December 2009

The healthcare reform legislation currently working its way through the U.S. Congress promises sweeping changes to the U.S. health system.  The likely impact on dentistry, however, appears to be much more limited.

In particular, dentists and other dental industry participants should note that:

• None of the current reform bills materially expand dental coverage for adults. Although each bill mandates health insurance coverage, dental coverage is not specifically required as part of the mandate.
• While the proposed bills increase the Medicaid eligibility threshold, none of the proposed bills specifically provide for increased Medicaid reimbursement rates for dental care.
• Changes to the Children’s Health Insurance Program (CHIP) program included in the proposed Senate bill may increase available funding for pediatric oral care, but the House bill phases out CHIP in favor of including pediatric care on proposed insurance exchanges.
• Each of the bills provides for increased funding for dental education, which may increase the number of future dental graduates.
• An excise tax on so-called “Cadillac” health plans that is included in the proposed Senate bill may lead some employers to drop their dental insurance coverage.

The Current Health Reform Bills

On Nov. 7, 2009, the House of Representatives passed The Affordable Health Care For America Act (H.R. 3962). The Senate is currently debating the Patient Protection and Affordable Care Act, H.R. 3590, which is a massaged consolidation of bills which originated in the Health, Education, Labor and Pensions (HELP) Committee (Affordable Health Choices Act, S. 1679) and the Senate Finance Committee (America’s Healthy Future Act of 2009).

If and when the Senate passes a version of the Bill, the House and Senate Bills would be consolidated by Conference Committee before being submitted for final approval to both chambers of the U.S. Congress. The issues related to these pieces of legislation are developing and change almost daily. Below is a summary of some of the key items contained in these bills as they are currently formulated:

House Bill

The House Bill expands health insurance coverage by mandating that individuals obtain health insurance coverage or face a penalty of 2.5% of income, subject to a hardship exemption and with provisions for subsidies on a sliding scale. Employers may provide insurance or pay an 8% payroll tax. Individuals can be covered through their employer or purchase individual policies on Health Insurance Exchanges that would provide access to policies subject to minimum coverage standards, including oral care for children under 21 years of age. The House Bill also provides for a “public option” on the Health Insurance Exchanges that would be managed and underwritten by the Department of Health and Human Services and compete directly with private insurance options. The Bill also raises the minimum Medicaid eligibility level to 150% of the federal poverty level.

The House Bill provides for funding to dental health professionals to make dental education more affordable and expand the dental health infrastructure. The House Bill also expands the National Health Security Strategy and the National Emergency Response Framework to include dental emergency responders. However, the House Bill phases out CHIP, moving all children insured by the program to the Health Insurance Exchanges in 2014.

Senate Bill

The Senate Bill currently includes a public option that would be offered on Health Insurance Exchanges similar to the Exchanges provided for in the House Bill, but—under a compromise reportedly being discussed in the Senate—the public option would only become available in the future if “triggered” by the failure of private insurance plans to meet certain cost and coverage targets. The Senate public option proposal also includes an opt-out provision for states. The Health Insurance Exchanges would also provide private health insurance plans certified as Qualified Health Plans; these plans must include the Essential Health Benefits Packages defined by the Secretary of Health and Human Services in order to be eligible for inclusion on the Exchanges. The Bill mandates that individuals carry health insurance, and institutes penalties on a sliding scale against individuals who fail to obtain coverage. The Bill preserves CHIP, and increases the federal match rate by 23% subject to a 100% matching cap. The Senate Bill is funded through increased taxes, including a 40% excise tax on insurance companies for “Cadillac” plans providing benefits in excess of $8,500 for individuals and $23,000 for families, limits on deductions for executive compensation, and an additional tax of 0.5% on high wage earners (earning $200,000 or more per individual or $250,000 or more for married couples filing jointly).

Of particular interest to dental industry members are provisions in the Senate Bill requiring pediatric services (including oral health care) for all Essential Health Benefits Packages. Also, under the Senate Bill stand-alone dental benefits may be offered on the Exchanges, as long as such benefits meet the minimum standards for pediatric benefits required of all Essential Health Benefits Packages. The Senate Bill also provides funding to strengthen the oral health infrastructure, including funding of a five-year national Oral Healthcare Prevention Education Campaign, demonstration grants, oral health infrastructure improvement funding (including funding of education programs for oral health professionals), and funding for the Pregnancy Risk Assessment Monitoring System (PRAMS) regarding oral healthcare.

Additional Information

The legislative process is ongoing, and the final form that any legislation will take is not clear. Waller Lansden Dortch & Davis, LLP will continue to monitor these developments and how they may impact professionals, investors and other participants in the dental and healthcare industries.

For more information on the potential impact of healthcare reform legislation on the dental industry, please contact Neil B. Krugman, Donald R. Moody, James W. Bowden or any member of the Waller Lansden Healthcare practice at 800-487-6380.

The opinions expressed in this bulletin are intended for general guidance only. They are not intended as recommendations for specific situations. As always, readers should consult a qualified attorney for specific legal guidance.