In 2010, President Barack Obama signed healthcare reform into law with the Patient Protection and Affordable Care Act (PPACA). At over 2,074 pages, PPACA is one of the most historic– and most confusing – pieces of legislation to come out of Washington.
So what does health reform mean to you? Here’s a look at what’s in the bill.
Why reform?
The Affordable Care Act was designed to address two major issues in our current healthcare system: affordability and gaps in coverage.
As many families know, health insurance is costly and is only getting more expensive. In the last decade, premiums have nearly doubled. The average home now spends $14,000 a year on health insurance.
Rising healthcare costs are also at the heart of our nation’s current debt crisis. Because of our aging population, the federal government has seen an explosion in spending on healthcare programs. According to the Congressional Budget Office (CBO), entitlement programs like Medicare and Medicaid account for 21 percent of our current budget. They estimate that by the end of the decade, Washington will be responsible for nearly half of all healthcare-related costs.
The current system is also filled with a number of holes that leave many Americans uninsured. Restrictions on pre-existing conditions and lifetime coverage caps often place insurance out of reach for people who need coverage the most. These gaps, combined with a struggling economy, have left an estimated 49.1 million Americans in need of insurance coverage, according to the Kaiser Family Foundation.
What does reform do?
The current healthcare law seeks to address these problems by implementing insurance reform measures and re-organizing the healthcare system to make it more cost effective.
Changes in the healthcare law won’t be fully in effect until 2014, but a number of reforms kicked in immediately after President Obama signed the law in 2010.
As of now, those that are currently on Medicare will get more money to help with their prescription drug costs. The bill also provides certain preventative services free of charge.
Insurers are also limited on how they can spend premiums. If they spend too much money on items like administrative overhead, they could be forced to give rebates back to their customers. They will also be prohibited from placing lifetime limits on health plans.
Children with pre-existing conditions can no longer be denied coverage, and parents can keep children on their insurance policies until they reach the age of 26.
Beginning in 2014, a second wave of reform measures will go into effect.
The most significant of these is the individual mandate, which requires you to purchase health insurance or face a $695 annual penalty. Businesses with more than 50 employees must offer insurance plans or pay of fine of $2,000 per worker each year.
If you are unable to get healthcare coverage through your employer, you will be eligible to buy a plan through a government-run health are exchange. Think of the healthcare exchange as a virtual swap meet -- depending on where you live, you will have a choice of approved health plans to choose from depending on your personal needs.
In addition to the creation of a health exchange, Medicaid will also be expanded to include low-income individuals. And if you lose your job, you could qualify to receive an insurance tax credit to help you buy your own coverage.
Finally, insurance companies will no longer be allowed to deny you coverage if you have a pre-existing condition.
How will this be paid for?
Reforming the healthcare system is complicated and does not come cheap. Latest figures from the CBO estimate that reform will cost taxpayers over $1.083 trillion in the next decade.
The bill proposes that the costs be paid for through a combination of savings in the healthcare system and new taxes.
Savings on health costs will mainly come from the Medicare program. Insurance companies and hospitals that provide Medicare will be paid less. The bill also creates the Independent Payment Advisory Board (IPAB), which will make recommendations on how to make Medicare more cost effective. Opponents of the healthcare bill have often referred to IPAB as “death panels” because of fear that cost containment measures will lead to rationing of healthcare services.
In addition to savings through Medicare, the bill will mainly be paid for with new taxes. Those with higher incomes will pay a higher Medicare tax. There will also be new levies on insurance companies and businesses who offer high-end health plans and on medical device companies. A 10 percent tax on indoor tanning services will also be charged to help pay for the bill.
Challenges ahead.
Public opinion is evenly split on the health reform law, though a majority of Americans – nearly 67 percent - are opposed to the individual mandate that requires the purchase of health insurance.
A number of states have filed lawsuits against the federal government, challenging the constitutionality of the individual mandate. In March of this year, the Supreme Court heard arguments over the law and is expected to publish a ruling this summer over whether or not health reform will stand.
The presidential election of 2012 could also alter the implementation of healthcare reform. Republicans have promised to repeal the healthcare law if they take back the White House and Senate in November.
Stay tuned as we continue to follow this ever-important, and often controversial, topic.
Cited Sources
"Policy Basics: Where Do Our Federal Tax Dollars Go?" Center on Budget and Policy Priorities, 2 Apr. 2012. Web. 19 May 2012. <http://www.cbpp.org/cms/index.cfm?fa=view>.
The Uninsured: A Primer. Rep. The Henry J. Kaiser Family Foundation, Oct. 2011. Web. 17 May 2012. <www.kff.org/uninsured/upload/7451-07.pdf>.
Jackson, Jill, and John Nolen. "Health Care Reform Bill Summary: A Look At What's in the Bill." CBSNews. CBS Interactive, 21 Mar. 2010. Web. 19 May 2012. <http://www.cbsnews.com/8301-503544_162-20000846-503544.html>.
Lawder, David. "CBO Cuts Cost Estimate for Obama Healthcare Law." Yahoo! News. Yahoo!, 13 Mar. 2012. Web. 19 May 2012. <http://news.yahoo.com/cbo-cuts-cost-estimate-obama-healthcare-law-012952341.html>.
"Santorum Says Americans 'overwhelmingly' Oppose Health Law, Mandate." PolitiFact. Tampa Bay Times, 29 Mar. 2012. Web. 19 May 2012. <http://www.politifact.com/truth-o-meter/statements/2012/mar/29/rick-santorum/santorum-says-americans-overwhelmingly-oppose-heal/>.
Carrns, Ann. "Health Insurance Deductibles Doubled in 7 Years, Study Finds." Bucks Blog. New York Times, 27 Jan. 2012. Web. 19 May 2012. <http://bucks.blogs.nytimes.com/2012/01/26/family-health-insurance-costs-doubled-in-7-years-study-finds/>.
Summary of New Health Reform Law. Rep. The Henry J. Kaiser Family Foundation, 15 Apr. 2011. Web. 19 May 2012. <http://www.kff.org/healthreform/8061.cfm?source=QL>.
