Q & A on the Passage of Health Care Reform

United for a Fair Economy cheers the passage of health insurance reform, but it’s not a standing ovation — yet. While it’s a not a perfect bill, it is a giant step forward from the status quo of health care for the United States.

Here are answers to some questions about the final health care bill that President Obama signed into law on March 30, 2010.

Q: What’s the biggest benefit you see in this bill?

A: The reform puts health care in a totally new light.

  • For the first time health care is seen as a right, not a privilege or a commodity. It will be very hard to reverse this. 
  • It moves the balance away from the market making all health care decisions and toward the government playing a greater role in what is an important segment of the economy. 
  • It’s momentum. It will get the ball rolling for other progressive efforts like reforming immigration, campaign finance, financial markets, and alternative energy. 
  • It demonstrates that millions of American can organize, together with elected officials, to defeat wealthy business coalitions like the Chamber of Commerce.

 

Q: Hey, I’m OK with my medical coverage – how could it possibly help me or my family?

A: It establishes the toughest patient protections in US history.

  • Insured Americans will be protected from seeing their insurance revoked when they get sick, or facing restrictive lifetime or annual limits on the care they receive. 
  • It will end discrimination against Americans with pre-existing conditions. They can join a special high-risk pool to get the coverage they need, starting in just 90 days.
  • Young people will be allowed coverage under their parents' plan until the age of 26.
  • It will phase out the Medicare prescription drug "donut hole."
  • Preventative check-ups must be provided with insurance at no additional charge.
  • According to NWLC, the reform ends the insurance company practice of denying coverage to domestic violence survivors and to mothers who have had Caesarean sections under the guise that they have “pre-existing conditions.”
  • And it will end discriminatory gender rating practices, in which insurers charge individual women more than men simply because they are women.

 

Q: How does it affect our national and personal bottom line?

A: It provides affordable health insurance options to almost all Americans. Having insurance will stop tens of thousands of preventable deaths each year. It’s hard to put a price on that.

  • It will extend coverage to 32 million people who are currently uninsured; 95% of all documented residents will be covered by 2019.
  • Cost controls will reduce the overall cost of health care — cutting over $100 billion in the first ten years and over 1 trillion dollars from the federal deficit in the following decade.
  • Premiums would range from 2 percent to 9.5 percent of family income on a sliding scale.
  • It makes Medicare more solvent.
  • Small businesses, including non-profits, and the self-employed will receive tax cuts to help them afford health coverage for employees.
  • Buying through new competitive health insurance "exchanges," individuals and small businesses will pool their purchasing power and gain buying power available only to large businesses now.
  • Workers will be able to change jobs without fear of losing health coverage.
  • It will establish a process for government review of increases in the cost of insurance.
  • Insurers will be required to spend 80 to 85 percent of premiums collected from enrollees on medical care — not on executive salaries and other administrative costs. According to Too Much, "the reform package denies health insurance companies [the ability to take] corporate tax deductions on any executive pay that runs over $500,000 a year."
  • As a stick — employers with more than 50 employees must provide health insurance or pay a $750 fee for each employee who receives federal subsidies to buy health insurance, and in 2016, individuals will be required to buy health insurance or pay a penalty of up to the greater of either $695 or 2.5 percent of their income.
  • As a carrot — there will be tax credits or other aid to help low-income people pay for the mandated insurance, and exemptions for low-wage earners.

 

Q: How does the health insurance reform affect economic inequality?

A: The taxes that will fund health reform are very progressive, a key tool in reducing inequality. UFE agrees with Citizens for Tax Justice (CTJ) that “the Americans who benefit the most from the educated workforce, infrastructure, stability and other public goods provided by government are those Americans who have made fortunes in this dynamic country. It is entirely reasonable that the richest Americans pay taxes at higher effective rates, particularly to finance concerted action to resolve the problems that threaten to unravel our society.”

  • Singles earning over $200,000 and couples with incomes over $250,000 will pay 0.9 percent more Medicare tax. For the first time a new 3.8 percent tax will be added to income from interest, dividends, annuities, royalties, and rents. Someone making over $1 million a year will see their tax bill jump by almost $46,000. The reform also taxes high cost "Cadillac" health plans.  As CTJ noted, the Medicare tax “will be transformed from a regressive tax to a progressive tax that no longer exempts the income of wealthy investors.”  This change came about due to the concerted efforts of a broad coalition led by CTJ, in which UFE took part.
  • According to the New York Times, the economic benefits “flow mostly to households making less than four times the poverty level — $88,200 for a family of four people”  which will really help reduce inequality.
  • The NY Times also noted, “The bill will also reduce a different kind of inequality. Since the late 1970s, the share of Americans with health insurance has shrunk. As a result, the gap between the economic well-being of the sick and the healthy has been growing, at virtually every level of the income distribution.” Insurance reform will help to turn that around.
  • It reduces the risk of financial ruin due to medical costs — a risk which until now fell more on families with fewer financial resources, a disproportionate number of whom are African American or Latino.
  • Because communities of color are the most likely to be uninsured, they will benefit the most from this legislation.
    • Eighty-one percent of African Americans who are currently uninsured will get coverage either through the Medicaid expansion or through government subsidies.
    • Sixty percent of uninsured Latinos and Asian Pacific Islanders will get coverage.
    • For Native Americans, it permanently reauthorizes the Indian Health Care Improvement Act.

Q: So what’s the downside?

A: It’s still “business as usual” in key areas.

  • The reform does not use a single payer approach to paying for health care. Instead of establishing a “Medicare for all” or public insurance option, the reform provides state insurance exchanges. In the future, we hope it will be expanded to include at least a robust public option.
  • The legislation continues the insurance industry’s ability to make huge profits by getting so many more people to buy health insurance.
  • Undocumented immigrants will not be able to receive subsidies or join health care exchanges. Everyone buying health insurance will have to show proof of legal residence. States can impose a five-year waiting period on lawfully residing immigrants who are eligible for Medicaid.
  • The reform continues the ban on federal funds to pay for abortion; women will have to pay separately for insurance that covers abortion.
  • It is not known how much the reform will actually control increases in medical costs.
  • More access to health care may not result in better health for people, due to the ill-health caused by extreme economic inequality, according to Too Much.

Q: So what’s next?

A: Some states plan to sue to repeal the reform, saying that it is unconstitutional for the federal government to require people to buy insurance. Most legal experts do not think they will succeed in overturning the reform, but let’s make sure of it. This bill is a very good start, but there’s room for improvement. Let’s get out there and do it!


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