covered by health insurance but may have high deductibles and out-of-pocket expenses. They might be unable to pay their medical bills or delay or skip treatment because of its cost.
UCR stands for Usual, Customary, and Reasonable, and it is the amount insurers will pay for a medical service in a geographic area. It is based on what providers in the area typically charge.
Two-tier health care
In a two-tier health care system, the government provides basic health care, and secondary coverage is available to those who can afford more costly coverage. Two-tier systems are in place in France, Australia, Ireland, Hong Kong, Singapore, and Israel.
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