Local health care and business officials gave mixed reviews to landmark federal health reform legislation expected to become law today, saying it will likely drive up premium costs, force senior citizens out of private managed care plans and delay coverage until 2014 for thousands of Capital Region residents with little or no insurance.
“In the short run, it means nothing. The majority of the bill, especially the piece that provides insurance to uninsured, does not take effect until 2014,” said Bill Spolyar, director of the Schenectady Free Clinic.
The clinic, staffed by volunteer physicians, nurses and other professionals, sees 2,500 patients annually, almost all with little or no medical insurance.
“It will have little or no effect on us. Four years is a long time, anything can change,” Spolyar said. “I don’t like the bill the way it is, but we needed to do something.”
Under the sweeping legislation, the federal government will provide or subsidize health coverage for 19 million uninsured beginning in 2014, and to 32 million out of 46 million uninsured by 2019. Approximately 16 million will be added to state Medicaid rolls by 2019. The Congressional Budget Office has said the bill will cost $940 billion.
The federal government will pay for the program by placing a 3.8 percent tax on investment income and a 0.9 percent tax on wages for people earning more than $250,000. Both taxes would take effect in 2013.
Further, the government will apply an excise tax on insurers of employer-sponsored health plans that cost more than $10,200 annually for individual coverage, or $27,500 annually for family coverage. This tax takes effect in 2018.
It would reduce payments to Medicare Advantage, which are health plans run by private insurers, by $132 billion and for home health care by $40 billion over 10 years. Additionally, it would place fees on drug and medical device manufacturers and health insurance companies.
“Ninety-five percent of the taxes start almost immediately, and 98 percent of benefits start in 2014 or later,” said Sally C. Pipes of the Pacific Research Institute.
People would purchase their health insurance through state-run exchanges, which have to be operating in 2014.
Michael Moran of the Business Council of New York State said the legislation failed to control or bring down health care costs. “What it will do is add more taxes and a tremendous amount of paperwork. It will require businesses to become more involved in employees’ lives, and it will require that they report a lot more information about people to the federal government,” Moran said.
Businesses with 50 or more employees will be required to provide health insurance or else pay a fine of $2,000 per employee. Moran said businesses will likely drop certain benefits, such as dental, eye and prescription drug coverage, to avoid having to pay the excise tax, he said.
Frank Fanshawe, vice president of government affairs for MVP, a not-for-profit health insurer based in Schenectady, said the legislation expands nationwide many consumer protections already in existence in the northeast. These include community rating, where everyone pays the same rate regardless of age, health status or claims history; and guaranteed issue, where a person cannot be denied health insurance because of pre-existing medical conditions.
Fanshawe said the legislation, however, does not provide a high enough incentive to encourage people to purchase health insurance. The legislation will require people to obtain health insurance — the individual mandate — or else pay a fine. The fine is $695 or 2.5 percent of income in 2016.
He said the people, especially those without serious medical problems, may pay the fine rather than pay for insurance, which could cost as much as $2,000 out of pocket, even with federal subsidies. Without these people in the pool, health insurance companies are left covering people who take up insurance when they are already sick or less healthy, which can increase premium costs, he said.
Fanshawe said federal reimbursement cuts to Medicare Advantage will increase costs to senior citizens in the plan and may force them to leave it for the government-sponsored Medicare plan.
“Upstate New York and western New York will be affected disproportionately compared to the rest of the country by these cuts,” he said.
Dr. David Hannan, president of the Medical Society of New York State, said the legislation has good and bad parts. “The most impressive part is we will get 32 million uninsured people insured. It would be nice if it were today, but it takes time to ramp up these things,” he said.
The bad part is the legislation does not address physician concerns about federal reimbursement for Medicare coverage. Federal reimbursement, which pays 20 percent less than actual costs, is subject to annual reductions.
“From a physician’s perspective, we have been fighting the Medicare payment issue for 10 years, and we had hoped it would have been addressed in this comprehensive legislation,” Hannan said.
Physicians are threatening to stop seeing Medicare patients because of the low reimbursement rates. Hannan said he expects Congress to address Medicare reimbursements in coming months.
On the other hand, Hannan said the society supports cuts to Medicare Advantage. “Medicare beneficiaries should have equal benefits,” he said. Medicare Advantage receives 14 percent more per person in reimbursement than traditional Medicare does. He added insurance companies are fighting the cuts because they affect their profit margins.
Hannan said the society is also disappointed the legislation did not address medical liability reform.
Categories: Schenectady County
