After months of debate, the health care reform bill finally passed and has been signed into law by President Obama. It is legislation that is slated to cover millions of Americans who don’t have health insurance and drive down insurance costs that have been on the rise since the start of the millennium.

So what does it all mean?

The reform bill has two phases. First, here are some things that Americans saw change change in the first 6 months the bill was in effect:

  • Senior citizens became eligible for up to $250 in prescription drug rebates to close the “doughnut hole,” the costly gap for prescription pills. In 2011, a 50% discount on prescription drugs was enacted.
  • Lifetime caps on insurance coverage were removed.
  • Insurance companies lost the ability to deny coverage if you became sick or cancel coverage already issued except in the case of fraud.
  • Prohibition of coverage denial or rate adjustment for children who have pre-existing conditions.
  • High risk pools were created for adults with pre-existing conditions to buy into until 2014 when they will also not be denied or have rates adjusted for pre-existing conditions.
  • Tax credits for small businesses when purchasing coverage.
  • Consumers gained protections against insurance company abuses through the Patients’ Bill Of Rights.
  • Children were able to stay under parents’ plan until they are 26 years old.
  • Consumers had a guaranteed choice of doctors and plans.
  • Free preventative care for all.
  • All insurers were required to post their balance sheets on the Internet and fully disclose administrative costs, executive compensation packages, and benefit payments.  

The second phase of the bill is set to be complete by 2014. Here’s what the bill will do then:

  • All adults will not be denied coverage or have their rates adjusted if they have a pre-existing condition.
  • Tax credits will be offered to families to help offset the cost of health care premiums.
  • Individuals who get insurance through their employer will be able to purchase a state-run option of health insurance instead when their current premiums are more than 9.5 percent of their income or when their current plan doesn’t cover 60 percent of the cost of their benefits. Certain middle-income families who pay more than 8 percent but less than 9.5 percent will be eligible for vouchers from their employers to purchase insurance from where the employer normally would have.
  • All Americans must carry health insurance or face a fine, but there are special exceptions for economic hardship, religious beliefs and other special cases. These exceptions include if a couple makes less than $19,000, they are not required to carry health insurance.
  • Medium-sized and large-sized companies will be fined if they do not provide coverage for their employees or if they do not meet a minimum standard of coverage.
  • States set up insurance pools to help small companies come together to pay for insurance coverage of their employees and offer tax credits if they participate. They must insure their employees and meet a minimum standard of coverage or pay a fine.
  • Flexible spending accounts used for health care costs will have a cap at $2,500 starting in 2013. There currently is no cap by law, but employers generally impose a cap around $4,000.
  • Those who itemize their tax returns will have their deductible medical expenses shrink. The new bill only allows you to deduct medical expenses that exceed 10 percent of your adjusted gross income, the current law has it at 7.5 percent.
  • 32 million Americans who were not covered before the bill was passed, will now be covered through subsidies averaging $6,000 per person to help pay premiums and other medical charges. This will also happen through the extension of Medicaid.

So now that you know how your coverages might change, how much will your payments change?

  • If you get your insurance through your company, your premiums will not change. 
  • If you get insurance privately and you make under $88K, your premiums are likely to go down with the assistance of subsidies.
  • If you get insurance privately and you make over $88K, your premiums are likely to go up to help cover the cost of the expanded coverage and subsidies.

The bill is projected to cost around $940 billion, so how are we going to pay for it?

  • The bill is a big investment now, but its projected by the Congressional Budget Office to cut the national deficit by over $130 billion in the first 10 years and by $1.3 trillion over 20 years.
  • Individuals earning more than $200,000 a year, or couples earning $250,000 or more, would be hit with a 3.8% surcharge on investment income and a higher Medicare payroll tax to help pay for the bill.
  • A medical plan tax that includes several different provisions to increase multiple taxes on things such as cosmetic surgery, cafeteria plans, health insurance providers, production and importation of drugs and medical devices, medical information providing, hospitals and the adjusted gross income floor of medical expenses.
  • Doctors and hospitals will receive less compensation than they do now to control revenue streams.
  • The Medicare program will see $500 billion in cuts to its program along with the Medicare tax being raised, but these cuts are not empty dismissals as the new plan can cover what these cuts lose.
  • The pharmaceutical industry has pledged lavish spending to the government through advertisements in helping to pass the bill.
  • A sweeping federal student loan legislation as a part of the bill eliminates banks as the middleman, thus eliminating millions in bank fees paid by the government.
  • “Cadillac Plans” or plans that exceed $10,200 a year for individuals or $27,500 for families will see a 40 percent tax rate attached to them for the insurers to pay.

Other concerns of the new health care reform bill:Many people are also concerned about longer waits to visit their doctor with this new increased, centralized government health insurance bill, such as what happened in Massachusetts. This will very likely not be the case because in Massachusetts, they made all their changes at once and it wasn’t feasible to overload the pre-existing system with those changes. The new national bill phases in these changes over time so that the system can adapt. 

Wait times are also expected to go down at emergency rooms at hospitals, where wait times have been steadily increasing over the last decade. Patients who are covered under the new bill who were not before are expected to go to a primary care physician instead of directly to the emergency room for one-time treatments.

Also built into the bill is millions of dollars for community health centers that are expected to be able to take on tens of millions of patients so that your primary care physician isn’t held up by the increase in patients covered.

A not-so-well-known part of the bill:Sweeping changes in the student loan program, an administration priority that has been stalled in the Senate for months, will now be in effect. They will have the government originate all student loans, denying banks and other private lenders of a lucrative business they have long had through government paid fees. Much of the savings would go into increased Pell Grants for needy college students, but black and Hispanic colleges would also benefit.

Of course this is only the beginning of the reform as many of the provisions set for 2014 could be changed by amendments and other legislation before then, but when they do, we’ll be on your side with what those changes mean.

Do you think this is a good bill for America? For you? For your neighbors? Let us know in the comments section below and vote in our poll.

Some of the information used in this report came from the Joint Committee On Taxation, the CBO, The New York Times, and