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Thu March 22, 2012
Answers To Your Questions About The Health Care Overhaul Law
Originally published on Thu March 22, 2012 5:05 pm
The Patient Protection and Affordable Care Act — the health care overhaul law that President Obama championed and Republicans rejected — turns two on Friday.
The law is headed to the Supreme Court on Monday, where the Justices begin hearing three days of arguments about the constitutionality of the law. Ahead of the big day, we asked for questions from our audiences online and on air. Here's a sampling of questions, edited for clarity and length, and the answers.
Q: If the health care law is found unconstitutional or even repealed, are there any contingency plans? And if the Supreme Court overturns the individual mandate, are the other provisions of the law in jeopardy?
A: Very few people think the court will strike down the entire law. In the unlikely event it does, that would be it. Congress would basically have to start over from scratch.
If the Supreme Court were to find a piece unconstitutional, the most likely thing would be the individual mandate — the requirement for most Americans to either have insurance or pay a fine starting in the year 2014.
Now if that happened, the court might also invalidate just the mandate, or it might also strike down a couple of other pieces that many people — including the Obama administration — argue are "inextricably linked" to that mandate. That includes the requirement that insurance companies sell policies to people with pre-existing health conditions. Insurance companies say that without the requirement for everyone to participate, they will go broke if they have to sell policies to sick people.
And in strictly legal terms, Congress does not have to act in the wake of a Supreme Court decision. But often Supreme Court decisions end up prompting Congress to do something, either by necessity to fix a law that ends up with a big hole in it, or because the court makes a legal decision that's so out of line with public opinion that Congress feels it has to act.
Q: What's the timeline of events, if the law stays in place?
A: Later this summer, for the first time, insurance companies have to start paying rebates if they failed to spend at least 80 cents of every dollar last year on actual medical care rather than administrative expenses. So some people might be getting a check to help pay for their summer vacations.
But other than that, there's not much more that takes effect until what we in the health policy world refer to as "the really big stuff." And that happens in the fall of 2013, when people can start using the new marketplaces called health exchanges to shop for health insurance. That starts Jan. 1, 2014.
That's also when:
- The requirement for most people to have insurance begins;
- Medicaid expands to cover able-bodied adults with incomes under 133 percent of poverty; and,
- Insurance companies can no longer refuse to sell insurance to people who have pre-existing health conditions.
Q: What parts of the law have already been enacted?
A: Mostly what's referred to as the patients' bill of rights. This includes restrictions on annual and lifetime benefit limits and requires preventive benefits with no deductible or copay and preventing insurance companies from revoking coverage after you get sick.
There's also a temporary plan in every state to cover people with pre-existing conditions who have been uninsured for at least six months. It's been a bit of a disappointment, though, with only about 50,000 people signing up rather than the hundreds of thousands expected.
Medicare beneficiaries are also getting new preventive benefits, as well as a gradual closing of the "doughnut hole" in their prescription drug coverage, which is a several-thousand-dollar gap between initial and catastrophic coverage where they keep paying premiums but don't get benefits. Children are also able to stay on their parents' insurance until they're 26.
Q: How does the health care overhaul law affect small business owners?
A: Employers with more than 50 workers aren't subject to a mandate the same way individuals are. But if they don't provide their workers with coverage, and those workers buy coverage through a health exchange and qualify for a government subsidy, the employer is subject to a "free rider" penalty of $2,000 to $3,000 per employee.
That's not the case for smaller businesses — those with fewer than 50 full-time workers. In fact, smaller businesses will be able to use the health exchanges to shop for coverage and get a better deal than they can now, because of the economies of scale.
Finally, the very smallest businesses, those with fewer than 25 workers whose annual average wages are less than $50,000 are eligible for a tax credit if they help pay for their workers' health insurance.
Q: How will the health care overhaul law affect the poor? Will it impact the kind of care they receive and how much it will cost them?
A. The law includes a huge expansion of Medicaid, the joint federal-state program for people with low incomes. That expansion, in fact, is being challenged in the Supreme Court. But if the law isn't struck down, it will add roughly 16 million people to the 60 million or so people on the program now. And for the first time, they will be people who are simply low income, not low income and something else — like a child, a pregnant woman, or an elderly or disabled person. So starting in 2014, anyone with an income under 133 percent of poverty, which this year is just under $15,000 for an individual and just over $25,000 for a family of 3, will be eligible for Medicaid coverage.
And that's not all: The law also provided nearly $11 billion over 5 years to expand community health centers, which also serve people with low incomes and people without insurance. It's important to remember that even though this law is expected to dramatically expand the number of people with insurance, there will still be millions of people who will remain uninsured, including undocumented immigrants who aren't eligible for any assistance and others who are exempt from the mandate.
Q: What about other government programs, like Medicare?
A: Not as much will happen to Medicare as many people may think. But Medicare is also the focus of most of the law's experimental efforts to find ways to both improve care and save money by changing the way the health care system is structured.
For example, there are demonstrations of things called "medical homes," where teams of doctors and nurses work together to better coordinate patient care and keep patients with chronic conditions out of the hospital or nursing homes.
You may also have heard of things called "accountable care organizations." Without getting too technical, these are groups of doctors and hospitals who band together to care for a group of patients, and if they do a good job at keeping them healthy they basically get a bonus.
And yes, the law does take $500 billion out of Medicare payments, but that's being given up mostly voluntarily by hospitals and other health care providers. They're betting that they will make it up on the other end by more people being insured, so they won't have to provide free care anymore.
Q: In some cases, (especially for young, healthy people) might it make more sense to pay the tax penalty instead of paying insurance premiums every year?
A: The fact that the penalty is so small has the insurance industry very worried that young healthy people will and pay the fine until they find they need insurance. For most people it will be about $700 a year — a lot less than buying insurance, actually.
Now that's a dangerous thing, of course. If you develop a major disease like cancer, and you don't have insurance, you're in big trouble. And in most cases even though you can still get insurance with a pre-existing condition, you'll only be able to sign up during specific "open enrollment" times of the year, so if you get sick at the wrong time you could be responsible for a lot of medical bills before you get another chance to enroll.
That may help explain why in Massachusetts, where they already have an individual mandate with a penalty that's also smaller than the cost of buying insurance, it's actually pegged at half the lowest priced plan for most people. It varies by age and income level. But still most people still buy insurance. About 1 percent of taxpayers pay any penalty.
Q: If the mandate is approved by the court as constitutional, what will it mean to those who cannot afford health insurance?
One of the most expensive things about the law is a vast system of subsidies to help people afford health insurance. Subsidies are available to people on a sliding scale, up to 400 percent of the poverty level. This year that would be a family of three with an income up to $76,360 and a family of four up to $92,050. Even then, if there's no affordable policy available, people can be declared exempt. And most of those with insurance provided by their employer will meet the requirement automatically, so they won't have to do anything.
Q: The president claimed the Affordable Care Act would cost $900 billion. But the Congressional Budget Office scored the next 10 years of the program and came to a number of $2.4 trillion. Why the discrepancy?
A: There are a lot of people who are misreading this latest cost estimate by the Congressional Budget Office. What it actually found is that the law will cost about $50 billion less than it estimated last year.
Now why are people saying it will cost twice as much? Because they're looking at gross spending, not net spending. And why is gross spending so much bigger? Because the Congressional Budget Office estimates in 10 year increments. And when it first estimated how much it would cost, it includes years in which most of the law wasn't in effect. So now that these 10 year estimates include more years when the law is in force, and the federal government will be paying for more people on Medicaid and more people getting subsidies to help them buy insurance, it will obviously cost more. But the federal government will also be collecting more money to help offset that cost, through a variety of new taxes and fees.
Thus, the overall cost is about $1.1 trillion. But it's all paid for. Now you might still disagree about whether it's a good idea to expand government and expand taxes and fees to pay for it. But this latest CBO estimate in no way says the cost has doubled since the law was passed.
AUDIE CORNISH, HOST:
It's ALL THINGS CONSIDERED from NPR News. I'm Audie Cornish.
ROBERT SIEGEL, HOST:
And I'm Robert Siegel.
Tomorrow, the Patient Protection and Affordable Care Act turns two. That's the health care overhaul law that President Obama championed and Republicans opposed. The law is headed to the Supreme Court on Monday, where the justices begin hearing three days of arguments about the constitutionality of the law.
We asked listeners to submit their questions about the law and its potential repeal, and we received many.
Today, we've invited NPR health policy correspondent Julie Rovner to the studio to help answer some of those questions. Hi.
JULIE ROVNER, BYLINE: Hi.
SIEGEL: And here is one of our most asked questions from our listeners, Julie.
CAROL CAMBRYN: My name is Carol Cambryn(ph), and I'm from Leawood, Kansas. Here's my question. If the health care law is found unconstitutional or even repealed, are there any contingency plans?
SIEGEL: Julie, contingency plans.
ROVNER: Well, no. If the Supreme Court strikes down a law, then the law goes away. Now, in this case, it is considered highly unlikely that the Supreme Court would strike down the entire law. The most likely thought is that they might strike down part of the law. In this case, it would probably be the individual mandate, that requirement that most people have health insurance or pay a fine, starting in the year 2014.
Now, if that happened, the court might also invalidate another piece of the law, some things that are inextricably linked to that mandate. That would include the requirement that insurance companies sell policy to people with pre-existing health conditions. Insurance companies say that without the requirement for everyone to participate, they'll go broke if they have to sell policies to sick people.
SIEGEL: Would a revised law, then, have to be reapproved by Congress? Or could the country just have what's left of the Health Care Act?
ROVNER: Well, it depends. If the Supreme Court were to just strike down the mandate and leave that requirement in place, for insurance companies to sell to people with pre-existing conditions, the insurance companies might come back to Congress and say: We'll go broke unless you fix that. In that case, Congress might feel that it would have to do that. But technically, when the Supreme Court acts, Congress doesn't have to do anything.
SIEGEL: Several listeners wanted to know if the Supreme Court leaves the law as it is, if it upholds it, what's the timeline? What starts happening?
ROVNER: Well, there's not that much that happens for the next year or so. The one thing that that happens later this summer is that for the first time, insurance companies have to start paying rebates if they fail to spend at least 80 cents of every dollar on actual medical care rather than administrative expenses. So some people might be getting a check to help pay for their summer vacations.
But other than that, there's really not that much that takes effect until what people in the health policy world refer to as the really big stuff, and that happens in the fall of 2013. That's when people can start using the new marketplace - it's called health exchanges - to shop for health insurance. That starts January 1, 2014. Of course, that's also when the requirement for most people to have health insurance begins, when Medicaid expands to cover about 16 million more people, and when insurance companies have to start selling to people with pre-existing health conditions.
SIEGEL: Listener Linda Miltner in Cincinnati, Ohio, wants to know what parts of the law have already been enacted. She's heard about 26-year-olds being able to stay on their parents' insurance policies, but what else?
ROVNER: Well, mostly, what's referred to as the patients' bill of rights. There are restrictions on benefit limits for insurance companies. They can no longer have an annual or a lifetime limit on what they'll cover. There are new preventive benefits with no deductibles or co-payments. Insurance companies can no longer revoke your coverage after you get sick. There are new temporary plans in every state for people who have pre-existing conditions, who've been uninsured for at least six months.
And then there's some new benefits for Medicare beneficiaries. They're getting some new preventive benefits. And there's a gradual closing of the notorious doughnut hole in their prescription drug coverage where they temporarily stop getting benefits even though they keep having to pay their premiums.
SIEGEL: Now, here's a question from a listener who's also a business owner.
BRANDON MARTIN MALONE: Hi, my name is Brandon Martin Malone from Charlotte, North Carolina. I'm a small business owner with around 75 full-time workers, and I'm worried about the mandate to provide health insurance. Do I need to pay for coverage for all my employees or simply offer an affordable option?
SIEGEL: Well, with 75 full-time employees, is he covered by a mandate that says you're supposed to offer insurance?
ROVNER: Well, he is definitely covered by a requirement that he pay a share of their coverage. And if he does not and they go into the health exchange and any of his employees have low enough incomes to get a subsidy - and the subsidies go up pretty high - then he would be subject to this free rider penalty, and that would be a couple of thousand dollars depending on how many employees were getting subsidies from the government. So he'd basically have to make up what his employees are then getting from the government.
Now, smaller companies, those with 25 or fewer employees actually get tax credits to help them afford to buy insurance for their workers.
SIEGEL: But you're saying he can satisfy the requirement without paying the full freight for the insurance policies. The employee can contribute - can be required to contribute to his health policy.
ROVNER: Absolutely. And most employees are required to contribute. He doesn't have to pay 100 percent.
SIEGEL: The next question comes from Carl Backman of Auburn, Alabama, who wants to know how the new law affects the poor. Will it impact the kind of care they receive, and how much will it cost them? Those are his questions.
ROVNER: Well, this law does have an enormous expansion of the Medicaid program, which I should add is being challenged in the Supreme Court by many of the states. It will add roughly 16 million to the 60 or so million people on the program now. And for the first time, those will be people who are not - who are simply low-income - who are not low-income and something else, like a child or a pregnant woman or elderly or disabled.
So starting in 2014, anyone with an income under 133 percent of poverty, which this year is just under $15,000 for an individual and just over $25,000 for a family of three, will be eligible for Medicaid coverage. And, no, you don't - you pay very little to have Medicaid coverage.
That's not all. The law also provides nearly $11 billion over five years to expand community health centers, which also serve people with low incomes and people without insurance. It's important to remember that even though this law expands dramatically the number of people who will have health insurance, there will still be a lot of people who will be left without it: undocumented immigrants, people who are exempt from the mandate. So there will be several million people who still don't have health insurance, and they are served by community health centers.
SIEGEL: Since those 16 million people, you say, won't be contributing very much at all, where does that money come from?
ROVNER: That money comes almost exclusively from the federal government. There's a small contribution that the states will have to make. It starts at 5 percent and goes up to 10 percent.
SIEGEL: This is a question from a listener who's in his early 30s.
ED BEHN: My name is Ed Behn. I'm calling from Hyattsville, Maryland. I was wondering, does it make more sense for a young, healthy person like me - I'm only 31 - to go without insurance under the new health insurance law and just pay the tax penalty instead of having to pay insurance premiums every year?
SIEGEL: Well, what do you think of the problem Mr. Behn presents you with?
ROVNER: Well, you know, the fact that the penalty is so small actually has the insurance industry worried that young, healthy people, like Mr. Behn, will do exactly what he says and pay the fine until they find they need insurance. For most people, it's going to be about $700 a year, which is a lot less than buying insurance.
Now, that can be dangerous if you develop a major disease like cancer and you don't have insurance. You could be in big trouble. And in most cases, even though he will still be able get insurance, even though you have a pre-existing condition...
SIEGEL: Yeah, aren't you protected by the pre-existing condition clause?
ROVNER: That's right. But you'll only be able to sign up during specific open enrollment times of the year. So if you get sick at the wrong time, you could be responsible for an awful lot of medical bills before you get another chance to enroll.
SIEGEL: One listener asked us this: If the mandate is approved by the court as constitutional, what will that mean for people like him who can't afford health insurance?
ROVNER: Well, one of the reasons the law is so expensive is that it has this enormous system of subsidies to help people pay for health insurance. It doesn't just say you have to go out and buy it and then leave them no way to pay for it. In addition to this big expansion of Medicaid, for people up to 133 percent of poverty, there are subsidies that go up to 400 percent of poverty. Now, that's $92,000 for a family of four or $76,000 for a family of three. So those are pretty hefty incomes.
Now, also remember that people who have employer-provided insurance, most of them won't be - won't have to do anything. They'll be covered already by this individual mandate. So if - and there are - you only have to spend a specific percentage of your income on it. So if you can prove that you truly can't afford it even with the subsidies, you will be exempt from the mandate.
SIEGEL: So, Julie, the big event is next week...
SIEGEL: ...at the Supreme Court?
ROVNER: Yes, it is.
SIEGEL: Three days of arguments?
ROVNER: And I will be covering it.
SIEGEL: And we look forward to hearing from you.
SIEGEL: That's NPR health policy correspondent Julie Rovner. Transcript provided by NPR, Copyright NPR.