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Congress recognized that and passed two laws that can help: the Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985, and the Health Insurance Portability and Accountability Act (HIPAA) of 1996. These laws were intended to provide personal health care stability, and stability for the economy as a whole. Then, in 2010, Congress and the Obama administration passed the widely known and somewhat controversial Patient Protection and Affordable Care Act, commonly known as “Obamacare,” (see #54 Obamacare) to deal with many of these issues, including availability to previously uninsurable individuals, and offering many other provisions to more widely mandate and reshape the availability of health coverage.
What You Should Know
Among other provisions, COBRA allows you as an eligible employee to keep your insurance for up to eighteen months after leaving a job (longer under some conditions, like disability). Now, “keep your insurance” doesn’t mean that it’s free—you’ll have to pay the premium. But it does save you from having to prove eligibility or insurability, and it allows you to maintain coverage at the group rate provided to your employer.
While COBRA helps, in practice it was found that only a small minority of ex-employees actually take advantage of it for the full eighteen-month period, as most employees opt for lesser and cheaper coverage than paid for by the employer. But COBRA can help you bridge the gap until you find this cheaper option.
The HIPAA act, in practice, has been more about the rules of privacy and transfer of medical records and information. But one of the key provisions allowed employees to transfer from one job to another without requalifying for insurance; that is, a preexisting condition was not to be grounds for denying insurance at the new employer. There are some wrinkles if an employee moves to a new state where the old insurer doesn’t do business, but in general, the law fixes what it intended to fix and, like COBRA, helps employees leave unwanted jobs.
Why You Should Care
Assuming you have health benefits with your job in the first place, if you have any inkling that your job might go away, or that it might be time for a change, it makes sense to learn about these two laws. Your health insurance provider or human resources department should be able to help you more.
54. OBAMACARE
“Obamacare” is the nickname given—mainly by opponents—to the landmark health care legislation more formally known as the Patient Protection and Affordable Care Act (PPACA) passed in March of 2010. The name “Obamacare” stuck after it was used and endorsed for use by the president himself.
What You Should Know
Obamacare, which had roots in some of the health care reform legislation attempted but not passed in the Clinton administration, brings sweeping changes to health care delivery and cost recovery over a period of eight years after its passage. The main intentions are to bring more affordable care to more people, and to increase access to certain segments of the population all but shut out of the current system. In numbers, the law intends to address the high cost of health care, currently consuming some 17.6 percent of GDP, and the estimated 45–50 million individuals not previously covered by health insurance or entitlements.
The primary mechanisms of Obamacare are:
Individual mandate. Most individuals will be required to purchase health coverage (and certain employers with more than fifty employees to supply it), else be penalized for opting out. That mandate comes with subsidies to help out low-income individuals and families with incomes up to 400 percent of the federal poverty level (currently $11,170 for an individual and $23,050 for a family of four). Those subsidies are paid on a sliding scale depending on income level. The intent of this provision is to broaden coverage and bring more “healthy” people into the insurance pool, lowering the costs for everyone, at least in theory.
Guaranteed issue. Health insurers will no longer (as of 2014) be able to deny coverage to anyone based on health, or cancel insurance for anyone who gets sick. No dollar limits can be applied to total lifetime coverage. Certain “essential” features like maternity coverage are compulsory, as are free preventive checkups after 2017.
Insurance exchanges. States are mandated to operate, or have access to, health insurance exchanges for individuals to compare and buy insurance, and to enact income-based subsidies.
New taxes and cost savings measures. To pay for subsidies, new and higher taxes are imposed on high earners for Medicare. Among the changes are a 2.3 percent excise tax imposed on medical equipment makers and importers, reduced tax benefits from medical expense deductions and flexible spending arrangements, reduced payments and increased audits of payments by Medicare to Medicare providers, and a “luxury tax” on so-called “gold-plated” health insurance benefits received by certain individuals (to take effect in 2018).
Why You Should Care
A major portion of Obamacare (individual mandate, subsidies, exchanges, and guaranteed issue) is set to take effect in 2014, so the long-term effects of this major policy change are yet to be felt. While more people will have access to coverage, and people will be less likely to be penalized for age or sickness, there is considerable concern that it will do little to reduce the overall cost of health care, except perhaps from some savings in Medicare costs (which may show up elsewhere as health providers “reallocate” costs). Higher demand from tens of millions more insured could drive health care prices higher. Additionally, if younger, healthier individuals choose to opt out of the individual mandate (by paying the penalty), the resulting insurance pools will be too small and overweighted with higher-cost, older, sicker individuals—and premiums will rise, not decrease as intended. Opponents of the legislation believe that driving costs down should have been first priority; if low enough, resulting insurance premiums would be more affordable, and people would subscribe naturally, without a mandate.
Whether you’re covered by an employer, Medicare, or are an individual health coverage purchaser, you should watch which way the winds blow on this one. There could be a lot more changes as certain provisions start to take place.
CHAPTER 6
Economic Schools and Tools
Just as Democrats, Republicans, and others have different views on politics and public life, there are also different “parties” and schools of thought on economics and the economy. These schools of thought, like the political parties, have their leaders and their followers, and many of them, like “supply-side economics,” work their way indelibly into the political vernacular.
Beyond such popular political panaceas, anybody who has spent time reading the papers or trying to understand this nebulous thing we call the economy has doubtless run into terms like “fiscal policy” and “Keynesian economics” and “monetary policy” and the “Chicago school.” It’s sophisticated stuff, most originating from the academic world, and hardly food for pleasant family di
But these schools of economic thought are interesting and important for anyone wishing to know how an economy works, and what “knobs and dials” can be used to control it. And the debate around which school works best or explains some kind of crisis can be interesting stuff—if you take it in small doses, like the summaries following. Otherwise, economic schools and their discussion can go into reams of articles and books and be about as dry as a southern Arizona zephyr.