Recent reports have suggested that health-care reform would lead to McDonald's workers losing coverage, to rate increases, to insurance companies leaving the business and to millions of seniors having to switch Medicare Advantage plans. It looks increasingly like most of those reports are proving unfounded. The reality? For the next year at least, people will see gains from health-care reform, not losses.
Most of the changes so far have resulted in increased health-care benefits for many -- granted, at a slightly higher cost. Some consumers now enjoy greater preventative care coverage without deductibles, they can consult a gynecologist without having to get an insurance company referral first, and they may be able to keep their child on the family plan until age 26.
Still, concerns remain about what's ahead, as some problems may have simply been pushed back a year. The Obama administration's decision to initially waive some key rules and negotiate with carriers offering Medicare Advantage plans on lowering prices or boosting benefits appears to be leaving most people ahead of the game. But health-care reform has a way to go before the implications fully play out. There are indications that problems could start surfacing long before reform is fully implemented in 2014. Some smaller insurance providers, for example, have warned they will have to leave the health insurance business if they must meet the law's requirement to use 80% to 85% of their revenues to pay claims. Some experts also worry that changes in the amount the government pays for its share of Medicare Advantage plans could force seniors to pay more or drop the coverage. Finally, employers facing uncertainties and the possibilities of additional costs for health care have to start making plans soon for what they will do in 2014 -- one option is to drop plans.
"There are tons of signs that the iceberg is visible and you can see the tip of it," warns James C. Capretta, a fellow at the Ethics and Public Policy Center and a critic of health-care reform. Capretta, who co-authored a report warning about the dangers ahead for Medicare Advantage plans, said employers are increasingly worried about how they may have to alter their plans in order to meet the requirements of health-care reform.
So how exactly is health-care reform affecting people now? And what can we expect? Here's a guide to help you separate fact from fiction:
Loss of health-care coverage: These fears were recently fanned by the McDonald's reports, as well as by warnings from insurance commissioners in Maine, Iowa, and Florida that smaller carriers were going to be forced to pull coverage.
The law's ban of annual caps on benefits poses a problem for mini medical plans like that of McDonald's. These mini plans provide some benefits but not full coverage, and they cap benefit levels.
The Obama administration has granted 30, one-year waivers to various employers and insurers, including McDonald's insurance carrier; 114 more waiver requests are pending. As a result, it appears pretty unlikely many people will lose coverage next year. Come 2012, when the waivers expire, it could be a whole other story.
Increased costs: It's not yet fully clear what's happening on the cost front. Health-care critics say costs will rise substantially. Reformers say costs will go down. Right now, costs are going up. Hewitt Associates estimates that costs will rise 8.8% this year for employers, compared to 6.9% last year, and some insurers have proposed far larger hikes for plans sold to individuals.
However, it's just not clear how much of that is due to health reform.
Additional benefits and resulting cost increases put pressure on employers wanting to hold down costs, said Cathy Tripp, a principal in Hewitt's health care practice. Hewitt estimates that health reform will increase the cost of employers' plans by 1% to 2%. Hewitt also reported that employers are asking employees to pick up more of the tab on health plans, with contributions expected to rise to 22.5% next year, up from 21.8% this year. She said employers looking to trim costs are looking at raising co-pays and increasing the cost of covering spouses.
Health and Human Services Secretary Kathleen Sebelius, in letters to the insurance industry, has accused some insurers of blaming health-care reform for boosts that have nothing to do with the law. The CEO of America's Health Insurance Plans, an association of health insurers, answered that while soaring costs and young people dropping coverage during a poor economy accounted for some of the increase, the additional benefits from health reform also raised costs.
Robert Moffit, a fellow at the conservative Heritage Foundation, said the uncertainty about just how much health reform will end up costing could also play a part in the rate hikes. "Insurers will try to hedge their bets," he said.
Coverage for children: One area where health reform is already presenting problems is in "child only" health insurance policies, often used when children live with grandparents, uncles and aunts.
Some insurance companies have stopped writing new "child only" coverage because of a new requirement in the health-reform law barring them from excluding children with pre-existing conditions. There is no central source to track the number of children under the plan, but administration and health insurance industry officials estimate the number as being anywhere between 100,000 and 600,000 children. Children who already have coverage won't be affected. Children requiring coverage, however, will have a hard time finding an insurer willing to cover them under a child only policy.
Insurers' decision to drop the coverage has already prompted one angry letter from Sebelius. Some states are considering legislation that would require any insurer offering family coverage to offer child only policies.
Yet, even as obtaining child only coverage becomes more difficult, covering children under family plans has become much easier. Health-care reform will require many family plans to cover children up to age 26, and it bars group plans from discriminating against children under 19 with disabilities.
Seniors and Medicare plans: Reform will bring some changes to the Medicare program. The government can now negotiate pricing and benefits with private insurers wanting to offer the Medicare Advantage plan. The law also requires seniors to be given some additional discounts on drugs that plans don't pay for.
The government has used its new authority to do two things. First, it's tried to ease seniors' confusion in making choices from numerous similar plans by requiring insurers to more clearly separate their Medicare Advantage plan choices from each other in price and benefits. That means each insurer will have fewer plans to pick from next year and some seniors will have to switch plans, but choices should be far less confusing.
Second, the government has used its new clout to require plans that wanted to boost prices this year to throw in additional benefits like better drug plans, eye exams or dental care. A few insurers have responded by dropping out.
The changes will force 1.25 million seniors to change Medicare Advantage plans, and the price of the most popular Medicare Advantage plans will rise 10%, according to an analysis by Avalere Health, a research firm that studies health-care public policy issues. Before the government negotiated with insurers, Avalere had estimated more than 3 million seniors would have to change plans.
Traditionally, many seniors change plans each year anyway. After they do, the government expects, on average, seniors will pay 1% less for the roughly $30 a month Medicare Advantage plans.
Seniors who exceed what Medicare Advantage and Plan D plans pay for prescriptions before Medicare fully takes over will now get drugs at 50% off. Their plans will also probably pay for more brand name drugs.
Seniors will also get more options for hospice care. Under the old rules, Medicare recipients could receive hospice care, but only by forgoing treatment. Now they will can continue treatment while receiving hospice care.
While it appears that seniors will benefit in 2011, concern remains about future costs of Medicare Advantage plans and whether seniors will have to pay much more.
Whether triggered by Medicare or McDonald's, the financial fears of health-care reform may not have yet manifested themselves in actual financial impact. But these controversies reveal there has been some immediate impact -- on citizens' views of government. "The effect is a catastrophic loss of public trust in the President and Congressional leadership," said Moffit. "The damage to the political process is enormous."