Health Care Reform: 8 Positive Changes
By Stacy Johnson
Mar 22, 2010 6:01 pm
Unless you’ve been living in a cave, you know the health care reform debate has been long, loud and contentious. But now that it’s over, whatever side you were on, there are positives for your future health insurance in this reform. Although many of these changes won’t be happening until years after the final bill is signed into law, exploring them now might make those opposed to the bill feel better about it.
Start by watching the following news story, then meet me on the other side for more.
So let’s go over those eight points again, this time with a little more detail.
Positive change number one: Fewer uninsured Americans should lead to a lower-cost health care system.
The core of health care reform is helping (or forcing, depending on your point of view) 30+ million uninsured Americans find coverage. This is a direct and obvious benefit to them, but it should ultimately benefit all Americans since heath care provided to those without the ability to pay is a huge burden that resonates across the system in the form of higher costs on health care and its primary funding source, insurance.
If you don’t understand what I mean by that, check out a story I produced called “Killer Hospital Bills.” It’s about an uninsured woman who went into a hospital ER with abdominal pain and emerged with a bill for $12,000. While the size of the bill was big, the real story was that the exact same services would have been billed to a Medicare patient at $4,000 and to an insured patient at $5,000. When I interviewed the hospital CFO and asked about the discrepancy, his response was that since so many uninsured patients don’t pay at all, they’re forced to charge those that can exorbitant prices to recoup their losses.
That explanation is certainly shocking if you’re the uninsured patient facing a bill three times larger than a Medicare patient’s for the same services. On the other hand, it’s hard to blame the hospital. A store that loses millions of dollars a year to shoplifters is faced with a simple choice: charge paying customers more to recoup those losses or go belly-up. Hospitals that take patients who can’t pay (and they have to by law if a medical situation is life-threatening) are faced with the same choice: either charge those who can pay more or close their doors. Hospitals can’t charge either Medicare or insured patients more because those rates are negotiated in advance. So that leaves them with only one choice: to charge those patients who can least afford it… those without insurance… a lot more money for the same services.
Bottom line? Even if you’re an American who has health insurance and who doesn’t care at all about those who don’t, you should be happy with this bill or any other that radically reduces the ranks of the uninsured. Because any law that lowers the number of people who can’t pay should theoretically save the entire health care system a lot of money, which in turn should reduce not just the overall cost of health care, but ultimately the health insurance premiums of every American.
In addition, adding 30 million people to the overall pool of those insured means spreading the risk and expense of health care over a wider group. Over time, that should also lower the cost of coverage for all of us.
But don’t expect benefits overnight. The provision helping some Americans pay for health insurance and forcing others to (if you don’t have coverage, you can be fined up to $2,085, or 2.5% of your income) largely take place in 2014. And even then, it will be years later before we see potentially positive effects. Why couldn’t we get this key reform to take place sooner? One reason is that this legislation requires states to establish what are called American Health Benefit Exchanges: insurance pools that hope to harness increased competition to help lower prices. And establishing these exchanges will take time. Another possible reason we have to wait years is the same reason the C.A.R.D. Act didn’t go into effect immediately (thus allowing banks to raise their rates prior to enactment), because industry lobbyists wanted it that way. As the banks did when faced with laws reining in credit card abuses, expect insurance companies to attempt to make as much as possible in the years before many of these provisions become law.
Positive change number two: No more caps on coverage.
Six months after the president signs this bill, insurance companies will no longer be able to cap your coverage, either annually or over your lifetime. This is a big change, and one you’ll be happy with should you ever develop an illness that requires big bucks to address. Prior to this reform, insurance companies routinely employed lifetime caps of one to three million dollars. Which means if you spent more than that over your lifetime, you’d lose your coverage and be forced to pay every bill yourself, a virtual guarantee that you’d be bankrupt shortly thereafter.
While removing these caps could increase insurance company risk and exposure, costs that might be passed through to policyholders in the form of higher rates, it may well keep you or those who love you from going bankrupt should you run out of insurance before you run out of disease.
Positive change number three: Insurance companies can no longer refuse coverage based on preexisting medical conditions.
If you have an illness like cancer or diabetes, today, insurance companies can simply refuse to insure you, or turn you away by charging so much in premiums there’s no way you can afford to pay. Health care reform did away with that, or at least it will in 2014. Children are an exception: Six months after enactment, children can’t be turned down because of preexisting conditions.
Positive change number four: Keeping kids on their parent’s policy longer.
Under the new law, dependent children up to 26 years old can remain covered under their parent’s policy; twenty-one was more the norm before. Keeping kids on a parental policy is normally cheaper than insuring kids individually, and unlike the numerous provisions that wait until 2014, this one goes into effect six months after the bill becomes law.
Positive change number five: More employers will be offering coverage.
The idea behind this bill is to get as many people as possible to have health insurance. For those with no or low income, that means expanding medicare and offering subsidies to help them pay premiums. Households who earn up to 400% of the Federal Poverty Level of $22,050 will be eligible for some sort of assistance.
But when it comes to business, the government is employing both stick and carrot to encourage more to offer coverage. The stick: By 2014, employers with more than 50 employees must provide health insurance or pay a fine of $2,000 per worker each year if any worker receives federal subsidies to purchase health insurance. The carrot: While companies with fewer than 50 workers won’t face penalties if they don’t offer insurance, they can get tax credits if they do. For example, those with 25 or fewer employees and average annual worker pay of $40,000 can get tax credits of up to 35% of the cost of the premiums in 2010, rising to 50% in 2014. These tax credits are based on the size of the business and the average pay of their workers: the smallest companies with the lowest-paid workers will get the most tax credits.
Positive change number six: Free preventative health care.
Until health care reform, preventative care coverage… like annual physicals, for example… could be subject to deductible and co-pays. The new law says this type of care is going to be free: no co-pay, no out of pocket. The idea is that this will encourage people to seek assistance early and often, which should translate into big health problems and big bills being nipped in the bud.
Positive change number seven: A better appeals process.
It’s hard to understand the drive for things like health care reform if you’ve never been mistreated at the hands of an insurance company or done a story about someone who has. But take it from someone who’s been a consumer reporter for 20 years: There are insurance companies that deny coverage for no other apparent reason than they don’t feel like paying. Did you ever see the movie The Rainmaker? It features an insurance company whose policy includes systematically denying all claims. While I can’t say that’s a true story, I can definitely say that many insurance companies have acted in a manner that suggests they’re more interested in their profitability than the welfare of their policy holders.
Health care reform establishes a new, theoretically more independent and consumer-oriented appeals process. So if you do have a disputed claim, your odds of having it resolved fairly should increase.
Positive change number eight: Help for seniors.
Today’s Medicare patients have coverage for the first $2,700 they spend on drugs and for any amounts over $6,154. But they’re on their own for drug expenses in-between… known as the “donut hole”. Starting this year, Medicare recipients who fall in that hole will get $250, in 2011 they will get a 50% discount on brand-name drugs, and by 2020, the donut hole will be closed with 75% of drugs costs covered.
Eight positives: But at what cost?
When I’ve encountered people vehemently opposed to health care reform, it’s usually for one of three reasons. The first and most common is that they don’t really have a clue just what it’s about and are simply parroting some specious nonsense they’ve recently heard on a talk show.
The second is that they feel a free people shouldn’t be forced to buy health insurance or anything else. I agree. In my opinion, if a society has collectively decided that it’s immoral to let its poorer citizens get sick and die in the streets, the solution isn’t to subsidize insurance for the poor and force the rest to buy private health insurance from for-profit companies. The solution is for the government to supply health care, just as most developed countries in the world do and ours does for its citizens 65 and older.
But since we have a rabid minority who insist that government-run health care is tantamount to communism, this apparently isn’t an option today. So the next best choice is passing a law that makes private health insurance available to all so that those with preexisting medical conditions or those who are either too poor, greedy or uniformed to purchase insurance for themselves don’t become a financial drain on the rest of society.
The third common reason for opposition to health care reform is cost. A legitimate concern. Over the next 10 years the cost of this reform is expected to be just short of a trillion dollars. Way cheaper than the Iraq war, but still a lot of money. Where is it coming from?
· Fees on drug companies and insurers.
· An excise tax of 10% on overly generous health plans.
· A 2.9% tax on the sale of medical devices.
· A 3.8% tax hike in your Medicare payroll taxes and on your investment income if you make more than $250,000/yr.
· Fees on employers who don’t offer required coverage.
· Fees on people who don’t get mandated coverage.
· A 10 percent excise tax on tanning salons.
According to the Congressional Budget Office, these sources of revenue more than offset the $940 billion cost of health care reform. Not a penny coming from any individual taxpayer other than those who don’t comply or those that are making more than $250,000/yr. Granted, employers (especially large ones) will be forced to offer coverage and that could divert funds for other uses, like hiring more workers. But all in all, I just don’t see what the hubbub is about. These changes appear to benefit the poor and sick among us as well as society at large. The costs are largely borne by those who profit most from health care: drug companies, medical device companies and insurance companies.
Other than waiting years for the positive changes to take effect, what’s not to like?
