Now that health care reform is a done deal in the U.S., it’s time to start looking at how it might affect our American readers in terms of their finances. It is well known that Americans pay more for health care than any other developed country, and it is well known that health care costs in the U.S. continue to skyrocket. But, while these wider issues are discussed, here are some of the basics of what health care reform means to you, on a more personal level.
Requirement to Buy Health Insurance
The biggest change is that most Americans will be required to purchase health insurance. This provision doesn’t kick in until 2014, so you have some time to consider your health insurance options, including a high deductible plan paired with a Health Savings Account. You can be exempted from the requirement to purchase health insurance if you can show financial hardship, that the health insurance goes against religious beliefs, or if you are American Indian. There will be financial penalties starting in 2014 for those who don’t purchase insurance. The penalty starts at 1% of income and rises to 2.5% of income by 2016.
Starting in 2014, Medicaid will be expanded so that more people qualify, including low-income adults without children. For those who still don’t qualify for Medicaid, and can’t afford health insurance, there will be state-based insurance exchanges. If you can’t afford health insurance, you could be eligible for sliding-scale subsidies to help you pay your premiums.
Getting Health Insurance Coverage
Starting in 2014, insurers can’t reject you for coverage based on your health status. For now, a high-risk insurance pool will be created on a temporary basis to make sure that those who have been rejected and uninsured for at least six months can get access to health coverage. Also starting this year, insurance companies have to cover pre-existing conditions in children. This could make it more affordable for some parents to get help for chronic diseases and other problems affecting their children.
Policies sold on insurance exchanges will have to cover doctor visits, prescriptions, preventative tests, maternity care and hospitalizations, possibly making these items more affordable in some cases where they have not been available.
Starting this year, lifetime limits on coverage are to banned, and in 2014, annual limits on coverage will be disallowed. Children will be able to remain on their parents’ insurance policy until the 27th birthday, as long as there is no insurance offered through the child’s work. Those in their 20s will have the option to buy a “catastrophic” plan with lower premiums and coverage that kicks in after $6,000 in out of pocket expenses.
Medicare
If you have Medicare, you are probably aware of the “doughnut hole”. This year seniors are getting $250 to help cover prescriptions in this area. Subsidies and discounts will eliminate the gap over the next 10 years, so that by 2020 those seniors paying 100% of their prescription costs will only pay 25% of them eventually. Preventative services through Medicare will all be free starting this year, providing a cost-effective way to receive screening for different cancers and other preventative care.
For those who have been enjoying some of the more lavish benefits of Medicare, there will be cuts. Starting in 2011, benefit cuts for things like hear aids, eyeglasses and gym memberships will be cut, phasing the cuts over the course of seven years.
Taxes
As you might imagine, health care reform is going to affect taxes, and even deductions. The Congressional Budget Office (CBO) says that this bill will actually pay for itself — and reduce the deficit in 10 years. That doesn’t just happen magically. Here are some of the changes to taxes as a result of health care reform:
- Couples earning more than $250,000 a year, and individuals earning more than $200,000 a year, will see an increase from 1.45% Medicare tax to 2.35% starting in 2013.
- Those with the higher income listed above would also see a 2.8% tax on unearned income (interest and dividends).
- Starting in 2018, a 40% excise tax would be imposed on the portion of employer-sponsored “Cadillac plans” that exceeds $10,200 a year for individuals and $27,500 for families.
- The threshold for deducting medical expenses (unreimbursed) would be raised to 10% of income from 7.5%, so many will lose the current tax deductions they tax advantage of.
- Starting this year, those who make use of indoor tanning facilities will pay a 10% tax.
- Starting in 2013, your tax-advantaged flexible spending account contributions will be limited to $2,500 for medical expenses.
Premiums
It is hard to tell what this will do to your insurance premiums. Whether or not this bill will actually keep a lid on costs is now being debated. There are some arguments that, for individual plans, unhealthy people will see lower premiums, while the healthy see the same or higher premiums. Those who end up receiving subsidies, reports the CBO, will see an 11% decrease in their premiums, and those with small group coverage are expected to see their premiums remain the same. Big employers are expected to see premiums stay flat or drop by as much as 3%.
It’s time to look over your health insurance, and make plans for what the future most likely holds for you, depending on your current situation, and the possibilities for health insurance going forward.
How will the Health Care Reform Affect you?
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Article by Miranda
Miranda is journalistically trained freelance writer and professional blogger. Her work has appeared in a number of media, online and off, including Discover magazine, Huffington Post, CNN Money and NPR.
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@mike
“The average premiums for those who buy insurance on their own would go up, however, by 10 percent to 13 percent. The reason is that benefits would become a lot better for this market under the bill. Also, most people buying their own coverage would receive subsidies that make their net costs for these plans substantially lower than they otherwise would be.”
From factcheck.org. Link me to the bill wording if you know differently, as everything I can get on the subject doesn’t agree with your assessment.
Brad: “Jennifer with all do respect it has nothing to do with NOT wanting to help others, and NO I don’t want to give the Government anymore of my money to waste. ”
Yes, Brad, I agree there are Government (a.k.a. PUBLIC) inefficiencies, but must we ignore the inefficiencies (and greed) in the PRIVATE sector. Many well known non-profit charities today secretly charge 40-60% administrative expenses, taken out of our charitable donations. Hey, but we are getting our tax breaks for our donations, so no worries, right?
Brad: “I really hate when people classify it as selfish to disagree with this over reaching 2,000 some page health care bill, that will put our kids in debt. ”
Medical care is without a doubt a complicated subject. How can the legislation be otherwise?
The CBO countless times as shown that this new Law will REDUCE the deficit by the end of the first decade and even more by the end of the second decade. I’m curious which generation of children will pay for the unnecessary Iraq War. Why is so much harder financially to take care of ourselves than lash out at foreign countries with our “Defense” spending?
Brad: “But hey as long as your insurance is cheaper right?”
Cheaper? No. I think we would all at LEAST want health care premiums to not increase dramatically faster then increases in income, like they have for the past two decades. Call me crazy, but it sounds like it would make more financial sense to try something different, right?
Brad: “I think it could be said that the ones benefiting the most are selfish since mostly anyone is able to get health care already.”
So the vast majority of the 40+ million people in he U.S. without health insurance are just choosing not to have health insurance but they could get if they wanted it?
Brad: “You’re also ignoring the fact that people still die in other countries where the care is universal. ”
I guess I was aware that Universal health care promised immortality.
Brad: “It’s going to save a few at the expense of others so no lives will actually be saved.”
So we will SAVE a few at the expense of others but no one will be SAVE? I’m just going to let that stand on it’s own with out comment. It speaks for itself.
Brad: “Ever heard of rationing care?”
I’ve heard of it. It happens today in the U.S. for decades now and the insurance company agents on the phone are the one-man “death panels” I hear so much about.
Brad: “How can people (you) so blindly trust a Government that has proven to be most inefficient in other areas of finance and “helping” others. ”
PUBLIC versus PRIVATE. The Private sector from banks to individuals has shown poor financial skills over the past decade. Why is that we should trust them over the State/Federal governments? Yes, State government who will run their Insurance exchanges.
Brad: “What makes you think that them managing and overseeing “this” project will yield different results?”
I quote Benjamin Franklin, “The definition of insanity is doing the same thing over and over and expecting different results. ”
Why should we continue with the same health care system which has annual premium increases that the middle class soon will no longer be able to afford. I say let’s try something different and if it doesn’t work, modify the plan as you go.
Brad: “I’ll admit, the gift wrap sounds great but the package contained inside is pure crap. Read it!”
I doubt you’ve read the bill at all. You expect us to believe that you read the 2,000 page bill? Oops, sorry I mean … LAW. You are far more likely to have been handed your talking points, told by the usual suspects like: Beck; Hannity; Palin; Rush; Rove; Chenney, etc.
Brad, I think you need to sit down and take the shot in the arm. We’ll give you a lollipop and send you on your way, son. You’ll be smiling before long and you’ll forget you even had a shot.
and that figure comes directly from the CBO’s report:
http://cbo.gov/ftpdocs/107xx/doc10781/11-30-Premiums.pdf
The end of page 4.
@ Mike,
Mike, I think as someone above me responded there are provisions in the bill to help you pay if you are financially unable to come up with the cost of insurance.
Also this question is to you and the others who seem to have issue with paying for insurance. Why is ok for me to have my premiums and co pays rise because people like would rather not buy insurance. If you fall down the steps and break you leg and end up in the ER the rest of us actually do pay for insurance are picking up your tab now. I don’t see why thats acceptable. But when someone asks you to pay for your own there is the grumbling from some people who feel they will not get sick or never have medical emergency. You and everyone else who opposes the mandate cannot predict something that you will never need medical care. Sounds like mandating insurance is the fairest way to address a problem to make things fair to everyone.
Jennifer, I agree with Brad. A major problem is that the government can’t do it because it is inherently inefficient: it breeds corruption and it has to spend a major percentage of OUR money just to regulate the mess.
As someone put it, government run ( “socialized”) healthcare is like giving a transfusion from your right arm to your left arm, only you spill half the blood on the floor in the process. We are heading in the wrong direction.
Take Medicare, for example. It is a complete financial disaster. Yes, it provides aide to our elderly, but the government has mismanaged Medicare so poorly that the cost is just staggering. We may not feel it now in our fake economy because we have been borrowing the money from the rest of the world to fund it, but one day soon we will. The outstanding debt on medicare – what the government owes to date that the WE taxpayers are going to have to pay for – is something like 30 TRILLION dollars. That’s more money than the US takes in from other countries per year 20 times over. We are in deep, deep, trouble financially.
And that’s just Medicare. The government cannot even run a post office without bleeding money. As soon as government sticks its fingers into anything, costs go way up. This exact reason why health care costs so much now. For example, the government allows the AMA to control the supply of doctors; The government protects insurance companies from competition; government supports pharmaceutical companies research through NIH, CDC, NSF and grants to universities; the government supports the legal industries costly tort regulation of healthcare quality; lastly the government allows the american public, tax breaks, employer provided can overuse health care to the hilt. The problem is not lack of regulation or lack of government involvement.
The status quo of building bigger and bigger government, which every administration on both sides of the isle have adhered to for a long time has bred a monstrosity so large it is sucking our economy completely dry. (Obama is no exception, he is just doing what Clinton and Bush have) If we don’t change course soon, any semblance of the standard of living (and standard of health care) we are now accustomed to will be impossible. We’ll become a 3rd class country.
The deeper problem is, no one has a right to health care. The whole health care industry is fringed with the assertion that we can save lives. (and how covenant for their profits!) But this is nonsense: the doctor’s job is to ease suffering, not help us try to live forever. Mark Twain said, chasing after your health is like buying a cow that has gone dry. In the end, you will die healthy. That’s a shame because of what is lost in the middle: the society we have now is so crazed with trying to save life, we’re becoming incapable of living!
@Gordon
Like I was stated earlier. This is NOT GOVERNMENT RUN INSURANCE. That would have been the Public Option or a Single Payer system. The insurance is still being run by insurance companys.
I also disagree that some how people who cannot afford health care some how not entitled to live?!? I think poor people should have the same chance to live as rich. Thats some messed up logic when it better to just let people die. Its might be one thing to keep someone alive on a respirator when there is pretty much zero chance of recovery. Buts its another to say ahh lets not treat that curable disease because you would just live longer when we know you are going to die someday. Talk about dealth panel..That pretty much is one.
Another thing you left out of the post office issue is called EMAIL. How much revenue has been lost since the advent of the internet? I don’t think all the financial issues with the post office is just because its not ran correctly.People don’t mail letters like they used to. To be honest ever think about how much mail is still sent on a daily basis and it for the most part reaches its destination in a timely manner. While im sure there is always going to be the story of the guy whos package got lost but for the most part the post office does what it supposed to do. I personally have had more delivery’s screwed up by UPS than I ever have from sending something through the post office.
Hey if you want to save money and shrink government. How about starting with the 2 pointless wars. Yes I said pointless. The amount of money spent will never be justified. We are never going to stop every evil doer who dislikes America. In fact your risk of getting killed in a Terrorist attack in this country before 911 was less than getting struck by lighting. I don’t see anyone in the government looking to provide every citizen with a personal lightning rod. But we can somehow justify spending trillions to kill 100 terrorists training on monkey bars in the middle of the desert. Waste of money!
@andy
Vague statements are useless, and one could argue they are just propaganda. Let’s analyze your quotes:
“The average premiums for those who buy insurance on their own would go up, however, by 10 percent to 13 percent.”
That is talking about the “average” – and I’ll assume then the “average” person has what I would call a “cadillac” plan – where almost everything is covered with a small co-pay. I am still getting completely screwed by this bill because I happen to be self-employed and not poor and don’t want a health plan where I pay a boatload of money every month for services I don’t use.
“The reason is that benefits would become a lot better for this market under the bill. ”
I don’t care if the benefits are “better” – I want fewer benefits at lower cost. Or at least not 3 to 4 times the cost I am paying now.
“Also, most people buying their own coverage would receive subsidies that make their net costs for these plans substantially lower than they otherwise would be.”
I guess people that don’t fall in the “Most” category get screwed. I think most people would call an $80k/yr family middle-class in “most” parts of this country, and they’re getting ZERO subsidies.
These rough figures appear in many documents, for example page 2 of:
http://www.cbo.gov/doc.cfm?index=10884
“Overall, CBO estimates that premiums for Bronze plans purchased
individually in 2016 would probably average between ” … ” $12,000 and $12,500 for family policies. ”
and here is what is covered in the minimum plan for people over 30:
http://www.opencongress.org/bill/111-h3590/text
SEC. 1302. ESSENTIAL HEALTH BENEFITS REQUIREMENTS.
(a) Essential Health Benefits Package- In this title, the term ‘essential health benefits package’ means, with respect to any health plan, coverage that–
(1) provides for the essential health benefits defined by the Secretary under subsection (b);
(2) limits cost-sharing for such coverage in accordance with subsection (c); and
(3) subject to subsection (e), provides either the bronze, silver, gold, or platinum level of coverage described in subsection (d).
(b) Essential Health Benefits-
(1) IN GENERAL- Subject to paragraph (2), the Secretary shall define the essential health benefits, except that such benefits shall include at least the following general categories and the items and services covered within the categories:
(A) Ambulatory patient services.
(B) Emergency services.
(C) Hospitalization.
(D) Maternity and newborn care.
(E) Mental health and substance use disorder services, including behavioral health treatment.
(F) Prescription drugs.
(G) Rehabilitative and habilitative services and devices.
(H) Laboratory services.
(I) Preventive and wellness services and chronic disease management.
(J) Pediatric services, including oral and vision care.
So, just about everything is covered, and somewhere in there I saw language explicitly requiring co-pays – not co-insurance, which would actually let people see the true costs and decide if they really needed that test or procedure.
@G
I’m assuming you’re talking to me and not some other Mike, but
I don’t think you read my post – I am paying for insurance – I pay $300/mo premiums, pay for doctor visits out of pocket, and my high deductible plan covers anything big. I make sure I have enough in the bank to cover the high deductible “just in case”
And because we make just over $80k/year, we get ZERO subsidies.
If you want to mandate insurance, mandate insurance that makes people responsible for their health, and doesn’t drive costs through the roof.
@andy
An earlier post of mine is awaiting moderation – maybe cause it was too long or manybe due to urls included. In short, your quotes are vague and look like propoganda – yes some people will benefit but many hard working people will suffer disproportionately.
See page 2 of http://www.cbo.gov/doc.cfm?index=10884
for the $12,000 minimum cost and
SEC. 1302. of http://www.opencongress.org/bill/111-h3590/text
for the minimum requirements. I’m done with this site.
G
I completely agree with you about all the money spent on wars, of which we are also indebted to other countries for. That 30 trillion is just what we currently owe for Medicare alone, not to mention our outstanding debts for all the other government messes we have let them create. We can’t pay for it all.
The problem is this just sticks government and us much deeper into the hole we already can’t get out of without severe consequences. This move is in the wrong direction because it does nothing to address the fundamental diseases plaguing our health care industry, which ARE caused by government involvement.
Doing the same thing over and over, (only larger ), and expecting a different result is the definition of insanity.
@andy
Sorry for the potential dup posts everyone, apparently links make posts stuck “waiting for moderation” – so I’ll try one more time:
In short, your quotes are vague and look like propaganda – yes some people will benefit but many hard working people will suffer disproportionately.
See page 2 of cbo dot gov index 10884 for the $12,000 minimum cost of a bronze plan (catastrophic plans only available if you are under age 30) and see
SEC. 1302 of bill hr 3590 available from a variety of sources including opencongress dot org.
I’m done with this site, thanks for the discussion.
Not to mention. These tax dollars will also go towards abortion. Hope everyone is okay with that.
@Mike
I stand corrected. I did misread your post. Apologies. I do not know 100% of any subsides are available for you. But on the other hand if your insurance company wants to start raising your premiums they are going have to prove it is justified. I think there is a provision in the bill that a certain amount of you premiums is going have to go to actual medical costs. And if the insurer can not prove it they have to refund the over charges.
There may some ways to bring down some of your costs by seeing what ends up being available to people when the insurance exchanges become available. For me personally who also makes around the same yearly income as you do might not see a whole lot in savings in cost. I never know when I am one illness or job loss away from being is the same boat as the guy who is working for $10 and hour and there i no way he is going to be able to pay for insurance for his family from out of pocket expenses alone. While the bill is by no means going to fix everything for everyone. I do think the positives out weigh the negatives over just let things continue like they are now. That is with insurance companies being able to drop and pick and choose who they insure and don’t insure at the drop of hat or when you actually get sick and need the insurance.
@G
Ask anyone on either side, insurance company profits only account for between 1% and 5% of health care costs. When they raise rates 39% it is not arbitrary, it is because hospitals, doctors, etc. are charging more, and people are demanding more tests, more procedures, etc. under their plans. Health insurance company stock has skyrocketed because of this bill, it is helping them not controlling them.
I know there are problems with the current system, especially for the self-employed, but the bill makes things much much worse, not better. To say that “the positives outweigh the negatives” is easy for anyone to say that won’t have to pay at least $1000/mo for something they don’t want. Obama said if I like my health care I can keep it – a complete lie – anyone who buys into his rhetoric is going to end up getting burned sooner or later.
“Ask anyone on either side, insurance company profits only account for between 1% and 5% of health care costs. ”
It’s very easy to pay the top executives huge bonuses and count it as expenses reducing the “profit” to below 5%. It’s done in business every damn day.
This bill isn’t about helping the unfortunate, or bringing care to those who can’t afford it. It’s about the government taking more control of our lives. It forces people to have insurance, even the ones who don’t want it (like some college students). It takes away our freedom to choose! It’s the first step on the way to single payer health care and socialized medicine where the government will say which doctor you can go to, how long you have to wait, and they’ll tell doctors how much they will make.
Some of you are saying that “only the taxes on those making over 200k will go up”. Ok, let’s put that aside as to whether that’s ok or not – but do any of you really think that premiums aren’t going to go up for those with private insurance? When they kill the ability for insurance companies to put caps on coverage, or to exclude people due to prior illness, or charge more to people who use more health care – of course rates are going to go up for everyone – except the ones who are unhealthy! So even though your taxes don’t go up, your rates will. And since the government can subsidize their own public health care plan up the wahoo, of course people are going to switch to the cheaper government plan, which will mean the insurance companies can’t compete and will die in the long run.
And when health care becomes more affordable, guess what – more people go to the doctor for small things, meaning that your health care is more utilized and less available and health care will have to be rationed. Look at any of the countries that have socialized medicine – waiting periods of months to get a CT scan, see a specialist or have an important surgery. And NO, the health care ISN’T free, it’s just paid for in a more roundabout way – high taxes!
Also, the fact that they’re trumpeting this whole “the bill reduces the deficit” just goes to show how tricky they can get with the numbers. They’ve left off certain provisions that were previously in the bill like the medicare payments”doc fix” that would have made it increase the deficit, because by leaving it out of the bill they could claim that it would reduce the deficit. The CBO numbers can only account for the things they’ve been sent in the bill, so garbage in, garbage out.
I recently read a quote from 19th century Scottish historian Sir Alex Fraser Tytle:
A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largess from the public treasury. From that time on the majority always votes for the candidates promising the most benefits from the public treasury, with the results that a democracy always collapses over loose fiscal policy
Sounds like we’re headed down that road.
@Mike
BTW, doctors and hospitals raise their prices because their own insurance increase !
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