Faq: How Senate Health Care Reform Impacts Health Insurance Plans

Senate Democrats recently announced that they have reached a compromise on healthcare reform. The new proposal appears to eliminate the possibility of a government-run public option to compete with other health insurance plans. However, there are several alternatives moderate and liberal Democrats have agreed on. These involve allowing people to acquire private health insurance plans through the federal program that negotiates rates for federal employees, as well as allowing those as young as 55 to buy into Medicare. How will these proposals affect you?



Q: I'm under the age of 55, and don't have employer-sponsored health insurance. Will premiums become cheaper?

A: Most likely, health insurance plans will be less expensive. This will be a result of increased competition in the market, including a health insurance exchange that offers subsidies to those below a certain income level. Existing coverage options will be joined by two nonprofit plans administered by the Office of Personnel Management but still run by private insurance companies. Buying power will presumably increase, making health insurance cheaper since the cost is spread among more people than it is with normal individual health insurance plans. Although each state is responsible for running the insurance marketplaces, the two national plans will be available to protect against the possibility that some states are not as well-regulated as others. The disadvantage is that under this scenario, rates will be slightly less competitive than they would be with a public option in the picture.



Q: I recently lost my job, and i'm between the ages of 55 and 64. Health insurance is hard to find, and i'm just waiting to become eligible for Medicare and hoping I don't get sick before then. What should I do?

A: Good news! Unfortunately, this demographic has suffered severely during this recession. Some are finding it difficult to become employed again after being laid off. When it comes to health insurance plans, many have pre-existing conditions that prevent them from signing up for many private insurers' plans. The ones that do accept them are often very expensive and offer fewer benefits. Now, the Senate allows middle-aged individuals to buy into the federal government's Medicare program. They will be able to purchase coverage that would be otherwise available or out of reach. Medicare does have some solvency issues, but the possible negative impact of adding an estimated three million people to the rolls can be mitigated by the fact that they will be paying premiums into it. Their premiums will be lower--and they will be more likely to get coverage--when they are in a large group pool.



Q: What is the public reaction towards these ideas? What do health care providers, such as doctors, think about these strategies?

A: In general, the Senate committee's proposals are receiving more support than previous versions of the healthcare reform bill. The public option was killed largely due to voiciferous opposition by portions of the public, several politicians of both parties, and industry lobbying groups. These proposals, which entail more government regulation and involvement but leave private health insurance plans mostly intact, have allowed some of that anger to cool. Some liberals are dissapointed at a bill they believe doesn't go far enough to solve the health care crisis, but appear to be coming around to these plans. Most importantly, these changes increase the chances of passage; reform supporters consider an imperfect bill preferable to maintaining the status quo. Hospitals and physicians, on the other hand, are not as supportive: they are especially leery of the Medicare buy-in proposal, because Medicare has notoriously low reimbursement rates for services.



Q: How likely is it that this will actually work, in reducing the cost of health insurance plans while insuring more Americans?

A: The chances of the Senate compromise's success are relatively bright, but opinions are mixed. According to proponents, the health care system will see savings through competitive pressure, negotiating lower rates, and lower profit margins with the national health insurance plans--which the private ones would have to match in order to compete in the marketplace. Medicare is less expensive largely due to its lower administrative costs and fewer margins. Despite those predictions, opponents are skeptical. They point out that the existing plans for federal employees managed by the Office of Personnel Management have seen their premiums rise by nearly 9% over the past year, and that the new national health insurance plans may end up adding costs through duplication of the health insurance already offered in individual states. It is also little-known that a large portion of private health insurance companies are non-profits; regardless, their costs are still high and are passed onto consumers.