Healthcare Reform 101
What Are the Basics of Healthcare Reform?
Love it or hate it, it is the law. After a bitter year long battle, and decades of failed attempts by Democratic presidents and Congressional leaders, on March 23, 2010, President Barak Obama signed the Health Care Reform Act into law. Officially titled, “Patient Protection and Affordable Care Act”, this is the largest piece of legislation to come through the presidents office, and arguably, the most controversial.
While the Healthcare Reform Act completely overhauls the American healthcare system, and guarantees access to insurance for millions of Americans, the final cost to Americans remains shrouded in mystery. The law has been signed, and some provisions have been implemented, but major portions of the act will take several years to fully develop and unfold. It was a major political issue in 2010 and will continue to be a political hot button for years to come, with some states joining in a Florida lawsuit condemning the bill as unconstitutional and even some Democratic lawmakers conceding to the imperfections in the bill and expressing a willingness to make adjustments.
In the meantime, what does the Healthcare Reform Act mean to families today? On the pro side, it means that approximately 95% of US residents will have insurance coverage. Currently the US Census Bureau reports that as many as 16% of Americans are uninsured. Another plus, insurance companies will be forced to be more competitive as regulation of the insurance industry increases. In addition, insurance companies will no longer be allowed to exclude people based on pre-existing conditions. They will have to accept everyone. Another benefit of the Healthcare Reform Act is that seniors may receive cheaper prescription drugs. On the other hand, the Medicare program faces $500 Billion in cuts, just as millions of baby boomers are becoming eligible to receive Medicare. Not only is the Medicare program facing cuts, the Medicare tax will be increasing and expanding. The cost of the Healthcare Reform Act is a negative. While total costs are unclear, the estimates are that it will cost the country $940 Billion over the next ten years. Other reports suggest the costs will hover around a Trillion dollars for the same time period. That is a lot of money for a nation struggling under the weight of an ever increasing budget deficit. The Congressional Budget Office currently predicts the 2011 budget deficit will reach $1.5 Trillion. In addition to the amount of money it costs, the Healthcare Reform Act provides no incentives for primary care physicians. Currently, most medical students head into specialized training, where the money is. Fewer and fewer are practicing as primary care doctors. A final drawback is the additional new taxes, increasing current taxes, and new fines.
Healthy Living Made Easy
Pro's and Con's of Healthcare Reform
Some of the Taxes, Fees and Upcoming Programs
Some of the new taxes that will help pay for the Healthcare Reform Act include 3.8% tax on payouts on “non-qualified” annuities; 3.8% Medicare payroll tax on high income families; 10% excise tax on indoor tanning services; 3.8% tax on the proceeds from the sale of a home; 2.3% excise tax on wheelchairs. Many of these taxes will take place over the next few years. In addition, starting in 2014 a person who does not obtain coverage would pay a penalty of $95 or 1% of income, whichever is greater. By 2016, the penalty increases to $695 or 2.5% of income.
While the act was signed into law last year, many provisions are not scheduled to go into effect for years to come. Some of the changes that can expect to be seen this year are the following: Insurance carriers must cover children, regardless of pre-existing conditions. They must also provide dependent care coverage for children under age 26. In addition, if a new, private insurance policy is obtained, it must cover the cost of preventative care without charging a co-pay or deductible. This year will also see the elimination of coverage caps, as well as a ban on coverage rescission. In other words, insurance companies are prohibited from voiding coverage, unless they have been provided with fraudulent information. Additionally, seniors on Medicare will receive a $250 rebate for prescription coverage which falls into the coverage gap.
The “Patient Protection and Affordable Care Act” is a far reaching and complex document. It will take years to realize the full effect of this law, both good and bad.
Update to Health Care Reform
With this summers Supreme Court decision, regarding Health Care, and the re-election of President Obama to a second term, the Affordable Care Act will become a part of our lives.
The Supreme Court ruled only on the constitutionality of the act. They refrained from commenting on the feasibility of it. That portion of the act will be lived out by each one of us, as states begin the lengthy and expensive process of starting Insurance Co-ops. While the federal government has given states the option of creating their own co-op or using a federally constructed model, many questions remain. Many states are concerned about the cost of creating such an insurance co-op, while others are struggling to maintain their Medicaid programs, which are proposed to increase under the Affordable Care Act.
With a fiscal cliff looming, and congress locked in disagreement, the Affordable Care Act might be something that we just can't afford.
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