Wednesday, December 12 2012
Don’t Forget the Health Care Law
This summer enormous attention was paid to the president’s health care law (i.e. the Affordable Care Act) when the Supreme Court ruled on its constitutionality. Aside from Republican calls during the campaign to repeal the law if elected, little attention has been paid to the ACA.
Most press attention these days is focused on the ‘fiscal cliff’, but the public needs to be aware of the major parts of the health care law that are going into effect soon.
Up until now, most public attention regarding the law has been focused on one key provision; the mandate that individuals must purchase health insurance. Nevertheless, the law contains many provisions that will impact the health care system, many of which are scheduled to occur in the coming years.
Today I’ll focus on three parts of the health law that are being implemented but have not been given due attention.
Expanded Medicaid Coverage – The primary focus of the health care law was to expand coverage to the more than 47 million Americans who are currently uninsured. One way the law does so is by expanding the Medicaid program to cover those with higher income levels. However, Medicaid is jointly financed by both the federal government and the states, with the individual states running their own programs. Part of the law stated that the federal government would fully fund the state’s Medicaid expansion for three years, with the states picking up more cost down the road. As part of its decision, the Supreme Court ruled that the federal government could not force the states to expand their programs, and it was up to the individual states to decide whether or not to do so. This is a decision that many states are grappling with as we speak, and their decisions regarding whether or not to do so will have ripple effects throughout the health care system.
New Health Insurance Exchanges – Another way the health care law seeks to increase coverage and regulate insurance is through the establishment of a health insurance “exchange” in each state. Think of the exchange as a sort of health insurance Expedia, a site where individuals will be able to easily compare different types of insurance plans and purchase them. There are numerous regulations that the exchanges must follow, including what types of benefits they must offer, how the plans are to be priced, and many others. The exchanges will also be the mechanism through which the uninsured will receive financial support to purchase a qualified plan, based on a sliding scale depending on their income.
However, it is up to the individual states to decide how the exchanges will be managed. The federal government has left it up to the states to decide whether they will manage their own exchanges, or if preferred, allow the federal government to run it for them. Many states are deciding which way to go, which will have far ranging implications on the success of the law going forward.
New Taxes – There are many different tax provisions in the health care law that help offset its cost, some of which are scheduled to be implemented on January 1, 2013. These include a 2.3 percent tax on medical devices, which many are fighting against, as well as an increase in the Medicare Part A payroll tax on wages to 2.35 percent (currently 1.45 percent) on earnings over $200,000 for individuals and $250,000 for married couples. There will also be a new tax levied on unearned income, including interest, capital gains and dividends for higher income individuals.
These three examples are just a subset of the many provisions going into effect during the next few years. Hopefully people begin to take notice because the health system will be changing significantly whether you hear about it in the press or not. I encourage anyone interested in learning more about the various parts of the law and when they will be implemented to check out the Kaiser Family Foundation’s great timeline. Share your thoughts about any of the law’s provisions by commenting below.