6 Real-Life Scenarios Changed by the Health Care Bill

What the health care reform may mean for you depends on your personal situation.

March 22, 2010, 6:42 PM

March 23, 2010— -- After a year of back and forth on health care reform, few people have a clear idea of what the mammoth bill President Obama will sign will actually mean for them.

While the majority of people with employer-sponsored health insurance will have to wait and see whether the bill will help or cost them money, change may be coming to millions of Americans sooner.

Below are six types of individuals -- from the poor, to the sick and the young -- who are likely to see their health insurance options change.

For 73-year-old Pat Englehardt, being in the "doughnut hole" meant that every year she paid $4,000 to $5,000 for the medications she needs.

"I cannot go visit my children as often as I would like," Englehardt told "Good Morning America" today. "If the plane is too expensive, I don't make the trip."

The doughnut hole refers to an absence of Medicare drug coverage after a patient has spent a certain amount -- in Englehardt's case, $2,830. Like millions of other older Americans, once she exceeded this amount she had to pay full cost for her drugs. Coverage kicks in again when patients reach a predetermined level of spending, but not before they have spent thousands of dollars out of pocket.

Englehardt's struggle with her drug costs reached a breaking point when the cost of her blood thinner medication jumped from $204 to $1,480, and her cholesterol medication went from $16 to $224.

"It's expensive," John Rother, executive vice president for policy and strategy at AARP told "Good Morning America." "Many stop taking their medications as a result."

Now that there is a new law, those like Englehardt will get a $250 rebate this year. Beginning in January 2011, they'll get a 50 percent discount on all of the drugs for which they used to pay full price. Had similar provisions been in place this year, Englehardt would have saved $1,500.

"This is very important both for the pocketbook of seniors because the drugs are expensive and getting more expensive every year," Rother said.

Englehardt, for one, is already looking forward to her savings next year.

"I may get to California with these new provisions to visit one of my children," she said.

Adults younger than 26 -- sometimes called Gen Y or "Millennials" -- will have a new option for insurance.

Under the legislation, unmarried young adults younger than 26 who don't have health insurance have a right to remain on their parent's health insurance family plan. Current law varies by state on age limits, with some states extending parent insurance through the college years and other states allowing health insurance plans to drop young adults much sooner.

"The biggest block of the uninsured are the young adults who have grown out of their parents' insurance," said Thomas Oliver, professor of population health sciences at the University of Wisconsin School of Medicine and Public Health, in Madison.

"In a lot of states, when you hit age 18, boom you're gone," he said.

Oliver said many young adults in that age group either have jobs without benefits, or are taking unpaid internships to start a career or simply do not make enough working jobs to buy their own health insurance.

Either way -- the new federal mandate that requires individuals or small businesses to purchase health insurance will also affect many of the millennials.

"It behooves these folks to stay on good terms with their parents," joked David Dranove, professor of Health Industry Management at the Kellogg School of Management at Northwestern University in Evanston, Ill.

People with Pre-existing Conditions: Covered Now, but at What Price?

People who have pre-existing conditions became the focal point of much political debate. As it is now, insurance companies selling individual policies can refuse to sell to people with a chronic or "pre-existing" medical condition that might require care. Anything from an obese child's weight to diabetes has kept people from buying individual health insurance.

But under the new bill insurance companies cannot deny coverage to patients based on pre-existing conditions or place lifetime caps on how much insurance will spend on an individual.

Gail Wilensky, a Senior Fellow at Project HOPE, explains the change may happen sooner for some than others.

"With regards to pre-existing conditions… only children would be protected in the short term, that is six months after enactment," said Wilensky.

Wilensky noted that pre-existing conditions are mostly a problem in the individual market because 1996 HIPAA legislation prohibited insurance companies from denying coverage to groups of two people or more buying insurance.

Willensky also noted that starting in 2014, insurance exchanges will offer insurance to people who are not offered employer-sponsored insurance and who are not on public programs.

In the meantime, Wilensky said an uninsured adult with a preexisting condition can enter a national high-risk pool for insurance that received 5 billion dollars in funding under the bill. An insurance risk pool is a group of people who spread their risk of needing care across all members of the pool. The bigger and healthier the risk pool then the cheaper the insurance. But the smaller the risk pool, and the unhealthier the participants then premiums rise.

"It's great news if you live in a state that does not yet offer this protection -- many states already have guaranteed issued, although premiums can be very high," said Dranove, the Kellogg School of Management professor. "Research shows that the state laws have had the perverse effect of driving up rates for everyone who might have already had coverage, because the risk pool now includes sicker individuals. I expect the same will happen here but with even larger increases."

Legislators backing the bill hope that convincing healthy individuals to join insurance exchanges will reduce costs.

People who are currently on their state's Medicaid plan will likely see a lot more company under the new health care legislation -- Medicaid is set to include about 16 million more people, according to Wilensky.

But whether or not the new additions will help or hurt people already on Medicaid is up for debate.

"There will be improved access to primary care as there will be more community health centers and a greater supply of primary care physicians," said Bradford Kirkman-Liff, a professor of Health Policy and Biotechnology at Arizona State University, in Tempe.

Oliver also thought that reforms within the bill would make it easier for families on Medicaid to sustain their coverage.

"People tend to bounce on and off Medicaid coverage. They're eligible one month then the system finds they made some extra money and they're off," said Oliver, who said many states use criteria like a grandmother's income in the home or extra money from a temporary job to calculate eligibility for Medicaid.

"It's going to be simplified, (taking into account) the month-to-month money you are sure is coming into your bank account," said Oliver.

But Project HOPE's Wilensky worries that expanding Medicaid will only exacerbate problems people on Medicaid already face, such as trying to find a doctor who will take the low payments offered through Medicaid.

"A person who is currently on Medicaid will continue to receive Medicaid. They may, however, find it increasingly difficult to find physicians who will take them on as patients," said Wilensky. "People on Medicaid are currently reporting increasing difficulty in this area."

Someone on a 'Cadillac Plan'

A tax on the high cost, or so-called "Cadillac," health insurance plans became a point of compromise in the version of the health care bill that passed Sunday.

The current Cadillac health insurance tax is equal to 40 percent of the cost of employer-sponsored health insurance that goes above a national average -- $10,200 a year for individual coverage at $27,500 a year for family coverage, according to Kirkman-Liff.

So if a family has a Cadillac health insurance plan valued at $31,500 a year, for example, then the amount over the limit would be $4,000 and the excise tax would equal $1,600.

"That would be paid by the insurers, who would pass that cost on to the employers," said Kirkman-Liff.

But many experts suspect that the cost of the tax would eventually be passed onto employees on a high-cost plan.

"The employer would be responsible for paying the tax but might find a way to pass that cost on to the employee," said Dr. Daniel S. Blumenthal, Professor of Community Health and Preventive Medicine at the Morehouse School of Medicine in Atlanta, Ga.

"Alternatively, the employer might switch to a lower-cost non-Cadillac health plan -- which would, of course, have fewer benefits," he said.

Oliver noted that the point of a Cadillac tax is to prompt certain regions of the country with high health care costs to become more efficient. The tax will be delayed for several years to give employers time to shop for cheaper health care.

"The idea was to bring the really high cost regions into line with the rest of the country and reward greater efficiency with the rest of the country" said Oliver.

But Oliver also argued that the higher cost healthcare plans weren't necessarily delivering premiere care.

Once someone turns 26, the current health care reform bill still provides some safety nets for poor individuals who may not be able to pay for health insurance.

But exactly what an uninsured working person can get depends on how much they make.

By 2014, a family of four making $29,000 dollars would be eligible for Medicaid under the health reform bill. And, for the first time, and individual without children who earns $14, 000 a year could qualify for Medicaid, according to Kirkman-Liff.

Earn any more than that without employer-sponsored health insurance, and a person may be eligible for subsidies to buy health insurance through a new health insurance exchange.

"If they work for an employer who does not offer health insurance, they will have the option to buy one of many different insurance plans through an exchange," said Kirkman-Liff. "For example, if the person was a single adult, 40 years old, earning $40,000, they would get a subsidy of $400."

Families earning above the cutoff line for Medicaid (or 133 percent of the poverty line) could earn even more subsidies.

Where people stand on the health care bill tends to break down along political lines, but many experts in public health and policy gave the bill mixed reviews.

"My way of thinking about this reform legislation is that it is undoubtedly a glass that's half full -- and it's also half empty," said Ted Marmor, emeritus professor of politics, policy and law at Yale University and author of Fads, Fallacies and Foolishness in Medical Care Management and Policy.

Marmor said while the bill has done a good job of expanding coverage and making insurance coverage "more fair," but doesn't cut it when explaining how to save money.

"If you believe the Congressional Budget Office can make predictions that are hard and fast 10 years out, you need to be on medication," he said.

For her part, Wilensky agreed that the bill expanded coverage well.

"By 2014, which is when most of the coverage expansion occurs, an additional 31 million of the uninsured will be covered," she said. But, "the legislation does little when it comes to slowing spending or improving quality."

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