TOPICS > Health

How Will the Health Care Law Work? Americans Ask, We Answer

July 3, 2012 at 12:00 AM EST
Susan Dentzer of the journal Health Affairs answers specific questions about the health care law from Americans visiting the National Mall. Among the questions, what will the law mean for small businesses, how soon can someone with pre-existing conditions buy coverage and how will the law get funded?
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JUDY WOODRUFF: Next: In the aftermath of the Supreme Court decision, we continue our coverage of the health care reform law.

Tonight, Ray Suarez looks at some important questions from Americans about how it’s supposed to work.

RAY SUAREZ: Many of the same Americans who are expressing passionate pro and con opinions of the Obama administration’s health care reforms are still not completely sure how the complex and sprawling system created by the Affordable Care Act will work.

We didn’t have time to go everywhere in America to sample questions, so we brought a NewsHour camera to a place Americans come from everywhere to visit, the memorials, monuments, and museums of Washington, D.C.

To answer a sampling of questions, I’m joined by NewsHour regular Susan Dentzer. She’s the editor of the journal Health Affairs.

And, Susan, we got several questions on small business and its responsibilities, including this one from a man, a young fellow who hopes to be a small business owner.

RAJ CLARK, Danville, Virginia: Hi. My name is Raj Clark. I’m from Danville, Virginia.

I’m a recent college graduate and an aspiring future business owner. So, I’m wondering, for somebody who is owning a small business, what does this new health — the new health care plan, how does that impact future business owners?

RAY SUAREZ: Susan?

SUSAN DENTZER: Well, if Raj were a small businessman in business today, he’d already be eligible for tax credits to help pay for his workers’ health insurance, if he were a business that had 25 or fewer employees.

Going forward, as a small business person, he would have the opportunity as of 2014 to buy coverage for his workers through new small business health insurance exchanges that will be set up in every state or that will be enabled to be in existence, because the federal government will step in and help to run those in certain states.

RAY SUAREZ: And then a new set of rules kicks in at 50 employees?

SUSAN DENTZER: Yes, exactly.

We can ask the question, what happens if you don’t offer coverage for workers? For companies that have 50 or fewer employees, if they don’t offer coverage to workers, nothing happens to them. For companies that are larger than that, however, if they do not offer coverage to their workers or if one of their workers ends up buying coverage through an exchange and claiming some of the federal subsidies, they will be subject to penalties.

The penalties are adjusted according to a formula. Just to give an example, if I were an employer with 60 employees and I were not offering coverage, I would pay the equivalent of about $60,000 a year in penalties. That money goes back into federal government funding to enable the support for people who are buying coverage with federal subsidies.

RAY SUAREZ: I got a reminder that this law is not fully in place yet from a young woman with diabetes who is finding it difficult to buy insurance.

ROBIN CRAWFORD, Maryland: Hi, my name is Robin Crawford. I’m from Maryland.

And my question is, how can a person with preexisting health conditions get medical health insurance now, without waiting to 2014?

SUSAN DENTZER: As she says, in 2014, all of this will change, because everybody with preexisting conditions will be able to buy coverage.

Up until that point, her best bet is probably going to be to look for the preexisting condition insurance plan offered in her state. This also was a program created by the Affordable Care Act. And a number of states are running their own programs, and the federal government has stepped in and is running programs in other states.

But every state now has one. You can only qualify for this preexisting condition insurance if you’re a citizen or a legal resident, if you have been without health insurance coverage for six months. So that has exempted a lot of people. And, as a consequence, only about 53,000 people in the country have been able to sign up.

But at the moment, that’s probably the best bet. The other alternative is to call your local state Medicaid office or the health insurance regulatory office in your state and ask them if there are other options for you, because some states have put those in place.

RAY SUAREZ: We got a lot of questions on what I’m willing to bet is one of the least-well-understood parts of the law, and that is the exchanges, like this one.

KATHLEEN MAISNER, Waterford, Michigan: Hi. I’m Kathleen Maisner from Waterford, Michigan.

And I’m from one of the states where our governor and legislators have not begun to formulate insurance exchanges. And I would like to know how that is going to affect the people of Michigan.

RAY SUAREZ: And that list now is getting longer, with Louisiana, Texas, Florida, Wisconsin, some other states saying they’re going to wait to see what happens in November before they put them in place. What can you tell her?

SUSAN DENTZER: We will have to see how this plays out.

If the law remains in effect, basically, every state is either going to have to set up its own exchange, partner with the federal government to create an exchange. So the states may do some functions, pass others over to the federal government, or the federal government actually steps in and runs an exchange or points another entity to run the exchange.

RAY SUAREZ: And by exchange, we just mean a marketplace for buying insurance, right?

SUSAN DENTZER: Exactly.

For most people, this is going to be a Web site, a Web site where you go on and look for various insurance products that are available in a state. So, as of 2014, or, more properly, when open enrollment begins, which will be October of 2013, most Americans will have access to coverage, either through their state exchange again or through a federal backup exchange.

RAY SUAREZ: We have another question on that topic.

LARRY BENSKY, Chicago, Illinois: Hi. My name is Larry Bensky. I’m from Chicago, Illinois.

My question is, how soon will the exchanges be up and running and how much will they resemble the insurance that I now purchase as a self-employed person? How well are they going to resemble what I already have?

RAY SUAREZ: Probably a lot of people buying their own insurance.

SUSAN DENTZER: For insurance that is available through the individual exchange, each state has the opportunity now to choose what is called a benchmark plan.

That has to look like a plan, that has to be like a plan that is already for sale within that state or available within that state. So the coverage overall will look fairly similar to what is out there now, with a couple of exceptions. It’s probably going to be a little bit more generous, because there are limits now on cost-sharing. There are — of course, the new lifetime limits have gone away and annual limits have gone away.

So, on balance, the coverage is probably going to look broader and better. It’s also possible it will be more costly. We will have to see how all of that plays out.

RAY SUAREZ: And, finally, Susan, we got a question that I think summed up what a lot of people were wondering about on the streets of Washington. How is this all going to work when it comes down to dollars and cents?

KENE OKOCHA, Washington, D.C.: Hello. My name is Kene Okocha. I live in Washington, D.C., and I’m from Madison, Wisconsin.

My question about the health care law was, how is it going to get funded? How are they going to pay for all the people who don’t have insurance?

RAY SUAREZ: Adding millions of new people to coverage, where is the money coming from?

SUSAN DENTZER: Well, we have to keep in mind that even uninsured people get about two-thirds as much health care as people who are insured. So, a lot of medical care is being provided now and paid for in many states in various ways.

Right now, what we do is kind of channel lots of indirect payments to hospitals and others to pay for this coverage. What we will start doing under the new plan is paying for that more directly. So, how do we come up with that more direct funding?

Roughly speaking, it’s a trillion dollars or so over a 10-year period. We do that in two ways. One of which is, we raise some new monies. We have imposed taxes in this law on health insurers, on pharmaceutical manufacturers, on device manufacturers, the entities that will actually benefit because, as more people are covered, they will probably use more of all of those products.

So those industries have agreed in effect — some more willingly than others — to give back some portion of that and help to pay for the law. The other way we are paying for it is to slow down the growth of what we pay other providers.

So to the degree hospital spending would have been expected to go up year by year under the Medicare program, we’re going to not grow those payments as fast as we would have otherwise. We’re also not going to grow payments to many other kinds of health care providers, and, in some instances, we will actually cut them.

But keep in mind the theory and the reason why many of those providers went along with the law is that we are essentially recycling the money back to them, because, as people have health insurance coverage, they can go into the hospital. The hospital will be paid for seeing those people, whereas, previously, the hospital wasn’t being paid, because those people weren’t insured.

RAY SUAREZ: Well, I hope that helps everyone.

Susan Dentzer, thanks a lot.

SUSAN DENTZER: Great to be with you, Ray.