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# Some healthcare reform provisions effective Jan 1, 2011
- URL: https://www.foodconsumer.org/healthcare_reform_health_insurance_0101110843/
- Published: 2011-01-02T09:23:00.000Z
- Updated: 2026-09-22T15:48:46.000Z
- Description: Three provisions took effect: insurers must spend 80 percent of individual and small-group premiums, or 85 percent from large groups, on care; Medicare enrollees get a 50 percent discount on brand-name drugs in the doughnut hole; and seniors get free preventive screenings.
- Author: Food Consumer
- Tags: Healthcare, Health News, Medicare, Donut Hole, Healthcare Reform, #vivvo-import

David Liu, Ph.D. and editing by Denise Reynolds, RD

Three major healthcare reform provisions took effect on Jan 1, 2011\. Under these rules, health insurance companies will have no say about how much profit they want to make, Medicare enrollees will receive a 50 percent discount for brand name prescription drugs after they reach the coverage gap or “donut hole”, and seniors will be offered free preventive care screenings for cancer and other diseases.

**Health insurance companies need to spend 80 or 85 percent of their incomes on consumers**

Under the healthcare reform law, health insurers are required to spend 80 percent of premiums from individuals or small businesses on the insurance policy holders. They must either spend the proportion to pay insurance claims or use it for activities intended to improve consumers' health. 

In the case that premiums come from large groups, health insurance companies are required to spend 85 percent of the income on consumers and the remaining 15 or 20 percent of the money may be used for salaries, marketing and overhead or kept as profit.

In the past, health issuers could keep 30 - or even as high as 50 - percent of the premiums they received as profit.

This provision sounds good for consumers. But health insurance companies have been working to find ways to make better profit. Eventually, what health insurance companies are doing would come back to affect the consumers' interest.

**Prescription drug discounts for seniors on Medicare**

The second healthcare reform provision that took effect on Jan 1, 2011 provides prescription drug discounts for seniors who have reached the donut hole or coverage gap in their Medicare Part D prescription drug coverage plans.

Seniors enrolled in Medicare Part D will pay the first $310 of the drug cost as the deductible. That didn't change.

If their drugs cost more than the deductible, they need to pay a copayment or coinsurance and the Part D drug plan pays the remaining until their total, including the deductible, reaches $2,840\. For this phase, seniors' copayment can be as low as 25%.

If the drugs cost even more, then enrollees fall into the donut hole. Here, Part D enrollees would pay 100% of the drug cost in 2010 until their total out of pocket cost reaches $4,550\. But in 2011, they can have a 50 percent discount on brand name prescription drug s. It is not clear whether seniors who are using generic drugs would receive any discount.

Albeit the prescription drug discount, how much money seniors can save remains uncertain. Some seniors were worried that drug prices can increase so much that this 50% discount may merely help offset the increase in the drug cost.

**Free preventive care for seniors**

Another healthcare reform provision that also took effect on Jan 1, 2011 provides free preventive care for seniors.

This healthcare reform law provision provides certain free preventive services such as annual wellness visits and personalized prevention plans for seniors on Medicare, healthreform.gov says. 

According to healthcare.gov, men ages 50 or older, can receive preventive services that include screening tests for abdominal aortic aneurysm, colorectal cancer, depression, diabetes, high blood pressure, high cholesterol, HIV, obesity and sexually transmitted infections.

For women aged 50 or older, the preventive services can include screening tests for breast cancer, cervical cancer, colorectal cancer, depression, diabetes, high blood pressure, high cholesterol, HIV, obesity, osteoporosis, and sexually transmitted infections.

Benefits may also include other drugs or services.

Under the healthcare reform law, seniors should not be required to pay any copayment or coinsurance for the preventive care.

David Liu