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07 November 2012

Obama and the health of the US

The healthcare reform bill that became law in 2010 in the US is unofficially nicknamed 'Obamacare'. Here's what it means for the citizens of the US.

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The healthcare reform bill that became law in 2010 in the US is unofficially nicknamed 'Obamacare'. 

Officially it is known as the Patient Protection and Affordable Care Act of 2010. Healthcare reform was one of the main topics of President Obama's election campaign in 2008. 

The two main purposes of this legislation were to decrease the number of uninsured Americans (estimated at just under 50 million – just less than a twenty percent of the population) and to reduce the overall costs of healthcare. 

It is interesting to note that these two issues are also high on the list of the ANC's healthcare reform plan for South Africa. The most striking difference though is that in SA only 7,9 million lives are covered by private medical schemes. That's about 15% of the population. 

Essentially, the Act has reigned in medical insurance companies, who were notorious for practices such as cancelling the policies of sick members, and imposing price hikes on their premiums. 

People will now be able to purchase health insurance through a competitive exchange that allows insurance companies to bid to provide affordable healthcare for families and individuals. 

The big question that many Republicans are asking is who will foot the bill? In short, the very rich and pharmaceutical companies, who will pay more taxes and fees to the state. There will also be government funding and wasteful spending on healthcare will be cut. It is hoped that this will eventually bring about a saving and that healthcare will become cheaper, and not more expensive as has been the pattern for the last few decades. 

Here is a brief summary of the main features of the Obamacare plan, some of which have already been implemented, and others which are to be phased in by 2020 at the latest: 

  • The aim is to increase the coverage rate of Americans, and in order to do this, mandates, subsidies and tax credits are being given to both employers and individuals. It is hoped that this will provide medical cover to 32 million currently uninsured Americans and to reduce the costs of healthcare for insured Americans.
  • Medical schemes have to cover all applicants at the same rate for their demographic and they cannot refuse applicants (or dependants) on the grounds of pre-existing conditions (excluding tobacco use) or gender.
  • Currently people over the age of 65, people with disabilities and people with end-stage renal failure qualify for Medicare assistance. Medicare is a national social insurance programme,  which is administered by the US government. It is hoped that the new legislation will reduce the Medicare expenditure, as private medical schemes will now have to accept older applicants.
  • The eligibility for Medicaid, historically a health programme for low-income people and families, is to be expanded.
  • Low-income families will be offered federal subsidies on a sliding scale based on their income. This could mean a very low-income family of four could be covered for as little as $50 per month.
  • Children up to age 26 can be added as dependants on parents' healthcare insurance.
  • Tax credits are being offered to 4 million small businessmen and women to help them cover the cost of their employees' medical insurance. This can amount to up to 50% of the costs.
  • Companies with 50 or more employees have to offer medical insurance to their workers. This insurance can be purchased through the insurance exchanges.
  • It has become illegal for health insurance companies to suspend peoples' membership when they get really sick, or if they have made a mistake on their membership application.
  • Insurance companies can no longer impose lifetime limits and restrictive annual limits on medical care for their members.
  • All new insurance plans are required to provide preventative care to their members. Americans on Medicare will receive free preventative care without co-payments of deductibles.
  • Middle-class people will receive tax breaks to help them pay for their medical insurance.
  • A new excise tax is to be levied on pharmaceutical companies based on their market share. This is expected to create $2,5 billion in revenue.
  • Insurance companies are required to spend 80% of premium payments on medical care – not on executive salaries or advertising. If companies do not meet this requirement, they have to pay a rebate to their policy-holders.
  • Price hikes in insurance contributions must be justified to individual state governments.
  • It is hoped that this legislation will reduce the costs of healthcare, as it will encourage more young and healthy people (read low-claimers) to take out medical insurance.
  • People who are not insured are to be fined $95 dollars per annum, unless they have religious objections to medical care, or the cheapest policy costs more than 8% of their total income.
  • People will now be able to purchase health insurance through a competitive exchange that allows insurance companies to bid to provide affordable healthcare for families and individuals.
  • The Food and Drug Administration can now approve generic versions of biologic drugs after 12 years of exclusive use by manufacturers.
  • Restaurant chains and food vendors with more than 20 establishments have to display the calorie content of their foods on menus and vending machines.
  • All new insurance plans have to cover preventive care and medical screenings without charging co-payments.
  • Taxes are to be increased by 0,9% on taxpayers who earn more than $200 000 to $250 000 per year.
  • Health insurance providers are to be charged an annual fee of $60 billion.
     

(Sources: useconomy.about.com; obamacarefacts; americansforprosperity.org)

 
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