6.30.2012

Health reform and the ACA approved. Now what?


SCOTUS ruled the healthcare reform as being constitutional if seen through the tax law. Even though it is a win for Democrats, to me it looked like the Republicans followed the "lose the war but win the battle" strategy. The way Justice Robert ruled, the tax (penalty) part of the ACA became the center stage attraction.

I am happy with the SCOTUS' ruling because everyone was predicting the outcome based on the political affiliations of the justices. It was worrisome since it hinted on the fact that we Americans no longer believe that our courts can rule without any biases attached. However, the Supreme Court through its ruling made three things very clear:

  1. Their rulings are based on what the law is (even if it contradicts their political views);
  2. The public should not put the responsibility on SCOTUS' shoulders to change/fix what was put in place by the leaders elected by the public in the first place.
  3. If you as an American disagree with the reform, then simply don't elect the same Govt. in the next election; but do not blame the courts for what was proposed by the Govt.
So the question is: now that the reform is upheld, how will this affect us?

The Employers

We will see good portion of employers dropping the employer managed health benefits.

Employers have always offered the health benefits as a tool to attract new talent. However, the major drawback with the employer offered health benefits is that the cost increases every year. The post-reform era will help employers estimate exactly what amount they will either have to pay as a penalty to the feds or pay to their employees so that they can buy insurance from the exchanges.

In short: it will be easier for employers to simply give say $5000.00 annualy to their employees, than to manage the whole plethora of plan benefits.

The Insurance Premiums

The premiums will increase greatly because the underwriters will have to write plans blindly (no pre-existing information available on the population segment the plan is being underwritten for). Starting in 2014, all individuals must be insured or pay a penalty. The dollar amounts for single adult penalty would be $95.

Once the reform and ACA takes effect, we will see healthy people who do not want to buy health insurance opting out and paying the penalty instead (since penalty is cheaper for them than paying the insurance premium). The un-healthy folks on the other hand -- who found it harder to get health insurance previously will flood the market because the insurance companies cannot ask about any pre-existing conditions.

When the majority of the applicants applying are sick and you cannot ask for any pre-existing condition is the perfect recipe for increased insurance premiums.
 

Quality and Price Shopping

When people are paying big money for their health insurance, they will want to make sure they are getting the right deal.

We will see expedia like pricing and quality tools that will allow patients to compare prices on different procedures. Ratings and reviews about each doctor will be merged with each procedure giving users more acurate information. These tools will put additional pressure on physicians to have an online presence, such as a website through which they can showcase their testimonials, reviews and procedures.

HealthCare companies will merge their plan/claims data with these tools and will offer customized quotes for each of their enrollees.
 

Stay Legal Insurance Plans

Looking at the automobile insurance for instance; some of us have high quality plans while others have nood good cheap plans offering minimal or no benefits at all. People buy useless car insurances to stay legal. Post reform will make healthcare more like the car insurance situation!

We will see healthcare insurance companies offering low cost "stay legal" plans. These plans would be of a lower cost than the tax penalty. While these "stay legal" health plans will do no real good, people will still buy them to avoid the penalty.

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