Health Care Reform 101: Breakdown of Main Concepts of the New Health Care Reform Bill

H.R. 3962, also referred to as the Health Care Reform Bill, promises “To provide affordable, quality health care for all Americans and reduce the growth in health care spending, and for other purposes.” However, at 2,000 pages, the Health Care Reform Bill is a very lengthy document. Over the next five to ten years the Health Care Reform Bill will change the way Americans receive healthcare so it is important for all U.S. and Illinois residents to understand this bill.

This post will summarize the key issues involved in the Health Care Reform Bill rather than how the Healthcare Reform Act impacts Illinois residents. Basically, the Health Care Reform Bill deals with the issues of community rating in health insurance markets, employer mandates to offer health insurance, imposing a tax on “Cadillac” health insurance plans, and health insurance market competition.

The purpose of establishing community rating in health insurance markets is so that people with pre-existing conditions can gain access to affordable health insurance. Currently these people, who some would argue are the ones who need health insurance the most, are subject to higher rates and premiums on health insurance. These increased premiums were imposed by health insurance companies based on the logic that people with pre-existing conditions are more likely to see doctors than those without. Under a community rating plan, insurance companies would not be prohibited from charging higher health insurance premiums for people with pre-existing conditions and would be required to provide insurance to anyone who desires it.

The Health Care Reform Bill also includes requirements for employers to offer health insurance to their employees. This portion has been referred to as the “pay or play” mandate because it requires employers to either pay an extra fee if they opt out of providing health insurance to their employees, or to “play” by offering health insurance to their workers.

This employer mandate is not scheduled to take effect until 2014, which is the same year individuals will be required to carry health insurance. Currently, the proposed fee that employers will be charged for not providing health insurance is $750 per employee. Companies with less than 50 employees are exempt from the employer mandate.

In addition to the fees imposed under the employer mandate, individual health insurance plans will be taxed if they fall into the category of “Cadillac” plans. Under this provision, high-cost health insurance policies will be taxed. This provision will not go into effect until 2018 and is expected to affect higher income individuals more than lower income employees.

The last major provisions of the Health Care Reform Bill is the implementation of health insurance market competition. In 2014, insurance plans will be available through state-run insurance marketplaces, or ‘exchanges’. The purpose of these exchanges is to make insurance coverage more affordable for the lower income population. The hope is that these exchanges will promote competition in the insurance market and could help slow the now-rapid growth of healthcare costs.

Many of the above provisions do not take place right away, but are scheduled to occur over the next five to ten years. Health care reform is complex and dense and while the Health Care Reform bill has been passed there remains a lot of work to do before it is smoothly implemented in the U.S. and Illinois.
Kreisman Law Offices has been handling Illinois medical malpractice lawsuits for over 30 years, serving those areas in and around Cook County, including Skokie, Lisle, Oak Forest, and Evanston.