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Jacques Chambers, CLU,
Posted April 19, 2012
In what has lingered longer than some soap operas, the fate of the Affordable Care Act (often derisively called Obamacare, but hereinafter called AFA) is still unknown and may not be until at least this summer.
The law itself is complicated and sometimes difficult to comprehend, partially because it tries to address so many issues that are problems in the current healthcare delivery system. It is even more complicated because it has tried to be a compromise of the two primary goals: to make health insurance available to all since everyone is or will be the user of health care and allowing individual choices from a variety of plans; yet it also avoids eliminating private health insurers’ roles in healthcare and moving to a very politically unpopular single payer system such as one national health plan.
A huge, multipronged law passed in 2010 in an attempt to rein in rapidly rising healthcare costs and provide coverage to the great number of uninsured people, it is now being reviewed by the US Supreme Court. Their job is to determine the constitutionality of the law to decide if it can go into effect as passed. Expected to announce their decision in late June of this year, the Court may say the law is constitutional; they may strike down the entire law, which will complicate matters since parts of it have already gone into effect; or, they may determine that parts of the law are constitutional and other parts are not.
No one knows the outcome of this review, and that includes the pundits who try to interpret every question and reaction of each Supreme Court justice during oral arguments. While we are waiting for their decision, it provides an opportunity to review the breadth of this massive legislation and how the healthcare and health insurance markets would be affected by it assuming it does continue to go into effect.
Of course, the most important and the most debated feature of the law is the mandate that everyone must purchase health insurance or pay a penalty. There will be subsidies to assist in the payment of the insurance premiums for many. Based on this year’s Federal Poverty Levels, a family of four with an income up to $92,050 would be eligible for these subsidies. Medicaid will also be greatly expanded to include low-income people without the current requirement of being a single household with children, disability, or old age. Under the AFA, only low income is required to be eligible for Medicaid.
This mandate is attacked by some as going beyond anything the federal government has ever done, that is, forcing people to buy something they may not want. This is an interesting argument since every working person is “forced” to pay into Social Security through payroll F.I.C.A. taxes. Social Security retirement benefits are essentially a type of “annuity” workers are forced to buy, and workers are also “mandated” to pay MedFICA taxes which is simply pre-payment for Medicare, itself a health plan, at retirement or disability.
In return for requiring people to purchase health insurance, the law requires the insurance industry to sell anyone a health insurance policy, regardless of their health history, medical condition, or any pre-existing conditions. However, if the mandate to buy insurance is struck down, then the insurance industry can’t be saddled with letting everyone in when they want as too many will wait until they are ill to purchase it. Guaranteed issue health insurance without a mandate to purchase will simply guarantee that premium rates will skyrocket as only “ill” persons flock to coverage.
Beyond these two features, however, there is a host of other provisions in the law, many of which have already taken effect and will be lost if the entire law is ruled unconstitutional.
Already in effect are provisions that:
Dependents are eligible to remain on their parents’ policies to the age of 26.
Working mothers who are nursing must be permitted to take reasonable breaks to collect milk and must be provided a private place other than a bathroom to do so.
There is a 10% tax on the use of tanning booths to discourage their use due to their being carcinogenic, and a prohibition on their use by minors.
Most health plans, other than a few “grandfathered” plans no longer have annual or lifetime dollar limits, and certain preventive services, such as mammograms, colonoscopies, vaccinations, and physical exams, must be provided without deductible or co-payment by the insured.
Children must be added to their parents’ health policy regardless of their pre-existing conditions.
Persons who have been without health insurance at least six months and are otherwise uninsurable due to pre-existing conditions are eligible to enroll in a Pre-Existing Conditions Health Plans (PCIPs) established in all states.
Although already in effect, but currently without regulations to enforce them, major chain restaurants with 20 or more locations would be required to list the calorie content of each item on the menu and make additional nutritional information such as fat, sodium, cholesterol, sugar, etc., available in writing upon request.
Small employers (under 100 employees) are eligible for grants to encourage wellness among employees. They will become available for larger groups in 2014, and discounts to health insurance premiums will be available for people participating in these programs.
Beginning in September, 2012, insurers and health plans must provide easy to read and understand information about benefits and the plan in a standard format with a glossary of terms, making it easy to compare various plans as well as to understand the plan you are enrolled in.
Also, later in 2012, insurance companies will be required to pay rebates if they fail to spend at least 80% of premium income on direct medical costs thus allowing only 20% to be spent on operating costs.
Government health programs, both Medicare and Medicaid, will also be affected. As mentioned earlier, Medicaid will be expanded and available to anyone earning less than 133% of the Federal Poverty Level beginning in 2014.
Medicare will also be somewhat affected. In addition to providing full coverage for preventive services as with private insurance plans, the “donut” hole in Medicare prescription coverage is slowly being reduced; it will be entirely gone in 2020, and then the basic drug coverage will continue up to where the Catastrophic Coverage takes effect.
Also, Medicare will test several pilot programs aimed to slow the rise in healthcare costs. “Medical homes” will be created where teams of doctors and other healthcare providers will work together to better coordinate care and reduce hospital stays for patients with chronic conditions. “Accountable Care Organizations (ACOs)” are being set up to similarly encourage medical teams to better coordinate patient care with the ability of receiving bonuses if successful at keeping patients healthy.
Still to come in 2014 are insurance “exchanges” in each state where people shopping for coverage, individuals, families, or small employers can compare health plan options and enroll in them directly. Also enrollment in health plans will be simplified making it easier to join the plan of your choice.
In 2014, the Physician Payment Sunshine Act will take effect. It will require pharmaceutical, durable medical equipment, and medical supply companies to report annually all payments or gifts of value to physicians and hospitals. This includes payment for items such as speaking or consulting fees, meals or travel. This would all be available for consumers to review on a public website.
No one knows for sure exactly what will come as the result of the Supreme Court’s decision. Most people on both sides of the argument at least agree that the current system of healthcare and its payment mechanisms are unsustainable.
Costs are rising too fast. Insurance premiums are rising even faster. More people are going without coverage, creating an ever growing burden on emergency rooms being used for routine medical care as well as government funded clinics and non-profit free clinics.
It is unfortunate that this comes at a time when the federal government, especially Congress, is bogged down with disagreements and infighting which has made this law something of a political football. We can’t continue with the healthcare delivery system we currently have and, if ACA is thrown out, something new will almost certainly have to take its place, but what it will be is a complete unknown.
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[Jacques Chambers, CLU, and his company, Chambers Benefits Consulting, have over 35 years of experience in health, life and disability insurance and Social Security disability benefits. For the past twelve years, he has been assisting people with their rights, problems, and other issues concerning benefits and disability. He can be reached at email@example.com or through his website at: http://www.helpwithbenefits.com.]
Copyright April 2012 – Hepatitis C Support Project - All Rights Reserved. Permission to reprint is granted and encouraged with credit to the Hepatitis C Support Project.
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