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Health Care Reform Time Table

For better or worse, a health care reform bill, the Patient Protection and Affordable Care Act, was passed earlier this year.  While the most significant modifications take place in 2014, the transformation of our health care system begins this year.  All of us will be affected by the rollout of this bill whether we are insured by our employers, self-insured or not insured at all.  Companies and industries will also face far-reaching change, but what we are covering here will be the changes we, as individuals, will experience.

Many details of the 2700+ page bill are still being defined but here’s what we know so far:

2010

  • Individuals without insurance because of a pre-existing condition may apply for help to purchase insurance through a temporary $5 billion federal fund.
  • $250 is being mailed to individuals whose drug purchases through Medicare Part D have exceeded $2830.  This is the first step in eliminating what’s known as the ‘doughnut hole’.
  • Qualifying small business can count 35% of employee health insurance as a tax credit thereby increasing the number of people insured through their employer.
  • Insurance companies cannot cancel coverage because of illness.
  • Preventive care is covered by new insurance policies without requiring  co-payments. This includes blood pressure, diabetes, and cholesterol tests; many cancer screenings, obesity screening, counseling for quitting smoking, losing weight, treating depression and reducing alcohol use; routine vaccines, such as measles and polio, flu and pneumonia shots, and other services.
  • Adult children 26 years old and younger are now covered under their parents’ health insurance
  • Life-time limits on health insurance coverage are no longer allowed
  • Children with pre-existing conditions cannot be excluded from parents’ health insurance policies

2011

  • Drug companies must discount brand name drugs sold to individuals in the  Medicare Part D coverage gap 50%, further closing the ‘doughnut hole’.  A government subsidy of 7% reduces the cost of generic drugs to these individuals as well.
  • Chain restaurants and vending machines for food must post the nutritional content of each item.
  • An additional $11 billion will fund community health centers.

2012

  • The government subsidy of Medicare Part D generic drugs for people whose  drug costs have reached the coverage gap is increased to 14%, further closing the  “doughnut hole”.

2013

  • The threshold for income tax medical deduction increases from 7.5 to 10%. (this increase is waived for people 65 and older in tax years 2013-2016)
  • Brand name drugs for people whose drug costs have reached the Medicare Part D coverage gap are subsidized by 2.5%, while the generic drug subsidy is increased to 21%. (Subsidies will continue rising until the “doughnut hole” is closed in 2020.)

2014

  • Self-insured and people with no health insurance can use state-based health insurance exchanges.  These exchanges will offer federally approved health insurance plans on 5 standard levels.
  • Health insurance costs will be subsidized on a sliding scale beginning with people having incomes at 4 times the federal poverty level ($64,000 for individuals, $88,000 for a family of 4).  The subsidy amount increases as income decreases.  .  The subsidy will be paid directly to the insurer, appearing as a discount to the policyholder.  Those whose income is 133% or less of the federal poverty level will be fully covered under an expanded Medicaid program
  • Tax penalties begin phasing in for those without insurance starting at $95 a year or 1% of taxable income.
  • Insurance companies must accept everyone, including people with pre-existing conditions.  In addition, their medical condition cannot be considered when setting rates.
  • The small business tax credit for employee insurance costs rises to 50%.
  • Insurance plans can not limit the amount of coverage a person can receive.
  • Businesses with more than 50 employees are required to provide health insurance to employees or pay hefty fines.
    2015
  • Tax penalties for those without insurance rises to $325 a year or 2% of income.

Many people are looking forward to the benefits they see here;  but how many are wondering how they will be paid for?  Already the Congressional Budget Office has increased the original estimate of the bill to just under a  trillion dollars; while others, looking at the total effect of the changes, see the actual amount as even more: several trillion dollars. In fact, the history of past government programs suggests a cost many times the original estimate.  Also, is anyone looking into other possible downsides?  The law of unintended consequences guarantees there’ll be some.  Future blogs will be looking at this.

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