Unless you've been living in a cave, you know the health care reform debate has been long, loud and contentious. But now that President Obama has signed the legislation, there are positives for your future health insurance in this reform, whatever side you're on. Although many of these changes won't be happening for years, exploring those changes now might make those opposed to the bill feel better about its passage.
1: Fewer uninsured Americans should lead to a lower-cost health care system.
If you don't understand what I mean by that, check out a story I produced called "Killer hospital bills." It's about an uninsured woman who went into a hospital emergency room with abdominal pain and emerged with a bill for $12,000. While the size of the bill was big, the real story was that the exact same services would have been billed to a Medicare patient at $4,000 and to an insured patient at $5,000. When I interviewed the hospital CFO and asked about the discrepancy, his response was that because so many uninsured patients don't pay at all, the hospital is forced to charge those who can exorbitant prices to recoup its losses.
That explanation is certainly shocking if you're the uninsured patient facing a bill three times larger than a Medicare patient's for the same services. On the other hand, it's hard to blame the hospital. A store that loses millions of dollars a year to shoplifters is faced with a simple choice: Charge paying customers more to recoup those losses or go belly-up. Hospitals that take patients who can't pay (and they have to by law if a medical situation is life-threatening) are faced with the same choice: Charge those who can pay more or close their doors. Hospitals can't charge either Medicare or insured patients more because those rates are negotiated in advance. So that leaves them with only one option: Charge the patients who can least afford it -- those without insurance -- a lot more money for the same services.
The bottom line? Even if you're an American who has health insurance and who doesn't care at all about those who don't, you should be happy with this bill or any other that radically reduces the ranks of the uninsured. Because any law that lowers the number of people who can't pay should theoretically save the entire health care system a lot of money, which in turn should reduce not just the overall cost of health care, but ultimately the health insurance premiums of every American.
In addition, adding 30 million people to the overall pool of the insured means spreading the risk and expense of health care across a much wider group. Over time, that should also contribute to lowering the cost of coverage for all of us.
Don't expect to see those benefits overnight, though. The provision helping some Americans pay for health insurance and forcing others to (if you don't have coverage, you can be fined up to $695 individually or up to $2,085 for a family of three or more, or 2.5% of your income) largely takes effect beginning in 2014. And even then, it will be years later before we see the broad positive effects described above.
Why couldn't we get this key reform to take place sooner? One reason is that this legislation requires states to establish what are called American Health Benefit Exchanges: insurance pools that hope to harness increased competition to help lower prices. And establishing these exchanges will take time. We will also have to wait years for the measure's full effects for the same reason the Credit CARD Act didn't go into effect immediately (thus allowing banks to raise their rates prior to enactment): Industry lobbyists wanted it that way. As the banks did when faced with legislation reining in credit card abuses, expect insurance companies to attempt to rake in as much as possible in the years before many of these provisions become law.
2: No more caps on coverage.
Six months after the president signed this bill, insurance companies will no longer be able to cap your coverage, either annually or over your lifetime. This is a big change, and one you'll be happy with should you ever develop an illness that requires big bucks to address. Prior to this reform, insurance companies routinely employed lifetime caps of $1 million to $3 million. Which means if you spent more than that over your lifetime, you'd lose your coverage and be forced to pay every bill yourself, a virtual guarantee that you'd be bankrupt shortly thereafter.
While removing these caps could increase insurance company risk and exposure -- costs that might be passed through to policyholders in the form of higher rates -- it may well keep you or your loved ones from going bankrupt should you run out of insurance before you run out of disease.
Continued: Insurance companies can't refuse coverage