Slowly over the next four years, health care reform in America will move from

rhetoric to reality — and virtually every American will feel the change.

But if you think the debate over the bill Congress passed last week was complex, just wait

until you watch the law take effect.

The law, rather than being an instantaneous reinvention of the American health system, is

more like a slow-motion reconstruction process that will take nearly a decade to finish.

But you better be watching, because, one way or another, you are bound to be affected.

If you don't have health insurance, the law means you will have to get it, perhaps with

government help, whether you want to or not, by 2014.

But it also will mean the emergency room no longer will be your health care provider ... and

that a sudden serious illness no longer will come with a ticket to bankruptcy court.

For those with insurance, the change will be more complex — and unpredictable.

If you have insurance, the law means you no longer will live with the worry that a sudden

illness will bust your insurance cap or prompt your insurance to drop your coverage.

And if things go right, the routine double-digit annual increases in health care costs will

disappear — and Americans will see bigger paychecks.

Seniors face changes, too.

The much-loathed "doughnut hole" in Medicare prescription drug benefits, which forced

seniors to start paying out of pocket for their medicines just as they started getting really

expensive, will disappear.

Will you pay more taxes?

Not unless you make more than $250,000 a year, at which point you will have to pay a new

Medicare surcharge. Or if you have a "Cadillac" all-expenses-paid insurance plan, you will

find it taxed in 2018.

That's the way things will look if everything goes as planned.

But many people doubt that it will — and that in the end, this law will be a budget-buster.

Meanwhile, starting in 2014, many businesses will either have to offer health care to their

employees or pay a penalty.

Those are just a few of the ramifications of one of the most poorly understood laws ever.

In hopes of helping our readers understand the law better, The Buffalo News is devoting

extensive space today to explaining it.

So read on, because health care reform is no longer about the Democrats versus the Republicans.

Now, it's all about you.

What does the new law mean for:

Those currently uninsured

Those currently insured

Businesses

Seniors

Taxpayers

For an interactive graphic with more on what the new law means for you, click here.

To see when different elements of the law take effect, click here.

Those currently uninsured

Q: If I don't have health insurance, will the health care reform law provide it?

A: Yes. It is expected to provide insurance to 32 million Americans who lack coverage.

Effective 2014, individuals and families will be eligible for Medicaid if their income is

at or below 133 percent of the federal poverty level, or $14,404 for individuals and $29,326

for a family of four.

Also starting in 2014, the bill provides subsidies to buy private insurance for U.S.

citizens and legal residents with incomes above the Medicaid thresholds but below 400 percent

of poverty, or $43,320 for individuals and $88,200 for a family of four.

The subsidies would work on a sliding scale, with those who earn more getting less help

than those who need assistance the most. In addition, for those with income below 400 percent

of the poverty level, total out-of-pocket health expenses would be limited.

Q: Where will uninsured individuals buy coverage?

A: The government plans to establish on the Internet and elsewhere places called exchanges,

where consumers can purchase and compare different policies, including quality ratings, from

private insurance companies.

Insurers that sell policies on the exchanges will be required to offer a minimum set of

standard benefits, with four levels of coverage that vary based on premiums, out-of-pocket

costs and additional benefits.

The law gives states some flexibility in how the exchanges are set up. But it requires

insurers to offer plans with standardized formats, definitions and enrollment applications.

A person could also buy insurance from companies outside the exchanges.

Q: I have had arguments with health insurance companies over coverage, including being

denied a policy because of a pre-existing medical condition. Will any changes reform how

insurers do business?

A: Reforms to the insurance industry are a key component of the new law.

All insurance plans will be prohibited from imposing lifetime caps on the amount of

coverage, and there will be restrictions on annual limits on coverage. Insurers will no longer

be able to cancel insurance except for cases of fraud. And insurers will have to sell policies

to individuals regardless of their health history, with the price of premiums varying mainly

on the basis of age and tobacco use, and not a person's medical condition.

Q: Does the law require everyone to have health insurance and, if so, why?

A: All individuals will be required to have insurance, with some financial hardship

exceptions, beginning in 2014.

Here's the thinking behind this requirement: Without an individual mandate to purchase

insurance, Americans could wait until they got sick to buy a policy, leading only sick people

with the biggest bills to buy insurance and to even higher premiums.

Advocates of the individual mandate say that having everyone in the system spreads the

risks, keeps the average cost of premiums under control and builds on the principle that all

people — young or old and healthy or sick — eventually will need medical care.

Q: Is there a penalty if I don't have health insurance?

A: Most people who do not have coverage will be required to pay an annual financial

penalty.

The penalty for individuals would start in 2014 at $95, or up to 1 percent of income,

whichever is greater, and increase to $695, or 2.5 percent of income, by 2016. Families have a

penalty limit of $2,085.

The law includes exemptions from the penalty for religious beliefs, native Americans,

people who have been insured for less than three months, individuals and families with income

below a certain level or if the least expensive insurance costs 8 percent of a person's

income.

Q: Is there anything for the uninsured that takes effect right away?

A: Starting this year, the law appropriates $5 billion for a temporary national high-risk

pool to help purchase coverage for people with a medical condition who have gone uninsured for

more than six months. But it's not clear yet what share individuals would pay for the

coverage.

Health reform also increases federal funding for community health centers — $11

billion over the next five years — allowing them to see more uninsured and poor

patients.

Tuona M. Batchelor, a graduate student at the University at Buffalo, is uninsured. To read her story, click here.

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Those currently insured

Q: For the 85 percent of Americans with health insurance from an employer or government

program, or purchased on their own, what happens to their coverage?

A: Not much, although all health plans now will be required to cover 100 percent of such

preventive services as checkups, colonoscopies and mammograms.

The value of health benefits given to workers through an employer will remain untaxed,

except for a 40 percent levy that starts in 2018 on high-cost health plans. The excise tax

applies to the portion of the premium that exceeds $10,200 a year for individuals and $27,500

for families.

Q: How will health reform affect my children?

A: Unmarried adults younger than 26 can stay on their parents' insurance coverage as long

as they are not offered health coverage at work. Currently, New York State law requires every

insurer to allow employers the opportunity to elect extended coverage for dependent children

to age 29 under a group health insurance policy.

Young adults also will have the option of buying catastrophic insurance that kicks in after

they pay $5,950 of their annual health expenses.

Q: What will happen to my insurance premiums?

A: This is a hotly debated issue about the future without a definitive answer. However, the

nonpartisan Congressional Budget Office, which analyzed the health reform proposals,

determined that reform would reduce premiums for most Americans. It also concluded that

providing subsidies to buy private insurance would encourage individuals to purchase more

comprehensive — and expensive — insurance than they can currently afford.

In addition, there is a cost to doing nothing. Experts say insurance premiums, without

health reform, are projected to rise at an unsustainable rate, leaving more people uninsured,

driving out-of-pocket expenses higher and slowing the growth of incomes.

Q: It seems as though many of the key reforms take effect in 2014 and after. What are some

of the provisions that happen sooner?

A: Health insurers will be barred from imposing lifetime caps on coverage; individuals with

serious health conditions that have prevented them from obtaining coverage will be eligible to

purchase a policy from a high-risk pool; health plans will be prohibited from denying coverage

to children with pre-existing conditions; and health plans will be prevented from dropping

people from coverage when they get sick.

Q: I'm worried about the cost of health reform. Does it include any cost controls other

than the tax on high-priced plans?

A: One of the provisions of the act that gets little attention but that may have a big

influence in the future is the creation of an independent Medicare commission with the

authority to recommend changes in Medicare payment policies.

Proponents say such a commission would reduce political influence, bring more expertise into

the decision-making process and do a better job of controlling the growth of Medicare

spending.

But there are critics. Among other things they worry that a commission will increase what

seniors pay for Medicare, reduce what hospitals and doctors receive for services or propose

policies that limit care in certain circumstances.

Q: Are there sleeper provisions in the law that deserve more attention?

A: Yes, and here are a few:

Drug and medical device manufacturers will be required to disclose their financial

relationships with physicians and teaching hospitals.

Hospitals and doctors will be encouraged to restructure financial arrangements to

reward the quality of care instead of the quantity of services provided.

The bill increases Medicare payment rates by 10 percent to doctors who provide basic

medical care, provides $1.5 billion for the National Health Service Corps to get more primary

care providers in areas where there are doctor shortages and offers new investments in

training programs to produce more primary care doctors and nurses.

Health insurers must report how much they spend on medical care versus

administrative costs and, in future years, accept tighter government review of premium

increases.

Payments and penalties to hospitals will be linked to quality outcomes, including

hospital-acquired infections and readmissions for conditions that should be prevented.

The Community Living Assistance Services and Supports Act inside the health reform law

would establish a national insurance program to allow voluntary prefinancing of long-term care

through payroll deductions.

Kathryn Regan Eskew, an associate professor at Hilbert College in Hamburg, is insured — though she and her family pay for a portion of the coverage. To read her story, click here.

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Businesses

Q: Which businesses will be required to offer health care to their employees?

A: Employers with more than 200 employees will be required to automatically enroll

employees into health plans that the company offers, although employees can opt out of

coverage.

Employers with 50 to 200 employees will be required to offer insurance, but companies that

employ fewer than 50 will not. Their employees, however, will be required to get insurance on

their own, most likely through the new state-run purchasing exchanges, starting in 2014.

Q: What will happen to companies that refuse to offer health care?

A: Companies that employ more than 50 people but do not offer health insurance will be

charged a fee of $2,000 per full-time employee, excluding the first 30 employees from the

assessment. That fee applies to companies that have at least one full-time employee who

receives a tax credit to help pay for health care.

Q: Will any penalties apply to firms that offer insurance?

A: Yes. Employers with more than 50 employees that offer coverage — but have at least

one full-time employee receiving a premium tax credit — will pay the lesser of $3,000

for each employee receiving a premium credit or $2,000 for each full-time employee.

Q: When do all these employer mandates start?

A: Jan. 1, 2014.

Q: What kind of aid will be available for small businesses to help them provide health

care?

A: Small employers with no more than 25 employees that offer average annual wages of less

than $50,000 and that offer insurance to their employees will receive a tax credit.

Between 2010 through 2013, such employers will receive a tax credit of up to 35 percent of

the employer's contribution toward the employee's health insurance premium — so long as

the employer pays at least half the cost of the employee's health care.

Employers with 10 or fewer employees and annual wages of less than $25,000 will receive the

full 35 percent tax credit, but the credit phases out as companies get bigger and pay their

employees more.

After 2014, things change thanks to the creation of state-based purchasing exchanges. At

that point, businesses that buy policies through an exchange will get a tax credit of up to 50

percent of their contribution toward each employee's insurance premium — so long as the

employer pays at least half the total premium cost. Companies with 10 or fewer employees and

average annual wages of less than $25,000 will be eligible for the full 50 percent credit, but

the credit phases out for bigger companies that pay more.

Q: Will the law force businesses to cut jobs?

A: Opinions differ on this.

The law "will further expand entitlements and explode the deficit, and raise taxes by a

half a trillion dollars at the worst possible time," said Thomas J. Donohue, president of the

U.S. Chamber of Commerce. "American jobs and growth are at risk."

Small businesses with just over 50 employees are especially likely to cut jobs, some

experts say, because they can escape penalties for not offering insurance simply by scaling

back to less than 50 employees.

But reform advocates say that the double-digit increases in health care costs in recent

years have been depressing wages and killing jobs already. They say that if the law slows the

rate of increase in health care costs, that will free businesses to pay more money for higher

salaries and more employees.

"Health care reform really is a job creator — and it helps businesses and employees

keep jobs," said Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee.

Q: Large businesses seem to be more comfortable with the law than small businesses. Why?

A: Because larger companies already tend to offer health insurance to their employees and

will be very happy if the law slows the rate of health care inflation. But for smaller

companies — especially those with 50 to 200 employees — there's no question that

the law is a new, if somewhat subsidized, burden.

Q: Are there businesses that will be especially affected?

A: Yes. The law targets companies that some see as instrumental in making Americans less

healthy. Starting this year, there will be a 10 percent tax on indoor tanning services. And

starting in 2011, chain restaurants and vending machines will have to disclose the nutritional

content of each item they sell.

Kevin Lipomi's company employs 55 people on Buffalo's East Side and he worries that the health care law is, for him, a good reason to trim his work force. To read his story, click here.

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Seniors

Q: Will the health law result in my Medicare benefits being cut?

A: Despite rhetoric to the contrary, Medicare advocates agree that the law, while including

efficiencies that extend the cash-strapped program's solvency by several years, doesn't trim

basic benefits at all.

"Not a single guaranteed benefit in Medicare is cut, and, in fact, benefits are improved,"

the Center for Medicare Advocacy said.

Q: How can it be that the government plans to cut $455 billion out of Medicare and other

health programs over 10 years without affecting benefits?

A: Medicare is the great engine driving health care costs higher, and the law aims to slow

that engine down in several ways. Under the law, Medicare will have to test payment systems

that aim to promote better coordination of care while improving its quality. The goal is to

cut down on duplication of services and to make sure seniors don't receive care they don't

need.

There's also an emphasis in making Medicare more efficient in parts of the country like

South Texas, where it costs more than twice as much as it does in Buffalo.

While providing more money to fight Medicare fraud, the law also sets up an independent

payment advisory board that will recommend ways for Medicare to save money and extend its

fiscal solvency.

Those measures account for more than half the Medicare savings, but the biggest single line

item will be about $200 billion in cuts in the Medicare Advantage program, in which the

government subsidizes private insurers like HealthNow and Independent Health to offer health

maintenance organizations to seniors. The government pays about 14 percent more for Medicare

Advantage than it does for regular Medicare, and starting in 2012, that subsidy will be

reduced.

Q: Does that mean if I am on Medicare Advantage my benefits may be cut?

A: Possibly. AARP notes that some Medicare Advantage plans now offer perks such as gym

memberships and free eyeglasses — and that such giveaways will be the first thing to go

if plans have to trim back benefits.

Co-pays and other costs to Medicare Advantage patients could also increase under the law,

said AARP, which supported the health care reform effort.

Q: How does the law affect the Medicare Part D prescription drug plan?

A: Most importantly, it phases out the much-loathed "doughnut hole" in the prescription

drug plan. Currently, Medicare recipients who spend $2,700 a year on drugs don't get any more

benefits until they have spent $6,154.

That will start to change this year, when people who fall into the doughnut hole will get a

$250 government rebate. Next year, those people will get a 50 percent discount on brand-name

drugs. From there, the government will slowly phase out the doughnut hole and close it

entirely by 2020, when 75 percent of drug costs will be covered.

Q: How will the new independent Medicare payment advisory board work, and what effect will

it have?

A: The board will recommend payment cuts when it determines that a particular Medicare

provider is being overpaid. Starting in 2014, the panel's recommendations will automatically

take effect unless Congress acts to stop them.

While it is too soon to know how much savings the board will find, some experts think drug

and medical-device makers are at most risk of seeing their payments cut.

Q: Are there any hidden benefits for seniors in the law?

A: Yes. Starting next year, Medicare will cover annual wellness visits for seniors. In

addition, starting next year, Medicare will cover all preventive services for seniors, such as

colonoscopies and mammograms.

Q: What ever happened to the provision in the bill that Sarah Palin described as creating

"death panels"?

A: While the House version of the bill included a provision offering end-of-life counseling

to seniors, the Senate excluded it from its bill, and the provision was not included in the

final legislation.

Supporters of the provision said it was a wild stretch to think such counseling sessions

would in any way lead to the government deciding who could live or die.

Gayle Abraham, a 64-year-old West Seneca resident, feels the pain of the Medicare prescription plan's "doughnut hole." To read her story, click here.

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Taxpayers

Q: Will my tax rate go up under the law?

A: Not right away, and not unless you have a relatively high income.

The first big tax increase for individuals will come in 2013 and will only affect

individual taxpayers who earn more than $200,000 and married couples who make more than

$250,00.

Q: How will that tax increase work?

A: The law increases the Medicare Part A tax rate by 0.9 percent (from 1.45 percent to 2.35

percent) on earnings over $200,000 for individual taxpayers and $250,000 for married couples

filing jointly. In addition, the law will establish a new 3.8 percent tax on unearned income

for higher-income taxpayers.

Q: How about the tax on high-end health plans — when does that start, and how big is

it?

A: Starting in 2018, there will be a new excise tax on insurers of employer-sponsored health

plans with an aggregate value of more than $10,200 for individual coverage and $27,500 for

family coverage.

Those thresholds will be indexed to inflation beginning in 2020 and may be adjusted upward

even earlier if health care costs increase more than expected. Higher thresholds will be

applied for older employees, retirees younger than 65 and those in high-risk professions.

The excise tax will be charged to the issuer of the insurance policy. To calculate it,

subtract the threshold amount listed above from the annual cost of the policy and multiply

that figure by 0.4.

Q: Are there any other tax provisions in the law that could directly affect me?

A: Yes. The law increases the tax on distributions from a health savings account or an

Archer Medical Savings Account that are not used for qualified medical expenses. For HSAs, the

rate will go from 10 percent to 20 percent starting in 2011, and for Archer MSAs, the rate

will go from 15 to 20 percent. Both changes take effect next year.

The law also limits the amount you can contribute to a flexible spending account for

medical expenses to $2,500 per year in 2013, with the limit to be adjusted upward annually

based on inflation.

In addition, the law will increase the threshold for the itemized deduction for

unreimbursed medical expenses to 10 percent of adjusted gross income, up from 7.5 percent

today. While this change takes effect in 2013 for most taxpayers, seniors will not be affected

until 2017.

Q: How can the Congressional Budget Office say that the law will save $143 billion over 10

years when it comes with a price tag of $940 billion?

A: The government is going to be spending billions on Medicare, Medicaid, veterans health

care and other programs, no matter what. Yes, the new law establishes a costly new burden:

subsidized health care for millions of Americans who don't now have it. But it pays for that

burden — and then some $#8212; through the increased taxes and efficiencies in Medicare

and Medicaid, the nonpartisan Congressional Budget Office said.

Q: How solid are the Budget Office projections?

A: The Congressional Budget Office has an impeccable reputation for accurate, unbiased

work. But its projections are only as good as the assumptions upon which they are based.

The assumptions are based on the notion that Congress will stick with the plan to cut

Medicare funding — and not amend the law to respond to angry doctors, hospitals or other

health providers.

Also, the CBO's work cannot accurately estimate whether demonstration projects aimed to cut

costs throughout the health care system will really work.

In other words, "while robust deficit reduction projections from the Congressional Budget

Office offer some reassurance about the legislation, there is a great deal of downside risk

that these projections will prove to be optimistic," said the Concord Coalition, a nonpartisan

deficit hawk.

Q: And what will happen if the law ends up costing far more than projected?

A: That's an open question. Congress could curtail benefits or increase taxes to pay for

the cost overruns — or simply let the federal deficit grow to even higher record levels.

None of those solutions is particularly politically palatable.

Mike Madigan, a 46-year-old Grand Island resident, feels the health-care law will be a budget-buster and a burden to future generations of Americans. To read his story, click here.

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What the law means for you

Interactive graphic by Wilson Andrews and Karen Yourish / Washington Post

Interactive graphic by Wilson Andrews and Karen Yourish / Washington Post

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