Health insurance premiums in the US have increased in cost by almost 100% since the year 2000, a growth rate three times larger than wage increases over the same period of time. At the same time, one out of every three Americans is uninsured, or underinsured. Moreover, health insurance premiums are more than double for Americans than they are for citizens of the second highest cost nation, Norway.
These daunting facts leave little doubt that health care costs in America have spun out of control and the financial health of each American, and the country as a whole, is dependent upon smart health care reform. What’s not as clear is the right way to go about it. Details on the health care legislation currently making the rounds are sparse and very fluid at this point, but we’ll try to dissect some of the basics and how the plan may impact you if it were to pass in its present form.
What are the basics of the Obama Administration’s health care reform legislation?
So far, this is what can be decoded from the constantly changing legislation.
- All Americans would be required to be covered by health care insurance – either through out-of-pocket or government subsidy.
- A new health care insurance exchange market would be created. You can think of this as a gigantic group plan, monitored by the government.
- You can keep your employer’s plan, if you’d like (and they decide not to drop their plan for the cheaper exchange).
- Insurance companies would be required to provide a basic level of insurance for everyone who signs up for the exchange. Premiums cannot be increased for those with pre-existing conditions.
When would the reform go into effect?
The Obama Administration had been leading a big push to get a health care reform bill passed quickly by the Senate. However, the details and resulting consequences of legislation of this impact have stamped out that possibility. On Thursday, Senate Majority Leader Harry Reid (D-Nev.) announced that the Senate will not vote on health care reform legislation by the August recess, saying that it is “better to have a product based on quality and thoughtfulness rather than try to jam something through,” as reported by the AP/Boston Globe.
Despite the delay, if the legislation were to pass later this year under the same timeline as proposed, it would go into effect in 2013.
Who stands to benefit the most from Obama’s health care reform?
It’s unclear how the bill will benefit the majority of Americans who already have employer sponsored health care plans at this point. In theory, premiums should be decreased because the insured are no longer footing the bill for the uninsured. The reform aims to immediately help:
- Those without any insurance.
- Those who have paid for expensive individual policies on their own.
- Employees of small businesses that have trouble affording the cost of joining a group plan.
- Low income Medicare participants who are left paying for whatever is not covered by Medicare for their medical bills and prescriptions.
Whether intended or not, the legislation could also mean more profits for insurance companies by making it a requirement for all Americans to purchase an insurance policy, be it by subsidy or out-of-pocket.
How much is this going to cost?
The legislation is expected to cost $1 trillion over 10 years. Obama insists that it would be revenue neutral, meaning that it would not be an expense added to the budget deficit.
Who is going to pay for it?
The entire tax burden is expected to be placed on the shoulder’s of the very wealthy. Originally, it was to come from a surtax on American households earning over $250,000 annually. However it was recently bumped to those earning over $350,000, and even more recently, those earning over $1 million.
What will happen to my doctor?
Nothing. You can still go to them, and they’ll still be living large in the wealthiest zip codes in your locale.
Who is opposing the present version of the legislation?
- Republicans: This goes without saying, right? Any new taxes on the wealthy or are sure to meet Republican opposition. This legislation is no different.
- Democrats: Wow, really? Yes. Some of the more liberal Democrats, led by Dennis Kucinich, have been pushing for the addition of a single payer option. The United States is currently the only high-income industrialized country in the world that does not have some version of a single payer, public health insurance. Single payer refers only to health insurance and payments for health service being funded by a single public fund. Kucinich and others want this option to be included in the legislation.
- The Obscenely Wealthy: More taxes means less luxury goods and $900 bottles of wine vs. $1,000. Can you blame them?
Where can I find out more?
The White House has created a public site dedicated to providing information and news on health care reform – at healthcarereform.gov.
For more of GE Miller’s writing, visit personal finance blog 20somethingfinance.com.