Thursday, October 2nd, 2014

Everything you want to know about the health care law*

President Obama signed the Patient Protection and Affordable Care Act on March 23, 2010.
President Obama signed the Patient Protection and Affordable Care Act on March 23, 2010.

The health care law turns 2 years old this week, and polls show the public still has a hard time understanding what's in the law. We can understand the confusion: Many of the law’s most biggest features don’t kick in until 2014 and the falsehoods about the law have often drowned out the truths.

Some provisions have started, though: Young adults can stay on their parents’ insurance until age 26. There are new state programs where people with pre-existing conditions can buy insurance. Insurers can no longer put lifetime dollar limits on coverage.

Here’s our overview of how the law works, based on our many fact-checks on health care.

Leaves in place employer-provided insurance. About 60 percent of Americans get health insurance through work, and studies show many people like their coverage. The law keeps that system in place. It does not require employers to offer insurance, but it does impose taxes on employers if they don't offer insurance and their employees qualify for new health insurance tax credits.

Health insurance exchanges. These are for people who have to go out and buy health insurance on their own, or for employees of small businesses. The law creates state-based exchanges, which are virtual marketplaces where individuals and small businesses can comparison shop. The government regulates the exchanges so that insurance companies can't discriminate against people with pre-existing conditions, or charge wildly different amounts for similar coverage. Some Democrats wanted a public option, which would have created a government-run insurance program to compete with private insurers, but that didn’t make it into the final law.

More regulation for insurers. People won't be able to buy high-deductible, catastrophic plans that only kick in for major medical expenses. Insurers will have to cover preventive care, and they won't be able to cut off coverage unfairly or set annual limits on benefits.

More for the poor. The plan expands eligibility for insurance programs like Medicaid and the state Children's Health Insurance Program. All poor people will qualify for Medicaid. (Previously, a person had to be poor and also elderly, disabled, pregnant or a parent to qualify.) People of modest means would receive tax credits to buy their own insurance on the health insurance exchange.

An individual mandate. This requires people to buy insurance unless they qualify for a hardship exemption. The law was intended to cover everyone, either through their employer, the new health care exchanges, the Veterans Administration, Medicaid or Medicare. People who don't buy insurance would have to pay a penalty on their taxes, but they can’t be jailed or face criminal penalty if they don’t pay. The government could withhold their tax refunds, though. This is one part of the law that is being challenged before the U.S. Supreme Court.  

Medicare. The law makes changes to how Medicare pays doctors and other health care providers. Taken as a whole, the new rules aim to pay doctors for good patient outcomes instead of paying them per procedure, also called "fee-for-service." The law eliminates excess payments to the Medicare Advantage program, which typically offer seniors extra benefits beyond what traditional Medicare offers. An independent payment advisory board, called IPAB, will set rules to reduce the growth of costs and improve the quality of care for Medicare beneficiaries. Its recommendations would take effect unless Congress overrules them.

New taxes. To pay for the expanded health care coverage, the law institutes several new taxes. One of the biggest is increasing Medicare payroll taxes for couples who make more than $250,000 a year and individuals who make more than $200,000; their rates go from 2.9 percent to 3.8 percent, and the 3.8 percent applies to investment income as well. There’s a new tax of 2.3 percent on manufacturers and importers of certain medical devices. Those provisions start in 2013. There’s also a tax on high-dollar "Cadillac" plans that cost more than average that starts in 2018. A new 10 percent tax on indoor tanning is already in place, as well as increased taxes on tobacco to pay for children’s health insurance.

Research on better treatments. A comparative effectiveness research center will conduct and publish scientific research to find which treatments are the most effective. The government hopes easy-to-access information for doctors, patients and insurance companies will reduce procedures and treatments that don't really work, wringing waste from the system.

Electronic records. To reduce inefficiency and duplication of services, the government is promoting standardized electronic health records, so doctors could see which tests and procedures patients have already had.

What we still don’t know

Cost for consumers. Will the new law lower insurance costs? That was President Obama's campaign promise, but it's a difficult question to answer until the law fully takes effect. The nonpartisan Congressional Budget Office created projections showing most people’s insurance costs would either decrease or stay the same. The CBO looked at three groups: the large group market (typically people who get insurance through large employers), the small group market (people who get insurance through small employers or other small groups) and the individual market (people who have to buy insurance on their own, directly from insurers). For the large group market, the CBO found that rates would either stay the same or decline slightly. For the small group market, rates would essentially stay the same as well. The individual market is a more complicated story, because insurers will be required to offer comprehensive coverage, and because people can qualify for tax credits. Rates in the individual market would go up 10 to 13 percent, the CBO found, because insurers would have to offer more coverage. But more than half of people who buy their own insurance would qualify for tax credits, and for them, rates would drop by more than 50 percent.

Cost for taxpayers. The plan doesn't come cheap. Covering millions of people who are now uninsured would cost billions more per year. The new taxes are projected pay for much of the plan, but again, those are projections.  The plan’s supporters have long said that the CBO isn’t counting all the potential savings; the CBO has said it won’t count possible savings it considers too uncertain. The CBO recently ran the numbers on costs in the health law again and increased its cost projections by about 8.6 percent. But even the CBO warns that it's very difficult to put dollar figures on many of these things, because of the size of the health care industry and the inherent unpredictability of major policy changes over many years.

"Rationing." Critics say the law will lead to health care rationing. Recently, that criticism has centered around the IPAB, the Medicare payment advisory board we mentioned. At recent hearing organized by opponents of the IPAB, the people who testified raised concerns that the IPAB’s powers are so limited that its only real recourse will be to reduce payments for doctors and other health care providers, and that could wind up putting pressure on patient care. We should note that these concerns are also present under the current system, in which Congress takes a more active role. Republicans in Congress have their own concerns about Medicare costs, and they’ve advocated plans to privatize Medicare by giving seniors voucher-like "premium support" to buy their own plans. Your comfort level on this probably depends on whom you trust more: the government or insurance companies.