By Kristie Kahl
Imagine being diagnosed at the age of 15 with Ewings Sarcoma, a form of cancer found only in children. To make things worse, imagine having no health insurance at the time.
A William Paterson University student found herself in this situation, as she battled cancer for four years before passing away in 2007. Because her father, an owner of a small business, found health insurance too expensive, she had no coverage for more than two years. And even under her insurance policy, she was only able to receive limited coverage because of her pre-existing condition. Three years after her passing, her parents are still swamped with medical bills.
In the past, insurance companies could get away with denying coverage to patients like her, but under President Obama’s health care reform, things will be different.
On March 23, Obama signed the Patient Protection and Affordable Care Act that will mandate that most U.S. citizens and legal residents purchase at least the minimal essential coverage. People can get this coverage through their current insurance companies or through new marketplaces that will sell policies to individuals.
Although public opinion is sharply divided, the new bill will directly benefit many young adults in the near future, particularly the graduating class of 2010.
“I think [the reform] is great for college students who are about to graduate,” said Joanne De La Rosa, a senior political science major. “They won’t have to worry about not being covered if they get sick when they’re done with school.”
Effects on young adults
The reform will start to make some changes as early as June, but most of the provisions are not set to take effect until 2014.
“I’m going to say within the next year you’re going to start seeing changes — good and bad,” said Dr. Joseph Rubino, a Rider adjunct teaching Introduction to Health Care. “It’s going to be painful for many individuals to adapt to a newer way of thinking about their health care.”
Starting in September, young adults can be covered under their parents’ health care policies through the age of 26. This will give young adults more security if they do not find a job with coverage right away after graduation.
“This will be a welcome option for grads who are dropped from their parents’ insurance plans the day they graduate,” said the director of Rider’s Health Administration Program, Dr. Hope Corman.
Currently, college graduates in most states are dropped from their parents’ insurance within months following commencement, and students are dropped in any case if they reach 25. Graduates can be dropped anytime from the day they walk across the stage to get their diplomas to six months later, depending on their parents’ insurance policy.
In New Jersey, a law called DU31 (Dependent Under 31) covers many unmarried young adults until they turn 31. The law allows coverage under their parents’ group plan as long as they have had “creditable coverage,” such as insurance through a university, at some point in the past. Since the law is based in New Jersey, the plan must be issued in New Jersey but the carrier does not have to be from New Jersey (www.njdobi.org).
Since New Jersey was already ahead of the game with young adult coverage, it will soon be determined if the age will remain at 31 years old, or drop to 26. The Department of Banking and Insurance commissioner “will define which adult children will be eligible for continuation,” according to the Web site.
If graduates are among the lucky bunch who are able to find jobs, they may get insurance through their employer, but for now the policies won’t have to meet the reform’s new standards. Starting in 2014, young adults will be able to buy coverage through marketplace exchanges. If an employer’s plan covers less than 60 percent of the costs, or a person is paying more than 9.5 percent of his or her income to get insurance, he or she can buy in the exchange.
For graduates looking to get jobs in entry-level positions at small businesses, employers will receive tax credits to offer coverage to their employees. If the small business owner pays at least half of his or her employees’ premiums, the owner can receive a tax credit up to 35 percent of the contribution.
Also in September, insurance companies will no longer be able to deny coverage to people with pre-existing conditions, who will be able to enroll in a new, but temporary, national high-risk insurance plan.
Insurance companies will also be prohibited from putting a cap on the amount of money that can eventually be paid out, known as lifetime caps. The lifting of the caps means no matter how much an individual’s treatment may cost over time, insurance companies cannot limit their coverage.
Generally, graduates will be affected in more ways than current students by the health care reform.
“Many traditionally aged students (18-22) are still covered by their parents’ plans,” Corman said. “And Rider does offer very inexpensive insurance to current students who are not covered under their parents’ plans. So current students have options for coverage right now and won’t be much affected.”
Health care reform taxes
Although the reform has many positive effects, it comes at a cost for graduates.
“If more people become insured, and more people receive subsidies, then there will be strains on both the health care system and on taxpayers,” Corman said.
Nowadays, people are used to just going to a specialist for specific problems. Under the reform, primary care physicians are going to have more responsibilities than most patients are used to.
Also, people will be paying more “out-of-pocket — tax-wise — to cover the new system,” Rubino said.
“I don’t know if you’re really going to realize it because you’re not realizing it now, the amount of taxes you pay,” he said. “So it may be something that you’re going to move into seamlessly with taxes.”
The reform will eventually provide insurance coverage for 32 million uninsured Americans. That is more than one-tenth of the entire U.S. population.
The changes are estimated to cost $940 billion over their first 10 years, according to the Congressional Budget Office (CBO). But the CBO said that the bill will actually cut the deficit over 10 years because of new taxes, fees and spending cuts.
If people choose to ignore the mandate to buy insurance, there will be a mandatory tax as a penalty beginning in 2014. To start, individuals without insurance will pay either $95 or 1 percent of income, whichever is higher. Then, in 2016, the penalty increases significantly. Individuals will pay whichever is greater — $695 for each uninsured family member, up to a maximum of $2,085, or 2.5 percent of the household income.
The bill will tax insurers of “Cadillac” health care plans that cost more than $10,200 annually for individuals or $27,500 for families. The tax would be 40 percent of the cost of the plan that exceeds those amounts.
The reform will also tax health care industries. Drug manufacturers would pay $16 billion between 2011 and 2019. Health insurers will have to pay $47 billion in the same eight years. Medical device manufacturers will have to pay a 2.9 percent excise tax on the sale of any of their products beginning in 2013.
A tax that will affect young adults is the new tanning tax. The reform will establish a tax of 10 percent on indoor tanning. This could raise an estimated $2.7 billion over the next nine years.
The future of health care
Eventually almost everyone will have some form of coverage under the health care reform, which means that young adults in this generation should stay informed on the changes.
“You’re going to have to be involved in the health care system early on,” Rubino tells students. “You are going to have to have some form of insurance. So, there’s going to be money coming out of your pocket. How much of that, I don’t know. As opposed to those of us that have graduated, we didn’t think about health care. You’re going to be forced to think about it.”