Confused about the new health law? You’re not alone. Over the past couple of weeks, All Things Considered asked listeners to e-mail questions. On Wednesday's show, I tackled some on the air. Here they are, with a few bonus questions and answers that weren't broadcast.
One question, by far the most common query, accounted for nearly half the e-mails we received. And for a hint, consider that the name of the Republican bill, H.R 2, is "Repealing the Job-Killing Health Care Law Act."
Q: How accurate is the Republican mantra that the new law kills jobs?
A: According to the Republicans, the job toll is about 650,000. But that statistic — which the GOP says comes from the Congressional Budget Office — has been pretty thoroughly debunked, among others by the group factcheck.org.
It turns out that what the CBO actually said about job loss is that the law would allow people to stop working because they could get health insurance — not prompt employers to cut jobs or fire people.
Now there are estimates that some low-wage jobs would be lost. But the CBO also said the impact would be very small — and that's something most other analysts agree with.
Dane Schumacher, of Huntsville, Ark., is full-time farmer who says he lives off the proceeds from farming and earns less than $15,000 a year. He's concerned about what the law may make him do.
Q: Will I be required to purchase health insurance? If so, how in the world does the government expect me to afford to do so?
A: In a word, no. People who earn less than 133 percent of the poverty line (about $14,400 in 2010; soon to be updated for 2011) will get Medicaid coverage, which costs them nothing. That's a big change. Before the law, qualifying for Medicaid meant you had to be poor and belong to another specific group, such as single mothers or the blind. Now you’ll just have to have a low income.
But there are other exceptions to the insurance requirement. You also won’t have to buy insurance if your income is too low to owe federal taxes (which is about $10,000 this year for an individual; about $18,000 for a couple) or if the lowest-cost plan costs more than 8 percent of your income.
Steve Rosenbaum asks from San Rafael, Calif., about what will happen to privately administered Medicare plans.
Q: What will be the situation when the new health care law ends Medicare Senior Advantage? Will the law require my HMO to continue my coverage/membership and provide a Medicare supplemental program at a reasonable cost?
A: First, the law doesn't end Medicare Advantage. That's a myth. It does reduce substantial subsidies the Republican Congress added to the program as part of the 2003 Medicare prescription drug law. Those were supposed to get more seniors to leave the traditional Medicare program and join privately managed care and other types of health plans.
The Medicare Payment Advisory Commission found in 2009 those plans were getting 14 percent more per beneficiary than it actually cost to provide Medicare's basic benefits.
Now it's true that the last time Congress cut subsidies to private Medicare plans, back in 1997, many of them left the market, and beneficiaries were upset. But this time the cuts are going to be much more gradual and are much less dramatic, and most analysts predict that the vast majority of beneficiaries will still have access to an affordable plan.
Dave Manley of Boston wonders why the law is taking so long to kick in.
Q: Why does most of the current law not go into effect for several years? If the purpose of the bill is to expand and improve health care in the U.S. and reduce its cost, why the multiyear rollout?
A: Two reasons. One, as Republicans are fond of reminding everyone, is that it does help with budgeting to push some of the costs outside the 10-year window the Congressional Budget Office uses to analyze budgets. Republicans did the same thing when they passed the Medicare prescription drug bill in 2003.
But the there's a more nuts-and-bolts reason, too. And that is that the health system is like a huge ocean liner that takes a long time to move in a different direction. There's a lot of planning and details to be worked out and changes that need to be made at every level of government and by employers and workers alike. So it really legitimately does take a couple of years to get things up and running. That was true for the Medicare law, too, by the way, which passed in 2003 but didn’t start until 2006.
Now could they have made most of this health law operational Jan. 1, 2013, rather than 2014? Probably. Could they have made it start Jan. 1, 2012? Probably not.
Theresa Stahlman-West of Los Angeles asked about the potential penalties for companies that don't comply with the new law.
Q: A friend of mine works for a law firm in New York City. The owners of the law firm said that when the new health care law takes effect, they will just refuse to provide health insurance for their employees and accept the government's fine for not providing it. They said this will be cheaper than actually providing the required health insurance. If this is true, wouldn't all companies do this? What is there in the law to prevent companies from blatantly refusing to provide health insurance for their employees? How will these employees of the law firm obtain health insurance if their company refuses to provide it?"
A: First, of all, let's get straight what's required and what isn't. There's no employer mandate in the law. For employers with fewer than 50 workers, there's no requirement — period. For those with fewer than 25 workers, there’s actually a tax credit to help them pay for coverage for their workers. But for those with more than 50 employees, there is a potential penalty. That would kick in if they don't offer coverage and have workers who go into these new health insurance exchanges they have incomes low enough to qualify for government subsidies. Those penalties are $2,000 per worker. And some companies may well do that.
But if they do, those workers will be able to get coverage in the new exchanges, so they won't be left high and dry. Plus, most businesses will still offer coverage as a way to recruit and retain workers, according to several surveys done of business executives. And, in Massachusetts, which already has a mandate for individuals, employer coverage has actually gone up since it was implemented, not down.
Here's one from Marita Eddy of Silver Spring, Md.
Q: What are the new rules regarding Flexible Spending Accounts and Medical Savings Accounts?
A: For those of you who are unfamiliar with these, they are various types of savings accounts from which you can pay medical bills that aren’t covered by your health insurance. The main new rule this year is that as of Jan. 1, you can no longer be reimbursed for over-the-counter medications in either your FSA or your Health Savings Account (Medical Savings Accounts have actually been phased out) unless you get a doctor to write you a prescription for them.
Starting in 2013, there's another change, at least for the Flexible Spending Accounts — you’ll be limited to putting away just $2,500 a year tax-free. Previously employers set the limit for how much you could shelter.
Both changes are not for policy reasons, but to help pay for the rest of the health law.
Mark Sandifer from Seattle asked about the profits of insurance companies in various parts of the world.
Q: I've read that the return on investment for health insurance companies averages around 16 percent. How does that compare with other countries?
Private insurance — particularly for-profit private insurance — isn't all that common in other countries other than as a supplement or complement to public health insurance. For example, in Switzerland, which has a system similar to the one that’s envisioned in the new health law, where everyone will have to purchase private insurance, all the companies are required by law to be not-for-profit in the sale of the basic benefit package. In the Netherlands, which has a similar system, although it also has public plans, there are for-profit health plans, but they generally have profit margins of about 5 percent.