When President Obama> signed health reform into law last month, perhaps the biggest sigh of relief was heard from people without insurance.
After all, one of the primary goals of the Patient Protection and Affordable Care Act was to provide affordable health coverage to those lacking it. With the new law, 32 million additional Americans will obtain coverage by 2019, according to the Congressional Budget Office.
Although the bill most dramatically impacts the uninsured, others will see change as well some as soon as this year. Here s what consumers can expect.
If you re on Medicare:
Beginning this year, the law narrows the Medicare prescription coverage gap also known as the doughnut hole by providing a $250 rebate to seniors in the gap once they have spent $2,830. Starting in 2011, the complete elimination of the doughnut hole begins with an immediate 50% discount on brand-name drugs and a 7% discount on generic drug costs (that fall into the hole). After that, the legislation phases in additional drug discounts each successive year, and the gap is eliminated completely by 2020.
Another benefit: This year, cost sharing for certain preventive-care services is eliminated in Medicare plans. For the first time, recipients can get an annual wellness checkup and a variety of preventive diagnostic tests without co-payments or deductibles, says Joe Baker, president of the Medicare Rights Center, a nonprofit advocacy group.
Seniors who use Medicare Advantage plans private plans combining hospital, physician and drug coverage could see their premiums increased or benefits reduced. That's because the law reduces payments to those plans. Baker advises seniors to pay attention this fall when insurers new benefit packages are released. The rule for seniors especially this year is shop around. If your plan cuts benefits, look at what else is available, Baker says.
If you buy insurance on the open market:
Nearly 5% of the population or about 14 million Americans purchase insurance on the individual market, according to Kaiser Family Foundation (KFF), a health policy nonprofit.
These consumers are primarily self-employed, sole proprietors or aren t offered insurance through their employer. Regulated health insurance exchanges or marketplaces (set up by each state) are scheduled to launch in 2014, and insurers won't be able to charge consumers higher premiums based on their health status or exclude anyone from a plan because of a pre-existing condition. (If you work for a small business, a new tax credit this year could provide an incentive for your employer to provide health benefits.)
The exchanges will have to ensure that the plans offered meet government standards and include a handful of minimum benefits (including emergency services, maternity and newborn care, preventive services, and prescription drugs). Now, for example, some bare-bones plans don t cover prescription drugs; in a standard benefits package, that would have to be included, says Karyn Schwartz, a senior policy analyst at KFF.
The legislation sets up a review commission tasked with reining in skyrocketing premiums. Nevertheless, people who buy insurance on their own (and who don t qualify for subsidies) are likely to see higher premiums than they have now primarily because the new coverage will be more comprehensive overall, Herring says.
But without a reform bill, individual premiums would increase 13% to 14% anyway, so my assumption is premiums will increase even through exchanges, says Paul Keckley, executive director of the Deloitte Center for Health Solutions.
If you get employer-based coverage:
The bill brings some important changes for the more than half of Americans who get coverage through an employer. Starting in September, young adults (who are not full-time students and who are not offered health coverage through an employer) can stay on a parent s policy until age 26. And several insurers, including WellPoint (WLP),
Further out on the horizon is the so-called Cadillac tax on pricey health plans. Starting in 2018, the law will impose a 40% excise tax on the portion of insurance premiums that exceeds $10,200 for individuals or $27,500 for families. So if your plan costs $30,000 for a family of four, $1,000 (40% x $2,500) will be added to your premium.
If you have one of these high-cost plans, your employer may decide to get less generous in order to avoid the tax and the increase in premiums that would come along with it. Employers might choose to offer coverage that falls below the threshold by limiting prescription drug coverage or raising the deductible," says Bradley Herring, an assistant professor at the Johns Hopkins Bloomberg School of Public Health. In that case, workers would be compensated with higher wages, Herring says. But that s only if it actually takes effect.
Because insurance premiums tend to grow by 7% to 8% every year faster than the tax thresholds, which are tied to inflation, increase eventually many more people will get hit with the Cadillac tax. It seems unlikely to me that future Congresses will follow through and implement this Cadillac tax because it s going to be so unpopular, Herring says.