Obamacare Upheld: How Health Care Reform Will Affect Your Wallet and Your Life

HealthcareOn Thursday morning, when the Supreme Court ruled that the Patient Protection and Affordable Care Act -- aka "Obamacare" -- was constitutional, there was a brief pause as the country took a moment to imagine what this brave new world would look like. Had socialism won the day? Were death panels on the way? Would children be roused out of their beds for compulsory morning calisthenics?

Within moments, Twitter was hopping with messages from conservative dissenters such as Michelle Malkin, Ari Fleischer, the Heritage Foundation, and dozens of others, vowing to keep fighting health care reform all the way. But outside the beltway in the rest of the country, many Americans simply wondered how this ruling would affect their daily lives.

Back to the Future

In some ways, the future is already here. Many portions of the PPACA have already been quietly enacted. The government has streamlined the approval process for generic drugs and expanded Medicare's prescription benefit. It has levied a 10% tax on tanning booths, and passed several rules that will make it easier for people with "pre-existing conditions" to get the lifesaving treatments they need. For insurance companies, lifetime limits on coverage, price gouging, and a host of other cost-cutting measures are now illegal.

Slowly, almost imperceptibly, medication is getting cheaper, insurance coverage is getting easier to attain, and a healthy lifestyle is becoming more attainable.

Now, we can expect that over the next few months, more and more of the future will show up. Starting in August, new insurance policies will not be able to charge a copay for many forms of preventive care -- in other words, treatments like colonoscopies and mammograms will be free for patients who open new insurance policies. A few months later, people who make more than $200,000 per year will start having to pay an extra 0.9% tax which will help fund health care.

The Big Changes You'll Hardly Notice

These are little things, incremental changes that most people won't notice, except perhaps to occasionally wonder about when medications got cheaper or why achieving the Snooki look has gotten more expensive. But the big transition, the creeping socialism that Obamacare detractors are really worried about, will arrive in 2014. That's when everyone will either have to get insurance or pay a tax.

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The funny thing is, creeping socialism probably won't feel much different than the current system. Imagine, if you will, an ordinary, middle class family. For mom and dad, who work full time, insurance will still be provided through work. They'll still go to the same doctor, pay the same copay, and head to the same hospital when things get dire. Their kids will still get the same care, too, although they'll be able to take advantage of their parents' health insurance until they're 26, if they need to.

As for grandpa and grandma, if they're over 65, they'll still be insured by Medicare, and their lives will largely go on as usual. If they're younger, and suddenly find themselves without insurance -- if, for example, grandpa is laid off from his job -- they will be able to get health insurance in spite of their pre-existing conditions. So grandpa may be stuck working part-time as a Walmart greeter, but he won't have to worry about paying for his insulin and blood pressure meds.

The Big Changes You Will

But what if grandpa's new job doesn't pay much and he can't afford insurance? Well, the new law may still cover him. One aspect of PPACA is that people who make up to 133% of the poverty line -- for a household of two adults and one child, this would be $23,344 -- would be eligible for Medicaid at no cost. Meanwhile, families that make up to 400% of the poverty line -- for a household of two adults and one child, this would be $70,208 -- would be eligible for some form of discounted insurance rate, scaled to their income.

So mom and dad, grandpa and grandma, and the kids are covered. What about Uncle Hank, the uninsured rebel with the ponytail and the motorcycle? Well, assuming he makes more than 400% of the poverty line, Hank's going to face a tough decision: He can either get insurance or pay a tax that will probably be slightly higher than the cost of insurance.

Hank might be able to get insurance through his work, but if he can't, the new law will give him another choice. It requires each state to create a health insurance exchange -- basically, an online marketplace where various insurance companies can directly compete with each other. Here are some proposals for Minnesota's health insurance exchange.

If Uncle Hank decides not to pay the health care tax, he would likely go to the exchange, pick a plan, set up a direct deposit program to take money from his paycheck -- much like the health insurance withholding that mom and dad pay -- and get an insurance card. And, later, if Hank gets into an accident on his bike, his insurance would cover his trip to the emergency room, as well as his ensuing operation and physical therapy.

The Winners and the Losers

So who wins and who loses under the new insurance program? For insurance companies, it's going to be a mixed bag: On the plus side, they will get millions of new, relatively young customers like Uncle Hank who will be cheap to insure, and will add mightily to their coffers. On the opposite side, they'll also get millions of older, low-income customers -- like grandpa and grandma -- who will be expensive to insure, and will have pricey pre-existing conditions. Overall, the insurance companies will probably make a tidy profit.

For the poor, the chronically ill, and the unemployed, the new insurance program will also be a definite win. Millions of people will be able to afford basic health care, get diagnostic tests, and buy medications. Many will be covered by an expanded Medicaid program, and those who aren't will likely see a steep drop in the cost of insurance.

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Obamacare Upheld: How Health Care Reform Will Affect Your Wallet and Your Life

This one could be an innocent mistake. There are many departments within a hospital, and it can be difficult for each one to know what the other is putting on the tab. For example, the hospital may charge for your anesthesia, and the anesthesiologist might charge you again. A quick review of your bill should reveal mistakes like this.

If you can, pay attention at the hospital (or designate somebody else) to make sure you only get billed for services actually provided. Sometimes the slip-ups are easy to overlook, like being charged for an extra dose of antibiotics that was never actually administered.

This is another easy one for the average person to miss. You may be diagnosed and treated for the flu, but charged for treatment of bronchitis. A quick Google search can help you verify the codes on your bills.

When Goldstein first started looking over his daughter's bills, this was one of the first things that stood out to him. "When I looked at my bill for my daughter, the operating room charge was $7,400. I thought that was excessive for a 20-minute procedure. The hospital tried to justify the cost by stating that it took an hour and a half to reset my daughter's leg, which means they charged me for the time it took to prepare and set up, which they are not allowed to do." The physician fee schedule search tool at the Centers for Medicare & Medicaid Services website provides payment rates to use for comparison purposes.

This is a tough one. Most doctors are independent contractors, not hospital employees. So while you may go to an in-network hospital, it's not uncommon for an out-of-network doctor to treat you. Unless you ask, you have no way of knowing up front. In emergency situations, asking your doctor what insurance he accepts is likely the last thing on your mind. But if you or someone you are with has the presence of mind to ask, your savings account may thank you for it later.

Excessive hospital billing practices will continue unless consumers get smart about examining and questioning the cost of care.

According to Goldstein, "Less than 15% of patients ask if their bill can be lowered. Of those who do ask to have their bill lowered, approximately 40% receive a discount."

Goldstein's advice: Don't pay any medical bill until you have had a chance to try and negotiate for a lower fee. And if you find fraudulent charges on your bill, it's your right to speak up. The more people who do, the more difficult it will become for unfair billing practices to continue.

For the average taxpayer, the new program will also be a win. Right now, a lot of the basic health care in America takes place in emergency rooms, where uninsured people end up when their colds turn into pneumonia, their untreated diabetes turns into a coma or an amputation, or their unmedicated high blood pressure leads to a heart attack. Many of these emergency rooms are already receiving taxpayer dollars. Preventing major, expensive health crises while they are small, inexpensive-to-treat problems saves everyone money.

In fact, the biggest losers of the new health care program will be folks like Uncle Hank, who previously didn't worry about health insurance, but will now have to pay for it. On the other hand, many will now have access to preventative care and basic medical care that were previously unavailable. Speaking as someone who once had to pay over $1,000 out-of-pocket for the treatment of a broken hand, I'd argue that mandatory health insurance might be an unwelcome prescription, but it is hardly unnecessary medicine.

Bruce Watson is a senior features writer for DailyFinance. You can reach him by e-mail at bruce.watson@teamaol.com, or follow him on Twitter at@bruce1971.
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