The Affordable Care Act Part III: Fixing a Broken System

[TexasTowelie]

By Dr. Brian Carr
President, Behavioral Health Associates, Lubbock, Texas, 1991-Present
Chairman, City of Lubbock Board of Health, 2013
Submitted on September 5, 2013 - 7:10am

Having spent 27 years operating a private practice in healthcare I am well aware of how the current system is broken. On the one hand we see a massive overutilization of services that increase health costs while at the same time the number of our citizens who are lacking any form of healthcare coverage is exploding. As discussed in an article on The Washington Post prices are greatly varied and consumers are blind to actual cost…or any competition. The one goal of reducing the number of uninsured Americans is critical at this time

The number of uninsured Americans has grown at an alarming rate in recent years. In 2000 about 38 million Americans were uninsured. With the recent economic downturn that number has spited to 50 million by 2010-a 32% increase compared to a decade ago.

While bringing anger and disdain to the discussion the individual mandate is a central component of the ACA. This forced participation is necessary to make the reforms possible.

In states that have attempted universal coverage the program failed because people were free to opt out. When Mitt Romney established an individual mandate for health insurance in Massachusetts it worked like a charm, increasing the number of insured in that state to 97% , the highest level of any state in the country.

By adding as many as 30 million of the uninsured into the healthcare system, the nation’s insurance “risk pool” is dramatically strengthened. A large influx of healthy Americans (The group with the lowest risk) creates a much more balanced system than the current one. The goal is to spread risk across a large pool of citizens so that costs are shared.

The individual mandate is unquestionably a coercive stick but there are also a perks. These perks come in the form of assistance from the federal government to help low-income Americans obtain health insurance and tax credits that give small businesses a financial incentive to offer health insurance to their employees.

An equalization of shared risk means that we move from a model where each states sets its own income level for qualification for Medicaid to one that is standardized across the country. Millions of Americans will qualify for Medicaid because the income threshold to qualify will be raised in 2014 to 133% of the federal poverty line ($29,327 for a family of four in 2010) in most states in the country

For those citizens whose earning level is above that needed to qualify for Medicaid they will be eligible for federal assistance in order to pay for health coverage. The threshold for this assistance is targeted to those who fail to qualify for Medicaid and who earn below 400 percent of the federal poverty line ($88,200 for a family of four in 2010). The health exchanges under the ACA will begin operating in 2014. The subsidized exchanges are projected to decrease the number of uninsured by 16 million people by 2019.

Those with an income up to 133 percent of the federal poverty line (or $29,327 for a family of four in 2010) will be eligible for Medicaid. Those with an income between 133 percent and 400 percent of the poverty line ($88,200 for a family of four in 2010) will be able to get financial assistance from the government to buy healthcare coverage on their state’s exchange. Those with an income above 400 percent of the poverty line will still be able to buy coverage through their state’s exchange, but they’ll be ineligible for government financial assistance. For this group the exchanges will provide an opportunity to obtain insurance that may not have been possible before due to pre-existing conditions or other exclusions.

Although it seems unprecedented for the government to force Americans to buy a particular service or product, there are many examples of government compelling its citizens to behave in certain ways for their own health and safety. The law requiring drivers to wear seat belts is just one example.

If you’re worried about being criminally prosecuted and put in jail for not getting health insurance under the ACA, don’t be.

If you do not obtain health insurance you will pay a fine. The amount of the fee will depend on the year it’s incurred. The individual mandate takes effect in 2014 and you will have to pay either a flat fee of $95 or 1 percent of your income up to a maximum of $285. You will have to pay whichever amount is higher in your case.

After this launch the penalty will grow until it reaches a ceiling in 2016-a flat fee of $695 or 2.5 percent of your income up to a maximum of $2085. As in previous years, you will have to pay whichever amount is higher for you.

Keep in mind that only a small fraction of Americans will have to worry about the individual mandate and the penalty that comes with it. If you already have health insurance (that’s 84 out of every 100 of us) you won’t have to pay any penalty since your existing coverage means that you comply with the law.

Of the 37 million who are uninsured in 2010 (not counting 13 million illegal aliens), about 14 million will be able to obtain healthcare coverage without paying anything out of their own pocket by enrolling in Medicaid after its expansion. Another 14 million currently uninsured Americans will be able to receive government financial assistance when they buy coverage through their state’s exchange. The remaining group of uninsured (about 9 million Americans or 3 percent of the population in 2010) will also be able to buy coverage through the exchanges, but they will have to do so without a subsidy.

Under the ACA, the confusing, inconsistent, and arguably unfair mishmash of Medicaid income eligibility levels across the nation disappears and is replaced by a single standard, at least for those states that agree to participate in the planned expansion of the program.

A working parent in Alabama had to make less than $5,515 (25 percent of the poverty level) to qualify for Medicaid. When expanded in 2014, the same working parent could make as much as $29,327 (133 percent of the poverty line for a family of four) and still get in.

In the first three years of the ACA, the federal government will pay for 100 percent of all the “newly eligible” people in Medicaid, with the level reduced to 90 percent by 2020.

The future of the ACA will depend very much on the exchanges.

Tomorrow: The ACA Part IV: Understanding the Health Exchanges

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http://lubbockonline.com/interact/blog-post/dr-brian-carr/2013-09-05/affordable-care-act-part-iii-fixing-broken-system

Cross-posted in Texas Group.