By David A. Love
Congress has just passed the most sweeping health care reform in America in the past fifty years. This is a great opportunity to look beyond the puffery, political posturing and demagoguery surrounding the legislation, and examine how it will really affect the average person.
PRICE TAG. The Congressional Budget Office (CBO) says the bill will cost $940 billion over 10 years.
SAVINGS. According to new CBO estimates, the measure will save $143 billion 2019, and reduce the deficit by $1.2 trillion in the second ten years.
NUMBER OF PEOPLE COVERED. 32 million uninsured people will be insured when coverage begins in 2014. Although not universal coverage, 95 percent of Americans will have health coverage, as opposed to 83 percent today.
EXCHANGES. Starting in 2014, the uninsured, small businesses and self-employed individuals can select coverage through state-run exchanges, pools that provide the same types of purchasing power as big corporations. Undocumented immigrants are not allowed to participate in the exchanges, even if they pay for it entirely from their own funds.
REFORMS. Insurance companies cannot deny children coverage based on a preexisting condition six months after passage. Beginning in 2014, insurance companies may not deny coverage to anyone with a preexisting condition. Children can stay on their parent’s insurance plans through age 26. Insurance companies are barred from arbitrarily dropping policy holders. In addition, insurers must spend at least 85 cents of every premium dollar on medical care in small group markets, and 80 cents in large group markets. Medicare Advantage plans are required to spend at least 85 percent of revenues on medical care.
ABORTION RESTRICTIONS. No health plan would be required to offer abortion coverage. Private insurance premium funds that pay for abortions are segregated from taxpayer money. As a gesture to anti-abortion Democrats who threatened to vote against the bill, a White House executive order extends the Hyde Amendments restrictions on abortion to the newly-created health insurance exchanges.
MANDATES. Nearly everyone is required to purchase insurance or pay a $695 annual fine. Low-income people are exempt. This feature takes effect in 2014. Although an employer mandate does not exist, employers with over 50 workers will be fined $2000 per employee per year.
SUBSIDIES. People who make between 100 percent and 400 percent of the federal poverty level will be eligible for subsidies to purchase insurance. Premiums for a family of four making $44,000 would have a cap of about 6 percent of income.
REVENUE SOURCES. The plan will be paid for with a 10 percent tax on indoor tanning services; a Medicare payroll tax of 3.8 percent for families earning over $250,000 and individuals making over $200,000; and a 40 percent tax paid by insurance companies on plans over $27,500 for families and $10,200 for individuals.
MEDICAID. The government health insurance program for poor Americans would be available to everyone with incomes up to 133 percent of the poverty level, which is $10,830 for an individual and $22,050 for a family of four.
MEDICARE. This legislation cuts $500 billion in Medicare over ten years, and closes the Medicare prescription drug donut hole by 2020. Seniors who are hit the donut hole gap in coverage by 2010 will receive a $250 rebate. In 2011, such people will receive a 50 percent discount on brand name drugs.
STUDENT LOANS. The health care legislation has eliminated banks and private lenders as middlemen in the federally-guaranteed student loan market, for a savings of $60 billion over ten years. This means more money for Pell grants and HBCUs.
PUBLIC OPTION. A government-run insurance plan, although popular, is missing in the measure. This was due to a lack of will in Congress. Consumers who purchase health insurance through national exchanges could purchase private and nonprofit plans through a federal agency that oversees the Congressional health plans. However, Senate majority leader Harry Reid (D, Nevada) promises a vote on the public option in the coming months. A public option could save an additional $110 billion over 10 years. Meanwhile, a single-payer system, a truly universal, government-run system in which one agency finances the nations health care could save the U.S. over $350 billion annually.