Health Care Reform: How It Will Affect You
This story was written by MoneyWatch.com's Michelle Andrews.
The political back-and-forth over health care reform has sometimes resembled a tennis match, with each day bringing new volleys and salvos from different interest groups and politicians. Keeping score is tough, in part because there are so many seemingly technical questions.
Should we end the tax exclusion for health insurance? If so, who should pay the tax: you, your employer, or the insurer? Should we sock the rich with an income tax surcharge to help pay for all this? How much help should the middle class get to pay for the plan?
These issues aren't just for wonks. How they shake out determine the shape of legislation that may have the greater influence over your financial future than any law this decade. As the congressional summer recess temporarily quiets the debate, here's your chance to get caught up on the issues.
1. Company contributions to employee plans
Does it affect you? It does if you get insurance through your job.
Politicians keep saying that if you like your current insurance you can keep it, but critics have raised serious doubts about whether they can make good on that promise. Even if you keep your current company-sponsored policy, health reform could put you on the hook for a bigger chunk of the premium. The House bill requires employers to contribute at least 72.5 percent of the premiums for singles and 65 percent for families, while the Senate bill requires a 60 percent employer contribution for both. Employers currently contribute a bit more than that: an average of 84 percent of an individual employee's premium and 73 percent of the premium for family coverage, according to the Kaiser Family Foundation. Your employer might continue to be that generous; odds are, though, that its contribution would drop to the mandated level. Guess who'd make up the rest?
2. Health care tax exclusion
Does it affect you? Maybe, especially if your company's health plan is more generous than average.
At the moment you aren't taxed on the value of the health benefits you get, and your company gets a tax break for offering them. Some health reformers have long argued that this tax exemption should be eliminated because it encourages overly generous policies and overly liberal use of them.
A likely compromise would be to end the exemption only for the most generous benefits. You might have to pay tax on the full value of your policy if you have a real "Cadillac" contract; or you might be taxed only to the extent that your policy exceeds a certain threshold ― perhaps that of the average employer-sponsored policy, about $13,000 right now.
Even if negotiators decide to tax insurers and employers that provide these generous benefits rather than employees. But it hardly matters: Any tax would likely be passed on to you in the form of higher premiums, deductibles, and copayments, says Len Nichols, director of the health policy program at the New America Foundation, a nonpartisan public policy think tank.
3. Extra taxes on the rich
Does it affect you? Maybe, if Washington decides you're rich.
The House bill includes a graduated tax surcharge of up to 5.4 percent on what it defines as wealthy households (singles with income more than $280,000 and couples with income more than $350,000). When some legislators complained that figure was too low, a $1 million threshold was proposed. Many experts believe it'll be next to impossible to foot health care reform's projected $1 trillion cost without some sort of tax increase, and "the surcharge has the virtue of allowing Obama to keep his campaign promise not to tax the middle class," says Nichols.
4. Insurance subsidies for consumers
Does it affect you? It could, if your income is less than four times the poverty level.
Both House and Senate bills would subsidize the cost of health insurance for families that aren't covered through work and who meet certain income guidelines. People with incomes up to four times the federal poverty level ― or $43,430 for an individual and $88,200 for a family of four ― would qualify for a sliding-scale subsidy to buy a policy on the national exchange. "Quite a few folks that would clearly be defined as middle class could get some help with premiums," says Kathleen Stoll, director of health policy for Families USA, a health care advocacy group.
Jonathan Gruber, an MIT economist who helped draft Massachusetts' universal health plan, says that the subsidy should extend to families at up to four times the poverty level. Setting the limit at three times poverty, as was done in Massachusetts, left too many people unable to afford coverage, he says. But as legislators try to trim the overall bills' price tag, the subsidy makes a tempting target. As a result, there's been talk of reducing the subsidy to three times the poverty level, or up to $32,490 for individuals and $66,150 for families of four.
5. The Medicare drug "donut hole"
Does it affect you? It does if you or a loved one participates in Medicare's drug coverage.
The House bill would gradually eliminate the provision in the Medicare Part D prescription drug law that leaves a gaping hole in coverage for seniors who spend more than $2,700 a year on drugs (coverage doesn't kick back in until they've spent $4,350). The donut hole helps keep a lid on the program's overall costs, but for the roughly 25 percent of seniors who end up there, the financial consequences can be steep. Under the House bill, drug companies would also have to provide a 50 percent discount on brand-name prescriptions filled within the coverage gap.
What will end up in the final bill is hard to predict, though. "Clearly, seniors will get some help with the donut hole," says Richard Kirsch, national campaign manager for Health Care for America Now, a consumer group. "But how much and how it will be done is an open question."
6. Health insurance underwriting
Does it affect you? Yes, if you're buying an individual policy.
Normally insurers price individual insurance policies based on the risk you pose. Both proposed bills prohibit charging people higher premiums based on pre-existing medical conditions or gender, but they do allow insurers to take age into account, up to a point. Called "age rating," the current proposals specify that premiums for older people can't be any more than twice as expensive as those for younger people.
But keep an eye on the Senate Finance Committee, which is charged with figuring out how to pay for reform, but hasn't yet put forward its proposals. An earlier committee paper proposed allowing insurers to charge older people five times more than younger ones.
7. The burden on small business owners
Does it affect you? It does if you work for or own a small business.
Both bills provide tax credits to help some small employers buy health insurance for workers. If they don't, neither bill requires them to pay the same penalty as larger businesses. Small businesses that could buy coverage through a national exchange would presumably be able to get a better deal than they could buying directly from an insurer, since they'd have the advantage of being part of a much larger insurance pool.
The main question now is: How small is small? The House bill would provide a tax credit for employers with fewer than 25 employees, for example, while in the Senate, "small" for the purposes of the tax credit means fewer than 50 employees.
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MoneyWatch.com The political back-and-forth over health care reform has sometimes resembled a tennis match, with each day bringing new volleys and salvos from different interest groups and politicians. Keeping score is tough, in part because there are so many seemingly technical questions.
Should we end the tax exclusion for health insurance? If so, who should pay the tax: you, your employer, or the insurer? Should we sock the rich with an income tax surcharge to help pay for all this? How much help should the middle class get to pay for the plan?
These issues aren't just for wonks. How they shake out determine the shape of legislation that may have the greater influence over your financial future than any law this decade. As the congressional summer recess temporarily quiets the debate, here's your chance to get caught up on the issues.
1. Company contributions to employee plans
Does it affect you? It does if you get insurance through your job.
Politicians keep saying that if you like your current insurance you can keep it, but critics have raised serious doubts about whether they can make good on that promise. Even if you keep your current company-sponsored policy, health reform could put you on the hook for a bigger chunk of the premium. The House bill requires employers to contribute at least 72.5 percent of the premiums for singles and 65 percent for families, while the Senate bill requires a 60 percent employer contribution for both. Employers currently contribute a bit more than that: an average of 84 percent of an individual employee's premium and 73 percent of the premium for family coverage, according to the Kaiser Family Foundation. Your employer might continue to be that generous; odds are, though, that its contribution would drop to the mandated level. Guess who'd make up the rest?
2. Health care tax exclusion
Does it affect you? Maybe, especially if your company's health plan is more generous than average.
At the moment you aren't taxed on the value of the health benefits you get, and your company gets a tax break for offering them. Some health reformers have long argued that this tax exemption should be eliminated because it encourages overly generous policies and overly liberal use of them.
A likely compromise would be to end the exemption only for the most generous benefits. You might have to pay tax on the full value of your policy if you have a real "Cadillac" contract; or you might be taxed only to the extent that your policy exceeds a certain threshold ― perhaps that of the average employer-sponsored policy, about $13,000 right now.
Even if negotiators decide to tax insurers and employers that provide these generous benefits rather than employees. But it hardly matters: Any tax would likely be passed on to you in the form of higher premiums, deductibles, and copayments, says Len Nichols, director of the health policy program at the New America Foundation, a nonpartisan public policy think tank.
3. Extra taxes on the rich
Does it affect you? Maybe, if Washington decides you're rich.
The House bill includes a graduated tax surcharge of up to 5.4 percent on what it defines as wealthy households (singles with income more than $280,000 and couples with income more than $350,000). When some legislators complained that figure was too low, a $1 million threshold was proposed. Many experts believe it'll be next to impossible to foot health care reform's projected $1 trillion cost without some sort of tax increase, and "the surcharge has the virtue of allowing Obama to keep his campaign promise not to tax the middle class," says Nichols.
4. Insurance subsidies for consumers
Does it affect you? It could, if your income is less than four times the poverty level.
Both House and Senate bills would subsidize the cost of health insurance for families that aren't covered through work and who meet certain income guidelines. People with incomes up to four times the federal poverty level ― or $43,430 for an individual and $88,200 for a family of four ― would qualify for a sliding-scale subsidy to buy a policy on the national exchange. "Quite a few folks that would clearly be defined as middle class could get some help with premiums," says Kathleen Stoll, director of health policy for Families USA, a health care advocacy group.
Jonathan Gruber, an MIT economist who helped draft Massachusetts' universal health plan, says that the subsidy should extend to families at up to four times the poverty level. Setting the limit at three times poverty, as was done in Massachusetts, left too many people unable to afford coverage, he says. But as legislators try to trim the overall bills' price tag, the subsidy makes a tempting target. As a result, there's been talk of reducing the subsidy to three times the poverty level, or up to $32,490 for individuals and $66,150 for families of four.
5. The Medicare drug "donut hole"
Does it affect you? It does if you or a loved one participates in Medicare's drug coverage.
The House bill would gradually eliminate the provision in the Medicare Part D prescription drug law that leaves a gaping hole in coverage for seniors who spend more than $2,700 a year on drugs (coverage doesn't kick back in until they've spent $4,350). The donut hole helps keep a lid on the program's overall costs, but for the roughly 25 percent of seniors who end up there, the financial consequences can be steep. Under the House bill, drug companies would also have to provide a 50 percent discount on brand-name prescriptions filled within the coverage gap.
What will end up in the final bill is hard to predict, though. "Clearly, seniors will get some help with the donut hole," says Richard Kirsch, national campaign manager for Health Care for America Now, a consumer group. "But how much and how it will be done is an open question."
6. Health insurance underwriting
Does it affect you? Yes, if you're buying an individual policy.
Normally insurers price individual insurance policies based on the risk you pose. Both proposed bills prohibit charging people higher premiums based on pre-existing medical conditions or gender, but they do allow insurers to take age into account, up to a point. Called "age rating," the current proposals specify that premiums for older people can't be any more than twice as expensive as those for younger people.
But keep an eye on the Senate Finance Committee, which is charged with figuring out how to pay for reform, but hasn't yet put forward its proposals. An earlier committee paper proposed allowing insurers to charge older people five times more than younger ones.
7. The burden on small business owners
Does it affect you? It does if you work for or own a small business.
Both bills provide tax credits to help some small employers buy health insurance for workers. If they don't, neither bill requires them to pay the same penalty as larger businesses. Small businesses that could buy coverage through a national exchange would presumably be able to get a better deal than they could buying directly from an insurer, since they'd have the advantage of being part of a much larger insurance pool.
The main question now is: How small is small? The House bill would provide a tax credit for employers with fewer than 25 employees, for example, while in the Senate, "small" for the purposes of the tax credit means fewer than 50 employees.
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Tell the true story about Joe Wilson?s position on funding health care for illegal immigrants. In 2003, Joe Wilson voted to provide federal funds for illegal immigrants' health care. The vote came on the Medicare Prescription Drug, Improvement and Modernization Act of 2003 co-written by pharmaceutical company lobbyists, which contained Sec. 1011 authorizing $250,000 annually between 2003 and 2008 for government reimbursements to hospitals who provide treatment for uninsured illegal immigrants. The program has been extended through 2009 and there is currently a bipartisan bill in Congress to make it permanent. This comes from the esteemed congressman Wilson who yelled out ?you lie? at the president of the United States of America for clarifying that the health care bill he will sign does NOT include government coverage of illegal aliens.
? He also receives FREE health care under a single-payer government run system called TRICARE. This is the national program that covers veterans, and yet, he has voted against veterans health benefits 11 times in 8 years! WOW, what a typical Republican hypocrite. And, typically, he gets away with it.
I'm over 50, female, diabetic. My husband is disabled, and covered by medicare and a work comp settlement. Our twenty year old son remains without health care, as do I. Son works and goes to school and helps take care of dad. I work (same company for 20 years, now, and I'm good at my job - I also like it, which is a blessing of sorts) My total tax last year was $432, which if you know much about taxes tells you that we don't earn much. We own a mortgage and a 10 year old car. Couple of cats and an old dog, some furniture. That's about it. But I earn too much to be covered by welfare type insurance and a policy with a high deductible would cost $500 a month. We'd pretty much have to stop eating and shut off the electricity to do that, so - no health insurance. I manage two visits a year to my doctor and by carefullly ignoring his rather desperate need for 'tests' I managed to buy my first new pair of eyeglasses in 5 years last week. We don't qualify for food stamps or any sort of assistance and don't need it, really - nobody misses any meals, the roof don't leak and the car started this morning so we're all good. This is the status quo: I have a lump in my breast, am at high risk for a heart attack due to high blood pressure, diabetic complications will certainly be a problem in the next few years (my feet tingle a lot), I haven't been to a dentist in years and my gums bleed a lot. My son needs to have cavities filled and new eyeglasses. If that lump in my breast is what I think it is, I won't live long enough to have that heart attack. If my son slips on the ice a breaks a leg...well let's just talk about that heart attack. If I do go down and I am rescued (likely, I think) the bill will be about $75000. My son's slip and fall will run about $12000 assuming it's a clean break. If both happen in the same year that my 7 year old 'temporary filling' goes south you can add $2000 to the dentist. A bad flu and we're close to $100,000.
Who do you think is going to pay for that? Me? Love to, I'll just write you a check. The house is worth less than I owe on it, the car would fetch about $1000 and leave us without a way to get to groceries or work, my savings account will not cover the property taxes as it is, but you're welcome to it - so far, I can't cover two percent of my bill.
For those of you who haven't figured it out yet, let me make it clear: you will pay for it. In fact, you already ARE paying for it, in cases just like this times thousands every week all over America.
So here are the choices you are making - you prefer to skip my $50 mammogram until it's full blown cancer costing $100,000 or more, the $100 high blood pressure screening and meds until the $50,000 heart attack happens, the diabetic treatments of a few hundred a year until the neuropathy disables me and prevents me from taking care of my husband, skip the dentist for the cavity until the crown is required...or...look at your 'total tax' line again. Can you afford to increase it by 1%? If YOUR medical and dental costs go DOWN because your providers are no longer writing off hundreds of thousands of uncollectible debt? I think you probably can.
And before you get all excited, let me just admit it up front: Yes, I should be working harder, making more money, supporting my own needs and not putting all this off on you - but let me make it perfectly clear: no one, NO ONE is going to give me a $100,000 salary increase, no magic wand is going to put me and the millions of other working poor into the middle class. So you get to pay higher costs to support the write-offs, or put preventative health care on my menu. Your choice. Me? I think you'll spend less of your hard earned money if you support health care reform.
A comparison between medicare and universal health care is a poor one due to the fact that you are primarily assisting the elderly and others with specific needs and there is plenty of waste and fraud. You scale that up to include all americans and illegal aliens and you will have a mess of unparralled proportion. I have read the data from WHO and the criteria used in determing these rankings is purely objective data based on criteria irrelevant to the U.S. and it's society. It takes, such things as, total number of immunizations against curable disease into consideration. that alone puts behind Botswana. When you fly to America you don't need to get immuno shots because malaria and then likes have been irradicated. Fly to India sometime and see how many times you get poked before you get on that jet.
Really, those of you who think universal health care is best for all of us should back-off and re-calibrate, in Obama's famous verbage, and look at this in terms of reform not drastic change. Thers is not a good universal health care system out there right now. My father in law is a doctor in Canada and went to the Cleveland Clinic for heart surgery. The Cancer center in Houston, Texas spends more money in research than all of Canada spends on it's cancer research and the numbers bare themselves out in cancer survival rates and prolonged life expectancy in almost all it's forms. Reform, yes I agree, but universal health care no, I do not. One more thing, please back off on you're fringe righty BS because I am certain you do not no what's best for me and my family.
I am paying more than ever now.