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May 25, 2013

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First changes would start six months after health bill becomes law

Insurance companies would have to alter some practices

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Even as Congress draws closer to passing historic health care reform legislation, many Nevadans remain confused about what the overhaul would mean to them.

Campaigns have been fierce on both sides of the debate, often spreading misinformation that distorts the facts (remember “death panels”?) or glossing over the hard realities (everyone must buy insurance or pay fines).

Here, as simply put as possible, is an attempt to answer the question: What’s in the bill?

Immediate changes this year

Six months after the bill is signed into law, insurance companies would be banned from some unpopular practices — no more rescinding coverage when policyholders get sick, imposing lifetime financial caps on coverage or denying coverage for children with pre-existing conditions.

Insurance companies would also be required within six months to allow parents to keep children up to age 26 on health care policies, unless their offspring are offered employer-backed coverage.

This year, the government would offer a $250 rebate to Medicare beneficiaries to help pay their prescription drug costs when they hit the “doughnut hole,” a gap in coverage under existing law. Next year, Medicare beneficiaries would see a 50 percent discount on brand-name drugs to further close that gap.

Within 90 days, a temporary high-risk pool would be created for those who are uninsured because of pre-existing medical conditions, allowing them to immediately buy insurance until new health care exchanges — marketplaces with a range of companies offering insurance policies — are up and running.

These are among the most popular aspects of health care reform, according to polls.

Less popular? Effective immediately would be a 10 percent tax on tanning salon services, which opponents say would lead to higher costs for indoor bronzing.

Personal penalties

Every American, beginning in 2014, would be required to buy insurance or pay a penalty. Subsidies would be offered to help those making less than $44,000 or $88,000 for a family of four, afford insurance.

Fines would be $95 in 2014, gradually rising to $695 by 2016, or up to 2.5 percent of income.

Proponents believe requiring insurance widens the risk pool so costs come down for all; opponents say buying health care should remain a choice.

Employer penalties

Companies with more than 50 workers would be required, by Jan. 1, 2014, to provide health care for their employees or face a penalty of $2,000 per worker (exempting the first 30 workers.)

Up to $40 billion in tax credits would be offered to help companies buy insurance for their workers.

The National Federation of Independent Businesses believes the requirement would be an unaffordable burden on small companies. But Small Business Administrator Karen Mills estimates that only 10,000 small businesses, among 6 million nationwide, would not qualify for the tax credit.

Affordability tax credits

To help individuals and companies afford health care, the government would offer a range of subsidies and tax breaks.

For individuals: Beginning Jan. 1, 2014, those making less than $44,000 annually, or $88,000 for a family of four, would be offered subsidies to buy health care. The subsidies would be on a sliding scale up to 9.5 percent of income.

For small businesses: Beginning this year, companies would be offered tax credits of up to 35 percent of health premiums to buy insurance for their workers. Tax credits would rise up to 50 percent by 2014. Those businesses with fewer than 10 workers would receive a full credit to cover costs.

New taxes on individuals

New taxes would be imposed, beginning Jan. 1, 2013, on individuals making more than $200,000, or $250,000 for couples. Taxes would be 0.9 percent on earned income above those amounts, and 2.9 percent on investment income (dividends, rents, royalties, etc.)

New insurance policy taxes

New taxes would be imposed, on Jan. 1, 2018, on high-value health insurance plans held by individuals — the so-called “Cadillac plans” often offered to union workers or executives.

The tax would be 40 percent on the value of individual plans above $10,200 and family plans above $27,500 (slightly higher, at $11,850 and $30,950, for retirees or workers in high-risk professions.) Excludes dental and vision plans.

This was a major concession in pushing the start date to 2018 made by the Obama administration to the labor unions, which fought the tax over concerns it would snare their members.

New health industry taxes

Pharmaceutical companies would face a $4.8 billion fee beginning in 2011; medical device manufacturers would be hit with a 2.9 percent fee in 2013; and insurance companies would begin to see a nearly $70 billion fee in 2014.

The insurance industry believes many of these fees would be passed on to consumers, raising their costs.

Medicare Advantage

Government payments to the Medicare Advantage program would be frozen in 2011 and decline in subsequent years.

Proponents say Medicare Advantage payments need to be reduced because the popular program costs the government 14 percent more than traditional Medicare. They say seniors on traditional Medicare end up paying higher premiums to cover the costs of Medicare Advantage.

Opponents warn that insurance companies may stop offering Medicare Advantage programs if payments from the government are cut.

Exchanges, the public option and temporary high-risk pool

By Jan. 1, 2014, most states would establish new health care exchanges, where those without job-based insurance could purchase policies, much the way members of Congress now buy insurance from an array of suppliers.

There would be no public option or government-run program. All companies on the exchange would be private providers.

A temporary high-risk pool would be established to offer insurance to those who are uninsured because of a pre-existing medical condition.

This is only a snapshot. Reforming health care is complicated. That’s why the bill runs 2,400 pages. That is also why every other political attempt in this country to provide universal health coverage, as most other leading nations do, has failed.

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