Landmark Health Reform: How Changes Will Affect You

Melly Alazraki
Updated

Finally, after a year of delays and debates across the nation, the House Democrats passed the health care bill by a vote of 219 to 212 late Sunday night -- significantly changing health policy in the U.S.

President Barack Obama, who had hoped to see an agreement at least six months earlier, will soon sign the bill -- already approved by the Senate -- into law.

The bill comes with a hefty price tag of $940 billion over 10 years. The Congressional Budget Office estimated that it would reduce the federal deficit by $130 billion in the next 10 years, and by $1.2 trillion during the following 10 years. But Republicans disagree, saying that other than meddling with the rights of individuals and companies when it comes to health care -- and thereby creating an inferior system -- the new legislation will also drive up costs and increase the budget deficit.

Some of the big changes will be effective immediately -- within six months of signing the bill; others will begin in a few years. Here are some of the main changes:

Coverage and Subsidies

  • The bill will require most Americans to have health coverage or pay a penalty, thus extending health coverage to 32 million Americans by 2014.

  • The new legislation will give subsidies and tax credits to help lower-income workers pay for coverage, expanding the Medicaid government program. Again, these measures won't come into effect before 2014.

  • Starting in 2014, there will be state-based exchanges where those who can't get insured alone or through their employer can compare and shop for plans, with government subsidies available to some.

  • Employers with more than 50 workers who don't offer coverage will be subject to a penalty, but the government will also offer tax credits to those who do.

  • Medicare "doughnut hole" -- where patients pay the full cost of drugs after a limit is reached -- will be closed by 2020.

Insurance Reform

  • The bill will bar insurance companies from revoking coverage or refusing to cover individuals who are sick or have a pre-existing medical conditions. This will be enforced sooner for children, later for adults. Also, parents will be able to keep children on their insurance plans through age 26. Similarly, insurers will not be allowed to charge women or persons with medical problems higher rates.

  • Ceilings on annual or lifetime benefits will be eliminated. Also, people will be able to take their coverage with them if they leave a job.

  • Insurers will have to reveal how they spend premiums -- how much is used to cover medical care versus how much is spent on executive salaries and administrative costs. They will have to pay at least 85% of group plans and 80% of individual plans on medical care.

  • There will be "essential benefits" that insurers must provide, but those will have to be drafted by the health and human services department first.

Funding the Bill

  • The government will impose a 3.8% Medicare tax on wealthy Americans earning more than $200,000 or $250,000 for a couple a year beginning 2013.

  • A tax on high-cost policies offered by health plans kicks in only in 2018.

  • There will be Medicare and Medicaid cuts.

  • Fees or taxes on insurers, drugmakers, medical-device companies.

Drugs

  • Generic copies of biotechnology drugs -- biosimilars -- will be allowed, but this will take a while as the Food and Drug Administration has to first decide on the process and regulations.

  • The drug industry will begin offering discounted drugs to elderly Medicare patients next year.

Research and Doctors

  • The bill will support research on comparative effectiveness of various medical treatments.

  • Physicians will not be allowed to refer Medicare patients to hospitals in which they have an interest.

Abortion

  • Obama will issue an executive order to ensure that no public monies are used to subsidize abortions.

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