Health care reform bill 101: Who must buy insurance?

In an attempt to de-mystify the health care reform bill now before Congress, the Monitor takes a look at what is in it and how it might affect you. First, we look at the new requirement to buy health insurance.

These protesters, who took to the streets of Washington on March 9 to complain about the health insurance industry, would get what they want if the House passes the Senate's health care reform bill. Healthcare reform would require all Americans – with some exceptions – to buy health insurance.

Confused about the healthcare reform effort? Don’t worry – you’re not alone. By the time it comes up for a final vote this weekend, health legislation will be twice as long, and half as intelligible, as Tolstoy’s masterwork “War and Peace.” And news coverage of healthcare reform has focused as much, or more, on political wrangling than on substance.

So we’re going to try to describe what’s in the healthcare reform bill in plain English.

That’s not easy. For one thing, the bill is full of sentences that begin “For the purposes of subparagraph 6(b)....” For another, healthcare reform would be the most sweeping change in US domestic policy in a generation. It’s big, and it’s complicated.

Healthcare 101: What the bill means to you

But here’s a key thing to remember: There is a simple concept at the center of this rambling, Rube Goldbergian machine. Democratic healthcare reform would expand insurance coverage in America by requiring people to obtain it.

That’s right. The healthcare reform bill would mandate that most US citizens and legal residents purchase “minimal essential coverage” for themselves and their dependents. They can get this either through their employer, or, if their employer doesn’t offer health insurance, they can buy it through new marketplaces that will sell policies to individuals.

Those marketplaces would be called “exchanges.” We’ll talk more about them in a later story. (We’ll also cover subsidies for health insurance, when it all would take effect, how it would be paid for, and what it means for businesses.)

Are there penalties if you don't buy insurance?

If you ignore this mandate and don’t get health insurance, you’ll have to pay a tax penalty to the federal government, beginning in 2014. This fine starts fairly small, but by the time it is fully phased in, in 2016, it is substantial.

An insurance-less person would have to pony up whichever is greater: $695 for each uninsured family member, up to a maximum of $2,085; or 2.5 percent of household income.

There are exceptions. Certain people with religious objections would not have to get health insurance. Nor would American Indians, illegal immigrants, or people in prison.

Why the requirement?

Why is Congress doing this? It’s a pretty obvious way to expand coverage, for one thing. Also, it will help bring in a flood of new customers for health insurance firms, including healthy young people who might not need much healthcare.

For insurance firms, those new customers could balance out the losses they might incur if they can no longer deny coverage to people with preexisting conditions. (Yes, that’s another change the bill makes.)

And remember, many people will not be buying this coverage purely on their own. Uncle Sam will be helping them. The bookend to the individual mandate is federal subsidies for insurance purchases, which reach deep into the middle class. We’ll talk about those next.

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Health Care Reform Bill 101:

Introduction: What the bill means to you

Part 1: Who must buy insurance?

Part 2: Who gets subsidized insurance?

Part 3: What's a health 'exchange'?

Part 4: How long will reform take?

Part 5: Who will pay for reform?

Part 6: What will it mean for business?

Part 7: What does it mean for kids and families?

Part 8: What does it mean for seniors?

Part 9: Rules for preexisting conditions

Part 10: Will it make health care more effective?

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