Understanding How Health Care Reform Will Affect You

By Derek Thompson

Last night the House of Representatives passed the Senate health care bill, and the Democrats' year of living flirtatiously with failure ended with what I would call the greatest progressive achievement of the last two generations. We -- that is you, me, and everyone we know -- have spent months wrangling over the implications of health care on the deficit and the cost curve and the tenor of DC politics. But now that the bill has become a law, the most useful approach to health care is to servicey rather than debatey: so what does it mean for you, anyway?

Ultimately health care reform is about expanding insurance coverage to 32 million new Americans by growing Medicaid, mandating that all Americans buy health care and offering subsidies to those living under 400% of the poverty line. For the tens of millions of Americans who already get health care through their employer, this law does not change very much. For Americans without insurance, it changes quite a bit. Starting at the end of the year, new college graduates can stay on their parents' insurance until age 26. For less fortunate Americans without coverage, the law will offer tax credits to help them buy insurance through new regulated "exchanges." For Americans enrolled in Medicare, the law should not dramatically change coverage even though it calls for billions in cuts, primarily in the Advantage program. It will, however, close the prescription drug "doughnut hole" to help seniors buy medicine below the catastrophic coverage threshold.

On the revenue side, the bill delays its taxes until at least 2013. For richer families, the law will add additional Medicare payroll and investment taxes in three years. In eight years, it will add an excise tax on high-cost insurance plans that is indexed to creep into more insurance plans in the second decade of the law. On regulatory reform, the law bars insurers from rescinding coverage to the sick; discriminating based on pre-existing conditions; and capping lifetime coverage.

Now let's make this personal. The Washington Post has put together this useful interactive tool that asks users to enter their source of health care (employer, Medicare, etc), household members, marital status and income, which it uses to calculate how the new health care law will affect you. For example:

-- An entry-level 22-year old employee making between $30,000 and $40,000 a year will get to stay on his employer's plan with the option to switch insurance to the exchange market with the help of government subsidies.

-- A married, employed breadwinner with one child making $100,000 will see no change to his or her coverage through the law.

-- A family making more than $250,000 with two children will see Medicare payroll taxes increase by 0.9% to 2.35% and they will have to pay a 3.8% tax on investment income.

Check out the WaPo tool. To get a better sense of when the major provisions of health care reform go into law, check out this time line.

This article available online at:

http://www.theatlantic.com/business/archive/2010/03/understanding-how-health-care-reform-will-affect-you/37819/