Health Care Reform

On March 30, in the most striking accomplishment of his presidency, President Obama signed the final piece of legislation that restructures access to health insurance for most Americans. 

It’s good to remember this legislation doesn’t directly change health care as you would receive it from a doctor or hospital, despite what you’ve heard.  It provides access to health insurance for up to 32 million Americans who are currently uninsured. And, it does so by doing two fundamentally simple things. 

 

First, the law requires all Americans to purchase health insurance, or to make a reasonable payment for not doing so.  Second, it requires certain taxpayers with high income to pay additional taxes.  More detail is discussed below, but simply, that’s it.

 

Once the legislation has been fully phased in, the vast majority of Americans will no longer have to fear bankruptcy because they, or an insured family member, have a catastrophic illness.  No longer will health insurance providers refuse coverage because of pre-existing conditions. Restricted lifetime limits on insurance benefits will be a thing of the past.  Full time students and college graduates can stay on their parents insurance until age 26.  And, those who change jobs, find themselves out of work, or are subject to divorce, will be able to find affordable health insurance with reasonable coverage. 

 

There are other attractive insurance enhancements that are provided by the law, but those described above will be of benefit to most Americans.

 

Details

 

In order to better understand the new law, some discussion about its detail is in order.  A more extensive, and more complicated, explanation of the new health insurance legislation can be found on the White House website.  A simple explanation follows here with detail that will be of interest for most people.

 

As mentioned above, some will decide to opt out of health care coverage.  In order to offset the inevitable cost of health care for those who make this choice, a payment will be required.  This payment will be either a flat amount, or a small percentage of income, whichever is higher. 

 

For those who meet certain hardship criteria, or whose income is below a certain threshold, financial assistance for the purchase of health insurance will be made available.  Taxpayers with high income will be required to pay additional taxes on earned and investment income, and will be subject to phase outs for tax exemptions and deductions above certain thresholds.

 



 

Those who currently have employer provided health insurance will be able to keep it, with the added benefit the enhancements I’ve previously described.  For the unemployed or those who are employed but uninsured through their employer, another health insurance alternative, a health insurance exchange, is available. 

 

The law provides for the establishment of health insurance exchanges on a state by state basis.  These exchanges will offer policies provided by commercial health insurance firms.  These firms will compete for customers based on cost and quality of coverage.  They must also provide a minimum level of coverage that is expected to be substantially similar to the current Blue Cross-Blue Shield Standard Plan for federal employees.

 

The next article on this topic will discuss the impact of the new healthcare law on Medicare, Medicaid, and access to primary care doctors.