Over-simplified Summary of the Implications of Health Care
Reform
Perhaps the most notable outcome of the recent election is
that in all likelihood the new health care legislation will stay intact. This set of laws was set forth in the Patient
Protection and Affordable Health Care Act and was reconciled by the Health Care
Education and Reconciliation Act of 2010.
This legislation was upheld by the Supreme Court early this year as it
was narrowly deemed “Constitutional” under the theory that the Federal
Government has the right to tax citizens.
Here are the major changes as far as I can tell:
1. Individuals not covered through government
programs (Medicaid, Medicare) or by a private plan are now required to purchase
health insurance or they are subject to a $695 annual fee.
2. In 2014 companies of more than 50 employees are
penalized for not offering health care coverage to their employees. They will be obligated to pay $2,000 per
employee exempting the first 30.
3. After 6 months of being signed into law it bans
lifetime coverage limits and the rescission of coverage to all existing health
care plans.
4. It requires insurers to offer the same premiums
to all applicants of the same age and location regardless of preexisting
conditions etc.
5. Health Insurances Exchanges for each state will
commence operation on January 1st, 2014.
6. Low income families will receive subsidies (on a
sliding scale) if they purchase insurance via an exchange.
7. Initiates additional Medicare and capital gains taxes
on people or families that earn $250,000 or more per year.
8.
Doctors that treat Medicare patients will be
reimbursed at the full rate.
9. The Federal Government will pay 100% of the costs
of expanding Medicaid until 2016, and then it is phased down to 90%.
According to a 2012 Reuters poll, 56% of people disapprove
of the law. While it was initially
intended and determined to cut the federal deficit, it is highly debatable. So far, 17 states have declared they will set
up their own exchange and 10 have stated they will not. The bottom line is that even before this became
law, the US Government costs for health care were extremely high especially
relative to the results, but It is extremely difficult to predict if this
legislation is the right answer or even a step in the right direction. Also, it remains to be seen whether employers
will gradually do away with private coverage and leave the Federal and State
governments as the only source of health insurance, and whether this would
limit people’s healthcare choices like many other countries that have national
health care plans.
Personally, my biggest fear is the impact on the incentive
for businesses to hire new people. If we
continue to tax businesses that foster employment (payroll tax, penalties for
not providing insurance), where will they draw the line and consider
alternatives to employing people in America.
This to some extent will undoubtedly promote out-sourcing of jobs as well
as investment in new vehicles to substitute for the employment of US citizens
(technology, automation etc). Also, is
now really the time to promote increased government spending and
intervention? Anyways, these are just my
thoughts. I, like many people, am
concerned about the consequences of this legislation, but I am by no means an
expert and by no means am I capable of predicting the outcome.
Bob Caperton, Jr., CCIM
With the assistance of Craig
Johns, Business Consultant
