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How the Health Reform Bill Would Affect You

Sonya Stinson, Bankrate.com

The House contender for a new health reform law is a done deal, while Senate Democrats have moved its version of a bill to the Senate floor. Once the final Senate bill passes, the next step is to reconcile the differences between the two bills, followed by the voting of both chambers on the compromise legislation. If it passes, it will head to President Barack Obama's desk for his signature.

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Every health care consumer, whether insured or uninsured, has a stake in the outcome of this process.

"Some people say, 'I have good insurance today, so how does this affect me?' The problem is that many of us have good insurance through our jobs," says Stuart Altman, professor of national health policy at Brandeis University. "Then all of a sudden you lose your job, and you're caught in the same situation as everybody else (without insurance). You have to shop around for a policy."

Here's a nuts-and-bolts review of how key provisions of the House bill would impact the way consumers purchase health insurance, what it costs and how they pay for it.

Who gets coverage
At an estimated cost of $1.05 trillion over 10 years, the House bill is expected to result in insurance coverage for about 96 percent of legal U.S. residents under age 65 by 2019, compared to the current level of 83 percent, according to analysis by the Congressional Budget Office.

Everyone would be required to have health insurance, except those who have religious objections, those who successfully apply for financial hardship waivers and those whose incomes fall below the threshold for filing income taxes -- the 2009 threshold is $9,350 for singles, $18,700 for couples. The bill would impose a tax penalty of up to 2.5 percent of income on anyone else without insurance.

Employers with annual payrolls of $500,000 or more would be required to provide health insurance to workers or else pay a tax penalty of up to 8 percent of payroll. The assessment is reduced for those with payrolls between $500,000 and $750,000.

Changes to benefit consumers
Insurance company denials of coverage based on pre-existing conditions would be history. Rescission of benefits for undisclosed medical conditions, except in cases of fraud, would also be eliminated.

"This is a practice that happens mostly in the individual market, where an individual appears to be healthy and then gets a diagnosis of, say, cancer," says Jennifer Libster, senior research associate at the Georgetown University Health Policy Institute. "The insurance company, rather than increasing their premiums, will revoke the contract under the presumption that this was an act of fraud on the part of the consumer. That will no longer be permitted."

The bill also bans charging higher premiums for women than men and limits the age rating ratio to 2:1, so older customers could not be charged more than twice what younger ones pay.
Libster and Altman agree that while other parts of the bill have attracted more attention, it's these market reforms that would have the most dramatic effect on the greatest number of consumers.

Next: Costs and benefits...