Last night — Sunday, March 21, 2010 — the House of Representatives passed major healthcare reform legislation, passing a bill that will be signed within days by President Obama. This is an historic moment that has eluded numerous Presidents, including Harry Truman, Richard Nixon and Bill Clinton.  The legislation will provide health care coverage for an additional 32 million Americans who are currently uninsured, and provide important consumer protections for all Americans.

The struggle to pass healthcare reform has been difficult, at times nasty, and filled with misinformation.  Now that it will be law, what exactly does it mean for the average person, and how will it affect our lives?

Who’s Affected

Women. This bill will help women both in terms of coverage and affordability of health insurance.  Currently 19 percent of women are uninsured, for a variety of reasons.  A smaller number of women receive health insurance coverage through their employers than men do, with 38 percent of women being insured through their jobs compared to  50 percent of men.  Additionally, a larger number of women receive dependent coverage through their spouses’ employers, with 24 percent being covered this way compared to  13 percent of men.  Another 6 percent of women receive coverage in the individual insurance market.  By providing greatly expanding health care coverage, the number of women who are uninsured should drop dramatically.

Additionally, the bill will help lower the cost of insurance for many women, since insurers now can charge women of childbearing age higher premiums than men in many states.  The bill eliminates this discriminatory practice by instituting community rating, a practice in which everyone is charged the same amount, including individuals and small businesses.

Children. Kids already benefit from the Children’s Health Insurance Program, but this bill provides additional benefits—the most important being the elimination of pre-existing condition restrictions for children, and allowing them to remain on their parents’ health insurance to age 26.

Uninsured. The bill provides much broader coverage by expanding health insurance to cover 32 million of the 46 million people who are currently uninsured. It achieves this through a combination of mandates to employers and individuals and expansion of government health insurance programs.

Who’s Left Out. It’s expected that approximately 14 million people will not qualify for coverage under the bill.

2010: What Goes Into Effect This Year

The bill is structured so that parts of the legislation will phase into law starting in 2010 and continue to phase in until 2020. There are many benefits that go into effect this year.

Elimination of Pre-existing Conditions for Children. The bill immediately eliminates the ability of insurers to deny coverage to children on the basis of a pre-existing condition.  For adults, the ban on pre-existing conditions goes into effect in 2014. High-risk insurance pools (below) will be available to help them gain coverage in the meantime.

Temporary High-Risk Insurance Pools. The bill creates high-risk health insurance pools for people who have pre-existing conditions and have been denied coverage due to those conditions. To qualify, they have to have been uninsured for at least six months.  Monthly costs will be based on those for general health insurance population. Perhaps most important: the monthly fees will not be able to vary more than 4-to-1 based on age. Out-of-pocket costs are capped at $5,950 for an individual and $11,900 for a family.  The pools sunset in 2014, when the pre-existing condition ban goes into effect and Health Insurance Exchanges (see below) come online.

Changes to the Medicare Drug Benefit. The bill provides a $250 “bonus” to all who have enrolled in a Medicare Prescription drug program in 2010.  It also begins closing the Medicare Prescription Drug “doughnut hole” in 2011.

Coverage of Adult Dependents Up to Age 26. The bill requires that insurers permit dependents to remain on health insurance policies up to age 26, regardless of whether or not they are full-time students. Most insurers currently cover dependents not in school only up to age 19 and those in school up to age 23.

Prohibition from Insurance Rescissions. Insurance rescission is a practice in which insurers retroactively cancel an insurance policy, usually due to an unreported pre-existing condition. The new bill makes this practice illegal.

Tax Credit for Small Businesses to Pay for Insurance. The bill includes $40 billion in tax credits to help small businesses pay for health insurance for their workers. The credits are available to employers with fewer than 50 workers and will cover 35 percent of health insurance premiums in 2010. This figure will rise to 50 percent of premiums in 2014.

Prohibiting Lifetime Benefit Caps. The bill will prohibit lifetime caps on health insurance benefits.

Years to Come: What Gets Phased-In

The bulk of the new benefits and subsidies for health insurance will begin in 2014.  The lead time is necessary to accumulate funds to pay for the cost of the new coverage.

Health Insurance Exchanges. These state-based marketplaces start operation in 2014 and are based on the Massachusetts Health Connector system, in which individuals and small businesses are able to purchase health insurance.  The goal is to provide individuals and small businesses with  transparency in benefits and pricing so they can compare health insurance and purchase the coverage that best fits their needs.

Employer Mandate. Starting in 2014, businesses employing 50 or more people will be required to provide insurance coverage to their employees or pay a $2,000 per worker penalty.

Individual Mandate. Almost all Americans will be required to get insurance coverage or face fines—a system similar to the one that’s already in place in Massachusetts. The fines start small at $95 in 2014, but rise rapidly to $695 in 2016. Low-income individuals are exempted from the mandate but most of them will be eligible for coverage through Medicaid or other subsidies.

Health Insurance Subsidies. In order to help families afford the mandatory insurance premiums, starting in 2014 subsidies will be available on a sliding scale, up to a level of $88,000 per year for a family of four. The amount of the subsidies will also be on a sliding scale, meaning that people with lower incomes will receive larger benefits.

Long Term Care. The bill includes the CLASS Act, which provides a public, voluntary long term care program that working people can purchase.  The program would cover home care, respite care, home modifications, transportation, and assistive technologies.

The Bottom Line: How’s It Paid For

The legislation is expected to cost $940 billion over ten years. It’s expected to reduce the federal deficit by approximately $143 billion during this time by slowing the rate of healthcare-cost inflation.

The new healthcare measures are paid for through cost savings in Medicare and other government health programs, estimated at approximately $500 billion over ten years.  The cost savings in Medicare are achieved by bringing payments for Medicare Advantage plans in line with the cost of providing care, and by reducing the rate of estimated growth in the program.

Additionally, some new taxes are being instituted. Approximately $100 billion will be raised by fees on prescription drugs, health insurance premiums, and an excise tax on medical devices. The bill also raises the Medicare tax from 1.45%  to 2.35% for individuals earning more than $200,000 and families earning more than $250,000 per year.

Finally, starting in 2018, an excise tax of 40% will be applied to “Cadillac” health plans: those costing more than $10,200 per year for an individual and $27,200 for a family.  These are health plans for wealthier individuals, since the average cost for family coverage is about $12,000 per year.

What’s Next

While health insurance reform has passed and will be signed by the President within days, the Senate still needs to act on a bill to fix some of the problems in the bill enacted into law. That’s expected to take place this week.

It is unlikely that work on health reform is done.  The lesson of other social insurance programs is that they always remain works-in-progress. Social Security and Medicare have been modified and expanded a great deal since they were first enacted. You can expect similar developments to occur with healthcare reform as it moves forward.


Susan Baida and John Mills are co-founders of www.eCareDiary.com, an online community for caregivers and seniors. The site includes free resources for those seeking and providing long-term care, including a singular set of tools called the
Care Diary, designed to make coordinating care and sharing information easy among family members and other caregivers. Susan Baida is a former marketing executive with Starwood Hotels, Estee Lauder, and Avon.  John Mills was a member of the Clinton Task Force on National Health Reform and legislative director to U.S. Rep. Eliot Engel, D-N.Y. Susan and John are married and share a passion for empowering caregivers and seniors.

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  • Ira Ellis May 20, 2010 at 2:17 pm

    When does the following go into effect?:
    Coverage of Adult Dependents Up to Age 26. The bill requires that insurers permit dependents to remain on health insurance policies up to age 26, regardless of whether or not they are full-time students.

    Reply
    • Chris Lombardi May 20, 2010 at 2:40 pm

      Right now, it seems,according to what I’ve been reading. Contact your insurer!

      Reply
  • Barbara A. Brody April 10, 2010 at 10:07 am

    Thank you for providing us with a well-written and clear
    synopsis of the Health Care Law.

    Reply
  • John Mills March 23, 2010 at 10:18 am

    @ abigail congdon – With regards to abortion the President is issuing an executive order that reaffirms the Hyde Amendment which has been in effect since the late 1970s and says no federal funds can be used to pay for abortions. States are free to use their own funds to pay for abortion services (quite a few do) and private insurance plans will continue to be able to cover them.

    Reply
  • Lombardi Chris March 23, 2010 at 9:59 am

    It’s hard to know what’s going on with the latter. A good summary is at the Raising Women’s Voices blog.

    Reply
  • abigail congdon March 23, 2010 at 9:41 am

    thanks for helping clarify this for those of us who have found it nearly impossible to stay on top of this bill, with all it’s changes and arguments.
    can anyone please clarify what might happen about abortion, which, in my understanding, is not covered.
    as we said in the 70’s, ‘if men had abortions, the right to them would be in the Constitution’.

    Reply