Glossary of Key Terms in Health Care Reform
Health care reform is complex and some of the terms and concepts may be unfamiliar. Here are some of the more frequently used terms and their definitions.
AHIP — America’s Health Insurance Plans
AHIP is a national association representing nearly 1,300 member companies that provide medical insurance, long-term care insurance, disability income insurance, dental insurance, and other insurance products to more than 200 million Americans. AHIP’s major policy goal is to expand access to high-quality, affordable coverage to all Americans. The association and its president and CEO, Karen Ignagni, have actively voiced the industry’s support of health care reform.
BCBSA — Blue Cross and Blue Shield Association
The BCBSA is a national federation of 39 independent, community-based and locally operated Blue Cross and Blue Shield companies. Collectively, the BCBSA provides health care coverage for more than 100 million individuals, or one out of every three Americans.
Biologic(al) Drug / Biologic(al) Agent
A substance made from a living organism or its products and is used in the prevention, diagnosis, or treatment of disease. Biological drugs include antibodies, interleukins, and vaccines.
A method of cost-sharing in a health insurance policy that requires a group member to pay a stated percentage of all remaining eligible medical expenses after the deductible amount has been paid.
Consumerism or consumer-driven health plan
Consumerism describes a relatively new way of thinking about health care that is gaining momentum. It is founded largely on the belief that consumers want more control over their health care decisions and how their health care dollars are spent. It also is based on the belief that with increased tools, information, support, and incentives, consumers will be more engaged in their own health matters and live healthier lives. Studies show that more than 50 percent of health care costs result from an individual’s behavior.
In addition, consumerism has gained acceptance with the public through the growing availability of a new type of health plan, often called a consumer-driven health plan or CDHP. This plan pairs high deductibles with low premiums and a pretax savings account that can be used for health services or saved for future health expenditures.
Cooperatives are an idea introduced by Senator Kent Conrad (D-ND) that is modeled after rural electricity, farming, and telephone cooperatives that are owned and organized by members. These nonprofit state or regional health care entities would negotiate rates with health care providers, and have the same benefit plans and licensing and regulatory requirements as private insurance companies. Supporters of cooperatives believe they would offer a competitive way to deliver health care without being run by the government.
Co-pay / Copayment
A specified dollar amount that a member must pay out-of-pocket for a specified service at the time the service is rendered.
A term used to describe the part of a provider or facility charge that is the financial responsibility of an insured person and/or his or her dependents. The term includes copayments (co-pays), coinsurance, and deductibles.
A flat amount a group member must pay before the insurer will make any benefit payments.
A gap in Medicare Part D prescription drug coverage that, under reform, provides recipients not already receiving Medicare Extra Help who reach the gap, with a one-time rebate for biologic drug expenses at varying rates: $250 in 2010, 50 percent of gap expense coverage in 2011, by 2020, the coverage gap will be closed. Meaning there will be no more “donut hole,” and you will only pay 25 percent of the costs of your drugs until you reach the yearly out-of-pocket spending limit.
Employer-based health care
Employer-based health care refers to health plans that are offered at the workplace for employees. Currently, 170 million Americans receive their health insurance coverage through an employer-based plan. In most cases, employees share some of the costs of the plan with their employer through a payroll deduction. The total cost of these plans is generally a lot less expensive for the employee than if he or she were to purchase the coverage individually.
Essential Health Benefits
A set of health care service categories that must be covered by individual and small group plans, starting in 2014, including doctor office visits, hospitalizations, and prescriptions. Insurance policies must cover these benefits to be certified and offered in exchanges, and all Medicaid plans must cover these services by 2014.
Evidence-based medicine is a method of improving and evaluating patient care. It involves combining the best research evidence with the patient’s values to make decisions about medical care. Looking at all available medical studies and literature that pertain to an individual patient or a group of patients helps doctors properly diagnose illnesses, choose the best testing plan, and select the best treatments and methods of disease prevention. Using evidence-based medicine techniques for large groups of patients with the same illness, doctors can develop practice guidelines for evaluation and treatment of particular conditions. In addition to improving treatment, such guidelines can help individual physicians and institutions measure their performance and identify areas for further study and improvement.
A national or state-by-state marketplace where consumers and small businesses can shop simply and quickly for health insurance, comparing products and prices. Exchanges would work with state insurance departments to set and enforce insurance reforms and protections. If a public plan is offered, it would be included in the health exchange, along with private insurance plans.
Flexible Spending Account (FSA)
An account that withholds pre-taxed income in reserve for health-related expenses. Expenses for over-the-counter medications and drugs (excluding insulin and doctor-prescribed medications) are no longer qualified medical expenses, eligible for tax-free payment or reimbursement.
Individual and group health plans issued on or before March 23, 2010 are “grandfathered” and do not have to comply with some of the provisions of the new law. If an existing health plan changes components of its plan, however, it may lose its grandfathered status.
Generally determined by the Internal Revenue Service as one of 5 highest paid officers, a 10 percent stakeholders in a business, or among the top 25 percent of employees ranked by compensation within a business. Self insured groups are currently prohibited from establishing eligibility rules for coverage and benefits that favor highly compensated individuals. One of the provisions of health care reform would extend that to fully insured group plans, exempting those that are grandfathered.
Health Information Technology
Also referred to as electronic medical records, health information technology is a system that allows medical professionals to store patient information electronically rather than on paper. Reform advocates point to this system’s great potential to achieve savings while improving the quality and efficiency of health care services.
Health Reimbursement Account (HRA)
An employee health spending account funded and owned by the employer. HRAs can be used to reimburse employees for certain qualified health services and expenses not covered by the company’s health plan, including copayment, coinsurance, and deductibles. Funds remaining in the account at year-end may go back to the employer. Expenses for over-the-counter medications and drugs (excluding insulin and doctor-prescribed medications) will no longer be a distribution used for qualified medical expenses, eligible for tax-free payment or reimbursement.
Health Savings Account (HSA)
An account that withholds pre-taxed income in reserve for health-related expenses. A tax penalty on distributions from HSAs that are not used for qualified medical expenses increases from 10 percent to 20 percent in 2011. Expenses for over-the-counter medications and drugs (excluding insulin and doctor-prescribed medications) will no longer be a distribution used for qualified medical expenses, eligible for tax-free payment or reimbursement.
Insurance Mandate for Individuals
Individuals must pay a government tax penalty beginning in 2014 if they lack health coverage. The penalty increases in successive years.
Insurance Mandate for Employers
Employers must offer health coverage to their employees beginning in 2014, or face a tax penalty. The penalty increases in successive years.
Markup refers to the meeting of a legislative committee that reviews the text of a bill before reporting it out. Committee members offer and vote on proposed changes, which are referred to as amendments, to the bill’s language. Most markups end with a vote to send the new version of the bill to the floor for final approval.
Medicaid provides health coverage to certain low-income individuals and families who fit into an eligibility group that is recognized by federal and state law. The eligibility rules vary from state to state. Medicaid sends payments directly to providers for individuals and/or families who qualify. However, depending on state rules, beneficiaries may pay a copayment for some medical services.
Medical Savings Account (MSA)
An account that withholds pre-taxed income in reserve for health-related expenses. Expenses for over-the-counter medications and drugs (excluding insulin and doctor-prescribed medications) will no longer be a distribution used for qualified medical expenses, eligible for tax-free payment or reimbursement from any of these accounts, effective January 2011. A tax penalty on distributions from MSAs that are not used for qualified medical expenses increases from 15 to 20 percent of the amount includable in gross income.
Medicare is a government program that provides medical care to seniors (individuals aged 65 and older). People of all ages with certain diseases also qualify for Medicare (e.g., end-stage renal disease). Today, approximately 45 million seniors are covered by Medicare. Medicare is broken down into four parts: hospital insurance (Part A), medical insurance (Part B), the Medical Advantage Plan (Part C), and the newer Prescription Drug Coverage (Part D). The Medicare Advantage Plan is a health plan option offered through private insurance companies. In most cases, there are extra benefits and lower copayments than in the Original Medicare Plan.
Medicare Advantage (MA)
Part of traditional Medicare but offered through private insurance companies. MA plans can include a variety of health plans such as HMO or PPO, prescription drug plans, as well as wellness and prevention benefits. Approximately 10 million or 25 percent of Medicare-eligible seniors are enrolled in Medicare Advantage plans.
Medicare Extra Help
A Medicare program to help people with limited income and resources pay Medicare prescription drug program costs, such as premiums, deductibles, and coinsurance.
Medicare Part D / Part D
The prescription drug coverage program offered under Medicare.
Patient-Centered Medical Homes (PCMH)
PCMH are new models of care that bring a personalized team approach to the primary care physician’s practice by better coordinating and organizing care, especially for patients with chronic conditions. This includes scheduling a patient to see a doctor as soon as a problem develops and employing care managers and health educators to help chronically ill patients receive key tests, take medication, and stay well. Primary care physicians who have adopted this model of care report being more professionally satisfied and achieving superior results.
Pre-existing Health Condition
Any condition, illness, or injury for which medical advice or treatment was recommended or received before a person obtains health insurance. Examples include diabetes, heart disease, and cancer. Most health plans, even grandfathered ones, may not deny coverage of or benefits to children under age 19 who have a pre-existing health condition; this extends to adults in 2014. Certain enrollment period limitations apply.
These services are covered under reform at 100 percent (meaning without copayment), and they are valued as helping to improve overall health and reduce health care expenses. They include child immunizations, breast/prostate/cervical/colon cancer screening, bone mass measurement, and routine physical exams.
A retroactive cancellation that treats the coverage as void from the time of enrollment or a cancellation that voids benefits previously paid before the cancellation.
State-Children’s Health Insurance Program (S-CHIP)
S-CHIPs are state-run programs that provide health insurance to uninsured children and teens who are not eligible for or enrolled in Medical Assistance, and whose families cannot afford private insurance. S-CHIP is administered by licensed private health insurance and regulated by state insurance departments. Independence Blue Cross is one of three health plans licensed to offer CHIP in the five-county Philadelphia region.
CHIP was first signed into law in Pennsylvania by former Governor Robert P. Casey in 1992. Pennsylvania’s CHIP program would later serve as the model for the federal government's S-CHIP program, which was signed into law by President Bill Clinton in 1997.
Self-funded plan / Self-insured plan
A health plan under which an employer or group sponsor is financially responsible for paying plan expenses, including claims made by group plan members.
Senate Health, Education, Labor, and Pensions (HELP) Committee
The Senate HELP Committee is one of two committees in the Senate, along with three in the House, drafting health care reform legislation this summer. This committee has broad jurisdiction over the operation of our nation�s health care, schools, employment, and retirement programs.
Single-payer health care
In a single-payer health care system, the government collects money, primarily through tax revenue, and pays all the health care bills for its citizens. Countries with a single-payer system include Canada, the United Kingdom, and Sweden.
The reform law establishes financial assistance on a sliding scale for individuals and families with incomes from 100 to 400 percent of the federal poverty level to help people buy individual coverage through the exchanges.
There are currently 46 million Americans who do not have health insurance. In addition to those who can’t afford health care, millions more are “underinsured” and struggle to pay medical bills or go without needed care because of cost. Covering the uninsured is one of the key objectives of health care reform.