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7 Myths About Health Reform

January 5, 2013

By Beth Howard

Photograph by Adam Voorhes

The 2012 presidential election has dialed up the rhetoric on health care reform. But how much of it is true? “The amount of misinformation about the Affordable Care Act [ACA] is astonishing,” says Shana Alex Lavarreda, Ph.D., director of health insurance studies at the UCLA Center for Health Policy Research. “The point of the law is to make the health system better for each person, for less cost to society overall.” But myths about the ACA abound. Here are some of the most persistent—and the straight facts about the law:

Papers Magnifying Glass1 The new law will drive up premiums astronomically. That’s an unlikely scenario. “A significant number of the uninsured people who will be brought into the system with the ACA are the ‘young invincible’ s,’” says Shannon Brownlee, acting director of Health Policy at the New America Foundation, a nonpartisan think tank, describing the 18-through-29 age group. “Their relative good health helps to subsidize care for less healthy people.”

The law also strengthens states’ power to question unreasonable rate increases, whether because of age, preexisting conditions or any other reason. And the law’s “medical loss ratio requirement” dictates that 80 to 85 percent of premiums be spent on medical costs. As of August 1, approximately 12.8 million Americans received an estimated $1.1 billion in rebates from insurance companies in cases where overhead expenses exceeded 15 to 20 percent of premiums charged in 2011.

2 The ACA basically turns our health care system into universal health care. So now some government bureaucrat will decide how and when I get treated. Health care under the ACA will not be government run. “The law builds on and strengthens the existing private insurance system,” says Sara R. Collins, Ph.D., vice president of the Commonwealth Fund, a private research foundation focused on health care. “Fifty to 60 percent of people will continue to get insurance through an employer, and people who are buying their own insurance will still buy private health plans. The choice of plan is not dictated, and you’ll be able to choose the provider you want—no government bureaucrat involved.”

The health care system envisioned by the law aims to be universal in one way: by making health insurance accessible to the vast majority of Americans. “That’s a good thing,” says Brownlee. “We’ll have more people covered.”

3 I’ll have to wait longer to see my doctor—or I won’t be able to see my doctor at all. “If your current plan allows you to see any physician in the plan, nothing will change,” says Lavarreda. Health plans are already building bigger networks in anticipation of new patients, so choices could be even greater.

Although the law doesn’t specifically address wait times, many of its provisions are aimed at improving quality of care. In particular, it encourages more physicians to become primary care doctors, provides a larger role for nurse practitioners and increases funding for community health clinics.

4 If my state doesn’t set up an insurance exchange, I can’t get health coverage. The ACA calls for each state to create an exchange, a marketplace of private health insurance companies. This will give individuals and small businesses a place to shop for affordable coverage, with subsidies provided, starting in 2014. But some states have declined to set up an exchange or have moved slowly. “If a state hasn’t done it, then the Department of Health and Human Services will set up an exchange in that state,” says Collins. “Each state will have an exchange operated by either the state or the federal government. And tax credits will be available in your state, regardless of who is running it.”

5 If I can’t afford to buy health insurance, I’ll be taxed—or worse. If you can’t afford health insurance because of financial hardship (if the cheapest plan exceeds 8 percent of your income), you w ill be exempt from the tax penalty. Special taxes (from $95 the first year to $695 a year by 2017) will be phased in over the next seven years for those who choose to forgo coverage. Even then, the government will not criminally prosecute or place property liens on people who ignore the tax. At worst, the IRS may withhold the tax amount from individuals’ tax refunds.

6 I’m a small-business owner and I’ll pay big fines if I don’t provide health insurance to my employees. “Penalties for not providing health coverage apply only to companies with 50 or more workers,” says Collins. In fact, many small companies will be eligible for tax credits to offset the burden of providing insurance. From now through 2013, eligible employers will receive a business credit for up to 35 percent of their contribution toward employees’ premiums. For 2014 and beyond, the tax credit rises to as much as 50 percent of the contribution. These credits apply to companies with fewer than 25 full-time employees whose average annual salaries are less than $50,000. Companies with more than 50 workers that don’t provide coverage will be subject to a fine of $2,000 to $3,000 per employee per year.

7 The law is going to bankrupt America. Not according to the Congressional Budget Office (CBO), the independent and nonpartisan budget scorekeeper. The CBO and the Joint Committee on Taxation estimate that health reform will reduce the nation’s deficit by $210 billion between 2012 and 2021, by such means as delivery-system reforms and crackdowns on waste and fraud. “If we don’t get health care spending under control, that’s going to bankrupt America,” says Brownlee.

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