The underlying intent of health care reform was to provide a format in the market place empowering the consumer. The formulators of HCR attempted to push the re-set button on competition when the new law eliminated discriminatory practices toward pre-existing health conditions among other mandates. Combined, they hoped this revised market would reward only the carriers who were able to maximize efficiencies.
A likely unintended consequence could very well be a less competitive market. A rash of mergers and acquisitions may be looming over the next three years prior to the January 1, 2014 date, on which almost all of the mandates must be in place.
Some experts see another unintended consequence of fast rising prices for health insurance prior to January 1, 2014, when regulations govern premiums. The health insurance industry will surely push for some modifications such as increasing the “penalty for not enrolling”, or seeking limited enrollment periods.
Employers in the 50+ employees range may begin to lay off employees to fall below that threshold and avoid the burdens HCR is mandating. They may instead opt for longer hours rather than increasing staff to more than 50 employees.
In its present state, the totality of the mandates in HCR look to be moving the health insurance industry toward the same operating environment as public utilities. If the trend plays out, certain geographic areas may, in fact, see reduced competition. Small regional carriers would be the most likely for acquisition by the large multi-state carriers.
Research has shown that when the profit motive is removed, operating efficiencies of organizations diminish. Many fear the profit motive is being stripped from the health industry. Research and development of new technologies that diagnose and treat health problems could suffer.
You will hear many say US citizens have shorter life expectancies than other nations throughout the world and that is because the US does not have a comprehensive national policy on providing health care to all. The opponents say the life expectancy issue is more a function of life-style choices such as a poor diet and personal hygiene practices.
The debate will continue to be vociferous and heated for the years to come. As the Secretary of Health and Human Services, Kathleen Sebelius, issues rules and regulations, we will begin to see the direction HCR is taking, whether it will in deed become the biggest social program in American history or a catalyst to improve efficiencies and therefore reduce health care costs.
One certainty is known now. The 2700+ pages of HCR law will be challenged Constitutionally. The rules and regs that come out of HHS will be challenged in court and public opinion. New rules and regs will be issued to clarify previous determinations.
How we shop for insurance will change: Consumer Owned and Oriented Plans (COOPs), Exchanges, subsidies, private purchase, small group, large group and individual plans. The category in which you find yourself on January 1, 2014, will generally determine where and how you shop for insurance. For example, those who qualify for a subsidy may be required to buy through the Exchange in order to receive the subsidy.
Health plans with limited benefits will be forced to comply with mandates or cease marketing those products.
The minutiae are so vast and complex, and some people might come to see the system invasive of privacy. When you receive your W-2 statement, you will notice the value of your health insurance on it. If it is too rich, you will have some tax consequences. If nothing is listed, you will be fined. The IRS will be in charge of this monitoring process.
Picture this…..January 1, 2014, arrives. You’re a family with 2 dependent children. You recently had to sell your lake house last year to keep your health insurance from lapsing.
Your neighbor down the street decided to let the insurance company repossess its health insurance policy so he could hang onto his mountain retreat. He has offered you to feel free to enjoy his getaway anytime you need, but you feel bad because you can not reciprocate by allowing him and his family to enjoy the peace and relaxation your health insurance can offer, although you have offered to share with him a reading of the policy.
Then one crisp winter evening following days of white-out blizzard conditions, an avalanche fells the cabin with the two families trapped inside.
True/False:
Will your friend be able to buy health insurance on the way to the hospital?
False?...Then we all should be able to enjoy the health insurance reforms as providing a much welcomed relief to long lingering problems of skyrocketing premiums, exclusion of health conditions, and so on.
True?...Then a nightmarish scenario begins. You beat yourself senseless now having realized you did not need to spend all that money on health insurance. You could have kept your lake home after all. Yes, the premiums are high, but your neighbor only needed to pay the premiums only when he needed the insurance.
As far fetched as this story may seem, it is plausible. Unless, HHS issues parameters on mandatory enrollment, this is exactly what could happen. You will only need to buy the insurance when you need it. AND, it appears, the ambulance ride would also be covered.
Try this…
True/False:
You and your spouse hold separate jobs with large employers (groups over 50 employees). Both provide insurance. Will your employer be required to provide proof of your income to your spouse’s employer, and likewise with her employer?
True. This goes to the reporting requirements of HCR and the “Cadillac Tax,” and the eligibility requirements for subsidies.
Here are some more tidbits of information on how your taxes will be affected. The law is not supposed to tax those making less than $200,000 (single) or $250,000 (household).
-If you make over that income threshold your Medicare tax will increase by 30%.
-If you are able to itemize medical expense deductions, the 7% of Adjusted Gross Income is increased to 10%.
-Employers who are eligible for the Medicare Part D tax credit will lose that credit.
-Funds in Health Savings Accounts can no longer be used to purchase over-the-counter medications.
-The early withdrawal of HSA funds or Archer MSA funds for non-medical reasons will see a 100% increase in the penalty.
-Contributions to Flexible Spending Accounts will be restricted to $2500. That means more income will be subject to taxation.
-Unless you qualify for subsidies from the federal government, you will of course have to pay a penalty for not enrolling in health insurance.
As time goes by, the picture will clear up considerably, but at present many individuals and employers are just waiting to see what will happen. Perhaps the legal challenges will expedite the clarity. Maybe HHS will issue rules and regs more favorable to all. At this point, about all we can do is wait and see how it develops.
Be prepared for the future. Visit www.HealthInsuranceForTexas.com
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