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How healthcare reform affects consumers

October 18, 2009|Kathy M. Kristof

The debate over healthcare reform has given one topic short shrift: How would reform affect consumers?

While some of the details are not yet decided (and may not be fully decided for months), a picture is emerging that could help you better understand how buying health insurance could change under the proposals.

The key issues for consumers fall into two broad categories -- market reforms and coverage guarantees, said Drew Altman, president and chief executive of the Kaiser Family Foundation.

Market reforms address how insurance companies can operate, and these changes are dramatic. Under existing law, insurers have the right to pick and choose their customers. They would not have that right under any of the reform proposals.

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Insurance companies would be barred from refusing to cover "preexisting medical conditions" and from denying coverage completely because of ailments that you already have or that run in your family.

In addition, the proposed laws would prevent companies from charging sick people so much for coverage that it would price them out of the market, Altman said.

"That's a sweeping change that touches everyone," Altman said. "You cannot get dropped or turned away if you lose your job or lose your insurance. And they cannot raise your rates to make it impossible for you to afford coverage."

Mandates

The flip side of that coin: You would have to buy insurance, whether you want to or not.

All the proposals require that you buy health insurance or pay a penalty, usually in the form of a tax. The amount of the penalty is a moving target at the moment, but it would probably amount to some percentage of the cost of bare-bones coverage.

A lot of people have a teenage reaction to mandates -- they don't like being told what to do. But experts explain that mandates are necessary here because they would eliminate the inequity of today's system.

Under existing law, you can choose not to spend money on health insurance without worrying that you won't get care. Why? Federal law demands that you get treated, regardless of whether you are insured or can afford to pay, said John Desser, vice president of public policy at EHealthInsurance Services Inc. in Mountain View, Calif.

The Emergency Medical Treatment and Active Labor Act, passed in 1986, says that you cannot be refused treatment or transferred to another facility when you are in an unstable medical condition.

As a result, people who are not insured merely need to wait until their condition is bad enough. Then they can go to an emergency room and get treated free of charge -- or rather at a huge cost, but to taxpayers rather than themselves.

That law is also why debates about whether illegal immigrants would get health coverage under the law are spurious. Yes, they will. They get coverage now. It's a matter of whether they get coverage through an insurance program or through emergency rooms, as they do now.

"We are a compassionate society," Desser said. "We have already decided that we don't want people dying on the street when they can't afford care."

Coverage changes

Whenever there's a mandate to buy coverage, the government also has to spell out what type of coverage meets that mandate. In other words, it has to create a model insurance policy that meets the requirements in the law.

Current proposals provide only a few details of what would be in these standard policies. Here's what we know so far:

* All policies would provide hospital, physician and preventive care.

* Young people would be able to buy a bare-bones policy called the "young and invincible" plan. It would have high deductibles and low premiums but would cover major medical.

* The amount you have to pay for such things as co-payments and deductibles would be capped. Under current proposals, the most a family would have to spend would be about $11,900 annually. After that, all costs would be covered, regardless of the restrictions in your plan. (Individual caps are half as much.)

* Consumers would be able to choose from a group of standardized policies, some of which would offer lower premiums but higher deductibles. Other policies would offer high-end coverage but at a higher monthly cost.

* Subsidies would be provided to people who could not afford insurance premiums or the cost of their deductibles and co-insurance. Currently, those subsidies would kick in for anyone with income below 300% of the federal poverty guidelines. These guidelines vary based on family size and location. A family of four living in the continental U.S. would get the subsidy up to about $66,000 in income, Dresser said.

The most contentious coverage debate boils down to this: Congress doesn't want to be accused of approving skimpy coverage. But the more it mandates in the model policies, the more you pay. If you demand that people buy insurance, you don't want to price them out of the market.

"There is a big balancing act going on between the cost of the legislation and the adequacy of the subsidies and the coverage itself," Altman said. "A lot of this is going to be tweaked several times as this goes through the process."

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kathykristof24@gmail.com

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