Health insurance revolution on the way
President Obama’s Affordable Care Act (ACA) was one year old as of Wednesday, March 23, but states still have until 2014 to set up their own health insurance exchanges. An exchange will allow small businesses to buy federally subsidized health insurance at big business rates. A small business in this case is defined as employing fewer than 100 people. Currently, small business pays about 18 percent more for its employee health coverage than big business. The Affordable Care Act was designed to bring down that difference—not raise the cost for big business but reduce it for small business.
If a state fails to get on board by 2014, that state must come up with its own improved plan to cover its uninsured state constituents. All told, about 31 million uninsured Americans are the targets in the ACA for health coverage by 2014. If by then businesses with more than 50 employees still don’t provide health care insurance, the businesses will have to pay a penalty. Businesses with fewer than 50 employees are not required to offer health insurance.
The businesses with more than 50 employees that don’t provide insurance but still pay a penalty are not being forced to buy the insurance. On the other hand, South Carolina is one of several states that has filed suit against the Obama administration, declaring the ACA unconstitutional. The United States Supreme Court appears to be getting in position to finally say so, one way or another.
The South Carolina Small Business Chamber of Commerce was host midday Monday, March 21 for a healthcare discussion and luncheon at the Clarion on Gervais Street. Frank Knapp, president of the chamber, welcomed the 30 plus people to the luncheon presentation and introduced Chiquita Brooks–LaSure, director of coverage policy in the Office of Health Reform at the U. S. Department of Health and Human Services.
Brooks–LaSure said health status will no longer be at issue after 2014. Existing health conditions will no longer be relevant. The insurance pool will cover everybody who applies, so everybody will pay at the same rate, roughly.
A prepared information sheet covering the main points of the ACA was handed out. Briefly put:
Beginning in 2010, small businesses wi th fewer than 25 ful l– time employees and with annual wages not exceeding $50,000 were eligible for a federal tax credit for up to 35% of their healthcare premium expenses. After 2014 and with a state exchange under the ACA, the small businesses will be eligible for a federal tax credit up to 50% of their healthcare premium expenses.
State health insurance marketplaces
The marketplaces, or exchanges, as identified in the ACA will offer choice, allowing small business owners to shop around for quality, affordable plans that meet their budgets and needs. Utah and Massachusetts al ready have state exchanges, two different models, but each is worth studying.
Medical loss ratio
To bring down the 18 percent premium health insurance costs small business compared with what big business pays for the same coverage, the ACA includes a medical loss ratio (MLR) provision that requires insurance companies to spend at least 80 percent of smal l employer dollars on medical costs rather than CEO salaries, marketing expenses, and other expenditures not directly related to providing insurance.
The Congressional Budget Office (CBO) estimates the ACA will lower the federal deficit by more than $143 billion over the next 10 years, and by more than $ 1trillion inthe following decade. The ACA creates substantial reforms to Medicare, and since Medicare makes up such a large por tion of the country’s overal l medical spending, the ACA requirements should signi ficantly reduce healthcare costs.
The ACA encourages preventive care. For instance, the law includes $200 million in grants that small businesses can use to develop things l ike employee smoking cessation programs. It eliminates patient co– pays for preventive services in Medicare, Medicaid, and private plans.
P re– existing condi ti on insurance plans
Established in mid– 2010, a temporary national Pre– existing Condition Insurance Plan (PCIP) provides up to $5 billion in federal funding to cover those who have been denied coverage due to pre– existing conditions. The ACA al lows the sel f– employed who have been uninsured for at least six months to get coverage through thei r state’s temporary high– risk pool. Once a complete ban on the denial of health insurance due to pre– existing conditions takes place in 2014, sel f– employed Americans will have more options when choosing coverage.
Grea ter accountability for insurance companies
Under the ACA, insurance companies will no longer be able to raise rates without just cause.
Employers who like their old coverage can keep it as long as their plan existed before the ACA was enacted on March 23, 2010, and as long as no significant changes in coverage are made. If a plan increases medical costs to employees, significantly reduces or cuts benefits or adds an annual limit, all of the new consumer protections of reform will apply to the plan. This is also true if an employer reduces the percent of premiums it pays by more than 5 percent. Plans that are maintained pursuant to a collective bargaining agreement that was in place before March 23, 2010, are considered grandfathered until the termination of the contract.
Eliminating job lock
A prospective entrepreneur with a pre– existing medical condition or with a family member with a pre– existing condition, can now leave an employer to launch a new company and enroll in a pre– existing condition insurance plan, thereby maintaining affordable health insurance coverage without being forced to stay put or locked in with a job just because of the need for continuing health insurance.
Brooks–LaSure pointed out one great advantage of the ACA is the concept of care by a group of doctors working together, so the patient with three strikes against him or her (heart problems, potential kidney failure, and diabetes, say) can still be treated in a holistic fashion. Every ailment is understood by every doctor and treated as part of the whole. Some medicines, for instance, nullify others or worse.
So that’s the plan—at least, the beginning of a plan. But will the plan work? It had better work. A 2009 Harvard University study concluded an excess 44,800 deaths occur in the United States due to lack of health insurance.
But even with the failure to pay adequate health insurance premiums, we in the United States pay 17 percent of our gross domestic product for healthcare, about twice what’s paid in other First World countries. And they have better health statistics like infant mortality (U.S. higher than most of the industrialized world), life expectancy (U.S. 42nd in the world and behind Cuba, 37th) and overall well–being. More money per person is spent on healthcare in the United States than in any other country in the world.
Health consultant Lynn Bailey offered the reality that no matter what happens, adequate healthcare insurance is going to cost about $8,000 per year per person, period.
On the other hand, out of the 50 states enough variety in health insurance exchanges, or marketplaces, should occur after 2014 to the point the country will be always looking at continuous improvement opportunities.