In the last few months, the Health and Human Services Department has introduced many Health Care Reform rules and regulations. Every time that happens, the media gets hold of it, and all kinds of articles are written in the Wall Street Journal, the New York Times, and the TV network news programs talk about it. All the analysts start talking about the pros and cons and what it means to businesses and individuals. The problem with this is many times, one writer looked at the regulation and wrote a piece about it. Then other writers start using details from that first article and rewriting parts to fit their theme. When the information gets widely distributed, regulations and rules get twisted and distorted. What shows up in the media sometimes doesn’t truly represent the reality of what the laws say.
There’s a lot of misunderstanding about what is going on with ObamaCare, and one of the things that I’ve noticed in discussions with clients is that there’s an underlying set of myths that people have picked up about healthcare reform that isn’t true. But because of all they’ve heard in the media, people believe these myths are true. Not everybody thinks these myths, but enough do, and others are unsure what to think, so it warrants dispelling these myths now. Today we’re going to talk about three myths I hear most commonly. The first one is that healthcare reform only affects uninsured people. The second one is that healthcare reform doesn’t affect Medicare benefits and the Medicare program. And then the last one is that healthcare reform is going to reduce the costs of healthcare.
Health Care Reform Only Affects Uninsured
Let’s look at the first myth about healthcare reform only affecting uninsured people. In many of the discussions I have with clients, they use several expressions: “I already have coverage so that I won’t be affected by ObamaCare,” or “I’ll just keep my grandfathered health insurance plan.” The last one – and this one, I can give them some leeway because part of what they’re saying is true — is, “I have group health insurance so that I won’t be affected by health care reform.”
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Well, the reality is that healthcare reform is going to affect everybody. Starting in 2014, we’re going to have a whole new set of health plans, and those plans have wealthy benefits with lots of extra features that the existing programs today don’t offer. So these new plans are going to be higher cost.
Health Care Reform’s Effect On People With Health Insurance
People that currently have health insurance are going to be transitioned into these new plans sometime in 2014. So the insured will be directly affected by this because their health plans are going away today, and they will be mapped into a new ObamaCare plan in 2014.
Health Care Reform Effect On The Uninsured
The uninsured have an additional issue: if they don’t get health insurance in 2014, they face a mandate penalty. Some healthy uninsured will look at that penalty and say, “Well, the penalty is 1% of my adjusted gross income; I make $50,000, so I’ll pay a $500 penalty or $1,000 for health insurance. In that case, I’ll take the penalty.” But either way, they will be directly affected by health care reform. Through the mandate, it affects the insured as well as the uninsured.
Health Care Reform Effect On People With Grandfathered Health Plans
People with grandfathered health insurance plans will not be directly affected by health care reform. But because of the life cycle of their grandfathered health plan, it’s going to make those plans more costly as they discover that there are plans available now that they can easily transfer to that have a richer set of benefits that would be more beneficial for any chronic health issues they may have. For people who stay in those grandfathered plans, the pool of subscribers in the program will start to shrink, and as that happens, the cost of those grandfathered health insurance plans will increase even faster than they are now. Therefore, people in grandfathered health plans will also be impacted by ObamaCare.
Health Care Reform Effect On People With Group Health Insurance
The last one, the small group marketplace, will be the most notably affected by health care reform. Even though the health care reform regulations predominantly affect large and medium-sized companies and companies with 50 or more employees, smaller companies will also be affected, even though they’re exempt from ObamaCare.
Many surveys and polls are starting to show that some businesses with ten or fewer employees will look seriously at their option to drop health insurance coverage altogether and no longer have it as an expense of the company. Instead, their employees will get health insurance through the health insurance exchanges.
Some carriers anticipate that up to 50% of small groups with ten or fewer employees will drop their health insurance plan sometime between 2014 and 2016. That will greatly affect all people with group health insurance, especially if they’re in one of those small companies that drop health insurance coverage.