PUBLIC LAW 111-152

Health care and Education Reconciliation Act 2010 (Public law 111-152)

Health care and Education Reconciliation Act 2010 (Public law 111-152)

The Legislation

When President Obama took office in 2009, he announced that health care would be a top priority; in fact, he sought to have a reform plan enacted before Labor Day. By July 2009 the shape of this proposal was clear. Everyone would be able to obtain insurance, regardless of any preexisting conditions. Moreover, it was likely that everyone would be required to purchase health insurance. Wealthier Americans would likely pay higher taxes to fund the new system. Individuals could keep their employer-based insurance or other private insurance if they were satisfied. If they were not, or if they lacked insurance, they could access a new insurance marketplace, or exchange, where individuals and small employers could compare plans side by side and choose the best plan for them. Many Democrats in Congress insisted that a public option be included in the legislation. Such an option would create a government-run insurance plan, much like Medicare, that would help decrease healthcare costs through strong competition with private insurance companies. Not surprisingly, Republicans and insurance companies argued against this option, contending that the government would have an unfair advantage that would ultimately lead to a single-payer healthcare system similar to those in Canada and Europe. In March 2010 President Obama signed health insurance reform legislation (P.L. 111-148, the Patient Protection and Affordability Act of 2010). (Templeton, 2010)

Cost Implications

However, the 2010 reform legislation might result in better coverage for those aged under 65 than for medicare beneficiaries. Efforts to raise the age of eligibility for the program to 67 also implicitly mean cost shifting to beneficiaries. If individuals must then seek coverage through the private insurance market until they reach the new age of eligibility, they will quickly find that coverage is very expensive or even unavailable (Pollitz et al., 2001). Once some of the recently legislated changes to reform insurance go into effect, this option will become more feasible (Kaiser Family Foundation, 2010). Because Medicare would be eliminating eligibility for its younger, least expensive older patients on average, the approximately 5% of people disenfranchised if eligibility age goes to 67 would only save Medicare about 2% of its costs. (Ferry, 2010)

In terms of Medicaid, it is not feasible to ask beneficiaries - who are by definition on lower incomes - to bear a greater share of the costs of their care. Indeed, the way that Medicaid works for long-term care services is to require that individuals devote most of their incomes to the costs of institutionalization; for example, with the government then only filling in the gaps. This program will also be important to retirees who need long-term care in the next several decades. The new CLASS Act that was part of the reform in 2010 will provide some new opportunities over time. But the financing crisis will come later, when the baby boom generation is in its eighties and nineties ...