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Children born with severe medical conditions and young adults excluded from their parents' insurance are immediate beneficiaries of the health care overhaul, local experts said Monday.

Small companies that account for 90 percent of the North Coast's business community also are among the winners under the bill President Barack Obama is expected to sign into law today.

Within six months, insurance companies will be prevented from denying coverage to children with pre-existing conditions, one of several reforms that take effect this year, said David Hodges, a Santa Rosa health insurance broker.

On the same timetable, dependent children up to age 26 will be eligible to remain on their parents' plan, provided they do not land jobs with health care benefits.

"This is huge," Hodges said, noting that the age extension applies universally and not just to college students.

Rep. Mike Thompson, D-St. Helena, who was among the 219 House Democrats voting for the bill Sunday night, said it was an important measure during a job-poor recession.
"A lot of jobs no longer come with insurance," he said.

Children born with conditions such as asthma or heart defects have consistently been denied insurance, a crushing blow to a young family, Thompson said.

As for adults, a temporary high-risk insurance pool will be established this year to cover those who are denied coverage due to pre-existing conditions, but Hodges said it's irrelevant in California because the state covers them under a Major Risk Medical Insurance Program (MRMIP).

Denial of adults with pre-existing conditions will be prohibited in 2014.

Hodges, who maintains health insurance plans for more than 400 companies from San Diego to Seattle, said he was enthused by a federal tax credit of up to 35 percent of premiums paid by small businesses.
Companies with up to 25 employees with an average salary of less than $50,000 - a typical blue-collar wage range - get the 35 percent tax credit this year, Hodges said, and in 2014 the credit jumps to 50 percent of premiums.

It means, in effect, that initially an eligible employer will be paying just 65 percent of the cost, cutting a $400 a month premium, which Hodges said is typical for group plans, down to $230.

That is good news to Bill Mashek, co-owner of a Santa Rosa pest control firm with seven employees. Under the current system, he said, "You can't survive and provide benefits for your employees."

Mashek said he was paying $160 a month for employee health care nine years ago and is now paying more than $600 "for a mediocre plan."

Hodges said the tax credit will enable some employers to improve their plan, and for others it will "keep them from going out of business."

Firms with fewer than 20 employees accounted for 90 percent of Sonoma County's 17,646 businesses in 2008, according to the Employment Development Department.
The same percentage, or slightly higher, applies to Mendocino and Lake counties and to the state as a whole.

Seniors also get an immediate break in the form of a $250 rebate this year for the so-called "doughnut hole," a gap in the Medicare prescription drug program. The hole will be eliminated by 2020, Hodges said.

The 2007 California Health Interview Survey conducted by the UCLA Center for Health Policy Research found that 61 percent of insured Sonoma County residents - a total of 262,000 people - had job-based health coverage.

People already covered by a group plan through their jobs "don't have to do a thing" under the overhaul, Hodges said.

In 2014, they will have the option of buying insurance through a state-run marketplace, called an exchange. Plans bought from the exchange will cost 7 percent to 10 percent more than if they were obtained directly from a company like Kaiser or Blue Shield, Hodges said, owing to the cost of an added layer of bureaucracy.

Kaiser Permanente, which insures more than 170,000 county residents, issued a corporate statement on the health care bill on Monday, but did not address what impact the legislation might have on its policies.

In January, Kaiser officials said it was "too early to tell" if the overhaul would have any impact on Kaiser premiums.

Many of the bill's most ambitious provisions - providing coverage for 32 million people who are now uninsured and applying penalties for those who don't buy insurance - take effect in 2014.

The delay is intended to give new taxes and fees time to build up revenue before subsidies start to be paid out, holding the cost of the overhaul under $1 trillion in its first decade, experts said.

Hodges said he generally approves of the bill's consumer benefits, but believes the "Trojan horse here is the cost."

"This sucker is smoke and mirrors," he said, referring to government reports that assert the health care plan is "paid for."

"You need to tax everybody for this thing," Hodges said, "because everybody benefits."
Assessments should be applied to people in the $50,000 income range, not just those making more than $250,000, he said.

February 2, 2010