By Judy Reed
President Obama signed the health care reform bill Tuesday, the first step in an overhaul mainly targeted at the insurance industry.
The house passed the bill by a majority vote Sunday, with the understanding that the Senate would vote on and pass a reconciliation bill amending some of the items. The bill was strictly supported by Democrats, and only received a majority once President Obama promised to sign an executive order banning federal funding of abortion, which was in the bill. Republicans balked at Obama’s offer, pointing out that an executive order can be rescinded at any time.
Many are hailing the bill as a historic breakthrough that will provide access to healthcare for 32 million Americans that wouldn’t have it otherwise. Under the plan, insurers would not be able to reject individuals with preexisting conditions, or cancel their healthcare when they get sick.
The plan does not offer a government-run single-payer plan. Instead, the bill builds on our current system of private insurance, mandates that individuals buy coverage and gives many subsidies to do so. They will be fined if they do not buy it, which has many wondering about the constitutionality of the bill.
Employers with 50-plus employees will be required to offer insurance to employees and will be given tax credits for doing so. But they will also be fined if they do not offer it.
It’s been said that the plan will cut Medicare spending by $500 billion. However, it’s a $500 billion reduction in the growth of future spending over 10 years, not a slashing of the current Medicare budget or benefits. According to factcheck.org, Medicare Advantage’s private plans (about 22 percent of Medicare enrollees) would see fewer add-on benefits. The bill aims to reduce the heftier payments made by the government to Medicare Advantage plans, compared with regular fee-for-service Medicare. The bill also boosts certain benefits: It makes preventive care free and closes the “doughnut hole,” a current gap in prescription drug coverage for seniors.
Another bone of contention has been the tax on the so-called “Cadillac” insurance plans. There will be a 40 percent tax on the value of plans above $10,200 for individuals and $27,500 for families, starting in 2018. The tax falls on insurers, but would be passed along to policyholders one way or another. The Congressional Budget Office believes it will boost paychecks by forcing workers to choose a less expensive plan, and that in lieu of the higher cost benefits, employers will raise salaries. But there isn’t anything saying they have to.
Most provisions in the bill go into effect in 2014, although some go into effect later this year.
A summary of House bill HR3200 and HR4872 can be downloaded here.