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During December of 2009, the United States Senate passed the Health Care reform act, which was later adopted by the House of Representatives. This bill represents monumental changes in the American health care system, both for consumers of health care, as well as employers and health care providers. Among other things, the bill requires health care policies to be approved by the government, and provides monetary penalties for citizens not covered by approved health care policies. The reason for such penalties, as described in the health care bill, is that by allowing citizens to go uninsured they become significantly less likely to seek preventative care for conditions they may experience. This translates into increased costs for the health care system as a whole, and indirectly to the taxpayers.
Wait a minute – you may be asking yourself, what does this mean for me? To begin with, rest assured that if you are currently covered by health insurance, you will be unaffected by this change: all existing health care plans will be grandfathered in by the bill and designated as approved policies. Furthermore, if you are currently uninsured, the government will not penalize you until the bill comes fully into effect in 2014. Even then, the legislation provides exceptions for those who cannot afford individual health insurance, object for religious reasons, are incarcerated, or citizens who do not currently reside in the United States.
The penalties thereafter will begin at for uninsured persons in 2014, increase to 5 in 2015, and 5 in 2016. Under the House’s amendments to the bill, the final amount of the penalty is 5 each year for each person for whom the taxpayer is liable. This can accrue up to either 50 (three uninsured individuals) or 2.5% of the taxpayer’s household income, whichever is greater. Some of the bill’s proponents feel that this figure is too lenient, as it allows taxpayers to simply pay the penalty until they require a medical procedure. They can then purchase insurance which would normally be more expensive, especially if the health insurance were not provided by an employer. This type of “adverse selection” could potentially be detrimental to the social health care system, though it is possible that a future amendment may increase the penalties for uninsured persons to prevent this.
By and large, effects of the bill will not be felt until 2014, though some regulatory acts will come into effect sooner, including regulations on health care plans renewing after September 23, 2010, requiring greater transparency in any existing health care plans, as well as the creation of a federal high-risk pool that will begin this summer.
The bill represents an unprecedented change in the United States government’s stance on health care. The goals of the Act are certainly very ambitious, and time will tell whether it achieves its goals. Though the Act may be changed by future amendments, and even challenged legally on constitutional grounds, it is imperative that taxpayers, insurers, and employers alike understand the bill and its implications, since they will have a profound and lasting impact in the landscape of America’s health care.
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