The health care reform bill being considered by Congress promises to do a lot: Provide health insurance to millions who are now uninsured; guarantee coverage for people with pre-existing conditions; and give subsidies to struggling Americans to help defray costs.
These are not insignificant?or inexpensive?feats. So where will the money come from? The good news: Unless you?re a high-income earner or you have a ?Cadillac? insurance plan, it probably won?t come from your wallet. In fact, you might actually see some savings.
According to the Senate health care reform bill, the bulk of the cost will be covered by changes to Medicare and Medicaid, including reductions in payments to Medicare Advantage (MA), a coverage plan that allows seniors to receive services through private insurance companies. The government contends that it pays on average 14 percent more for coverage through MA plans than for the same services delivered through traditional Medicare. Reducing this overpayment could save more than $100 billion over 10 years.
The Senate bill would also levy an excise tax on so-called ?Cadillac insurance? plans valued at more than $23,000 per year for family coverage, which would affect about one in five employee policies. (Families don?t typically pay anything near the full value for the plan; on average, an employee pays just 27 percent of the cost for family coverage, according to the Kaiser Family Foundation). The 40 percent tax would be levied on the amount that exceeds the threshold. For example, if you have a plan worth $25,000 the tax would be on the $2,000 difference. It would be paid by the insurance company or the employer, but that might be passed on to consumers through premiums.
If you don?t have a plan that expensive?and the vast majority of Americans don?t?you?re likely to pay about the same amount, or even less, each month for insurance under the proposed changes, according to the Congressional Budget Office (CBO). In a study released Nov. 30, the CBO says the 83 percent of Americans who already receive coverage through an employer-sponsored plan shouldn?t see an increase in their insurance premiums. In fact, some could even see a savings of 8 percent or more. Those who are buying their own insurance are also likely to get some relief, with some exceptions.