By Assemblyman Will Barclay (R-Pulaski)
The Patient Protection and Affordable Care act is one of the most expansive and sweeping laws to pass in a generation. Major changes will take effect by the end of 2014 for taxpayers, consumers, businesses, insurance companies, Medicaid and Medicare. The bill outlined immediate changes that were required by federal law to take effect at the state level by the end of 2010. I talked in this space last week about those changes the state has made, including the NY Bridge Plan. This week, I wanted to outline some of the major changes that will take hold through 2014.
The most obvious change is the major mandate this law brings: it requires everyone to purchase health insurance. Beginning in 2014, those who do not have health insurance will be fined. By 2016, the fine is either $695 for each uninsured family member or up to $2,085 or 2.5 percent of the household income.
By 2014, states will be held responsible for creating exchanges—a marketplace for people to purchase health insurance. These exchanges are expected to level the playing field for consumers and are supposed to make shopping for options and comparing coverage easier. In the beginning, they will be offered to people who are unemployed, self-employed or work for businesses that don’t offer insurance. There will be different insurance plans but all are required to cover essential benefits such as: emergency, hospital, maternity, ambulatory care, mental health, substance abuse, drugs, rehabilitative and habilitative services and devices, lab, prevention and wellness, and pediatric services.
The Congressional Budget Office estimates about 25 million will shop for coverage in the exchanges run by the states; about 19 million of which will qualify for financial aid, which would help keep costs of health insurance for consumers to about 10 percent of their income, as specified by the new law. It is up to states to decide criteria of the exchange. For example, prior to 2016, states have the option to limit exchanges to businesses with up to 50 employees; beginning in 2017, states have the option to allow businesses with more than 100 employees to purchase coverage for their employees through the exchange. By 2011, federal grants will be made available to states to establish the exchanges.
This will all cost a great deal of money. According to news reports published in the Christian Science Monitor, the price tag is about $940 billion over the first 10 years. On top of that, small businesses will receive $40 billion in tax credits as an incentive to offer health insurance to their employees. New taxes, fees on health insurance companies, drug manufacturers and medical device manufacturers will be instituted to raise the revenue needed for subsidized health care. Medicare will see changes too, specifically Medicare Advantage will experience cuts throughout the next 10 years. (Medicare Advantage is an alternative to traditional Medicare and often offers more options.) Also, individuals who are on Medicare who make more than $200,000 a year or a couple that makes more than $250,000 will see a tax rate increase by .9%. Additionally, the bill creates a new tax of 3.8 percent on unearned income, such as dividends and interest, for people in the same income bracket.
Other noteworthy fees and taxes include: $16 billion from 2011 to 2019 for drug manufacturers; $47 billion for health insurers over the same period; medical device manufacturers would pay a 2.9 percent excise tax on the sale of wares beginning Jan. 1, 2013.
In the near future, I’d imagine people can also expect to hear of studies found by the Patient-Centered Outcomes Research Institute. The law allocates $500 million in seed money for this new nonprofit organization that will compare treatments. Supporters say this center will figure out whether cheaper drugs, medical devices or surgical techniques work just as well as more costly options. Opponents worry this could lead to rationing of care. In other words, new or expensive treatments may be an excuse to deny coverage for insurance companies.
Where New York Stands
According to the New York State Health Department, nearly 5 million New Yorkers are covered by public health insurance: Medicaid insures 4.5 million people; Child Health Plus insures almost 400,000 children. Over 10.5 million New Yorkers have employer-sponsored health insurance and 2.7 million New Yorkers are uninsured.
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