Understanding Healthcare Reform

Image by xavierla via Flickr

The nation is in a buzz over the health care reform legislation that will bring monumental changes to the way the health care system is run. Looking past all the fine print details and numerous claims coming from all directions, here are some changes it will bring that you should understand prior to the enactment of the health care legislation.

1. The bills will create “insurance exchanges,” where a more transparent system of comparing health plans would be created to make the process of health care coverage shopping clearer for the self-employed and small businesses.

2. The plan is not a government take-over of the health care system. Private hospitals, clinics, and their employees would not become government-run and government employees, respectively. Integral parts of the current system, such as Medicaid for the poor, employer-provided insurance, and Medicare for the elderly will remain in place (and be expanded) while the new health care exchange system will make the process of purchasing insurance individually much more transparent. Medicaid will be expanded to encompass all of the poor as opposed to groups of them (children, disabled, and elderly), which is how the current system works.

3. Older children can be kept on their parents’ coverage up to age 26. A new high-risk pool will cover the uninsured with medical problems until 2014, which is when the expansion of coverage goes into high gear.

4. There will be a more stringent regulation of insurance companies. By the time the health care exchange system is opened in 2014, insurance companies will not be able to deny individuals with pre-existing conditions. Lifetime dollar limits on policies will be eliminated, and the insurance industry will be forbidden from canceling policies when a person becomes ill. In addition to paying a percentage of premiums for patient care, insurance companies will be obligated to cover preventative care and other minimum services.

5. Those without health insurance will be fined. The minimum penalty for not having insurance will be $695 per person per year. Those who earn below a certain income will be aided by a capped premium. A significant portion of the funding for the bill will go to help families with incomes below $88,000/year pay their premiums. For example, if a family of four making $88,000 purchased insurance on the exchange system, their cap would  be 9.5 percent of their income. While employers are not required to buy insurance for their employees, in an effort to encourage employer-provided insurance employers with more than 50 workers who do not provide insurance will be fined.

6. Insurance premiums will not see a significant decline in cost. Most of us will see our premiums either remain the same or rise due to increased coverage of services. The cost of employer coverage would remain largely the same, while those who purchase insurance on their own would see a rise because of more expansive policies that would cover basic services. The biggest drops will be seen by those with low-income who qualify for insurance credits.

7. There might not be a curb on health care spending. Many of the figures offered by the reform are highly speculative. In the most recent estimate by CBO, the $940 billion spent in 10 years would be offset by new taxes and penalties. While the plan boasts a system that would pay for itself in the long run, legislation has accommodated more the $400 billion in higher taxes in the next decade, including a new Medicare payroll tax paid  by those with an income over $200,000.

8. Benefits for illegal immigrants is not likely. While some House members had proposed an exchange system where illegal immigrants would be able to purchase insurance on their own, the system appears to be unlikely.

9. Taxpayer subsidies will not pay for elective abortions. Coverage for abortion will be available for individuals to purchase on the new exchanges as long as the service is paid for by patient premiums, not taxpayer money.

These are just a few points about the new system, but as the system is really much more expansive, feel free to explore the Consumer Report coverage of Health Care reform for more information.