ObamaCare: The Way Things Were and How They Change

March 22nd 2010 marked the climax of a yearlong and contentious debate over health-care. The House of Representatives passed the Patient Protection and Affordable Health-care Act by a vote of 219-212. Barack Obama reminded us why it was so important to him as he signed it into law, "I'm signing this reform bill into law on behalf of my mother, who argued with insurance companies even as she battled cancer in her final days."  The battle for Obama wasn't over. Republicans vowed to take down a bill they thought to be unconstitutional and irresponsible. This week, over ten months after its passage, the bill was ruled unconstitutional by Florida Supreme Court justice Roger Vinson. To this date the bill has been ruled upon four times and the results have been split. NYT - Federal Judge Rules That Health Law Violates Constitution

 Along the way the public has been primarily divided into three emotional groups delighted, outraged, and indifferent to it all. This is for those who want some background but don’t know where to start to bring it all together.  I ask stay with me and 1000 word from now you will have the ammo you need to understand what is going on, or to at least debate your grandfather under the table.

I am going to describe health-care before the bill and the system set up by the bill. Why so many people lose their minds about it and Are they right? That I will leave up to you in future posts.



“Broken System” – before the bill 
 We had two options to obtain health insurance; through the government or through a private company. Medicaid and Medicare were the two major public options, Medicaid for the poor and Medicare for those over 65 years old.  Here are some major differences. Medicaid was funded by both the federal government and your state; therefore the criteria to qualify varied with each state. Medicaid saves money by paying hospitals and doctors much less than the doctors bill for, usually 50-65% less. This is why many physicians do not accept Medicaid.  In the health-care debate it is important to point out that not all people eligible for Medicaid actually sign up. This issue comes back up when we talk about “mandates” and states suing the feds. Medicare was funded entirely by the federal government, policy holder premiums and by workers who had Medicare taxes deducted from their paycheck. It had a much better reputation than Medicaid. It reimbursed physicians a much fairer amount and usually didn't deny tests or procedures. Medicare covers everything including prescription drugs.  Medicare (500billion) and Medicaid (300billion) make up a huge portion of our budget, that is why any discussion about “national debt” is really about these programs.
States have other programs that make insurance affordable if you aren’t poor enough for Medicaid but can't obtain private insurance.

Private insurers, such as Aetna and Cigna, make money by selling health insurance. Aetna for example made 1.7billion last year off a 5% profit margin. Let’s put it in perspective though, McDonald’s last year pulled in 5billion off a 20% profit margin. Private insurers sell insurance to companies and to individuals. If you are employed by a company with 200+ employees chances are you have health-care.  That is because the employer buys the plan on behalf of all the employees at a lower cost. The insurance companies like when there are many employees to spread the risk around.  Individuals that can’t get employee health care can get it on their own, but at a higher price because there are no other people to spread the risk around with.

 Employer based healthcare is a quirk of history; it began during World War II when companies weren’t allowed to raise wages to attract workers. Instead, they offered health-care coverage. This arrangement became popular and was never taxed by the IRS.  Currently, employees and their employers have agreements on how costs are divided between the two.  Many companies may pay 80% of a plans ranging $4-14,000  each. The specifics of these arrangements vary widely and often are the cause of strikes.
      
This system creates holes where people either don’t get insured (like those who don’t take advantage of Medicaid), or those who cannot afford individual plans. The rising cost of healthcare premiums have caused smaller companies to drop health coverage which leaves a higher population of people at the mercy of individual plan prices.


(Obamacare)- a few key points
One of the main goals of the health-care bill is to make insurance affordable. Another goal is to make sure everyone has it. The bill mandates everyone has insurance and it outlines new ways to help people pay for their insurance. Those making less than 80,000 dollars will spend no more than 5-10% of their yearly income on normal health-care costs. Medicaid, Medicare, and Private insurance will all see changes.  Medicaid must be given to those who currently are eligible but aren't signed up. This flux of new people is considered by some to be to large a financial burden on the states; since Medicaid is partially state funded. This fact lies at the core of many lawsuits against the bill. Medicare will be overhauled to improve on quality, cost, and disparities. The effectiveness of these changes is the real factor in whether the bill will actually save any money.

Private insurers will see the biggest change. Plans will be sold in state run “exchanges”starting in 2014.  These plans are the only plans federal money can be used to subsidize premiums. Therefore, they will be substantially cheaper than non exchange plans. The plans will be under the direction of their parent companies (say Aetna or Cigna), but will be regulated heavily by the government.  It is a trade off, more regulatory power for the government, but then again they are technically going to pay the insurers for most middle and lower class plans.
All medium and large businesses will be required to offer health-care to employees, if they don’t then a tax of around 2,000 per employee will be levied. Individuals will also be required, and if they don’t then they will be taxed an amount no more than what health-care would have cost them.

There you have it, the bare bones version of how this bill is designed. It is important for many of us just coming out of college to pay attention to the rest of the bill. It will be a defining issue in the 2012 election. It shows two contrasting point of views in America. The end goal of the bill is to drive down costs. There will be studies designed to demonstrate the value of  medical tests and procedures. In order to decide which ones to "encourage" in the name of saving money. In the end the health-care bill is a debate between who do you think can do these jobs better? A public armed with information about their treatment options or a government agency armed with the same information?