With so many questions related to the recently passed "Patient Protection and Affordable Care Act", many of those questions simply cannot be answered right now. These questions will be answered over time, however. "Will health care be free", "Will there be waiting lines at doctor offices", and "How does this personally effect me" are all questions that will take time to answer.

Health care reform has been a re-emerging topic for over 100 years. Former President Bill Clinton was the last to attempt to reform 1/6 of the nation's economy during his inaugural year. The principal goal of reform is to ensure that 47 million uninsured have access to health care.

Cost-shifting would then be brought into play. Cost-shifting means the rich pay for the poor essentially. So, those that CAN afford to pay their bills will also have to foot the bill for those that cannot afford to their own health insurance bills. Conclusively, the well-to-do are stuck paying for their health coverage, as well as, several other people's care in the form of rising premiums.

Managed Care plans were brought into play after the demise 1994's health care reform attempt. Managed Care plans offered discounts in premiums to steer insureds into certain blocks of providers. The most common in our area and many other parts of the country was the Preferred Provider Plan, or PPO.

Unfortunately, while cost-shifting stress was somewhat alleviated, managed care plans failed to introduce uninsured people to health coverage. Premiums began to rise higher and higher as the number of those uninsured rose. Today, it is commonplace for a house payment to be cheaper than a health insurance policy for a family of four.

By March 23, 2010, the result of reform provided only modest incentives for those 47 million to participate in cost sharing system. Rather, the result ended up as insurance reform.

On March 23, 2010, President Obama signed into law the Patient Protection and Affordable Care Act (PPACA). On March 30, 2010, the President signed into the law the Health Care and Education Reconciliation Act of 2010 (HCERA), adding certain amendments to PPACA. Combined the two laws comprise health care reform.

The primary goal of health care reform was to reduce costs. In now way will the PPACA lower costs of any form. Simple economics state, when you take on more risk by trying to insure more people, costs across the board will be raised. By guaranteeing the insurability of those with pre-existing conditions, private insurers will be forced to drastically raise their rates because of the amount of risk being taken on.

There are incentives to get more people into the system though. Some of these incentives include:

  • tax credits for businesses who offer and help pay for insurance
  • penalties to individuals and families who do not buy insurance
  • elimination of pre-existing health condition exclusions by health insurance carriers
  • premium subsidy payments to individuals and families who could not afford insurance
  • expansion of Medicaid

These mandates along with a host of other mandates will be phased in yearly until 2017, with the majority required by January 1, 2014. It is on this date that subsidies, penalties, and adult pre-existing condition limitations begin. Other prominent provisions begin on that date as well:

  • State run "Health Insurance Exchanges" must be operating
  • Policies may no longer include limitations on annual benefits
  • Wellness programs begin
  • Group plans will not be able to extend waiting periods for insurance eligibility beyond 90 days
  • Employers must begin to "certify" coverage.

Other mandates require insurance companies to install important provisions by September 23, 2010:

  • Dependent children, whether married or unmarried, student or non- student may remain as dependents until age 26
  • Group health plans may not set lifetime maximum benefit amounts on "Essential Health Benefits". The Dept of Health and Human Services will be determining what "Essential Health Benefits" are by September 23
  • Children under age 19 who have a pre-existing condition must be "guaranteed issue"
  • Insurance companies may not rescind health insurance policies except in limited cases of fraud or misrepresentation by an applicant
  • A $250 payment will be made to Medicare Part D (prescription drug plan) beneficiaries as the first installment toward closing the "donut hole" by 2020.

Health plans in effect on March 23, 2010, or collectively bargained plans will be exempt from certain requirements and will retain the "grandfathered" status until, as yet undefined, policy changes are made. The grandfathered plans must still abide by dependent children to age 26 and benefit limitation rules. However they will be exempt from other more significant requirements that will be addressed in later columns.

Post-grandfathered plans will be forced to adhere to many more mandates than grandfathered plans will have to endure. Industry experts believe that non-grandfathered plans may have premiums up to 75% higher for a similar plan today than grandfathered plans by January 1, 2014.

Very small group plans may give way to individual plans of insurance because the structure of health care reform blurs the line of distinctions between the two.

In the meantime prior to September 23, 2010, insurance companies will distribute updates to small group plan sponsors the following items:

  • Children can remain on parent's coverage until age 26
  • elimination of lifetime benefit caps
  • 35% tax credit for offering and paying all or a portion of group health plans