President Signs Healthcare Reform

March 23, 2010       Mark Hrywna      

President Barack Obama signed healthcare reform legislation into law today, two days after it passed the House of Representatives. The Patient Protection and Affordable Care Act was approved Sunday night by a 219-212 vote.

Some aspects of the landmark Patient Protection and Affordable Care Act and how they might affect nonprofits are certain, such as a small employer tax credit and required community health assessments for hospitals. Other areas affected are less clear as nonprofit leaders keep an eye on reaction to the historic measure. Already, 13 Republican state attorneys general are reportedly challenging its constitutionality as the Senate prepares to take up technical aspects of the bill in reconciliation this week. Any changes to the second bill would affect the bill signed today and head back to President Obama for his final signature.

The Washington, D.C.-based National Council of Nonprofits (NCN) believes several provisions in 10-year, $940-billion bill could help nonprofits control their health care costs. The Small Employer Credit would provide a tax credit allowing small nonprofit employers to deduct 25 percent of qualified health costs from 2010-13 and 35 percent of qualified costs for 2014 and onward for up to two years from their withholdings tax liability. Small nonprofits are those with 25 employees or fewer, with average wages less than $50,000 per year.

The measure also provides grants for up to five years to small employers that establish wellness programs and provides technical assistance and other resources to evaluate employer-based wellness programs.

Employers would be allowed to offer employees rewards of up to 30 percent of the cost of coverage for participating in a wellness program and meeting certain health-related standards. The reward limit might be increased to 50 percent of the cost of coverage if deemed appropriate. Rewards could be premium discounts, waivers of cost-sharing requirements, or benefits that would otherwise not be provided.

The direct impact of healthcare reform on philanthropy for hospitals will be minimal, according to Bill McGinly, CEO of the Association for Healthcare Philanthropy (AHP) in Falls Church, Va. “The biggest thing that’ll shape philanthropy for a while will be the uncertainty about healthcare delivery and what it means to individuals, whether we’ll see costs really go through the roof in providing healthcare,” McGinly said. There remains a lot of uncertainty because of the struggle to keep up with what’s going on in Washington, D.C. “I don’t think we’ll realize the full impact of this yet,” McGinly said in a telephone interview on Monday.

“The larger influence that will hurt philanthropy, and we see this happening already, is there’s still uncertainty as to what’s included and what the impact will be on me as a patient, as citizens,” he said.  “It’s hard to comment because there is so much uncertainty and unknown,” McGinly said. Some legislation introduced by the Republicans already aims to derail parts of healthcare reform or challenge the constitutionality of some elements, McGinly said.

What could have created some issues for philanthropy was not included in the healthcare reform that passed on Sunday, McGinly said: the administration’s proposal to reduce the tax deductibility of charitable contributions. That’s good news, he said, because it likely would have meant a reduction in the size of gifts.

AHP supported a measure in the Senate bill that required nonprofit hospitals to perform a community needs assessment at least once every three years. “We do support the reporting, measuring and assessment of communities, to demonstrate community benefit,” McGinly said.

The 1,200 free clinics in the United States last year saw 8 million patients, twice as many as the year before, said Nicole Lamoureux, executive director of the National Association of Free Clinics (NAFC) in Alexandria, Va. “Free clinics receive little to no state or federal funding and these clinics have been servicing the nation’s underserved since the ‘60s,” she said.

“Based on our growth rate and the current economy, it’s safe to say that will see eight million patients or more this year,” she said. About 83 percent of people who visit free clinics come from a working household, according to Lamoureux. “They have a job, they can’t afford a payment. What we really need is affordability, accessibility and portability. It’s what’s too early to tell is if this bill answers those questions for us,” she said.

While it may be early to determine the details of healthcare reform, some organizations are hailing its passage as a victory.

“Health care is at a tipping point and the shortcomings within our health care system can no longer be ignored,” said Rich Umbdenstock, president and CEO of the American Hospital Association, in a written statement. “Today’s vote will chart a new and better course for our nation’s health and health care. Bottom line: the health reform bill may not be perfect, but it expands coverage to 32 million people, enacts significant insurance market reforms and lays a solid foundation upon which we can continue to build.”

The American Cancer Society Cancer Action Network (ACS CAN), the advocacy affiliate of the American Cancer Society (ACS), believes reform would make “far-reaching improvements” to the healthcare system. “Families affected by cancer know first-hand the gaps that exist in our broken ‘sick care’ system,” said John Seffrin, chief executive officer of ACS CAN, in a letter to House leaders last week. “Though the fight for health care reform has not been easy, we’ve come too far and accomplished too much to let this effort fail.”

The legislation would improve access to health care by ensuring the “availability of adequate and affordable insurance coverage to nearly all Americans,” according to ACS CAN. Critical reforms would specifically eliminate discrimination based on health status and pre-existing conditions, and eliminate “arbitrary” limits on annual and lifetime benefits, which they believe have been detrimental to cancer patients.

The bill also would help to transform the health care system to focus more on prevention and early detection by requiring all insurance plans to provide coverage for essential, evidence-based preventive measures with no additional co-pays. ACS CAN also believes the bill would go a long way toward reducing the disparities in prevention and treatment of cancer among low-income and minority populations through the expansion of Medicaid and inclusion of tax subsidies.