Health Reform: What's In It? | Jackson Free Press | Jackson, MS

Health Reform: What's In It?


President Barack Obama addressed the country last night about Osama bin Laden's death.

President Barack Obama enjoyed rising approval ratings Tuesday as he signed a historic health-care bill the U.S. House of Representatives passed late Sunday without a single Republican vote--the same health-care bill the Senate approved last December.

"The bill I just signed puts Americans in charge of our own health care by enacting three key changes: It establishes the toughest patient protections in history; It guarantees all Americans affordable health insurance options, extending coverage to 32 million who are currently uninsured; and it reduces the cost of care--cutting over 1 trillion dollars from the federal deficit over the next two decades," Obama said Tuesday.

The Senate will debate a package of changes the House authorized the same day it passed the Senate bill. The Senate reconciliation is not subject to a filibuster and needs only a simple majority to pass.

The question on everyone's minds is: What does the bill mean for me--now and later? What are the specifics?

The reform bill prohibits insurance companies from refusing coverage to customers, or raising rates, due to pre-existing conditions by 2014. This year, within six months, the prohibition will apply to children.

The bill will immediately allow access to insurance for uninsured citizens who currently have no insurance because of a pre-existing condition through a temporary $5 billion high-risk pool, until insurance exchanges are in place by 2014. It also prohibits insurance companies from dropping policy-holders who file an expensive claim or find themselves diagnosed with a condition requiring expensive treatment.

In addition, the bill ends insurance companies' controversial ability to set insurance rates based on gender, and it forces insurance plans to cover an enrollee's dependent children until the kids reach age 26. It creates a new government-regulated policy review procedure wherein policy-holders may take action against rate hikes they argue 
are unreasonable.

The bill requires insurance companies to give premium rebates to policy-holders suffering high administrative expenditures, exceeding 15 to 20 percent depending on the size of the plan. It also requires companies to publicly disclose the percentage of premiums applied to the company's overhead costs--including advertising costs and executive pay.

The Congressional Budget Office confirmed that the bill will lead to a decrease in the national deficit of more than $1 trillion within two decades, but it also requires most Americans to purchase insurance by January 2014, or pay a penalty.

The original Senate bill proposed a penalty of $95 a year or 0.5 percent of a household's income, whichever is bigger, starting January 2014, and a $495 penalty, or 1 percent of income in 2015. In 2016, that number goes up to $750 or 2 percent of income--which caps off at $2,250 a year for the whole family.

The House reconciliation bill keeps the $95 penalty in 2014, but increases the 2014 cap to 1 percent of a household's income. The penalty goes up to $325 or 2 percent of income in 2015, and $695 or 2.5 percent of income in 2016--with a maximum penalty of $2,085 for a family. The reconciliation bill exempts from penalties any single-person household with an income below $9,350 a year, or any couple making $18,700 a year. Also exempted are Native Americans, people with religious objections or anybody who can prove financial hardship.

Most income brackets will benefit from federal subsidies, to insurers to manifest as discounts on the customer's policy. The Senate version allows tax credits to people with incomes all the way up to 400 percent of the federal poverty level, which translates as $88,200 for a family of four. The bill requires a family of four, making $88,200 a year, to dedicate up to 9.8 percent of their income to insurance premiums. Households falling into the lower income bracket of $33,075 for a family of four, or 150 percent of the federal poverty level, must dedicate, at most, 4.6 percent of their income to insurance premiums. The House reconciliation bill would tweak the Senate bill slightly: Households below 150 percent of federal poverty level ($33,075 for a family of four) must pay only up to 4 percent of their income on premiums.

Individuals who make less than 133 percent of the federal poverty level ($14,404) are able to enroll in the Medicaid program, which the bill expands.

The Senate bill also carries a considerable mandate for larger employers, but does not apply to most small businesses. Starting in 2014, employers with 50 or more full-time workers could pay a penalty of $750 for each full-time worker if they do not offer health benefits--but only if any of their workers obtain subsidized coverage through new health insurance exchanges created by the bill.

Companies whose workers obtain federal subsidies to buy their insurance could suffer a $3,000 per year penalty for each of those employees who receives subsidized coverage--or the $750 penalty for each full-time worker in the company, whichever is less.

The House reconciliation version counts part-time employees toward the 50-employee minimum on a pro-rated basis, based upon the number of hours the part-time employees work--which would bring more businesses into the 50-employee bracket required to provide coverage. The House reconciliation bill also increases the penalty to $2,000 for each full-time worker in the company, but exempts the first 30 employees when calculating penalties. An employer with 60 employees who does not offer health insurance, for example, could pay a penalty on 30 employees at a price of $60,000, under the House version.

There is a difference between offering insurance and employees taking it, however. An employee whose share of health premiums is more than 8 percent of their income--with a cap of 9.8 percent--has the option of rejecting company insurance and buying less expensive insurance on their own. In that case, employers must provide a "free choice voucher" reflecting what the firm would have paid to provide coverage in the company insurance plan that the employee refused. If the employee rejects both these options, their decision could put them in line to pay their own penalties courtesy of the individual mandate mentioned above.

The Senate bill sweetens the deal for employers, particularly small businesses with fewer than 50 employees. Starting this year, small businesses will get a tax credit of up to 35 percent of the employer's insurance contribution for providing health insurance even though they are not mandated to do so. Employers with 25 or fewer workers and average wages of $50,000 or less also qualify for credits--while employers with 10 or fewer workers and average wages of less than $25,000 get a full credit of up to 35 percent of the costs of insurance premiums between 2010 and 2013. That credit goes up to 50 percent after 2013.

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