2014 is right around the corner. Are you confused about how the new healthcare reform law really works? This short animated movie explains the problems with the current healthcare system, the changes that are happening now, and the big changes coming in 2014. Written and produced by the Kaiser Family Foundation (we love them). We summarized the video here for you as well:
Explaining Healthcare Reform:
Running over a thousand pages in small print, the new healthcare reform law is very complex and far reaching. It will have a dramatic effect on our health, finances, and the way we deal with healthcare.
According to polls, opinion is evenly divided about Healthcare Reform. Polls show that about 1/3 of Americans believe that Healthcare Reform will improve our situation. Another 1/3 say it will worsen our situation, and the final third have no opinion.
The problems with the current healthcare system:
1.) Cost: Most people agree that health insurance policies are too expensive. For a family, the average premium is 14 thousand a year, and growing. Premiums have doubled over the last 5 years, overtaking the rise of inflation. And the population is aging, which means more people with more health problems.
2.) The system is full of holes. For example, individuals can be turned down for having a pre-existing condition. Small businesses may be charged extra if some of the workers are sick, making insurance unaffordable. Some policies have a “lifetime limit” on benefit spending, which means that after that limit is reached, the insurance plan will no longer pay for covered services. This means that 1/7 Americans are uninsured, while many more struggle to pay the minimum they can.
The reforms to of Phase 1, to occur between now and 2014:
Insurers will be limited in how they spend the money from premiums. If they use too much for administrative costs or profits, they will be forced to return some through rebates. This won’t stop premium increases, but it may slow them down. Preventative care like screenings and vaccinations will become free in all new private insurance policies and in Medicare. People over 65 or disabled who are on Medicare will get more help with their drug costs. Young people will be allowed to remain on their parent’s policies until age 26. Small businesses will get tax breaks to help them pay for insurance for their employees.
Some of the “holes” will be fixed as well. Lifetime limits on coverage are no longer permissible, and it will be illegal to turn down children who have a pre-existing health condition such as asthma or diabetes. Adults with pre-existing conditions will still be rejected between now and 2014, but they will be able to enter a government high-risk pool if they desire. The high-risk pool is a government subsidizing insurance plan for people with pre-existing conditions. Some believe these high-risk pools will help a lot of people, while others believe that they will not sustainable long enough to reach Phase 2.
Phase 2 begins on New Years Day, 2014:
Medicaid will be expanded to cover all low-income individuals and families in every state. Depending on wages, some people may be able to receive tax credit if the coverage their employer provides is insufficient. If your place of employment does not provide coverage, you will be able to buy coverage via a new institution called The Exchange.
The exchange is a virtual market place that offers a menu of options to compare plans. The exchange controls competition between insurance companies with strict rules. The idea is that giving consumers good information, a fair playing field, and lots of choices will result in more competitive rates.
In 2014, insurers will no longer be able to reject applicants who have pre-existing conditions. To prevent people from waiting until they are sick, everyone (with a few exceptions) must purchase coverage or pay a fee. Without this rule, we would not be able to require that everyone be eligible for coverage.
How much will this cost and how will we pay for it?
It is estimated that by 2019, 32 million additional people will be insured, but 23 million people will still be uninsured: undocumented immigrants, who aren’t eligible for coverage under the law.
It is estimated that reform will cost $938 billion dollars over the next 10 years. According to the Congressional Budget Office, this represents 2% of the federal budget, and 3% of overall health costs. Some of the money will come from health care providers and insurers in the Medicare program. The rate of increase for the fees the government pays to hospitals under Medicare will be regulated. Insurance companies that provide services to people on Medicare will be paid less.
Medicare will also create several experiments around the country to test different ways of paying doctors, hospitals and other providers to make the health care system more efficient and improve the quality of care. A new federal advisory board will make recommendations about other ways to deal with increases in health care costs. Additional costs will be covered by tax increase. People with high earnings will pay higher Medicare taxes. There will be new taxes on insurers and businesses who offer high-end benefit plans, and on companies that make medical devices and drugs.
Healthcare needs reform and the new laws could help a lot of people. But the system is very complex. It remains to be seen how effective the changes will be and how the cost will be distributed.