Workers expect their defined contribution plans to play a greater role in their retirement income than annuities.
May 29--Audrey Joyce and her family will lose health insurance coverage at the end of June, the same month the Supreme Court is expected to issue a landmark decision on the constitutionality of the Patient Protection and Affordable Care Act.
The court's ruling could profoundly affect the Joyce family and millions of others across the nation. Among questions the justices are expected to address are two that attracted the most attention for consumer impact: Can the government force people to buy health insurance? If not, should the entire law be nullified?
"In the center ring is definitely the question about the individual mandate," said Mary Crossley, dean of the University of Pittsburgh School of Law.
Joyce, 55, a part-time farm worker from Cecil, and her 21-year-old daughter, a hair stylist, have chronic medical conditions. That makes it difficult and costly to obtain insurance without coverage from an employer's group plan. Joyce's husband, a truck driver, provided insurance for the family until last year when his company reclassified his job and cut the benefit.
They pay nearly $1,100 a month to continue the plan under COBRA, a 1986 federal law that temporarily extends insurance after a job loss, but that coverage will run out.
If the court upholds the law, in 2014 it would bar insurers from excluding people because of chronic conditions. By that year, states must have established health insurance exchanges for people to buy insurance at competitive rates. Both aspects could help the Joyces.
But if the court strikes down the law, Joyce worries that a serious illness or accident could drain the family's savings.
"We were always the ones that thought, if something happens, that our children could come to us and we could help them. Now I'm afraid that we couldn't do that. We'd be the ones in their basement," she said. "I feel vulnerable, I guess."
Supporters say millions of Americans are benefiting from portions of the law, including:
--More than 5.1 million people with Medicare, including nearly 250,000 in Pennsylvania, who saved more than $3.2 billion on prescription drugs in 2010 and 2011;
--About 100,000 Pennsylvanians who purchased individual health insurance and will receive rebates from insurers;
--About 50,000 adults with pre-existing conditions, including nearly 5,000 in this state, covered through a government-subsidized program;
--An estimated 3.4 million young adults receiving coverage on their parents' plans until age 26.
Critics are skeptical of those numbers and say negative consequences outweigh the positive ones.
"This was not a well-thought-out piece of legislation to start with," said Edmund Haislmaier, a senior research fellow at the Heritage Foundation in Washington. "Essentially, the argument is we lose all these benefits. ... But they weren't benefits to start with."
The law forces new costs onto employers, said Haislmaier, who predicted many employers may stop providing insurance to workers. The Congressional Budget Office in March estimated that 3 million to 5 million people a year could lose employer-sponsored health coverage starting in 2019 because of the law.
Many businesses "don't know a lot about the law" or how it will affect them, said Eileen M. Anderson, manager of government relations for SMC Business Councils, a Churchill organization that represents small businesses. If the court upholds the law, she said, "employers are going to have to learn what it means to their business."
The law makes available tax credits to help small businesses pay for health insurance for employees and an estimated 160,700 companies in the state qualify. Yet it's unknown how many take advantage of the incentives.
"Like anything involved with the government, there are always strings attached," Anderson said.
An estimated 89,000 young adults in Pennsylvania gained coverage by staying on their parents' plans, said Erin Gill-Ninehouser with Pennsylvania Health Access Network.
Beth Humphries, 24, of Bloomfield is among young adults without medical problems getting insurance that way. Humphries earned a degree in social work from Chatham University but hasn't found full-time work in her field. She works part time as a nanny but doesn't earn enough to cover the cost of insurance.
Though she may not need it, Humphries said insurance could keep her from acquiring medical debt if she required hospitalization for an accident or illness.
"That's how so many people in America are going bankrupt right now," she said.
The numbers are inflated, Haislmaier counters, contending that many young adults simply switched from employer-provided insurance to parental plans because of better deals. "You're not really insuring anyone new," he said.
Either way, the benefit does not cost health insurers much money because most people in their early 20s are healthy, according to a recent study from consulting firm Aon Hewitt. It found that the provision enabling young adults to stay on their parents' plans increased premium costs around the country an average of 1.5 percent in 2011.
A report last month touted another aspect of the law, which requires insurers to spend 80 percent to 85 percent of premium dollars, depending on plan size, on medical care rather than on administrative costs. In Pennsylvania, rebates to consumers and companies totaled $104.5 million, according to the Kaiser Family Foundation. That includes $24.2 million in overcharges to consumers who bought coverage individually.
The provision "actually encourages the insurers to ignore fraud," Haislmaier said. The cost of paying claims reviewers falls under administrative costs, and the more claims that are paid, the less likely a rebate will be given, he said. "It's completely backward."
The requirement that all Americans buy insurance is essential for insurers to pay for wider benefits and protections that take effect in 2014, such as the prohibition on denying coverage for pre-existing conditions, said William H. Maruca, a partner in Pittsburgh law firm Fox Rothschild who represents hospitals, doctors and medical suppliers.
Without the mandate providing insurers with millions of new premium-paying customers -- especially young, healthy customers -- the industry couldn't afford to cover sick people, Maruca said.
"If the individual mandate is struck down but the rest of the law stands, the insurance industry is going to be in pretty serious trouble," he said.
A Bloomberg Government report this month estimated insurance companies could get $1.03 trillion between 2013 and 2020 if the law stands. That's based on a Congressional Budget Office calculation that 31 million Americans would gain health coverage under the law. At least 80 percent of that money would pay hospitals, doctors, nursing homes and other providers for medical services, the report said.
"When you're talking about $1 trillion, that's more than a half-percent of GDP," said Matt Barry, author of the report. "That's not just going to have an impact on (the insurance) sector, but it's a decision that will have an impact on the entire economy ... whether the court affirms or strikes down all or part of the law."
Affordable Care Act
The Supreme Court could rule next month on the federal health care law. Some provisions took effect in advance of full implementation in 2014:
--Insurance premium tax credits for small business
--Insurers can't exclude children younger than 19 for pre-existing conditions
--Temporary, federally funded health insurance plans for adults with pre-existing conditions
--Insurers cannot drop people from coverage when they get sick
--Medicare recipients receive 50 percent discount on prescription drugs
--Co-pays eliminated for preventative care
--Preventative care free under Medicare
--Young adults can stay on parents' insurance until age 26
--Lifetime limits on coverage banned
--Insurers required to spend a greater percentage of premium dollars on medical services
--Insurers must publicly justify large rate increases on small business and individual plans
By the numbers
Benefit, Number in U.S., Number in Pa.
Young adults on parents' insurance, 3.4 million, 89,100
Medicare beneficiaries receiving drug discounts, 3.6 million, 247,400
Medicare beneficiaries receiving free preventative care, 45.9 million, 2.2 million
Children with pre-existing conditions getting coverage, 4.9 million, 177,900
Small businesses eligible for tax credits, 4 million, 160,700
Adults with pre-existing conditions getting coverage, 50,000, 4,816
Source: Families USA
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