Why Many of the Health Care Reforms will Not Go Into Effect Until 2014

President Obama signed the health care reform bill into effect March 23, 2010. But why is it that some of the changes in the bill will not take effect until 2014? For example, the popular regulatory change that will prohibit insurance companies from denying coverage to a those with pre-existing medical conditions will not go into effect until 2014. (But the regulation that prevent insurance companies from denying coverage to children with pre-existing conditions will go into effect this year.)

The reason is because the health care system is a complex interconnected system where one piece cannot be implemented without another piece. The health care reform bill calls for the creation of health care exchange pools. And it is the creation of these exchange pools (of which none exists right now) that would take four years to implement.

SFGate.com says "We understand why there's a long wait for these reforms - it's going to take a great deal of time to set up all the necessary administration for insurance exchanges and subsidies.^[1]

Prior to the passage of the health-care reform bill, individuals and small businesses who wants to buy insurance on their own will have to pay many times more than what a large corporate employers has to pay for the same individual as an employee (assuming equivalent coverage).^[2] That is because if the insurance company can sign up for coverage for a group of people that contains a wide range of health statuses with both healthy and not so healthy, then they can reduce their risk against incurring a huge payout that exceeds their premium revenue. Insurance companies do not like to sign up a single individuals and will raise the price for that individual. Health-care exchanges are designed to group all these individuals and thereby they act as a group. This hopes to reduce premiums making it affordable for small or single individual businesses to pay for their own insurance.

Another change that goes into effect in 2014 is the individual mandate that everyone buys insurance. We cannot implement this mandate until these exchanges are in place to make the premiums affordable.

And until we have a individual mandate in place, we cannot add regulations that would eliminate the insurance company practice of denying coverage to people with pre-existing conditions. Because if we add that regulation without the individual mandate, the price of premium will skyrocket. (However, the lawmakers felt that children were important to warrant that the regulation go into effect earlier for children of pre-existing conditions.)

In summary, we cannot put regulations on the insurance companies without a mandate that all individual purchases insurance. And we cannot implement this mandate without health care exchanges that would make insurance premiums affordable. And it wouldn't be until 2014 before the health-care exchange infrastructures is built and in place. And since the individual mandate won't take effect until 2014, there's no need for government subsidies to low-income families until then. So that is why all those major reforms will not go into effect until 2014.

Well, what about those who need health insurance now? Those who are sick and can not wait until 2014? The health care reform bill will put into effect (within 90 days of the bill's signing) a "high-risk" pool where people with pre-existing conditions will be able to buy insurance.^[1]

[1] Patient anticipation: Health care law timeline

[2] Hidden Costs of Health Care