The Health and Human Services Department has introduced a lot of Health Care Reform regulations and rules in the past few months. The media grabs it every time it happens and many articles are published in the Wall Street Journal, New York Times and TV news programs. All analysts begin to discuss the pros and cons of the news and how it affects businesses and individuals.
This is where the problem lies. Many times, one writer has looked at the regulation and written a piece about. Other writers then take pieces from the first article and modify them to fit their articles. The actual regulations and rules are often distorted and misrepresented by the media when the information is widely distributed.
There is a lot of misinformation about ObamaCare. One thing I have noticed in my conversations with clients is that there is an underlying set myths about ObamaCare that are not true. These myths are often believed to be true because of what they have heard in the media.
Today, we will be discussing three myths that I most often hear. These myths may not be believed by everyone, but many do.
The first is that health reform does not affect uninsured persons. The second is that health care reform won’t affect Medicare benefits or the Medicare program. The last is that healthcare reform will reduce healthcare costs.
Health Care Reform Does Not Affect Uninsured
Let’s examine the first myth that health care reform will only affect uninsured persons. I often hear clients say that they have coverage so they won’t be affected. Or they will use the expression “I already have coverage so I won’t be affected” or “I’ll just keep my grandfathered insurance plan.” The last one is true, but I can’t deny it. It is “I have group insurance so I won’t be affected.”
The truth is that everyone will be affected by health care reform. We will have a new set of health insurance plans starting in 2014. These plans offer many more features than the current plans. These plans will be more expensive.
Health Care Reform’s Impact on People With Health Insurance
These plans will be available to people who have current health insurance. This will directly affect the insured as the current health plans they have are ending and they will be mapped to a new ObamaCare plan in 2014.
Health Care Reform: The Impact on the Uninsured
Uninsured people face an additional problem: if they do not get health insurance in 2014 they will be subject to a mandate penalty. Many healthy people will look at the penalty and say “Well, it’s 1% of my adjusted income. I make $50,000 so I’ll have to pay $500 or $1,000 for insurance.” In this case, I will accept the penalty. They will still be affected by the health care reform. It affects both the insured and the uninsured by its mandate.
Health Care Reform and Grandfathered Health Plans
Health care reform will not directly affect grandfathered plans for health insurance. However, because of the length of their grandfathered plans, they will be more expensive as they find that new plans are available that offer a wider range of benefits and would be more beneficial to any chronic conditions they might have.
People who remain in grandfathered plans will see a decrease in subscribers. As a result, the cost for grandfathered insurance plans will rise even faster. ObamaCare will also affect grandfathered plans.
Health Care Reform and Group Health Insurance
The health care reform will be most significant for the last group market, which is small-group marketplace. Although the regulations governing health care reform will most affect large and middle-sized businesses and those with 50 employees or more, small companies will also be affected by the law, even though they are exempted from ObamaCare.
Many polls and surveys are beginning to indicate that many businesses with 10 or fewer employees will seriously consider dropping health insurance coverage. It won’t be an expense for them. They will instead have their employees obtain health insurance through the exchanges.
Some carriers now predict that as many as 50% of small businesses with 10 or fewer employees will drop their health insurance plans sometime in 2014 to 2016. This will have a significant impact on everyone who has group health insurance, particularly if they are in one of the small companies that drops their health insurance coverage.
Health care reform will not only affect the uninsured, but all people will be affected.
Medicare Reform Will Not Affect
Next was the myth that Medicare would not be affected by health care reform. This is a funny one because the cuts that were most noticeable in the Medicare program’s budget were made right away. If you examine Medicare’s share of the overall federal budget, you will see that it was only 4% in 1970 and had grown to 16% by 2011.
When we look back over the past 10 years, 2002-2012, Medicare has grown almost 70% in that time period.
Due to the size and rapid growth of Medicare, ObamaCare has made it one of its key programs. It is not going to bankrupt the U.S. Medicare. In fact, the initial cuts to Medicare are already at $716 billion.
Medicare Advantage: The Cuts and the Effects
The Medicare Advantage program will experience the largest impact of the $716 billion reduction. This will increase premiums for Medicare Advantage plans and decrease the benefits.
Medicare Advantage Prices Increased
Many people are choosing Medicare Advantage plans right now because they have no premium. People view Medicare Advantage plans as an easy option because they are free. They will see Medicare premiums rise, going from zero to $70 to $80 to $90 to $100. This has already been seen with Blue Cross Medicare Advantage plans. As we move forward, it will only get worse.
Medicare Advantage Benefits Reduced
Many Medicare Advantage plans will increase the copayments, deductibles and co-insurance rates to reduce premium increases. To keep premiums low, they will push more costs onto Medicare Advantage beneficiaries. We will see Medicare Advantage plans with higher premiums and lower benefits.
Fewer Medicare Physicians
As if all that weren’t enough, Medicare doctors will stop accepting new Medicare Advantage beneficiaries as they receive lower reimbursements for Medicare Advantage patients. If there aren’t changes made in the next five year, we will see the number of Medicare doctors supporting people start to shrink. Medicare will be affected and health care reform will have a significant impact on it. Everyone is kind of waiting on the outcome.
Health Care Reform Will Lower Healthcare Costs
Last but not least, the most common myth about health reform is that everyone believes ObamaCare will lower healthcare costs. This is utter nonsense. When they first started the process of drafting the rules and regulations, healthcare cost reduction was the main goal.
However, somewhere along the way, their goal shifted from cost reduction towards regulation of the insurance industry. After that transition, cost reductions were put on the backburner. ObamaCare has some cost-reduction components, but the real focus is on regulation of health insurance. For example, the new plans have more benefits than most plans. Richer benefits mean higher prices.
Subsidies for Health Care Reform: Will They Make Affordable Plans?
Many people believe that subsidies will make it more affordable to purchase health insurance. In some cases, subsidies may make plans more affordable. If you earn $1 more than that, affordable plans can suddenly become extremely expensive and cost thousands of dollars per year. It is still unclear whether a subsidy will make it affordable. We will have to see the rates for these plans.
New Health Care Reform Taxes passed on to Consumers
To pay for ObamaCare, there are a lot of new taxes related to health care reform. This means that everyone who has a medical insurance plan, regardless of whether they are part of a large or small group, will be taxed to help pay for reform. The health care reform will add various taxes to the cost of health care. However, insurance companies won’t have to collect or pay them, and they will just pass it on to you, the consumer.
The Mandate Will Not Reduce Uninsured Very Much
The mandate was very weak during the first years of reform to health care. The mandate states that everyone must have health insurance, or they will be subject to a penalty (a tax). This mandate will make people who are healthy just wait and watch for it to come to an end. All people with chronic conditions, who couldn’t obtain health insurance before, will be able to get healthcare coverage at the start of 2014.
The cost of the plans will rise in 2015, at the end. Because the plan’s cost will rise in 2015, I can assure you that it will. The plans aren’t going to appeal to young healthy people. They won’t see any benefit in joining an expensive plan. However, the chronically ill will be able to join the plans and drive up the cost.
The Purpose of Health Care Reform Is Only A Matter Of Semantics
This is the last section. One of the key points – and it’s hilarious, I saw it for both 2010 and 2011, was that Health Care Reform would reduce the cost we would see in future, if nothing is done today. This was repeated over and over. This was the way they presented health care cost reduction. It would lower future costs. It would not be possible to reduce the costs of future care if we didn’t act now.
