In recent months, we have seen how many health reform rules and regulations have been introduced by the Department of Health and Social S...
In recent months, we have seen how many health reform rules and regulations have been introduced by the Department of Health and Social Services. Every time this happens, the media becomes aware of it, and all sorts of articles are written about it in the Wall Street Journal, the New York Times, and the news programs of the television stations. All analysts are starting to talk about the pros and cons and what it means for companies and individuals.
The problem is that an author often deals with the regulation and wrote an article about it. Then other authors start using pieces from this first article and rewriting parts to fit their article. Until the information is widely disseminated, the actual rules and regulations are distorted and distorted, and what actually appears in the media sometimes simply does not really correspond to the reality of what is in the rules.
There's a lot of misconceptions about what's going on with ObamaCare, and one of the things I've noticed in discussions with customers is that there are a number of myths that people have picked up on about health care reform that are just not true. But after everything they've heard in the media, people believe that these myths are actually true.
Today we will be talking about three myths that I hear most often. Not everyone believes in these myths, but enough, and others are nuptially sure what to believe, so it is justified to dispel these myths now.
The first myth is that health care reform only affects uninsured people. The second is that Medicare benefits and the Medicare program will not be affected by the health care reform. And the last is that health care reform will reduce the cost of health care.
Health reform affects only the uninsured
Let us look at the first myth about health reform that only affects the uninsured. In many conversations I have with my clients, there are various phrases they use: "I'm already insured, so I'm not going to be affected by ObamaCare," or "I'm just keeping my grandfather's health insurance," and the last expression - and I can give them some leeway, because some of what they say is true - is, "I have a group health insurance policy. , so I will not be affected by the health reform".
Well, the reality is that health care reform will actually affect everyone. From 2014 we will have a whole new set of health plans, and these plans have very rich services with many additional features that the existing plans do not offer today. These new plans will therefore entail higher costs.
The impact of health reform on the health insurers
People who are currently covered by health insurance will be transferred to these new plans sometime in 2014. So policyholders will be directly affected as their current health plans disappear and are transferred to a new ObamaCare plan in 2014.
Impact of health reform on the uninsured
The uninsured have an additional problem, because if they do not receive health insurance in 2014, they are threatened with a mandate penalty. Some of the healthy uninsured will look at this penalty and say, "Well, the penalty is 1% of my adjusted gross income; I'm earning 50,000 dollars, so I'm going to pay a fine of 500 dollars or 1,000 dollars for health insurance. In this case, I'll just take the penalty." But one way or another, they're going to be directly affected by the health care reform. The mandate affects both the insured and the non-insured.
Impact of health care reform on people with paternal health insurance
People who have paternal health insurance will not be directly affected by the health care reform. But because of the life cycle of their paternal health plan, it will make these plans more expensive, as they discover that there are now plans that they can easily transfer to them and that have a richer range of services that would be more beneficial to all the chronic health problems they have.
For people who remain in these paternal plans, the pool of subscribers to the plan will begin to shrink, and then the cost of these paternal health insurance plans will rise even faster than it does now. That's why people in obamacare's ancestral health insurance will also be affected.
Impact of health reform on people with group health insurance
The last, the marketplace for small groups, will be hardest hit by health care reform. While the health care reform rules primarily affect large and medium-sized enterprises, as well as companies with 50 or more employees, smaller companies will also be affected, even though they are exempt from ObamaCare itself.
What many surveys and studies show is that some of the companies that have 10 or fewer employees will seriously consider their option to drop health insurance coverage altogether and stop letting it fall at the expense of the company. Instead, they will have their employees health insurance through the health insurance exchanges.
In fact, some of the carriers now say that they expect up to 50% of small groups with 10 or fewer employees to give up their health insurance sometime between 2014 and 2016. This will have a very big impact on all people who have group health insurance, especially if they are in one of these small companies that give up health insurance coverage.
It is not only the uninsured who will be affected by the health reform, but everyone will be affected.
Health care reform won't affect Medicare
The next myth was that health care reform would have no impact on Medicare. This is kind of weird, because from the beginning, the most significant cuts were specifically aimed at the Medicare program. If you look at Medicare's share of the total federal budget, you can see that Medicare accounted for 4% of the federal budget in 1970 and increased to 16% of the federal budget by 2011.
If we look at the last decade, from 2002 to 2012, Medicare is the fastest growing part of the federal government's large entitlement programs, and it has grown by nearly 70% over that period.
Because Medicare is so big and growing so fast, it's one of the key programs that ObamaCare is trying to get under control so it doesn't lead to us bankruptcy. In fact, the first cuts to Medicare have already been set at about '716 billion.
Cuts to Medicare benefits and their impact
Of these cuts, which amount to USD 716 billion, the Medicare Advantage program will be cut the most and will be felt for the most part of the impact. What that will do is increase the premiums people pay for their Medicare Advantage plans and reduce the benefits of those plans.
Increased Medicare Advantage Costs
Currently, many people opt for Medicare Advantage plans because they don't get a premium. If they have the opportunity to opt for a Medicare plan, they see it as an easy choice because it's a free program for them: "Sure, I get Medicare benefits, I don't pay anything for it; Why not? Now they're going to see Medicare premiums start to rise and go from zero to 70, 80, 90, or 100 dollars. We've seen that in some of the Blue Cross Medicare Advantage plans this year. It will get worse in the future.
Reduced Medicare Advantage benefits
To minimize premium increases, many Medicare Advantage plans will increase co-payments, increase deductibles, and change co-insurance rates. To keep premiums low, they will simply shift more of the cost to Medicare benefit recipients. Increased premiums and reduced benefits are what we'll see coming in the Medicare Advantage plan.
Fewer Medicare doctors
And as if that weren't bad enough, if Medicare doctors receive ever-lower reimbursements for Medicare-Advantage patients, they will no longer accept new Medicare-Advantage recipients. We will see the pool of doctors supporting people in Medicare also begin to shrink unless changes are made over the next five years. So Medicare will be affected, and it will be dramatically affected by the health care reform. Everyone is sitting on needles, so to speak, waiting to see what will happen there.
Health reform will cut health care costs
The last and probably biggest myth of health care reform is that everyone believes ObamaCare will cut health care costs. This is complete nonsense. At the beginning of the process, when the rules and regulations were being worked out, the focus and one of the objectives of the reform was to reduce health care costs.
But at some point, the goal actually shifted from cutting costs to regulating the health insurance industry. After making this transition, they pushed down cost reductions. There are some small cost-cutting components in ObamaCare, but the real focus is on regulating health insurance. The new plans, for example, have much richer benefits than many plans today: richer benefits mean richer prices.
Health reform subsidies: Will they make the plans affordable?
Many people are hoping: "The subsidies will make health insurance plans more affordable, right? Yes, in some cases the subsidies will help make the plans affordable for people. But if you earn 1 dollar too much, the affordable plans suddenly become very expensive and can cost thousands of dollars more over the course of a year. Whether or not a subsidy makes the plans affordable is really the subject of debate at this stage. We will actually have to see what the tariffs for these plans are.
New taxes on health care reform passed on to consumers
Then there's a whole ton of new taxes on health care reform that have been added to the system to fund ObamaCare. This means that anyone who has health insurance, whether in a large group, a small group, or simply as an individual, is taxed to pay the cost of the reform. The health care reform adds various taxes on health care that insurance companies will have to levy and pay, but they will simply pass them on to us, the consumers.
The mandate will not greatly reduce the number of uninsured
In the early years of health care reform, the mandate is actually quite weak. The mandate states that everyone must take out health insurance or pay a penalty (a tax). This will mean that healthy people are sitting on the sidelines, waiting for the mandate to get to the point where it will eventually force them to buy health insurance. People with chronic health problems who have not yet been able to get health insurance will all enter health care in early 2014.
By the end of this year, the cost of the plans will rise in 2015. I can guarantee you that this will happen, because young healthy people will not be motivated to get involved in the plans. You won't see the benefits of an expensive plan, while the chronically ill will get into the plans and drive up costs.
The aim of health reform is only a matter of semantics
The last part of it is, one of the most important things - and it's funny, I saw it in the first two years, 2010 and '11 - is one of the most important things that was listed in the Obama administration's documentation: Health care reform would help reduce the costs that we would see in the future if we didn't do anything today. This has been emphasized over and over again. For example, they represented the reduction in healthcare costs that would reduce future costs. Not today, but it would reduce what we would pay in the future if we did nothing about it now.
Well, that's great, in 10 years we're going to pay less than we could have paid. And we all know how accurate forecasts of the future are. In the meantime, we are all paying more today, and we will pay even more in 2014, and we will pay even more in 2015 and 2016. People will be quite upset about this.
Conclusion
These three myths that the health care reform will only affect the uninsured, that it will not affect Medicare beneficiaries, and that ObamaCare will reduce health care costs, are just that. These are myths. There is nothing wrong with them.
It is really important that you pay attention to what happens to the health care reform, because there are other changes to come this year, 2013. It will be really important for everyone to know how to position yourself in such a way that you are in the right place to be able to make the best decision at the beginning of 2014.
Tim Thompson is the founder of SPF Insurance Services in San Diego, CA, and has been writing about insurance issues for over 10 years. http://spfinsurance.com
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