Analyst explains effects of new health care law

Thomas McAuliffe of the Missouri Foundation for Health is trying to bring clarity to the confusion surrounding federal health care reform.

A health policy analyst, McAuliffe is speaking to groups across the state and on Thursday addressed a crowd of about 70 people, including health care workers and community leaders, at the Show Me Center.

"The fastest growing sector of individual debt is medical bills from a high-deductible insurance plan, a recent surgery or a trip to the ER," McAuliffe said.

A total of 48 million people in the U.S. had problems paying or were unable to pay medical bills in 2007, according to The Commonwealth Fund, an independent health care research foundation.

Federal health care reform that became law in March addresses access to and affordability of health care, McAuliffe said, but does not take into account the issues that drive up health care costs. These include chronic illnesses, the costs of new medical technologies, poor coordination between health care providers, and cost shifting -- where those who can afford it pay higher prices to make up for those who are uninsured.

Under the new law more than 400,000 Missourians will now qualify for health benefits, McAuliffe said, either through Medicaid or private insurance.

By 2014, the new law will create health insurance exchanges in each state where small businesses and individuals can compare and buy insurance plans with varying levels of benefits from different companies. While it's not yet been determined exactly how the new exchanges will be set up, McAuliffe said, people should be able to compare prices and purchase health insurance coverage on the exchange's website.

"There will be a hot line number to call. If you are Medicaid or Medicare eligible, they will tell you about other benefits that you qualify for and start you in the process of applying," McAuliffe said.

Plans will have varying levels of coverage ranging from a Bronze plan that covers 60 percent of health care costs to a Platinum plan that covers at least 90 percent.

If an employer provides a plan that costs more than 9.5 percent of an employee's income, that person will be entitled to a voucher from the employer and use this to purchase less expensive insurance from new insurance exchange, McAuliffe said. Employees will be allowed to keep the difference in price.

Also by 2014, people will be required to buy health insurance or pay an income tax penalty. There will be exceptions for people with financial hardship and certain religious beliefs.

The individual coverage mandate is too weak, according to McAuliffe, who said there will be many people who will choose to just pay the fine. The penalty will be $95 per person or $285 per family, increasing over time and tied to inflation.

Tax credits for families to help offset the cost of purchasing insurance are also part of the health care reform law. These will be paid based on the percentage of household income used to buy health insurance.

"Those same individuals will still show up in an emergency room needing care, and hospitals will still be mandated to provide care for everyone who walks in there door, but they will stop getting money from the government to do so," McAuliffe said. "Those individuals will imperil the system."

Under the new law, Medicaid coverage will be expanded to include individuals and families with incomes at 113 percent of the federal poverty level. Medicaid payments to primary care physicians also will increase to be equal to rates currently paid by the Medicare program. Rural doctors, pharmacies and hospitals also will see Medicare payments increase by up to 10 percent next year.

This year's changes

Changes to private health insurance that took effect this year as part of the health care reform law include:

• No lifetime limits on coverage.
• Coverage for dependents up to age 26.
• Cannot be dropped from insurance for illness or pre-existing conditions.

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