The House of Representatives passed health care reform Sunday night. This new legislation will extend coverage to millions of uninsured Americans, prohibit insurers from discriminating against sick people, and reduce the federal deficit in the coming decades, according to official estimates. Yet many questions remain unanswered. Here’s a sampling.
Say I have a pre-existing condition. Can I get affordable insurance now? Wait three months. The requirement that insurance companies take any and all comers—known as “guaranteed issue”—doesn’t kick in until Jan. 1, 2014. But the Patient Protection and Affordable Care Act allocates $5 billion for the establishment of “high risk pools” within 90 days across the country. These group insurance plans will provide coverage only for people with pre-existing conditions who can’t find insurance through normal avenues. By law, they must take all eligible applicants and can’t charge more than the standard rates.
The bill costs nearly $1 trillion in the first 10 years. How exactly does it reduce the deficit?
First, it slows spending on Medicare and Medicaid by reducing the rates those programs pay for services such as hospital visits. (It also reduces the amounts paid out through the Medicare Advantage program.) Second, it introduces new taxes, including a 0.9 percent Medicare payroll tax hike for workers who make more than $200,000 a year (and couples who make more than $250,000 a year) and a 3.8 percent tax on unearned income for the same tax brackets. Both taxes will take effect in 2013. Lastly, the so-called “Cadillac” tax on relatively high-end employer-sponsored insurance plans will target individual plans that cost more than $10,200 every year and family plans that cost more than $27,500. (The “Cadillac” tax won’t roll out until 2018.) The Congressional Budget Office estimates that, together, these measures will decrease spending and increase revenue enough to reduce the deficit by $143 billion over the first 10 years and more than $1 trillion in the second decade.
There’s a fine for not having insurance. How does the government know whether you have insurance or not?
Through the tax system. The legislation doesn’t explicitly say how the individual mandate for health insurance will be enforced, but taxpayers will probably be required to prove that they own insurance when filing their taxes each year. (If you get insurance through your employer, they’ll help take care of it. If you’re self-employed, your insurer will probably send you a document to submit with your other tax forms.) If a taxpayer doesn’t have insurance, the IRS will notify him of his nonenrollment and show him how to sign up through their state’s insurance exchange. If he still refuses to enroll, the IRS will levy a fine that shows up on his tax forms. The fee starts small in 2014—$95 or 1 percent of income—but edges up incrementally until 2016, when uninsured individuals will have to pay $695 a year, with a family maximum of $2,085 or 2.5 percent of household income.
What if I have federally subsidized insurance and need an abortion? Who pays for it?
You do. The compromise struck between the House and the Senate says that federal funds cannot be used to pay for abortions. So if the federal government fully subsidizes your plan, you have to pay out of pocket for abortions—except in cases of rape or incest. (This is the same arrangement for women covered by Medicaid.) Even if the government only partly subsidizes your insurance, you still have to pay for the portion of the insurance that covers abortion. Here’s how it works: You write two separate checks to your insurance company every month—one to cover possible abortions, one for all other treatments and services. The federal government then contributes a third stream of money, which cannot be used to pay for abortions. Insurers that offer abortion coverage are required to keep those three pots of money separate. So any time someone gets an abortion, it’s paid for from the account devoted exclusively to abortion coverage. (Pro-life advocates who claim that the health care bill subsidizes abortion argue that even if you keep the pots of money separate, the government is still contributing to plans that allow abortion.)
The Virginia attorney general has promised to file a lawsuit against the federal government claiming that it can’t compel Virginians to buy health insurance. His supporters say health care reform violates the 10th Amendment. Does it?
Probably not. The 10th Amendment states that “[t]he powers not delegated to the United States by the Constitution, nor prohibited by it to the states, are reserved to the states respectively, or to the people.” The federal government, however, can claim two Constitutional justifications for mandating health care. One is the right to regulate interstate commerce, which includes any business that operates across state lines. (Even if not all health insurance companies operate in more than one state, Congress can still regulate them as long as that regulation is part of a comprehensive interstate scheme, according to the Supreme Court.) Congress also has the Constitutional right to tax. Just as Congress taxes polluting companies for imposing a burden on other people, it could tax Americans who don’t buy health insurance for doing the same. As if to emphasize the point, the fine for not buying insurance is levied by the IRS.
What would it take to repeal health care reform?
Realistically, a Republican majority in the House and Senate, plus a Republican president. Even if the GOP won back a majority in the House and Senate in 2010, President Obama could still veto any legislation that would repeal any part of health care reform. Republicans would then need a two-thirds majority in both chambers to override his veto. That’s unlikely.
If the Republicans control the House, Senate, and presidency in 2012, they will still need 60 votes in the Senate to overhaul the bill in its entirety. They could, however, cut off funding for it through the budget reconciliation process, which only requires a 51-vote majority. But they wouldn’t be able to tamper with any part of the legislation that doesn’t affect the budget, such as the ban on discrimination against pre-existing conditions.
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Explainer thanks Henry Aaron of the Brookings Institution, Jessica Arons and Judy Feder of the Center for American Progress, Sarah Binder of the Brookings Institution, Karen Pollitz of Georgetown University, and Kermit Roosevelt of the University of Pennsylvania.
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