Update on Obamacare

The Patient Protection and Affordable Care Act (Obamacare) was passed  in March of 2012. The Supreme Court held that it is constitutional in June of 2012 and the full implementation will take place in January of 2014.  The full implementation includes: the individual mandate, employer responsibility provisions, insurance subsides, and state health insurance exchanges. Ok, what does that mean?
The individual mandate is: a shared responsibility that requires all individuals that do not have health insurance through their employer, Medicaid, Medicare or any other public insurance program, to secure private insurance or health insurance through some subsidy or government program.  If an individual fails to obtain health insurance they will be responsible for a fee, unless the they are a member of a recognized religious sect exempted by the IRS or the fee can be waived in circumstances where there is financial hardship.
Remember, the goal of Obamacare is to increase access to health care, increase the number of people in the United States that have health insurance, and to decrease the overall costs of health care.
The employer responsibility provisions is relevant for any business where there are over 50 employees. Any small business (less than 50 employees) will not be held to the penalties for failing to provide health insurance. Click here for a flow sheet.
Insurance subsidies will be offered by the government for eligible parties who wish to participate in health insurance exchanges. Health insurance exchanges will be different state-by-state and will be a place where individuals and small businesses can compare policies and premiums, and buy insurance. The states have the ability to set up these exchanges or have the federal government set up and operate the exchanges.

What has happened so far?

1.  The Act has now included coverage for young adults up to 26 years of age under their parents plan
2. There is a ban for pre-existing conditions for those under 19 years of age
3. There is no longer cost-sharing for preventiative services
4. There is a ban against lifetime overage limits and there are now restrictions on annual premium rate increases as well as annual limits
5. By September 2012, the Act's preventive service expansion improved coverage for approximately 47 million women.

What will happen?

1. Medicaid coverage will be extended to all adults (including anyone younger than 65) with incomes $30,657 or less for a family of four.
2. Beginning January 1, 2013, the limit on pre-tax contributions to healthcare flexible spending accounts will be capped at $2,500 per year
3. By January 1, 2014, Insurers will be prohibited from discriminating against or charging higher rates for any individuals based on gender or pre-existing conditions.

What will it cost?

1.  Major sources of new revenue include a much-broadened Medicare tax on incomes over $200,000 and $250,000, for individual and joint filers respectively, an annual fee on insurance providers, and a 40% on so called "Cadillac policies" or expensive policies that have a very broad coverage.  The income levels are not adjusted for inflation, leaving the possibility of increased taxes on incomes over 250,000 inflation-adjusted dollars after more than two decades.
2. There are also taxes on pharmaceuticals, high-cost diagnostic equipment.
3. A 10% federal sales tax on tanning services.

Summary of tax increases: (ten year projection)

• Increase Medicare tax rate by .9% and impose added tax of 3.8% on unearned income for high-income taxpayers: $210.2 billion
• Charge an annual fee on health insurance providers: $60 billion
• Impose a 40% excise tax on health insurance annual premiums in excess of $10,200 for an individual or $27,500 for a family: $32 billion
• Impose an annual fee on manufacturers and importers of branded drugs: $27 billion
• Impose a 2.3% excise tax on manufacturers and importers of certain medical devices:$20 billion
• Raise the 7.5% Adjusted Gross Income floor on medical expenses deduction to 10%: $15.2 billion
• Limit annual contributions to flexible spending arrangements in cafeteria plans to $2,500: $13 billion
• All other revenue sources: $14.9 billion

Summary of spending offsets: (ten year projection)

• Reduce funding for Medicare Advantage policies: $132 billion
• Reduce Medicare home health care payments: $40 billion
• Reduce certain Medicare hospital payments: $22 billion