| What Health Reform Means for California
The historic passage of a national health care overhaul has triggered an avalanche of questions as to just how the law will be implemented. Below, the California HealthCare Foundation examines how some Californians with varying employment, income, and demographic profiles will be affected by the new law.
Q: What will this law mean for a 22-year-old in excellent health who has two part-time jobs, but earns only about $21,000 a year, with neither employer offering health insurance? Would such a person be eligible for coverage as a dependent under his or her parents' health insurance policy? And, if not, will this person be required to obtain health insurance on their own at some point?
A: Six months after the health reform law is enacted, a young person in this situation will be eligible for coverage as a dependent under his or her parents' plan until age 26. There will, however, be some incremental costs (in the range of $150 to $350 per month) depending on how comprehensive the parents' coverage is.
In 2014, four years out, a person in this situation will be subject to what is called an "individual mandate" -- meaning that he or she will be required to obtain health insurance. Because this salary in 2009 puts this person at about 200% of the federal poverty level, however, he or she will be eligible for subsidies from the federal government to help cover the cost of insurance premiums.
With annual earnings of $21,000, he or she will not be required to pay premiums higher than 2% to 3% of their total income. Responsibility for any out-of-pocket costs will not exceed $1,983 per year.
If a person in this situation fails to obtain coverage, he or she will be subject to a tax penalty of $95 in 2014. That penalty would grow to $695 by 2016 if the person were to remain uninsured.
Q: What would this law mean for a 37-year-old with no children earning about $12,500 a year working part time for an employer who doesn’t offer health insurance, but who is also not currently eligible for Medi-Cal?
A: Since this individual's income puts him or her at between 90% and 120% of the federal poverty level, under the new law such a person will be eligible for Medi-Cal in 2014. An individual in this situation will receive comprehensive benefits, and won't be required to cover much of the cost of care. In some counties, he or she may be required or encouraged to participate in a managed care plan. In other, predominantly rural locations, new federal funds to increase Medi-Cal reimbursements for primary care providers may make it easier to find doctors who will accept Medi-Cal payments than it is today. But finding specialist physicians who accept Medi-Cal could continue to be a challenge for Californians enrolled in the program.
Q: What would the law mean for a married couple who are both 45 years old and healthy; with a combined income of $50,000 per year? The husband’s employer offers coverage, but they cannot afford the 50% share of the monthly premium and still pay their other bills. Their two children are now covered by the state's Healthy Families program, since the couple doesn't have health coverage through their jobs.
A: Under the new law, by 2014, the couple will both be required to purchase health insurance. If their income stays between 200% and 250% of the federal poverty level, they will qualify for subsidized coverage through the new health insurance exchange -- a centralized clearinghouse that facilitates shopping and administers government subsidies. They will qualify to receive credits toward their health insurance premium, which would limit their premium contribution to about 7% of their total annual income (approximately $3,500 per year or $300 a month).
The comprehensiveness of the health coverage they purchase would have to meet certain standards and, no matter what health problems the family developed, the most they would have to pay out of pocket for health care services would be $5,950 per year. If they don't obtain coverage, they would be subject to a tax penalty of $95 per person, per year starting in 2014. That penalty would grow to 2.5% of household income ($1,250 per year) by 2016 if they remain uninsured.
If the wife's employer is small and hires mostly lower-wage workers, new tax credits beginning in 2010 may make it more attractive for the employer to offer health coverage.
Q: What would this law mean for a would-be entrepreneur who has health insurance through his full-time job, but who wants to start his own business? A 50-year-old, single person earning $80,000 a year, he now contributes about $1,000 each year toward his health insurance premium. Since he has an existing health condition, he's afraid he would never be able to get health coverage on his own.
A: As soon as 90 days after the law’s enactment, new federal funds will establish a temporary national high-risk pool that makes coverage available to those who have been turned down by insurance carriers because of their health status. People would have to be uninsured for six months before they’d be eligible to enroll, however. There remain unanswered questions about whether these funds will be available to California’s existing high risk pool (the Major Risk Medical Insurance Program or MRMIP) and if so, whether California’s share would be adequate to meet the state’s need.
By 2014, under the new law, an individual in this situation will qualify for "guaranteed issue" individual coverage. This means that any health plan selling individual coverage in California would have to offer a full range of products at the same price to everyone within a particular age range. With new age-rating rules, a basic plan might be available for between $325 and $500 per month. Out-of-pocket costs would be limited to $5,950 per year. If and when this individual starts a new business and his first employees are hired, he could obtain a group policy at prevailing market premiums.
Q: What would this law mean for a 60-year-old single, self-employed woman earning about $95,000 per year, who happens to have a pre-existing condition? She has a heart condition, so she is now buying health coverage through the Major Risk Medical Insurance Program (MRMIP). This coverage provides her with an annual coverage limit of $75,000 and a lifetime limit of $750,000. Her plan now costs her $1,200 per month through Blue Cross of California.
A: In the short-term, to remain insured she would need to maintain her coverage through the program. It’s possible, but not likely, that new federal funding opportunities associated with the temporary national high-risk pool would expand benefits or reduce MRMIP premiums for existing enrollees.
By 2014, she will qualify for guaranteed issue individual coverage. With new age-rating rules, a plan with basic benefits might be available for an estimated total premium between $400 and $700 per month. Her out-of-pocket costs would be limited to $5,950, and there would be no annual or lifetime limits.
- from the California HealthCare Foundation
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