Decoding Obama, Romney Health Plans

A health insurance attorney explains some of what the two presidential candidates said in Wednesday's debate.

When President Obama and Republican nominee talked about insurance during the debate last Wednesday, some of us may have needed just a little background.

Brad Burd, J.D., general counsel at GoHealthInsurance.com, a Chicago-based purveyor of insurance plans, explains some of what they were talking about. The attached infographic helps spell it out too. You can also see it a little more close-up here. 

Q. Romney and Obama talked a little about how Obamacare and Romneycare would affect people who are on the verge of retirement (age 62-65) and also how it would affect people about a decade younger, (age 53-55). Could you enlighten us on that?

Brad Burd: A key difference between the Medicare plans of the two candidates has to do with the manner in which health care providers receive payment.

The current system of payment that President Obama would keep in place is one where the government pays health care providers directly for medical services received by Medicare beneficiaries.

Governor Romney would like to introduce a “premium support” payment system. Premium support is the paying out of cash to Medicare beneficiaries so that they can buy their own health insurance from a private insurance company.

Under Romney’s plan, the premium support model would not be implemented until 2023. This means that no one currently over the age of 55 would see any changes to the Medicare they receive now or expect to receive in the near future.

During the debate, Governor Romney stated that $716 billion would be cut from Medicare programs under the Affordable Care Act. Is this true?

Burd: This is true according to the most recent estimate from the Congressional Budget Office (CBO) for the period of 2013-2022.

The question is – how will this affect Medicare beneficiaries directly? The planned Medicare cuts are portioned out in the following manner: A third of the cut will come out of reduced reimbursements to hospitals. Another third comes out of cutting down overpayments to insurance companies offering Medicare Advantage. The rest of the estimated $716 billion will come from eliminating reimbursements to a wide range other healthcare providers.

Of the $716 billion, there are technically no cuts to Medicare benefits. Does this mean that it still could happen? It’s all speculation at this point. Cuts to Medicare could lead to cuts in quality of care down the road. 

Some Medicare Advantage beneficiaries are particularly concerned that lower payments from the government could result in a decrease in the amount of Medicare Advantage benefits their private insurance company will provide.

Another concern Romney brought up during the debate is that doctors and hospitals may just completely cease providing care to Medicare-covered patients, because, after the cuts, the government will cover fewer of the expenses charged.

How would Obama's plan and Romney's plan affect owners of small and medium-sized businesses, particularly in regards to providing health insurance for their employees?

Burd: Both candidates share a desire to encourage small business growth. The topic of health reform and small business is a different story.

President Obama’s Affordable Care Act requires large businesses (defined as those with 50 or more full-time employees) to provide health insurance or face a penalty. Businesses with fewer than 50 employees are exempt from this provision entirely. However, if a small business (under 25 full-time employees) wants to provide health insurance to its employees, they may be eligible for a small business tax credit.

Governor Romney is against a federal-based health insurance mandate for businesses of any size and does not support financial penalties for businesses that do not comply.

No matter who wins the election, I think we will see a marked increase in the number of businesses deciding to open a Health Reimbursement Arrangement (HRA). These IRS sanctioned arrangements are established as a way to reimburse employees (tax free) for their out-of-pocket medical expenses and health insurance premiums. An employer completely funds the account and sets clear parameters for what medical costs the HRA will reimburse employees for. HRAs do not “rollover” once an individual becomes employed somewhere else.

What does the election mean for the future of Americans with pre-existing conditions?

Burd: Regardless of who is elected, the Affordable Care Act has already been passed and likely will go into full effect as planned in 2014. Therefore, pre-existing conditions will indeed be covered.

If elected, Governor Romney definitely has plans to repeal and change health care reform. While he has not provided any specifics about his plan, he has publicly stated that he would keep the pre-existing conditions provision intact.

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