Health Care Reform for the Unemployed

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Say what you will about the politics surrounding health-care reform, but the new legislation undoubtedly will boost the quality of life for the unemployed and the underemployed. In the midst of the Great Recession, that's a lot of folks: roughly 15 million Americans. "Those are precisely the type of people helped by this bill," says Linda Blumberg, a health-policy expert at the Urban Institute, a nonpartisan economic and social think tank in Washington, D.C. NEWSWEEK'S Nancy Cook recently spoke with Blumberg about the specifics of the bill and what it means for the jobless, the self-employed, and small-business owners. Excerpts:

How will health-care reform change people's lives in the short term once President Obama signs the bill?
There are a couple of things that will happen quickly that may or may not be useful for people who are unemployed or who are on the fringes. The bill will be significant for people that have health problems. Right now, the practice in the private health-insurance industry is something called "rescission." That means that once somebody files a claim that is relatively significant, the insurance companies often try to find some error on your original application, even if it wasn't fraud, and then make your plan null and void. That practice would be outlawed immediately under the reform.

For people changing jobs, or for those who don't have continuous coverage in their new job, there is often a waiting period before your health insurance kicks in. That waiting period would be shrunk, so that it could not be longer than 90 days. Six months following enactment, people who are up to 26 years old can remain on their parents’ health-insurance plans. It definitely gives a bridge that is useful for some people. The other new rule that will happen early on is that insurance companies will be prohibited from imposing lifetime insurance limits for individuals. This happens more in health-insurance policies that people have had for an extended period of time, like if you've been with the same firm for years and you end up having a number of chronic conditions. The lifetime limits would be prohibited right away.

What about for people who are unemployed or underemployed who have had major health problems?
Within six months of enacting the law, every state would have to set up a temporary "high-risk pool" for people who have been uninsured, and who have been very sick, and who cannot get a policy. You'll have to be able to show that you've got a condition that prohibits you from buying insurance, or that you've recently become uninsured.

Most of the new health-care reforms don’t kick in until 2014. What happens then?
Each state will have to set up health-insurance exchanges that will provide health-insurance coverage to anyone. Nobody can be declined for coverage. A small number of states already have this. The exchanges will serve people who are unemployed, or who are working for small firms that may be in trouble, or for anyone who may have had to stop their health-insurance plans. The health exchanges will offer financial assistance for modest-income people [and] will cover you without jacking up the price for your past health status, or your past claims or your age or gender. The 64-year-old, for instance, could not be charged four times or more than the 18-year-old.

Very-low-income individuals and families would be eligible for Medicaid. For example, a single person who made up to $14,400 would be eligible. A family of four that made up to $29,300 would also be eligible. Single [people] and families who earn slightly more but who are still considered poor by federal government standards could take advantage of the health exchanges with subsidies from the federal government.

What about for self-employed people or small-business owners who typically buy insurance plans on their own?
The plans that are available in the health exchanges will be particularly good for people buying insurance on their own. They will offer much more predictable policies. Right now, it's hard to figure out what you're buying. What you get is a general summary from the insurance company that's too complicated to follow, and often, you may find out at just the wrong time that the policy does not cover chemotherapy, and you have cancer. These exchanges and the federal government will set a minimum standard for insurance policies, so that all plans must comply with the minimum benefit. For people who want to start their own businesses, the market will transform from night to day. It will make the Wild West of health care much tamer. If I lost my job, or maybe become employed by firm that does not offer insurance, I can always go to the health-insurance exchanges and get insurance at a fair price. There will still be a number of different levels of coverage, but when I say "fair price," I mean that the insurance companies can't charge you more based on your health status or your older insurance claims—though they will charge higher prices if you're a smoker.

Which workers will take the hit on health-care reform?
In order to fund the increase in coverage, the bill will impose a tax on the unearned income [a.k.a. investments] of people who make more than $200,000 or families who earn more than $250,000. Other people will end up being required to buy health insurance, but that's both a positive and a negative. Overall, I think it's a good thing. As these people age, they will have coverage that they would not have had otherwise. My sense now is that many people don't have coverage today simply because they can't afford to get it.