Starting on October 1, 2013, people will be able to sign up for health insurance through the state run exchanges. I have been seeing an increased number of commercials advertising the exchanges. They imply that ObamaCare and the exchanges are Health Care. When actually ObamaCare:
- regulates the Insurance Industry
- requires nearly everyone to sign up for health insurance
- attempts to expand subsidies and assistance for people to afford health insurance
As mentioned in a previous post the definition of Health Care is the diagnosis, treatment, prevention of disease, illness, injury, and other physical and mental impairments. ObamaCare does not directly provide health care to anyone. It does however regulate the health insurance industry and as a concession for some of the features that cost health insurance companies more money, it requires the majority of people to sign up for health insurance. That has been considered a key point to the legislation.
As always with health insurance the premiums paid by those who use very little health care services offset the cost of those who use a lot of health care. With the provision that health insurance companies now must cover all consumers regardless of pre-existing condition premiums would rise and people would drop out of the market. Unless there was a provision, requiring most people to purchase health insurance. Thereby, supposedly stabilizing the market by providing health insurance companies with more consumers and driving down costs. The exchanges were also supposed to draw health insurance carriers to them in order to provide more competition and thereby the cost of premiums on the individual market would be lower.
One way to encourage people to sign up was to institute a fee for lack of coverage. The fee in 2014 is 1% of yearly income or $95 per adult person, whichever is higher. In 2016, it goes to 2.5% of income or $695 per person. Not everyone is required to sign up for ObamaCare. American citizens who are exempt from paying the non-compliance fee:
- are determined to have a very low income and coverage is unaffordable
- are not required to file a tax return because their income is too low
- would qualify under Medicaid, but their state isn’t expanding Medicaid
- are a member of a federally recognized Indian Tribe
- participate in a health care sharing ministry
- a member of a recognized religious sect with religious objections to health insurance
Back in 1993 when Washington State enacted reforms similar to the healthcare reform Hillary Clinton proposed including that insurance carriers couldn’t deny health insurance because of pre-existing conditions. Insurance rates on the individual market rose by 78% over three years and coverage fell by 25%, and some insurers left the market completely. The market only stabilized when lawmakers changed the law and among other things moved the riskiest individuals to a Washington State Insurance Pool. Similar situations were seen in other states that made similar moves.
When the exchanges open in October 2013 there are some markets in the U.S. that will not have more than a few insurance companies offering plans. In some markets, few insurance carriers applied, approved, or they dropped out of the insurance exchange for the individual markets. There have been reports that indicate that for the individual market, once subsidies are taken into account, they should have better coverage for less; depending on the coverage option picked. While other studies indicate just the opposite and claim that rates for the individual market will significantly rise.
One of the important parts of the plan is to get healthy people to sign up for the individual market. To make it more affordable and as incentive there are tax credits and subsidies; and there is a fine if someone who can pay for health insurance doesn’t sign up. The tax credits, available through the exchanges, only go up to people with incomes up to 400% the federal poverty level. The law also caps the out of pocket expenses for covered care at $6,350 for singles and $12,700 for families. People still have to pay premiums, deductibles, co-pays, out of pocket maximums, and coinsurance rates.
With the importance of getting more people to sign up for health insurance, Medicaid was expanded to 133% poverty. The Medicaid expansion puts more people onto the state insurance for low-income workers or the unemployed. As part of Obamacare doctors who treat those covered by Medicare are expected to see pay raises, for two years. This is so doctors won’t drop the program and so others will start accepting Medicaid patients. Therefore, while it is mandatory for the majority of people to have health insurance no part of the law required all doctors to accept Medicaid patients.
Part of the expansion of Medicaid assumed that all states would expand coverage and take advantage of the Federal money available. Obamacare then reduced reimbursements to what are considered “disproportionate share hospitals” those that mostly serve the poor and uninsured. The belief being that once on Medicaid the patients would be able to afford the payments, and therefore the federal money to those hospitals wasn’t required at the level it had been. Unfortunately, in states where Medicaid wasn’t expanded hospitals that fall into this category could face bankruptcy. At least one in North Carolina has stated that they will close down in six months.
Corporations have been making the news with stories of how they are cutting back workers hours, delaying hiring, changed how they classify jobs, and how they are dropping spouses from coverage. Part of the reason is that for the health care law the definition of a full time worker is 30 hours a week, not 40. It also keeps employer sponsored health insurance with penalties for companies with more than 50 employees who don’t offer minimum essential coverage policies. ObamaCare does not require employers cover spouses of their employees. The law requires employers cover the employee and their dependents only. Another situation is that the law doesn’t define what “minimum essential coverage” is for employer sponsored plans, as a result it will be possible for large employers to offer bare bones plans, that cover little more than preventative care.
ObamaCare does address some of the practices by Health Insurance agencies including:
- Cannot deny health insurance for pre-existing conditions
- Helps people understand health insurance terms and coverage
- Holds insurance companies responsible for rate increases
- Requires health insurance companies to pay more in health care than administrative costs
- Health Insurance companies can’t cancel coverage because a person gets sick
- Provides free preventative care
- Ends lifetime and yearly dollar limits on coverage
- Guarantees your right to appeal
- Lets kids stay on parents health plans until 26
However, it also still leaves gaps and holes in policy that can be exploited by companies and does not address other insurance and health care concerns.
Health Care is not the same as Health Insurance (http://roseylinn.wordpress.com/2012/09/06/health-care-is-not-the-same-as-health-insurance/)
Health Care (http://en.wikipedia.org/wiki/Health_care)
What if someone doesn’t have health coverage in 2014 (https://www.healthcare.gov/what-if-someone-doesnt-have-health-coverage-in-2014/)
Guaranteed Issue Provision Backgrounder (http://blog.law.cornell.edu/healthcarecases/guaranteed-issue-provision/)
Patient Protection Act Final Sec. 4980H. Shared Responsibility for Employers Regarding Health Coverage (http://www.govtrack.us/congress/bills/111/hr3590/text)
Major New Study on ObamaCare Premiums Should End the “Rate Shock” Hysteria Once and For All (http://thinkprogress.org/health/2013/09/05/2575601/obamacare-premiums-expected-kaiser/)
North Carolina Hospital Will Shut Down in Six Months Because the State Won’t Expand Medicaid (http://thinkprogress.org/health/2013/09/06/2583771/north-carolina-hospital-shut-obamacare-medicaid/)
Why Health Laws Essential Coverage Might Mean Bare Bones (http://www.kaiserhealthnews.org/Stories/2013/August/26/essential-benefits-bare-bones-health-insurance.aspx)
How does the health care law protect me? (https://www.healthcare.gov/how-does-the-health-care-law-protect-me/)