Health Care Reform Basics

As I am sure you all know the health care bill passed Sunday, March 21st, 2010. This is monumental in that health care reform has been an elusive target for our government for such a long time. One of the key factors in passing this bill is that Obama made clear that none of the government funds will be used for abortions. The bill is very complicated and I am going to try to clarify the high points. My figures come from CNN and The Wall Street Journal. 

The bill costs $940 billion. The breakdown for that is as follows: $466 billion in tax credits to help those in lower income brackets afford insurance. $434 billion to expand the Medicaid program for impoverished individuals and families. $40 billion in tax credits to small businesses to offer coverage for their employees.

Beginning in 2010, insurers will be banned from denying coverage to children with pre-existing illness. Children will additionally be able to stay on their parents’ insurance until their 26th birthday. Subsidies begin this year for small businesses to provide coverage for their employees. Seniors whose medications have not been covered by Medicare will get $250 credit this year and, over the years, more and more medications will be covered

In 2011, a long term care program will be set up. Drug makers will face an annual fee of $2.5 billion, which will increase over the years.

To help offset the expenses of the bill, starting in 2013 there will be an increased Medicare tax on individuals who make over $200,000 and couples that make over $250,000. This will be in the form of a 3.8% tax on unearned income such as investments, capitol gains, dividends and interest. Tax on wages will rise from 1.45% to 2.35%. For cost control, a Medicare pilot program will begin to bundle payments for care, focusing on quality rather than quantity of services.

2014 is the year that medical coverage of most Americans will be enforced. At this point, insurance companies will be barred from denying insurance to any individual with a pre-existing medical problem. Most people will be required to have insurance. Medicaid will expand to all Americans with income up to 133% of poverty level (which is about $22,000 for a family of four). Families of four that have an income of $88,000 or less would get subsidies from the government to afford insurance. The less the family earns, the more they would get. . Employers with more than 50 employees who get tax credits for insurance will be imposed a fine if they are not providing affordable coverage. Subsidies for small businesses to provide coverage for their employees will greatly increase. The insurance industry will be required to pay an annual fee of $8 billion that will increase in subsequent years. There will be a government ombudsman established to help clarify people’s insurance claims when there are problems. There will be better oversight of how Medicare money is spent through an Independent Medicare Board.

There will be a fine for those individuals that do not carry coverage. By 2016, the fine will be 2.5% of taxable income or $695, whichever is greater.

By 2018, insurers of existing policies will be required to cover preventive care and preventive care will be exempt from deductibles. 

There is additionally a Senate bill that is yet to be passed that will further address how to raise more money to support Medicare and other subsidies for families in lower income brackets. 

Estimates are that 95% of all Americans would have health insurance by 2014. This will be a significant improvement in coverage for Americans; CNN reports that at some point during 2007 and 2008 33% of Americans under the age of 65 were uninsured. 

It seems the American public is divided about this plan and how it will affect people. Some are worried they will lose the coverage they have for “bundle” programs, some are angry about paying more taxes, and some are thrilled by the fact that America’s health care system will be more accessible to more people.

In regards to how this will affect physicians, it is unclear. The AMA (American Medical Association) does support the bill. The main concern, however, is that physicians in general are already over-worked and there are shortages of physicians in many parts of the country. This certainly includes psychiatrists and especially child psychiatrists. To increase the amount of physicians, there will be some money going to subsidize medical school loans, but not much. There is an estimated 32 million Americans who are currently uninsured who will have medical insurance by 2014.

From a psychiatry standpoint, this bill should help with parity laws focused on having insurance companies cover patients’ mental health problems on par with other health issues. That has been a problem for around three decades. Insurance companies carved mental health out of their plans and, despite more coverage in recent years, have made authorization for treatment and reimbursement very difficult. I am hopeful that by 2014 insurance coverage for psychiatric care will be reasonable enough that most private practice psychiatrists who had stopped will once again accept insurance.  Additionally, there will be more focus on coverage for early intervention and prevention programs.  This will especially benefit children in that there will be a ban on pre-existing condition exclusions.  There will be  a focus on helping expand the workforce for child mental health care by focus on increased funding for community mental health, loan repayment incentives for psychiatry residents who agree to work in undersevrved areas, and more focus on collaboration between psychiatrists and primary care physicians.

At this point in time, many Republicans are angry over this plan and they are going to fight it, likely at a federal and state level. There are still many legal and political battles to be settled. Things may change before all of these laws come into effect. 

There has not been anything in health care reform remotely this big since the 1960’s (the formation of Medicaid and Medicare). It is a both scary and exciting time for health care in the United States.

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