With enactment of health care reform, voters can finally learn what’s in the new law. Up until now, the continuing uncertainty allowed everyone to apply their best hopes and worst fears to the various proposals.
As with just about everything coming out of Congress, health care reform is a compromise, meaning that it ends up being neither anyone’s best hope or worst fear. It does, however, make a lot of changes in our health care system.
The biggest changes for Americans under age 65 will be that they cannot be denied insurance due to preexisting conditions and that everyone will be required to have insurance, with subsidies for those who can’t afford the premiums.
For those over age 65, the law would includes the following elements:
- Deficit reduction. While the bill would spend more money due to its providing coverage to an additional 35 million Americans, it also includes many provisions that will either cut costs or produce new revenue. As a result, according to the latest estimates by the Congressional Budget Office, the Senate version will save $118 billion over 10 years.
- Medicare. Most of the costs savings are in the Medicare program, a fact which has made many seniors fearful that their benefits will be cut. In addition, the plan calls for an increased Medicare premium for those individuals earning more than $200,000 a year and married couples whose income exceeds $250,000. A combination of the additional revenue and savings are estimated to extend the life of the Medicare Part A trust fund for an additional 7 to 10 years from its current insolvency date of 2017.
The cost saving measures do not affect the basic Medicare benefits to which all enrollees are entitled. However, those enrolled in Medicare Advantage plans may lose some extras they offer, such as reimbursement for gym membership, free eyeglasses, and other incentives to join their programs.
The reason for this is that up until now, Medicare has paid insurers who offer these plans on average $135 a month more than they spend on other Medicare beneficiaries. The original idea of Medicare Advantage was to save money by paying them less, the idea being that private insurers could be more efficient than the federal government. The opposite turned out to be the case. Health care reform would pay the private insurers the same amount Medicare spends on other beneficiaries, meaning that some insurers will choose not continue their Medicare Advantage plans and others will curtail extra benefits they offer enrollees.
There are many other changes in the law aimed and curtailing costs and improving care, such as a program for doctors and hospitals to coordinate care after a patient’s hospitalization to try to avoid the all to frequent quick return to the hospital.
- The Donut Hole: As all seniors know, the Medicare Part D prescription drug program covers medications up to $2,830 a year, and then stops until the beneficiary’s out-of-pocket cost reaches $4,550 in the year, at which point coverage begins again. The gap is known as the “Donut Hole,” into which many seniors fall around Labor Day, at which point they have to pay for the medications out of pocket through the end of the year. While the Senate bill (which has been turned into law) does not close the Donut Hill, the House reconciliation bill still awaiting a vote by the Senate would close the gap.
- The CLASS Act. Health care reform contains a limited long-term care benefit championed by Senator Ted Kennedy before his death, and known as the CLASS Act, which stands for the Community Living Assistance Services and Supports Act. It would provide every American taxpayer they opportunity to set aside a monthly sum of between $50 and $100 to be drawn on for long-term care costs, whether at home or in an assisted living or nursing facility. The payments coming out would be around $50 day, but in many cases this can make all of the difference between being able to stay at home and having to move to a nursing home. Everyone will have to pay into the program for at least five years before they can begin drawing benefits.
It’s an opt-out program, meaning that while it’s voluntary, the premium will be deducted from your paycheck (if you’re working) unless you choose not to participate. Some have expressed fears that so-called adverse selection could undermine the program. In other words, only those likely to need care in five years will enroll – especially those who are turned down for private long-term care insurance due to preexisting conditions – and all of the healthy younger taxpayers will opt out of a program that they don’t anticipate needing for at least 40 years. The result could be that not enough money comes in to pay out to the people who need support.
During its long gestation, health care reform came under attack from the left as being inadequate because it still leaves most of health care in the hands of private insurance, and under attack from the right as a government takeover of health insurance. It was hard for the voter to know who to believe, which left many to conclude that they were better off if Congress didn’t act. Now that Congress has taken this step, it will take up to four years for all of the features of the new law to take effect. It may take us even longer turn learn and understand all of its consequences. No doubt, adjustments will be needed to make it work as well as possible.
Harry Margolis founded Margolis & Bloom LLP, a six-lawyer Boston law firm in 1987. He has been a designated “Super Lawyer” since 2005 and is Founder and President of ElderLawAnswers that supports seniors, their families and their attorneys by providing various online tools and resources.