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How does health care reform hit home?

(This is Part 1 of a 2-part story about The Patient Protection and Affordable Care Act signed into law by President Obama last year. Read Part 2 here.)

Saturday, Jan. 15, 2011

Talk with local businessmen about health care reform that was signed into law by President Obama last year and the first comments you're likely to hear will center around who is going to pay for it? The obvious and simple answer is, of course, all of us. But beyond that, there's nothing simple or obvious about understanding the new health care law beginning with its name.

After much discourse and wrangling from both sides of the political aisles, President Obama signed into law The Patient Protection and Affordable Care Act on March 23. (It was amended by The Health Care and Education Reconciliation Act on March 30.) Some refer to the new law by its acronym PPACA, others by it's full name, others by ACA, andsome simply by health-care reform. Those not caring for its passage prefer "Obamacare."

Whatever your feelings regarding the past, current or future state of health care in America, one thing everyone can agree on is that few facts about health-care reform were aggressively presented to the public prior to its passage. However, myths revolving about the bill were.

"Death panels," taxpayers paying for abortions, coverage for illegal immigrants and that the law will put insurance companies out of business made headlines and were the subject of countless talk-show discussions -- more than any about the facts of the law. As one industry expert said, "It was easier to use a death panel sound bite than explain what was going to be in the new law."

Consequently, many knew little about health-care reform before it was passed and that dilemma continues. Two months after it was signed into law, for example, the Employee Benefit Research Institute conducted a 2010 Health Confidence Survey. Results showed nearly 40 percent of respondents didn't know when the health reform act was to go into full effect. Today, many still don't.

When did reform begin?

Benefits from health-care reform began rolling out in June when the first $250 checks were mailed to seniors who hit the Medicare Prescription Drug "Donut Hole." That was, however, just the first of a host of other benefits the act put in place last year, many of them big.

For instance, since Sept. 23, insurance companies offering new health plans or existing group plans no longer could deny children under age 19 coverage because of a pre-existing condition; coverage rescinded for an insured individual because of an error or technical mistake found in that customer's application was no longer possible; lifetime dollar limits on things like benefits or hospital stays could no longer be imposed; and young people up to age 26 could remain covered under their parents' health plan. There were also tax credits for small businesses put in place that extend to 2014. And the list goes on.

"What we're seeing in the first nine months is that this new law is giving people more freedoms and more choices," Health and Human Services Secretary Kathleen Sebelius said. "It's beginning to free families from some of the worst abuses of insurance companies. People no longer have to worry about losing coverage if an insurer finds a mistake in their paperwork, or if they are seriously ill and reach a lifetime dollar limit on their policies. And it's freeing Americans with pre-existing health conditions from being denied coverage."

But wait, there's more

As of Jan. 1, a few other items are now in place including providing seniors with a 50 percent discount when buying Medicare Part D covered brand-name prescription drugs (this coverage stops in 2020), offering them free preventive services and wellness visits, and better care for high-risk Medicare beneficiaries.

Beginning this year, the law also requires insurance companies covering large employer plans to spend at least 85 percent of premium dollars on health care services. That percentage drops to 80 for plans sold to small companies and individuals.

In the years to come health-care reform is supposed to reduce paperwork and administrative costs, provide options for long-term care insurance, increase Medicaid payments to primary care doctors, establish heath insurance exchanges, and on Jan. 1, 2015, a provision that pays doctors based on the quality of care they provide -- and not the volume of care.

Again, that's merely a sampling of what's in the act. An easy-to-read timeline of the changes to our health care system is available at www.healthcare.gov/law/timeline/index.html.

How much will it cost?

Read through what's included in that short list of health care changes and the question of funding can't be ignored. Neither can the fact that the cost of health care has been skyrocketing in the United States for years. Or that estimates of how much reform will cost are all over the board.

Regarding health care costs, Sebelius says, "Insurance rates for families and business owners have gone up 131 percent over the last decade, while other consumer products are up about 30 percent."

How much the health care reform act will alter those costs is unclear.

"I'm not saying that the bill is bad or that it's good, but there is a cost to everything that's been put in it, and everything that isn't," says Richard S. Bernstein, chief executive officer of Richard S. Bernstein & Associates. "I don't think America understands that."

As for the full price tag, a House Budget Committee report this year finds that the cost of the new health care law will be $2.6 trillion once all aspects are in place. Congressional Budget Office estimates are roughly half of that. Plus, the CBO estimates the law will lower the deficit by more than $100 million this decade and by more than $1 trillion in the next.

Time will tell how accurate any of those estimates are. Until it does, there is plenty of opposition to the Affordable Care Act nationally and locally.

Earlier this month, U.S. Rep. Eric Cantor, the House Republican whip, said he plans to use every tool available to fully repeal the health care reform act: "If all of Obamacare cannot be immediately repealed, then it is my intention to begin repealing it piece by piece, blocking funding for its implementation and blocking the issuance of the regulations necessary to implement it."

Locally, Bernstein would like to see a "do over" and the act repealed. While he agrees everyone in America should have health care, he says there's a better way to deliver and pay for it.

"Why don't we take the uninsured and the illegals and put them under the government's VA system? Expand the hospitals that have already been built, expand them into cities (around the country) so it doesn't affect private enterprise," Bernstein said. He estimated that by doing so, millions could be saved. With the current bill in place, he predicted price increases on everything across the board.

Michael Dixon, director of planning and wealth management at Carl Domino, is also not a fan of the act and points out that in 2013, high-income individuals could face new Medicare-related taxes.

Sebelius: System broken

Whether you're a fan of the Affordable Care Act or not, the health care system prior to the law being passed wasn't working for everyone. Speak with those unable to afford coverage and you'll hear first-hand about their fears and concerns.

"We have had a broken system and what we needed was a strategy to reform it, and that's exactly what Congress passed," Sebelius said.

As for its costs, in addition to the services provided, she said that given the competitiveness of the global economy, a healthy workforce is imperative.

"What we couldn't afford was doing nothing."

READERS: Look for the IMPACT OF REPEAL in Part 2

To read more articles, please visit the column archive.

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