How Americans Benefit from New Health Care Law

AFGE Week in Review (April 8, 2010)

Last year as nearly six million people lost their jobs and most economic sectors saw their profits plummet, the nation's five largest health insurance companies WellPoint, UnitedHealth Group, Cigna, Aetna, and Humana took in combined profits of $12.2 billion, up 56% from 2008, but at the same time covered 2.7 million fewer Americans. Each of these five CEOs was compensated up to $24 million in 2008. This was happening when Americans saw their premiums skyrocket and went though the worst recession since the Great Depression. One CEO WellPoint's Angela Braly recently admitted to Congress that Anthem Blue Cross of California has raised its individual plan premiums by 39% to feed its profits, not to cover health care cost.

Besides California, WellPoint has raised or is about to raise premiums in 11 other states. Meanwhile, Braly's 2009 pay went up 51% from $8.7 million in 2008 to $13.1 million.

Insurance companies and their CEOs prosper at the expense of working families. They make money by raising premiums and dropping people when they get sick despite the fact that these people have been paying their premiums for years. A recent study shows that more than 60% of bankruptcies are because of medical bills, and most of those who filed for bankruptcy were middle-class, well-educated homeowners.

For decades, we have seen more and more companies eliminate health insurance coverage as premium costs have risen. We all know relatives and friends who are without coverage. Young people are finding it more difficult to get coverage. Federal Employees Health Benefits Program (FEHBP) premiums are taking a larger share of our paychecks. And if federal employees want to leave government, they fear losing their coverage. As more and more companies drop providing health insurance, it makes our health insurance benefits a target for anti-federal employee politicians. Making sure everyone in America gets covered is not only the right thing but protects our ability to have health insurance coverage as well.

That's why the American Federation of Government Employees strongly supports the new health care law that will end the worst insurance company abuses and make sure they are held accountable. Like Medicare and Social Security, Americans will be able to secure affordable health care. Under the law signed by President Obama March 23, 2010:

Insurance companies can no longer deny coverage to children who were born with illnesses or have pre-existing conditions.

Insurance companies are prohibited from dropping people because they get sick.

They must allow children to stay on their parent's insurance plans until age 26.

Starting in 2014, insurance companies can no longer deny coverage to people with pre-existing conditions.

Insurance companies in 2014 will be barred from imposing annual limits on the amount of coverage people can get. There also will be no lifetime coverage limits.

32 million Americans who are currently uninsured will be covered.

The uninsured and self-employed people will be able to buy insurance through state-based exchanges with government subsidies given to those who can't afford it.

There will be limits on what people have to pay for premiums and out-of-pocket costs based on income.

Wasteful spending on insurance company executive salaries will be stopped by limiting how much of people's insurance premiums can go toward company administration and profits. A company that goes over the limit has to rebate it back to consumers.

Insurance companies will be forced to end discrimination against women by charging more for groups with high percentage of women.

Large employers will pay a penalty if they don't provide health coverage and their employees have to get subsidies in the exchanges to buy their own insurance.

Small businesses that provide their workers with insurance will get tax credits that cover 35% of premium costs immediately and 50% in 2014.

Seniors will get additional help for prescription drugs by closing the Medicare "donut hole" or coverage gap, which requires patients to pay the full cost of prescription drugs that cost between $2,830 and $6,440. The donut hole affects about one in four Medicare recipients, forcing them to start splitting their drugs or stop taking medications altogether. Seniors who fall into the donut hole will get a $250 rebate this year, a 50% discount on brand-name drugs starting next year and the donut hole will be completely eliminated by 2020.

In 2018, there will be an excise tax on employer-provided health plans costing more than $27,500 for family coverage and $10,200 for individual coverage. The tax is imposed only on the amount of the premium that goes over the threshold. It is to be paid by the insurance companies.

How does the new law affect federal employees?

Dependent coverage: AFGE was successful in persuading the Office of Personnel Management to apply the dependent coverage provision to federal employees so they can keep their children on their FEHBP plans until age 26, up from 22. OPM recently informed the union that the dependent coverage provision will apply to federal employees, effective Jan.1, 2011.

Premiums: Federal employees who are enrolled in FEHBP are in a separate risk pool from uninsured Americans, so there will be no effect on their FEHBP premiums. In the long run, reform is expected to slowly reduce the growth in premiums.