Invest

how to invest

Live

career, food, travel

Save

saving, credit, debt

Protect

insurance, security

Retire

401K, IRA, FI, Retire

Home » Health

Healthcare Reform: How it Impacts You

Last updated by on 22 Comments

Political affiliations aside, the Patient Protection and Affordable Care Act, will be signed into law by President Obama tomorrow. And it will impact every U.S. citizen. If you’re interested in reading the entire version of the Patient Protection and Affordable Care Act, you may do so. However, it’s over 2,000 pages long, and I wouldn’t wish that kind of hell upon anyone.

Some of the changes will begin immediately. Others will scale out over the next 6 years. Here’s an excellent summary on the health care reform via Reuters:

Health Care Reform in 2010:

  • health care reformInsurance companies will be barred from dropping people from coverage when they get sick.
  • Lifetime coverage limits will be eliminated and annual limits are to be restricted.
  • Insurers will be barred from excluding children for coverage because of pre-existing conditions.
  • Young adults will be able to stay on their parents’ health plans until the age of 26 instead of being dropped at age 19, or when they finish college.
  • Uninsured adults with a pre-existing conditions will be able to obtain health coverage through a new program that will expire once new insurance exchanges begin operating in 2014.
  • A temporary reinsurance program will be created to help companies maintain health coverage for early retirees between the ages of 55 and 64. This also expires in 2014.
  • Medicare drug beneficiaries who fall into the “doughnut hole” coverage gap will get a $250 rebate.
  • A tax credit will become available for some small businesses to help provide coverage for workers.
  • A 10% tax on indoor tanning services that use ultraviolet lamps goes into effect on July 1.

Health Care Reform in 2011:

  • Medicare will provide 10% bonus payments to primary care physicians and general surgeons.
  • Medicare beneficiaries will be able to get a free annual wellness visit and personalized prevention plan service.
  • New health plans will be required to cover preventive services with little or no cost to patients.
  • A new program under the Medicaid plan for the poor goes into effect in October that allows states to offer home and community based care for the disabled that might otherwise require institutional care.
  • Payments to insurers offering Medicare Advantage services will be frozen at 2010 levels. These payments are to be gradually reduced to bring them more in line with traditional Medicare.
  • Employers will be required to disclose the value of health benefits on employees’ W-2 tax forms.
  • An annual fee will be imposed on pharmaceutical companies according to market share. The fee will not apply to companies with sales of $5 million or less.

Health Care Reform in 2012:

  • Physician payment reforms will be implemented in Medicare to enhance primary care services and encourage doctors to form “accountable care organizations” to improve quality and efficiency of care.
  • An incentive program will be established in Medicare for acute care hospitals to improve quality outcomes.
  • The Centers for Medicare and Medicaid Services, which oversees the government programs, will begin tracking hospital readmission rates and puts in place financial incentives to reduce preventable readmissions.

Health Care Reform in 2013:

  • A national pilot program will be established for Medicare on payment bundling to encourage doctors, hospitals and other care providers to better coordinate patient care.
  • The threshold for claiming medical expenses on itemized tax returns will be raised to 10% from 7.5% of income. The threshold will remain at 7.5% for the elderly through 2016.
  • The Medicare payroll tax will be raised to 2.35% from 1.45% for individuals earning more than $200,000 and married couples with incomes over $250,000. This tax will also be imposed on some investment income for that income group.
  • A 2.9% excise tax will be imposed on the sale of medical devices. Anything generally purchased at the retail level by the public is excluded from the tax.

Health Care Reform in 2014:

  • State health insurance exchanges for small businesses and individuals will open.
  • Most people will be required to obtain health insurance coverage or pay a fine if they don’t.
  • Healthcare tax credits will become available to certain income groups to purchase coverage on the exchange.
  • Health plans will no longer be able to exclude people from coverage due to pre-existing conditions.
  • Employers with 50 or more workers who do not offer coverage will face a fine of $2,000 for each employee if any worker receives subsidized insurance on the exchange. The first 30 employees aren’t counted for the fine.
  • Health insurance companies will begin paying a fee based on their market share.

Health Care Reform in 2015:

  • Medicare will create a physician payment program aimed at rewarding quality of care rather than volume of services.

Health Care Reform in 2016:

  • An excise tax on high cost employer-provided plans will be imposed. The first $27,500 of a family plan and $10,200 for individual coverage will be exempt from the tax. Higher levels will be set for plans covering retirees and people in high risk professions.

Health Care Reform Discussion:

Let’s keep this a friendly debate.

  • Are you for or against the passage of H.R. 3590? Why?
  • What would you change?

Related Posts:


About the Author
I am G.E. Miller, & this is my story. My goal is financial independence ASAP. If you share that goal, join me & 7,500+ others by getting FREE email updates. You'll also find every post by category & every post in order.


22 Comments »
  • Jeff Walden says:

    By introducing a new entitlement, we will cut costs. When has that worked? Social security, Medicare (and its expansions), Massachusetts’ health care system, Hawaii’s recent abortive universal child health care plan, the list goes on and on. Up is down. Black is white. I am high as a kite.

    More substantively, I’ll repeat a comment I’ve left on a couple other sites regarding how I’ll be affected:

    Further barriers will be placed in the way of my purchasing exactly the insurance I desire — a very minimal form of insurance that would only cover very high-cost situations. I spent a total of maybe $500 on all health-related things last year (one x-ray and office visit to look at a sprained ankle, contact lens visit/prescription which wasn’t covered by insurance anyway); I’m healthy, lead a healthy life, and expect that the vast majority of potential problems I could easily cover out-of-pocket if — and that’s a big if — they were to happen. I would much prefer to purchase catastrophic insurance that only covered, say, situations with a cost higher than, say, $10k or so — I might temporarily hurt financially if such happened, but I could get over it, and I’d enjoy the money I would likely save in better ways than on something I don’t need. This bill will make it even more difficult for me to achieve my ideal coverage. (My employer’s not offering a way to opt out of insurance, my inability to purchase something more minimal from another state, and the non-tax-exempt status of self-purchased health care are other problems which this bill doesn’t address but which would have been much better addressed by competing bills.)

    Regarding what I’d change: Start from scratch. An incremental solution would make a vast difference while being much smaller, more comprehensible, and less stuffed with particularized favors and disfavors. (A 10% tanning tax? Really? Really?)

    Eliminate taxes on purchases of health care and insurance outside the employer-provided context. These taxes are what make self-insurance so much less appealing than employer-provided insurance, which has all the portability, flexibility, and control downsides Democrats noted in their arguments. (Why they strengthened employer provided care in various ways in the bill is beyond me.)

    Don’t add lopsided favoritist handouts for states like Nebraska, Louisiana, and Florida.

    Don’t require accepting any and all comers when selling insurance; that’s not how insurance works! It’s a flavor of mixing high-risk and low-risk together. Doing so means insurance companies can’t accurately predict expected cost per customer, which means they’ll have to be more cautious, which means the average healthy, risky-behavior-avoiding person will pay more in insurance premiums and the risk-takers and unhealthy folks will get a handout. If you’re worried about the minuscule fraction of people who get multi-million dollar maladies, they could be targeted much more directly, more narrowly, and more cost-effectively without a one-size-fits-all solution.

    Don’t require everyone to purchase insurance. If you’re young, healthy, and lead a healthy lifestyle, why shouldn’t you be able to forego insurance if you want, spending some of the gain and saving other parts for future health expenses? (See my health care costs for last year, above.) Or what if you just want to live alone as a hermit? You shouldn’t have to check in with an insurance company or with the government just so it can check up on whether you’ve cared for yourself or not.

    Eliminate the prohibition on purchasing insurance across state lines. The reason there are so many one-state monopolies in health insurance is because competition is so reduced. If I could buy insurance across state lines, I’d surely buy a package from outside California, which mandates coverage for many situations I believe, and would willingly wager my own money, will never happen: HIV/AIDS testing/treatment/etc., alcoholism treatment, acupuncture, for example. I believe many if not most others are so infrequent and rare that I’d willingly pay out of pocket for them on an as-needed basis.

    (Of course, this analysis is specific to now. Thirty years from now I’d doubtless consider substantially different insurance. And that’s the beauty of a system without mandates: insurance is particularized to individual situations, not generalized beyond meaningful personal relevance.)

    These ideas were all in competing, substantially simpler bills. They all could have happened, and everyone would have been happier. Instead we get a bill 58% of people dislike, 70% of people think will increase the already-large deficit, and which will only embolden the inmates currently running the asylum to spend even harder beyond our means. At least it ends (for a time) in January, when I expect to see incredible losses in both houses of Congress for the current majority party, probably enough in at least one — particularly now — for control to switch parties. Republicans haven’t been so great either in recent congresses (Medicare Part D, among others), but they never overreached to 16% of the economy, either.

    (I consider this a “highly energized” :-) , while still logically stated, contribution to comments here. I don’t think any part of it is “unfriendly” [except to Congress, but I think that’s part of the price they pay for taking their jobs, and my invectives against them are not extremely or excessively derogatory], merely vociferously expressed. I apologize in advance if people disagree with these estimations. As should be clear, I have strong feelings on these matters. ;-) )

  • Jeff Walden says:

    Oh, one other: don’t require coverage of pre-existing conditions. This encourages healthy people to simply pay the penalty (which is itself questionable: paying a penalty for engaging in an activity is one thing, paying for not engaging in an activity is another), then go in for insurance after they’re already sick. How can you lose in this situation? But there ain’t no such thing as a free lunch, and this is a good way to drive the companies trying to reduce the risk of health costs by wide dispersal out of profitability, and out of business. (You only get to stay in business when you’re consistently unprofitable and budgetarily imbalanced if you’re the government.)

  • Julie says:

    The only part of this which even remotely affects me is the part about the age limit for children on their parent’s insurance being raised. I could have stayed on my mom’s insurance and not had to get my own! However, my insurance costs me $60 a year, plus another $40 for my doctor visits every year. Not really a big deal.

    I hate politics though, and what truly disturbed me is that although republicans tried to enact a very similar bill just a few years ago, they now pretended like this bill was against everything they believed in:

    http://www.kaiserhealthnews.org/Stories/2010/February/23/GOP-1993-health-reform-bill.aspx

    http://www.washingtonpost.com/wp-dyn/content/article/2006/04/04/AR2006040401937.html

  • Honey says:

    I love the health care bill. I am so happy that it actually passed. Though if I could change it, I’d make the US a truly universal, single-payer system. I won’t respond to Jeff Walden’s comments because others have explained it much better than I can, except to say the 10% tanning tax is because tanning beds cause skin cancer, so the tax isn’t really any different from taxing cigarettes because they cause lung cancer.

  • Budgeting in the Fun Stuff says:

    Thanks for the breakdown by year! My only questions right now are:

    How will this affect my health insurance which was already a free benefit to me from my employer?

    How much will my taxes go up?

    I’m young enough that my chance to receive full social security benefits are slim to none. I’m wondering if this will help me somehow in the future or if it’s just another thing I’ll pay taxes for but not use…

  • Honey says:

    Well you’re talking to a vegetarian who thinks that meat, eggs, and any processed food containing a corn by-product should be taxed also – so you haven’t convinced me…

    People still are free to tan – they just have to pay more to do so. Part of the reasoning behind sin taxes is creating an obstacle between the person and what they want, since the negative consequences for a lot of the things you mention don’t in fact deter people because they are “down the road maybes” instead of “right now certainties.”

  • Jeff Walden says:

    So tanning can lead to skin cancer; true enough. But why does that mean it should necessarily be taxed? How do you draw the line between “too harmful” and “not too harmful”? Do you tax alcohol because when overused it leads to liver disease? Do you tax smoking because it leads to lung cancer? Do you garnish the salaries of workers in hazardous industries because they’re more likely to come in contact with a toxic chemical? Do you tax fast food, sugar, candy, pop, and chocolate because they’re fattening? Do you tax fruit juice because it doesn’t contain enough substance relative to its sugar content? Do you tax eggs for causing high cholesterol? Do you tax red meat because it can lead to heart disease? Do you tax salt because an excess of sodium isn’t good for you? Do you tax computers because they lead to eyestrain which requires vision correction? Do you tax keyboards because they induce RSI and carpal tunnel syndrome? Do you tax travel to the Caribbean because it too can lead to skin cancer? Do you tax car ownership because those who own them exercise less? Do you garnish the salaries of office workers because they have desk jobs that mean they get less exercise? Do you tax bacon (God forbid!) because it’s fatty and induces obesity? Do you tax smoke detectors because they contain radioactive chemicals? Do you tax spray paint because people can inhale its chemicals when used? (I’m not just talking about drug users here, either — people painting signs with stencils, for another example.) Do you tax pools and beaches, because people can drown in them? I repeat, where does this stop?

    Of these, the only tax I support — maybe, and to a more limited extent than we have today, calibrated to an estimation of the costs to others — is a cigarette tax, because smoking imposes a negative externality via secondhand smoke. But even that can, to some extent, be avoided by people choosing the places they frequent. But for the rest? The problems, to the extent that they exist, fall squarely on the person responsible: it’s a negative feedback mechanism. You reap what you sow, so fewer people will make those choices. That’s freedom, freedom to choose.

    The problem here is the sheer arbitrariness of taxing tanning salons rather than any other plausible negative behavior. You can’t fight every problem, so you have to pick and choose. Better to fight only the ones where the user imposes the problem on others, and only where the problem is sufficiently immense that the imposition on individual freedom must be tolerated.

    Also, this all seems a rather huge imposition on the right to privacy found in the emanations and penumbras of the Constitution. The government has to insert itself to know whether or not my plan complies with its mandates, where before my plan was between me and my provider (and my state, bad enough on its own). Or does that right only exist in very narrow circumstances?

  • Jeff Walden says:

    Honey: So because you think those things are bad for people, it’s acceptable to penalize them for using it? Just trying to be clear: is enforced paternalism always acceptable so long as it accords with your own ethics? At what point does penalizing someone for an action that harms him become impermissible due either to the nature of the penalty or the transgression being punished, and when should he be permitted to live his life different than you would have him live it?

    Julie, the Republicans of 1993 certainly aren’t the Republicans of 2010, just as, say, the Democrats of 1964 are not the Democrats of 1984. Nor does a Chafee represent the mainstream of the Republican party. And Mitt Romney is a special breed — a Massachusetts Republican (one many thought unprincipled and untrustworthy precisely for Romneycare), along with those who voted for it. Wherever elected Republicans were in 1993, they certainly aren’t where Republican-leaning members of the public are today. But in any case, it seems Chafee’s 1993 Republican position was as bad as the 2010 Democrat one, at least if the 1993 bill is being correctly portrayed — I’ll buy that.

    Oh, I’ll add one more to your list: the Wyden-Bennett (D-R) bill vaguely proposed sometime over the however-long, which also included an individual mandate. But in that case, it’s notable it didn’t get much Republican uptake, partly for that reason, and Bennett as incumbent may well face a primary in June if Utah’s caucuses don’t go well for him.

  • Julie says:

    Jeff, in NYC, they have talked about taxing many of those things.

    Also, I’m really not interested in politics–mostly because political discussions tend to center around things we cannot change, and I really don’t enjoy debate for the sake of debate. But it’s not like there is not a single republican elected official who was not around in 1993.

  • Honey says:

    Well of course, we all think we’d make the perfect dictator :-)

  • M Denis says:

    Honey – There is much truth spoken in jest. I know that you were kidding about the perfect dictator comment, but it reveals the fundamental difference between those that favor a free-market system and those that favor a socialist democracy. The socialists believe they know what is best for everyone else. The free-marketer knows he/she doesn’t know best, but wants everyone to be free to make their own mistakes and reap their own rewards.

    I believe the Dems are pushing to get single-payer, universal care instituted – several pols including Pelosi and Obama have admitted that this bill is just the first step to that goal. We shall see if that comes to pass, but I doubt it. Elections have consequences, we all know that. And actions cause reactions. Sometimes actions even with the best intentions have unintended consequences. I think we will see quite a lot of poor unintended consequences from this bill.

  • Jeff Walden says:

    Indeed, what M Denis says. I’d like to think I have the humility to recognize that my personal preferences may (inevitably will, even) be wrong for others, and that by forcing mine on people with other preferences I limit their freedom. If I were the dictator, I think people would be much freer to live their lives as they desired, and to be left alone, than if you were dictator (dictatrix?) — even if I thought the choices they made were disagreeable or even immoral, as in many, many, many cases I undoubtedly would.

    Julie, NYC’s tax on salt is just scary. The chutzpah necessary to consider a sin tax on a fundamental cooking ingredient is just mind-boggling. As for “it’s not like there is not a single republican elected official who was not around in 1993″, true. But one person at least is not a very useful threshold, because you can find one person to support just about any thesis.

  • tj says:

    I just read a businessweek article that detailed some costs of the ‘reform’ to some of the nations top employers. At&t is going to book a $1 billion first quarter cost. And overall this will shave $14 billion from corporate profits this year.

    Now that sounds like a way to foster growth, innovation and job creation if I’ve ever one.

  • tj says:

    I just read a businessweek article that detailed some costs of the ‘reform’ to some of the nations top employers. At&t is going to book a $1 billion first quarter cost. And overall this will shave $14 billion from corporate profits this year.

    Now that sounds like a way to foster growth, innovation and job creation if I’ve ever heard one.

    Actually it sounds like a step closer to socialism. Aka the underachievers utopia.

  • Honey says:

    Or it’s confirmation that they’ve been screwing us over all along.

  • Manifestor says:

    This bill is a step in the right direction.

    Having a health care system based solely on employer provided coverage leaves us and our health at the mercy of the corporations and insurance companies and consequently by the vagaries of the economy. This bill helps us move away from that.

    Those who are against this bill should take a moment to reflect, how they will get health insurance when they lose or leave their current job and are taking time to find a new one. Add to that the scenario of what if they already have some illness such as asthma, arthritis or diabetes, or what if their child has some birth defect, or if their wife is pregnant.

  • Robert says:

    Or it’s confirmation that they’ve been screwing us over all along.

  • Abby says:

    I think my biggest problem with all this lies with the pre existing condition changes. (And maybe I just need to be educated further on the subject as I have not read the 2000+ page bill.)

    For children? No problem- The situation they are in regarding health insurance is way over their head, and I will gladly pay my share for the next healthy generation.

    For people with a short gap on coverage due to job change or ONE missed payment? I’m sure their costly ailments did not develop overnight.

    I don’t even have a fundimental issue for the temporary thing thru 2014 (outlined above) because now you can at least argue that some don’t have ACCESS to reasonable health care.

    But for others who choose not to buy health insurance? (Which for those who will actually budget for their medical expenses and not just show up at the ER on taxpayers, can save a lot of money for everyone involved.) Why should they be able to get it after they are sick? What is the reasoning for this? Is it because it is assumed that those unsinsured without the ability to pay will be paid for by the public anyway- So why not? IS this one of those “feel-good” or “right things” to do? Something just does not compute in by brain.

    Does that mean I can buy flood insurance AFTER I get a few feet of water in my home?
    Can families take out a life insurance policy on someone AFTER they die?
    Can I get extra coverage or drop my auto deductible AFTER an accident?
    NOOOOOOOOOOOOOOOOOOOOOOOO!!!! That is the whole point of insurance!
    Why should this be different?

  • Julie says:

    Abby, I guess it is different because auto/home/flood/life insurance is specifically for when you have an accident or something goes horribly wrong. It protects you from those events.

    However, health insurance is different. I am perfectly healthy, and the reason I have health insurance is because I want to go get my checkups at a lower cost (I think without insurance it’s pretty damn expensive). For my, my health insurance is like…a savings card. I’d go to the doctor anyways, this way, I just pay a copayment instead of the full amount. And yes, there is the added protection of if I have an emergency, I am covered for that as well.

    I think that’s the difference between health insurance and floor insurance, for example.

  • Jeff Walden says:

    Ah, but that’s the point: health insurance isn’t different from all the other insurances. The fact that it is is a historical accident due to wage controls, where fringe benefits like health care were not included in salary restrictions, so businesses rationally used health care as an employment incentive. Reinforce that with the disparate tax treatment of personal health expenditures (taxed) and health expenditures provided through one’s employer (tax-exempt), and you see why the system remained broken.

  • Abby says:

    Julie-

    I use my health insurance the same way I use my other insurances. In my case, yearly preventative care is FAR less expensive than even my 20% contribution to my health insurance. (And I am fortunate enough to have my employer pay the other 80%)

    The reason I have health insurance is not to pay for the checkups, it is for *knocks on wood* if I ever get my face rearranged in a car accident or have some other serious medical condition. That is also why I opted for an HMO instead of a POS. In a catastrophic situation I could never afford, I’d much prefer a $100 co-pay to 15% of all expenses incurred.

    Right now I am seriously overpaying, but if I ever have cancer or bypass surgery after a heart attack, I’ll make it all back and then some. Most people end up in at least one very expensive medical situation in their life. Think of it as cost-averaging.

    How can some people be allowed to not contribute until after they will cost 8x what they will pay for the rest of their life? How can an insurance company be expected to survive that way? That is a terrible business model! In the end, I expect I will have paid my fair share for my health care. I will have just paid for most of it years in advance.

    You can’t get something for nothing. Nothing just means someone else is paying for it.

  • Julie says:

    Abby,

    My healthcare costs me $10 a month. Plus $25 for each checkup. Not exactly “expensive”. So for me, it’s cost savings as well as insurance. If I was paying a significant amount ($145 a year is not significant for healthcare in my opinion), I probably would wait several more years. At 22, given my lifestyle, I would probably risk it for a few years.

    Healthcare functions as both insurance for the unexpected events, and also subsidizes your regular and expected doctors visits.

    I agree about the terrible business model. However, when the government is involved, and subsidies are involved, there is no market efficiency. But also, if the market was truly efficient, there would be no need for government involvement either.

    I’m sorry, but everything in life is not fair, and unfortunately, you will be paying “more than your fair share”. Have you heard of social security? I’ll gladly not accept a dime from the government after I retire if they stop taxing me right now.

SPEAK YOUR MIND

Enter your:


Home | Sitemap | Terms | © 20somethingfinance.com