What You Need To Know About Health Care Reform

By Carol Kopp  AUG 19, 2009 8:15 AM

What Obamacare really means for you and your granny

 


The scariest thing about the health care reform bill is not the vision of granny-killers roaming hospital corridors. It’s the fact that few rational people seem to grasp how it really may change our lives. The facts have gotten lost somewhere between the howls of protesters and the sputters of proponents.

So, here’s a summary of how the bill will affect you and yours, shorn of rhetoric and government-speak.

First, none of this is a done deal. When our elected representatives return in September from hair-raising experiences in town halls across America, the Congress will work out a final bill based on several versions now floating around. Then it will go to President Barack Obama for his signature.

One thing is certain: the granny-killers are out of the picture. That incendiary rumor grew out of a minor little item that would have reimbursed doctors for having a chat with patients about the wisdom of making their own end-of-life decisions while they are still capable. Some harried clerk is deleting that bit as we speak.

One other thing is certain: few hard numbers are available now. How much will your premium be for “affordable” health care? How much will this bill cost the taxpayer? How much really can be saved by eliminating fraud and waste in Medicare and Medicaid? All this and much more is TBD.

And one more thing: none of this happens overnight. The changes kick in over time, with some not popping up until 2013. Here are 7 big facts you need to know now about the health care reform proposal.

Fact 1: If You Have Insurance Now, You Can Keep It

If you already have private health insurance as a company benefit, this bill won’t change your life much.

That is, just as in the current system, your company might change its coverage plan, whether you like it or not. Under the reform plan, it might have an added incentive to switch to a cheaper new plan. Even that possibility is several years in the future, as the plan focuses on expanding coverage to the uninsured first.

If you buy your own insurance now, you can keep your plan.

Cigna (CI),  Aetna (AET),  Humana (HUM),  and about 180 other companies will still be around selling health insurance.

(They all would be dead if the plan had been designed as the “single payer system” that some advocate. The single payer would be the government.)

But change is coming for those companies and their customers.

Fact 2: Even If You Get Sick, You Can Keep Your Insurance

If you can’t get “affordable” insurance now, you can under this plan (although the proposals don’t hazard a guess on the price of “affordable.”)

The bill requires companies to offer a basic lowest-cost option, with minimum services defined by the government.

If you get sick, or have some health condition that needs treatment, the reform bill prevents insurers from rejecting your application, canceling your insurance or hiking your premiums, as they can now.

And, they can’t deny you coverage for treatment of a “pre-existing condition.”

The bill also prohibits lifetime or annual limits on benefits.

Fact 3: You’ll Have A Choice Of Health Insurance Plans

If you need to buy health insurance for your family, or you own a small business and need to cover your employees, you’ll have access to a kind of marketplace for comparison shopping, called the Health Insurance Exchange.

Your choices will include the basic, lowest-cost “affordable” plan, as well as higher-priced premium options.

And here’s another bit that has enflamed town halls coast to coast: The minimum and premium choices would include a “public option,” a non-profit, government-run health insurance policy competing directly for your business with private insurers.

That public option is the centerpiece of the plan, the bit that defines “affordable health care” for all and forces private insurance companies to compete. Removing it is like editing the whale out of Moby Dick.

The vitriolic reaction to this alleged “government takeover” of American health care has caused some of the bill’s backers, including President Obama, to soft-pedal the idea.

There may be an effort to recast the public option as a kind of not-for-profit health “cooperative” run by its members. The President used that word in public, apparently opening a door to negotiation. Hours later, the White House was saying that his support for the public option is not weakening.

Whatever. The bill will require private companies to offer that basic “affordable” plan as one of their options.

And, it authorizes the government to define the “essential benefits” plan that must be offered by any insurance provider, public or private. It will limit annual out-of-pocket costs, too, in an effort to end a major cause of personal bankruptcy.

The current House plan sets those limits at $5,000 for an individual and $10,000 for a family. Fact 4: ‘None Of The Above’ Is Not An Option

The bill aims for universal health care coverage, but stops short of an outright mandate that you must buy it.

For individuals…

If you already have coverage, you’re set.

If you’re already covered by the government through Medicare or Medicaid, you’re set.

If you’re not quite poor enough or old enough for Medicare or Medicaid, you may be eligible soon. The bill expands the guidelines for Medicaid eligibility.

If you’re still not quite poor enough or old enough for free coverage, you’ll get vouchers to help you pay your premiums. Illegal aliens are specifically excluded.

If you can afford health insurance but don’t buy it, you’ll be fined 2.5 percent of your adjusted gross income on your tax return. This clause waffles a bit, with the fine kicking in “above a certain level” of income.

Just in case there’s anybody who doesn’t fall into one of the categories above, there’s a hardship exemption.

For employers…

Big employers must provide coverage or pay an 8 percent payroll bonus. It isn’t clear in the bill whether that payment goes to the individual or into the exchange.

Small businesses (from $250,000 to $400,000 in payroll) must provide coverage or pay a 2 to 8 percent bonus to employees, but they’ll get a tax credit to offset the cost.

The smallest business -- those below $250,000 in payroll -- are not required to provide insurance, but if they do, they’ll get the tax credit.

Small businesses may benefit from a clause that bans insurers from charging them more for coverage because their employee pool happens to have a lot of young parents or older workers, or for any other reason.

Fact 5: The ‘Reform’ Word Applies To Medicare and Medicaid

One concern floating through public forums is that the already high government cost of health care through Medicare and Medicaid will crush our economy to powder if this legislation goes through.

An equally powerful concern comes from seniors who rely on Medicare, and people who expect to get Medicare in the future.

The sheer size and scope of the bill, and its high-sounding but vague bureaucratic language, have raised fears of cuts in care, rationing of care, long lines to see a doctor and long delays for an operation.

In fact, services under both programs would be expanded.

The bill waives deductibles for preventive care under Medicare, and adds mental health services.

It expands Medicaid coverage to include more low-income people, and requires coverage for newborns.

Fact 6: Somebody Has Got To Pay For This

How We’ll Pay For The Public Plan:

The public option is intended to pay for itself entirely through premiums.

If that sounds dubious, here’s the logic: The public option is intended to cover most of the people who currently have no health insurance -- estimated at 47 million of us, although that figure is disputed. Over time, it may cover many other people who opt to switch from private to public plan.

Most of us are pretty healthy most of the time. So, the people in that vast pool of premiums paid by healthy people will pay premiums that cover care for those who need it right now.

If that sounds like a poor business model, it seems to have worked for the private insurers for some time now.

How We’ll Pay For The Rest Of The Bill:

It looks like the richest Americans are going to pay up, one way or another.

Some truly big ideas, with big potential costs, are built into this bill. The Congressional Budget Office estimates the cost at $615 billion over 10 years, and that is probably a wild guess.

One part alone allocates an additional $38 billion over 10 years for community health centers around the U.S., part of a general focus in the bill on routine and preventive care for all.

Other ambitious pieces do not yet have price tags attached, such as training programs for primary care physicians, and for medical staff needed by those new community health centers.

At the same time, the legislation promises to cut billions of dollars of costs through elimination of waste, fraud, inefficiency and overpayments in the public health programs. And the idea underlying the entire bill seems to be an emphasis on primary and preventive care in order to free up over-burdened and costly emergency rooms and hospital wards.

The White House estimates that two-thirds of the costs will be covered by these greater efficiencies in the system.

That leaves one-third of the money to be raised. President Obama has already said that the bill must be “deficit-neutral,” meaning that the cost can’t just be shoveled into the national debt.

There’s no agreement yet, but most proposals suggest that the paychecks of the richest Americans will be targeted with an additional tax or surcharge.

In a recent town hall meeting, President Obama repeated his definition of the richest as people with incomes above $250,000. The House bill defines the richest as individuals earning more than $280,000, or couples making more than $350,000.

At this point, the House is floating the idea of a health care surcharge on the rich, and maybe implementing a couple of obscure tax law changes that would affect foreign multinationals that use tax havens and people who pay foreign taxes on interest.

President Obama has broached the idea of capping tax deductions for the richest Americans.

Others have suggested taxing so-called “Cadillac health policies” that only the richest people get as a job benefit.

Stay tuned this autumn for a major food fight over this.

Fact 7: There Are A Lot Of Scary Lies Out There

Many variations of the word “Fire!” are being shouted in America’s auditoriums.
 


Some of the fears people are expressing are way too complicated for a yes or no answer. Such as:

“I’ll be forced to join the public plan.” Proponents say it’s just not true; the plan is a choice not a mandate. But opponents say some employers are bound to switch to the lowest-cost public option.

“I won’t be able to keep my doctor.” You will, as long as your doctor participates in your public plan, or for that matter, your private plan. The choice really is the doctor’s.

"Government bureaucrats will write my health insurance policy
." The benefits included in the affordable health care option will be defined by the government, as will the minimum benefits in premium and premium-plus plans. Proponents say that will allow consumers to compare costs and benefits easily. Opponents say the government ought to stay out of health insurance.

“A faceless government paper-pusher will make decisions on my health care.” Proponents say these decisions will be made by you and your doctor, as always. Cynics say that a faceless corporate paper-pusher now makes that decision for you, by approving or disapproving reimbursement, so you have your choice of public or private devils.

“This plan is a socialist takeover of the health care system.” The government is not proposing to seize ownership of private, for-profit hospitals or insurance companies. It does propose to offer its own insurance plan to compete with private insurers. And it will continue to offer insurance coverage to seniors, through Medicare, and to the poor, through Medicaid.

“The plan will drive private insurers out of business.” Impossible to say, but it certainly has made them nervous.

Check It Out

If you’ve tuned into any of the Town Hall meetings, you’ve seen people hoisting all 1,018 pages of “The Bill” and demanding to know if anyone has read it.

That’s HR 3200, the House version of the plan, dated July 14, 2009.

And the answer is no. Almost nobody has read it, including your Congressional representatives, because it’s written in a mind-numbing language intelligible only to the drones who work behind the scenes on Capitol Hill.

(Sample: With respect to the basic plan offered by the entity, the entity shall contract for outpatient services with covered entities (as defined in section 340B(a)(4) of the Public Health Service Act, as in effect as of July 1, 2009).

But if you insist,  click here to see HR 3200.

For a much more readable 35-page version, see  the Section-By-Section Analysis It’s not really an analysis. It’s a summary of the House bill.

The House Ways and Means Committee has an entire menu of information on the bill on  its site  It’s not spin-free, but it’s in English.

summary of the version of the bill that was approved by the Senate Health Committee on July 15 also is available.

President Obama asked Congress to take the lead on writing the health care reform bill, but he is by no means silent on the issue. The White House has its own  Health Reform site.
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.