Frequently Asked Questions General questions about health care reform

1. What does the health care reform law do?

2. When does the reform law take effect?

3. Why was health care reform necessary?

4. What will the health care reform law cost to implement?

5. What makes health care premiums go up?

6. Will health care reform lower the cost of health insurance?

7. What changes will employers have to make as a result of health care reform?

8. What is the signfigance of recent legal challenges to the new law?

1. What does the health care reform law do?
The Patient Protection and Affordable Care Act signed into law on March 23, 2010, builds upon the employer-based health insurance model that now covers 83 percent of Americans. Some of the important things about reform are:

• increasing coverage for 32 million more Americans;
• requiring people to buy insurance or pay a penalty;
• providing subsidies to people who can’t afford health coverage;
• requiring larger companies to provide insurance or pay a penalty;
• helping small businesses offer insurance through tax credits;
• expanding Medicaid to cover an estimated 15 million more people;
• setting up state-based exchanges to help people shop for, compare prices for, and buy insurance;
• changing insurance practices such as refusing to insure someone because he or she has a preexisting condition or dropping them from coverage;
• setting up a number of pilot programs to test ways of improving quality or reducing costs in health care, such a pilot program in the Medicare system that will pay providers for the quality-of-care, not the quantity of care, they deliver.

2. When does the reform law take effect?
Many provisions of health care reform do not go into effect until 2014, such as the requirement that individuals buy insurance and the subsidies to help people who can’t afford health coverage. But a few provisions become effective in 2010, such as those that eliminate lifetime maximums on essential benefits, eliminate unreasonable annual limits on insurance coverage, and allow adult children up to age 26 to remain on their parents’ policy. The federal government will continue to issue regulations that interpret the various provisions in the law. As that happens, we will communicate quickly and clearly with our customers and members and update this website.

3. Why was health care reform necessary?
There are three major reasons why health care reform was necessary. First, health care costs continue to escalate; more than one sixth of our GDP is spent on health care. Next, the quality-of-care is inconsistent. Our country spends more on health care than most other nations but we’re not any healthier than many of them. Third, too many people — 46 million — are uninsured, which is unacceptable. Everyone deserves the peace of mind that having health care coverage brings.

4. What will the health care reform law cost to implement?
When the law was passed in March, the Congressional Budget Office (CBO) said it would cost $938 billion over 10 years and included cost savings and revenue increases that would cover that cost. However, the CBO recently reported that implementing the legislation will cost more than $1 trillion, $60 billion more than originally anticipated.

5. What makes health care premiums go up?
Here are a few of the major drivers of what causes health care costs to rise, according to PricewaterhouseCoopers:

• Unhealthy lifestyles: 70% of health care costs are driven by people with chronic, but largely avoidable, conditions, such as unhealthy lifestyles like obesity, smoking, and inactivity;
• Aging population: As we get older, we use more health services, which raise health care costs;
• We want the best, most expensive care: MRIs, new drugs, and other technologies are very expensive — and they don’t always make us healthier;
• The uninsured: 6.5 cents of every premium dollar goes to pay for care of the uninsured;
• Defensive medicine: Doctors order extra or unnecessary tests so they aren’t accused of missing a serious health issue later.

6. Will health care reform lower the cost of health insurance?
Many experts believe that the reform law does not do enough to lower heath care costs because it concentrates mainly on widening access to care not to addressing the real drivers of why health care costs are so high. If reform doesn’t lower health care costs — which drive premium increases – it’s not logical to expect that premiums will stop going up. In fact, according to some experts, because of the reform law, premiums for individuals policies will actually increase on average by 54% and small employers’ premiums will rise up to 20 percent in five years.

7. What changes will employers have to make as a result of health care reform?
It’s important to note that some employers may not be subject to all of the provisions in the new law, depending on whether their plan is considered “grandfathered” — in other words, is allowed to remain as it is was before the law was signed on March 23, 2010.

Here are a few of the provisions in the law that affect employers, some beginning right away and some that will happen later, including:

• employers with fewer than 25 employees and average wages less than $50,000 may qualify for a tax credit for offering health care coverage (effective 2010);
• employers who offer dependent coverage will need to extend that coverage to adult children up to age 26 beginning the plan year on or after September 23, 2010;
• employers with more than 50 employees that don’t offer coverage may have to pay a penalty for each uncovered employee beginning in 2014;
• employers may qualify for reimbursement of some of the employer’s health care costs for coverage of early retirees (effective 2010);
• employers will have to automatically enroll employees when they are hired and allow them to opt out if they have other coverage (effective 2014).

8. What is the signfigance of recent legal challenges to the new law?
While there are legal challenges to the federal health care reform law, the Patient Protection and Affordable Care Act (PPACA) remains a valid law, which Independence Blue Cross (IBC) is implementing.

There have been several court rulings that PPACA or parts of it are unconstitutional. Specifically, a mandate that becomes effective in 2014 has been challenged. The mandate requires that all Americans must have health insurance. If it is not offered to them through their employer or another entity, they must purchase an individual plan. In March, the Obama administration filed an appeal to a ruling by a federal judge in Florida that found the entire law unconstitutional, but also ruled that implementation of the law should continue while his decision was being appealed.

On the other hand, there have been several district court rulings that support the constitutionality of the individual mandate or of PPACA generally.

None of these rulings are final and most legal experts believe strongly that PPACA’s constitutionality will ultimately be decided by the Supreme Court. It is impossible to know when the Supreme Court might rule on PPACA but it might not be until 2013. While the debate and the court activity continue, PPACA still remains valid, and IBC will continue to implement all applicable provisions as required by the law. This position is also consistent with the Commonwealth of Pennsylvania which has decided to move forward with implementation of PPACA.