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What Supreme Court ruling on health care reform means for you

Who will benefit most from the U.S. Supreme Court's ruling that upheld President Obama’s health care reform law? The Patient Protection and Affordable Care Act (PPACA) passed in 2010 with some provisions that already have taken effect and others that won’t take effect until 2014. The law’s biggest impact will be on people who don’t receive health benefits through an employer.

• Insurers must fully cover preventive care — such as birth control, vaccinations and cancer screenings — with no deductibles, co-pays or co-insurance.

• Insurers must cover dependent children on their parents’ health plan up to age 26.

• Employers must offer adequate and affordable health coverage to employees or pay a penalty. Businesses that have fewer than 50 full-time workers are exempt from this requirement.

• Beginning in 2014, most every American must buy health insurance or pay a financial penalty.

• Starting in 2014, insurers won't be allowed to deny coverage to people with pre-existing health conditions.

• Beginning in 2014, insurers won't be allowed to charge higher rates because of a patient’s age, gender or pre-existing conditions.

• Starting in 2014, insurers won't be allowed impose lifetime limits or annual limits on coverage.

health_insurance_lawThe role of exchanges

Two years from now, consumers will be able to buy health insurance through state-run health care exchanges. Websites for these exchanges will allow consumers to compare prices and coverage levels, and buy policies to fit their needs. Those who already have coverage through an employer aren’t required to use the exchanges.

“Individuals need to pay close attention to what’s going to be available at the exchange level,” says Brian Pinheiro, chair of the employee benefits and executive compensation group at law firm Ballard Spahr. For example, partial subsidies will be available for those with income up to 400 percent of the federal poverty level, which would be $92,200 for a family of four. “It might be better for them to go to the exchange,” Pinheiro says, rather than stick with employer-based coverage.

Some employers that don’t offer health insurance to employees now may decide to start offering it, so that they won’t have to pay a penalty. Other employers may decide to drop their health benefits and let employees buy their own insurance through the state-run exchanges.

“We may see a sea change in the way our health care coverage is delivered these days,” Pinheiro says. “If (the exchanges) work well, they will be a viable alternative.”

Individual mandate

Starting in 2014, individuals will be required to purchase health coverage or pay a penalty of $95, or 1 percent of annual income. The penalty increases to $325 (or 2 percent of income) in 2015, and then to $695 (or 2.5 percent of income) in 2015. The Supreme Court ruled that the individual mandate is constitutional under Congress’ power to tax, since the penalty legally is a tax.

Individuals are exempt from the coverage requirement if their income is less than 100 percent of the federal poverty line, if they aren't U.S. citizens, if they belong to a Native American tribe or if their insurance premiums are more than 8 percent of their annual income. Religious exemptions also are available.

Failure to pay the penalty won't result in criminal prosecution, tax liens or levies on someone's property.

Support and opposition

The Supreme Court’s ruling sparked plenty of support and opposition from a variety of lawmakers, academics and industry observers. President Obama says the law will make health insurance more secure and affordable, thereby protecting middle-class families.

“Here in America, the wealthiest nation on earth, no illness or accident should lead to any family’s financial ruin,” he says. “(The) decision was a victory for people all over this country whose lives will be more secure because of this law and the Supreme Court’s decision to uphold it.”

Ron Pollack, executive director of Families USA, an advocacy organization for health care consumers, says the Supreme Court ruling “sends an unmistakable message that the building of a better, fairer health care system will continue to move forward. Implementing health reform will provide peace of mind for our families, the peace of mind that comes only when our loved ones are sure to receive the health care they need when they need it.”

Republican presidential candidate Mitt Romney vowed to immediately work toward repealing the law if he's elected.

ObamaCare is bad medicine, it is bad policy, and when I'm president, the bad news of ObamaCare will be over,” he says.

Janet Trautwein, CEO of the National Association of Health Underwriters, a trade group for health insurance agents, says: “While we still have concerns that PPACA does not address the true drivers of health insurance costs in this country, and the law is having a huge and costly compliance burden on American employers, it is our responsibility as industry leaders to move forward within the constraints of the law to help Americans access high-quality, affordable health care.”

Shrinking the uninsured population

One of the main goals of the law is to provide access to coverage for the estimated 46 million Americans who are uninsured. When uninsured people receive care in emergency rooms and don’t pay for it, those costs get passed on to everyone else in the form of higher insurance premiums. Individuals and employers pay about $1,000 a year more for family coverage solely because of the cost of uninsured people getting treated and not paying for it, according to Families USA.

The nonpartisan Congressional Budget Office has calculated that the health care reform law “would ultimately reduce the uninsured population by more than half, which would sharply reduce the amount of uncompensated or undercompensated care provided to people who lack health insurance.”

It remains to be seen whether the law will reduce health care spending for individuals, employers and the nation as a whole.

Pinheiro, the Ballard Spahr attorney, says: “The current system is not working. People get extraordinary increases in their premiums from year to year. I do think that (the law) will help to reduce the (cost) volatility from year to year, and that by itself will be an improvement.”

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