PHARMALEADERS: May- June 2012
THE OBAMA HEALTHCARE BILL : TURNS, TWISTS & DEVLOPMENTS
WHAT DOES IT MEAN?
President Obama is ready to reform health care in America. His $634 billion health care billproposal is said to be just a down payment for future insurance reform. Of course with that much money being spent and with health insurance reform being a hot topic since the faileduniversal health care proposal by President Clinton, Obama is going to have his critics. So, what are the main points that the opposition is saying about health insurance reform as proposed by President Obama? A few of the main problems that experts feel America will face if we do indeed reform health care the way that Obama wants is done is:
1. The Government Will Be Unfair Competition
This is a legitimate complaint and Obama has agreed it needs to be addressed. The problem may come when the government does offer a health care plan that is so reasonable, even people with good insurance currently will drop their to choose the new government run program. This would not only cause problems with insurance companies loosing business (and the domino effect of job losses) but it would put more people on the government plan than was previously planned for.
2. Employers May Stop Offering Health Care
This again could cause a problem. Employers may just drop their health care offerings altogether expecting the government to pick up the cost of providing health care for them. And again, like above, this could cause a ripple effect that would not be favorable for anyone.
3. We Should Work on Competition and Not a Government Run Health Care System
This really comes deep from the American roots. Critics of the Obama health care bill and health care insurance reform feel it is not the American way for the government to take away the natural competition that America was built on. They feel, yes there are problems in the health care system but the solution is not to just have the government jump in and take over but to fix the problems we have by promoting better competition. Besides the above oppositions, others are concerned about what it will cost to reform health care. One of the proposals for payment include lowering the tax deduction on charitable contribution. Charities have mixed emotions on this one - they want better health insurance reform but will it cost them in the long run?. Really, no one knows if Obama's plan is really the best solution for America. But right now it is the only plan and it looks like it will become "The Plan." Fortunately, President Obama is taking the time to look at all the problems that may arise and is making a good faith effort in addressing those problems. America needs health care reform and it may be a bumpy ride in the beginning but it seems nothing can be worse than the health care crisis we are already experiencing... let's hope not.
New Health Care Bill: Changes Happening in 2010
- Children age 26 and younger will be able to remain covered under their parents health insurance plans (this is increased from past age limits which were anywhere from age 22-25). Medicare recipients will receive a $250 rebate to help in closing the “doughnut hole” (with the goal being to close the doughnut hole completely by 2020).
- Health insurance companies will be banned from excluding coverage for pre-existing conditions for children.
- Adults with pre-existing conditions will be eligible for coverage into high risk health insurance pools until future health care exchanges are up and running.
- Health insurance companies will be prohibited from levying annual limits and lifetime limits on coverage.
- All new health insurance plans must provide coverage for preventative services with no out of pocket cost (all health plans will be forced to comply by 2018).
- Those companies that offer health benefits for early retirees ages 55 to 64 will receive assistance from a temporary reinsurance program.
All new health insurance plans will have to comply with new regulations that lay out an appeals process for when health insurance claims are denied. Small businesses that employ less than 50 people are eligible for a tax credit equal to 35% of their health insurance premiums (this increases to 50% by 2014).
New Health Care Bill: Changes Happening in 2011
- Medicare will offer wellness visits for free one a year and personalized prevention plans. All new Medicare plans will offer preventative services with no out of pocket cost.
- Seniors enrolled in Medicare Advantage or the Prescription Drug Plan will receive a 50% discount on brand name drugs immediately with additional prescription drug discounts to follow.
- The current penalty tax of 10% on all distributions from a Health Savings Account before the age of 65 on nonqualified medical expenses will increase to 20%.
- A small business alternative to a cafeteria plan will be presented so that small businesses can offer tax free benefits without having to deal with the administrative costs of a cafeteria plan.
- Everyone earning more than $200,000 as an individual or $250,000 for those who file married filing jointly will have their Medicare payroll tax increased from the current 1.45% to 2.35%.
Health Care Bill: Changes Happening in 2013
- A $2,500 annual cap will be placed on all contributions to flexible spending accounts (amount indexed for inflation each subsequent year).
- The current tax deduction that employers receive for subsidizing the prescription drug costs of their employees who are eligible for Medicare Part D will be done away with.
- A 2.9% excise tax on the sale of medical devices will be put into place. Certain common items like glasses, hearing aids, etc. are exempted from this tax.
- The hospital insurance tax will increase .09% for those who earn more than $200,000 ($250,000 for those married filing jointly).
- Additional requirements on health insurance companies to implement uniform standards for exchanging health care information, electronic communication, and other measures to reduce insurance company administrative costs.
- The minimum threshold for being able to claim an itemized deduction for health care expenses increased from 7.5% to 10% of AGI although those over the age of 65 can stay at the 7.5% threshold through 2016.
Health Care Reform: Changes Happening in 2014
- All US citizens will be forced to have health insurance coverage considered acceptable by the US Government or else pay a fine of $95 in 2014, $325 in 2015, $695 in 2016 (capped at 2.5% of AGI). All of the fines are per person per year except for families have a cap on the total fine of $2,250 and the fine amount for children is half of the adult fine.
- Eligibility standards are implemented for newly formed health care exchanges.
- Businesses with 50 or more employees will face a fine of either $2,000 or $3,000 per employee for not offering health insurance coverage.
- Group health insurance plans have a maximum waiting period of 90 days.
- Health insurance companies are prohibited from using an individual’s health status to issue a policy or renew a policy. All pre-existing conditions must be covered and higher health insurance rates cannot be levied because of health, gender, etc.
- The eligibility standards for Medicaid will be changed to 133% of poverty for those who are not considered elderly.
- New annual fees will be levied on all health insurance providers based on an insurance companies market share and whose total premiums exceed $25 million.
Health Care Reform Bill: Changes Happening in 2018
The “Cadillac” health insurance plan tax will kick in. An excise tax will be levied on all employer provided health insurance plans costing more than $27,500 for families and $10,200 for individuals (with increased limits for those considered to be in “high risk” professions).