Countdown to Health Care Reform

By Beacon Staff

The Patient Protection and Affordable Care Act, also know as “Obamacare,” is about to bring about the biggest change to the U.S. health care system in nearly 50 years. But as the federal government prepares to roll out the most significant regulatory overhaul of the country’s healthcare system since passage of Medicare and Medicaid in 1965, the political landscape remains fractured and the public is still trying to decipher how the changes will affect them.

The Affordable Care Act (ACA) aims to increase the quality and affordability of health insurance, lower the rate of uninsured people by expanding public and private insurance coverage, and reduce the costs of health care for individuals and the government. To accomplish that it provides mechanisms like mandates, subsidies and insurance exchanges.

The U.S. Supreme Court upheld most of the Affordable Care Act in June 2012, allowing for a comprehensive overhaul of the nation’s health care system. The act plans to guarantee insurance to more than 30 million people and, in some states, expand Medicaid and lower- and middle-income assistance for private coverage.

On Oct. 1, online insurance markets are scheduled to open in every state. Consumers must sign up by Dec. 15 for coverage to take effect Jan. 1.

According to a recent poll, 42 percent of the general public is unaware that ACA is about to become the law of the land, 12 percent thinks the bill was repealed by Congress and 7 percent believe it was overturned by the United States Supreme Court.

Meanwhile, 49 percent of the public reported that they do not have enough information about the health reform law to understand how it will impact their own families.

Uninsured and low-income individuals are the groups likely to benefit the most, but are the most likely to lack the proper information.

“It’s such a complex law. I compare it to a 2,000-piece jigsaw puzzle and only a few of those pieces are put together so you don’t know what the whole picture looks like,” said John Doran, director of strategic marketing and services for Blue Cross Blue Shield, the largest health insurance provider in the state

Doran has been touring the state on a multi-year marketing campaign, hosting informational sessions in an effort to clarify the changes to individuals and businesses.

“The federal government has put some pieces back in the box,” he said. “Some pieces need an X-Acto knife to make them fit, and others need a chainsaw to buzz off the big edges.”

A major component of the 2,700-page Affordable Care Act, which requires all Americans to have health insurance starting next year, or pay a tax penalty, is a new Internet marketplace, or Exchange, which allows all Montanans to shop for insurance, just as though they were buying a book through Amazon.com. Anywhere from 150,000 to 200,000 Montanans are expected to be eligible for federal subsidies to help pay for the policy.

Individuals must acquire “minimum essential coverage,” or face a penalty. The penalty in 2014 is $95 (or 1 percent of income) but that amount increases each year thereafter.

Supporters of the ACA say the new Internet Exchange will make health insurance available and affordable for tens of thousands of Montanans without it.

But only those with income from 100 percent to 400 percent of the federal poverty level will be eligible for the subsidies. For a single household, that range is $11,490 to $45,960. For a family of four, it’s $23,550 to $94,200.

The subsidies are highest for those with the lowest incomes. A single person earning $15,000 a year will pay, at most, 2 percent of his or her income for health insurance – $300, so if the cost of a benchmark policy is $5,000, the federal subsidy will pay $4,700 of the policy cost.

A person earning $45,000 a year, on the other hand, is expected to pay up to 9.5 percent of his or her annual income for insurance, or $4,275, so the federal subsidy on a $5,000 policy would be only about $700.

No subsidies apply to those earning more than 400 percent of the federal poverty level.

Employees with household incomes at or below 400 percent of federal poverty level will be eligible for income-indexed premium subsidies and those below 250 percent of the federal poverty level will be eligible for cost-sharing cap subsidies.

In Montana, there are approximately 40,000 uninsured adults earning less than 100 percent of the federal poverty level, and who don’t qualify for coverage from Medicaid, the state-federal program that pays medical bills for the poor.

The Montana Legislature in April rejected plans to use federal money to expand Medicaid to those earning less than 138 percent of the poverty level – a measure that was expected to provide coverage to about 70,000 Montanans.

Doran said all individuals will be guaranteed the ability to purchase coverage regardless of health status, and all employers with 50 or more full-time equivalent employees must provide health benefits to employees or pay a $2,000 penalty per full-time employee per year.

To help answer Montanans’ questions, on Sept. 20 a new educational website goes live at ReformAndYouMT.com.

A health care education call center will also be available at 855-508-2502.

“There is still a lot of misinformation out there and frankly just a lack of information, despite the efforts of a lot of people,” Doran said.

Expanded Health Care at What Cost?
Despite reform, legislation is needed to drive down costs of health care, lawmaker says

Republican Rep. Scott Reichner, a mortgage lender by trade, as well as a family man with 10 children, recently donned surgical scrubs and gloves and spent a 40-hour work-week shadowing physicians and nurses at Kalispell Regional Medical Center’s trauma unit.

The reason?

“I want to know how the system works,” said Reichner, a three-term legislator from Bigfork, who serves House District 9. “We’re rolling out a new health care system that expands coverage, but nothing addresses reducing the costs. Health care insurance rates keep climbing because we’re not doing anything to cut back on the waste and misuse of the system.”

During his week observing the hustle-and-bustle of the ER, Reichner encountered plenty of trauma, as one would expect. But he also witnessed “frequent flyers” – people who abuse or over-utilize the ER’s services when they cannot afford them – as well as a strong contingent of elderly patients and people whose health ailments are due to lifestyle choices.

The drain on hospital resources is substantial and drives up the cost of health care.

Shutterstock photo

According to the County Health Rankings and Road Maps, it is estimated that 22 percent of Flathead County residents under the age of 65 are uninsured, limiting access to health care. Of those who are uninsured, 72.9 percent report that it is due to being unable to afford to pay the premiums, according to 2010 Behavioral Risk Factor Surveillance System.

“My goal going into the next (legislative) session is to bring the cost down 20 percent,” Reichner said. “There has to be a consequence for that behavior and a reward for healthy decisions.”

“I think there is a need for health care reform, absolutely,” he added. “But it can’t be a one-size-fits-all fix. We need to sit down and talk to doctors and providers. Because taxpayers are going to be footing the bill, we need to be sure that fraud is at a minimum and everyone is covered as much as we can afford them to be, without handing money to someone who is already a drag on the system.”

Beginning Oct. 1, Montana residents can begin shopping for health insurance in the state’s marketplace, an online insurance store that includes products sold by three different insurance companies. Any policies purchased there will not go into effect until Jan. 1, 2014.

According to Montana Commissioner of Securities and Insurance Monica Lindeen, a Montanan buying health insurance in the individual market can expect to pay an average of $273 a month for comprehensive health insurance purchased in the marketplace, compared to an estimated average of $290 a month had the Affordable Care Act not passed.

A small business consumer can expect to pay an average of $375 a month per employee for a comprehensive small group plan in the marketplace, compared to an average of $450 a month per employee had health reform not passed.

“A lot of Montanans have been worried about how Obamacare would affect the cost of health insurance,” Lindeen said in a statement. “These preliminary figures show that rates haven’t skyrocketed. Rates are actually lower than projections, which is a relief to a lot of Montanans, including me.”

Supporters of the ACA say the new Internet Exchange will make health insurance available and affordable for tens of thousands of Montanans without it.

But only those with income from 100 percent to 400 percent of the federal poverty level will be eligible for the subsidies. For a single household, that range is $11,490 to $45,960. For a family of four, it’s $23,550 to $94,200.

In Flathead County, 11.7 percent of the residents live at or below 100 percent of federal poverty levels. The median household income is almost $45,000, and 13.6 percent have an annual income of more than $100,000. According to Montana Department of Labor and Industry, the unemployment rate in Flathead County increased from 4.1 percent in 2005 to 11.8 percent in 2010.

Reichner enjoyed huge success in 2011 when he passed a bill that lowered workers’ compensation rates, which were among the highest in the country, by about 24 percent in its first year and an additional 15 percent in subsequent years, making it the largest work comp reform in the state’s history.

He intends to approach the issue of health care reform with the same gusto.

“We really can do it here,” he said. “More people are on board than we might expect. They’re going to be scared that it’s Obamacare expansion. It’s not. This is reform.”

Velinda Stevens, CEO of Kalispell Regional Healthcare, the parent company of KRMC, and Jim Oliverson, vice president, will collaborate with lawmakers, insurers and actuators to help shape legislation, Oliverson said.

He made the point that between 70 and 75 percent of health-care dollars are spent on less than 7 percent of the population in the final 20 days of life, and said society should address the issue. He also agreed with Reichner that there should be consequences for bad behavior, and rewards for good behavior.

“I think we are all going in the same direction on this,” Oliverson said. “But it’s going to take some work.”

Health Care Jargon
Major new laws come with their own jargon, and President Barack Obama’s health care overhaul is no exception. With the first open enrollment season kicking off for the uninsured, here are some terms consumers might want to get familiar with:

Affordable Care Act — The most common formal name for the health care law. Its full title is the Patient Protection and Affordable Care Act. Opponents still deride the law as “Obamacare,” but Obama himself has embraced that term, saying it shows he cares.

Employer mandate — A federal requirement that companies with 50 or more workers pay a penalty to the government if one of their workers obtains taxpayer subsidized coverage through the law. Delayed one year to Jan. 1, 2015. Intended to keep companies from “dumping” employees into public coverage.

Individual mandate — A federal requirement that virtually everyone in the United States has health insurance, either through an employer, a government program or by buying his own plan. Effective Jan. 1, 2014. Exemptions for financial hardship and religious objections.Does not apply to immigrants living in the U.S. illegally. People who ignore the mandate will face fines from Internal Revenue Service.

Essential health benefits — Basic health benefits that most health insurance plans will have to cover starting in 2014. They include office visits, emergency services, hospitalization, rehab care, mental health and substance abuse treatment, prescriptions, lab tests, prevention, maternal and newborn care, and pediatric care.

Marketplaces — Online health insurance markets in each state where consumers can get private health insurance, subsidized by the government. They used to be called “exchanges,” but the feds decided that was too confusing and started calling them “marketplaces.” Still, some states stuck with the original name. Open enrollment starts Oct. 1, and the coverage takes effect Jan. 1, 2014. Fifteen states and Washington, D.C., are running their own marketplaces, according to a tally by The Associated Press. The Obama administration is taking the lead in 35 states, in some cases partnering with the state government. All the marketplaces can be accessed online through healthcare.gov. Small businesses will have their own marketplaces.

Medicaid expansion — The health care law also expands the federal-state safety-net program to cover more low-income people. Medicaid is expected to account for about half the 25 million uninsured people who, the Congressional Budget Office estimates, eventually will gain coverage through the law. The federal government will pay the full cost of the new coverage from 2014-2016, then phase down to 90 percent. Twenty-four states plus Washington, D.C., have accepted the expansion, according to AP’s count. Eight states are still considering it. And 18 have rejected it, including Texas and Florida, which have many uninsured residents. Many adults below the poverty level will remain uninsured in the refusing states. A state can change its decision at any time, but the full federal payment for the expansion is only available through 2016.

Metal levels — The four levels of coverage available through exchange plans, called bronze, silver, gold, and platinum. Bronze plans feature the lowest monthly premiums, but cover only 60 percent of average costs. Platinum plans have higher premiums and cover 90 percent of expected costs.

Pre-existing condition — An ongoing or past health problem. Currently insurers can use pre-existing conditions to deny or restrict coverage, or charge more. Those practices will be barred by federal law starting Jan. 1, 2014, and insurers will have to accept all applicants.

Tax credits — Government health insurance subsidies for individuals will come in the form of tax credits. The money will be paid directly to the consumer’s health plan, to help cover premiums. The subsidies are on a sliding scale based on income. Each year, people will have to “true up” with the IRS to make sure they got the right amount. People who receive too generous a tax credit may owe money back to the government.

Tax penalty — The fine levied on individuals who disregard the individual insurance mandate. It starts small and gets bigger in subsequent years. In 2014 it’s $95 or 1 percent of taxable income. By 2016, it’s $695 or 2.5 percent of taxable income, whichever is greater. Thereafter it’s adjusted for inflation.

– Associated Press

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