Every day that I wake up and see it’s no longer November 6th, I’m overjoyed. While I’m by no means happy about the result (or the other one), I’m delighted that I no longer want to defriend every 3rd person that shows up on my facebook feed.
“Hm I wasn’t able to change someone’s political opinion by posting the first 10 times? Oh I know, it must’ve been because I didn’t use enough CAPS!” – From worst-selling book, SHOUTING TO WIN PEOPLE OVER.
Half-kidding aside, there’s one thing we have to discuss, and that’s Obamacare (worst anagram ever for Patient Protection and Affordable Care Act.) I’m sure you’re tired of hearing about it, but despite it popping up all over the place lately, do you really understand what it means for patients? If so, congrats: you’re policy-wonkier than this newbie. If not, read and weep (for happy or sad reasons):
1. Undeniably Nice For Patients
I’ll start with the parts I’m happiest about. Removing “cherry-picking” of preexisting conditions has been a long time coming. Surprisingly, a Reuters-Ipsos poll during 2012 indicated “82% favored banning insurance companies from denying coverage to people with pre-existing conditions,” (14) making it by far the single most consensual aspect of the law.
Also great for patients:
Lifetime coverage limits are now banned, young adults can get dependent coverage from their parents up to age 26, and preventative care is covered. For the flipside of these expanded benefits, see: Rising Costs below.
2. Health Insurance State Exchanges
These are state-regulated orgs that buy and sell insurance plans which are guaranteed issue (offered to any person, without regarding health status). This is to prohibit insurance companies from “cherry-picking” based on preexisting conditions. The exchanges will take effect on Jan 1, 2014.
Interestingly, only 13 States and DC have said they’ll offer open exchanges either out of refusal or holding off because of the election. States have the option to create their own exchanges, partner with the federal government in creating exchanges, or use the federal exchange that’s eventually created.
A lawsuit that may very well determine whether this number stays at 13: see Employer Penalties below.
3. Individual Subsidies
“Households with incomes below 400 percent and above 133 percent of the federal poverty line (FPL) who are enrolled in insurance plans offered through the exchanges are eligible for premium assistance financed by the federal government” (1).
Additionally, “those offered insurance at work who have premiums that exceed 9.5% of their income also could qualify to buy insurance on the new markets and get tax breaks to lower their costs” (2).
(Find out how much your subsidy would be here: http://healthreform.kff.org/Subsidycalculator.aspx#incomeAgeTables)
4. Individual Penalties
A thorny part of the law is the “individual mandate” penalty on individuals whom do not purchase insurance, although this is understandably more offensive to relatively-young, healthy folks than the patient population.
“In 2014, the annual penalty will be $95 per adult and $47.50 per child, up to a family maximum of $285 or 1 percent of family income, whichever is greater” (6).
But if you’re insistent on forgoing health insurance, there are a few ways to escape this penalty:
“Using 2010 rules, (you would not be penalized if you have) less than $9,350 for an individual and $18,700 for a family” (3). “Higher-earning households may also be exempted from penalties for not buying health insurance if their out-of-pocket cost for private health insurance is more than 8 percent of their taxable income. This amount is for any additional cost after subtracting employer healthcare insurance contributions” (4).
There are a few other exceptions such as if you’re in between jobs, you can go without insurance for 3 months.
5. Individual Tax Shelter Gets Halved
One of the most popular alternatives to counter rising insurance premiums has been Flexible Spending Accounts (FSA). These allowed workers to put money in tax-free so long as they’re spent on certain health care and work-related transit costs. Before Obamacare, the common limit on contribution amount has been $5,000 (although some companies allow more). Obamacare caps it at $2,500.
This account was actually most appealing to chronically-ill patients because you have to spend what you put in; it doesn’t roll over to the next year. Patients have more out-of-pocket costs, so maxing out their contribution is a no-brainer, along with the tax shelter benefits.
Jody Dietel of WageWorks: “Sadly, because you can only use them for health care expenses, the limit is really going to affect those who really need it the most,” she said. “It will hurt people with chronic illnesses, special needs kids, people with autism, so it’s not really a health care friendly policy—it was a revenue grab” (13).
6. Employer Penalties
A huge flashpoint in the law is the penalty on employers of $2,000 per employee (if they have over 30 & under 50 employees, and the employee is eligible for a subsidy — remember this part) if they don’t offer government-qualified insurance plans. The creates the squirmy scenario of small businesses limiting hires and switching full-time positions to part-time to avoid the penalty. But a huge lawsuit is going on in Oklahoma right now which may change everything:
“The text of the law stipulates that only state-based exchanges — not federally run ones — may distribute credits and subsidies” (5.) If this is deemed true, then if states don’t offer a health insurance exchange, employers are no longer on the hook for the $2,000 penalty (since employees can’t be offered subsidies.)
Keep an eye on this one, especially if you’re a small business owner or employee.
7. Prepare For Rising Costs
Let’s boil this next part down to basic economics. Private insurance companies will now have to cover more people (preexisting conditions, dependent coverage up to 26), can’t stop covering them (no lifetime coverage caps), and need to provide more benefits (preventative care.) In short, their costs will rise, and to buffer this, they’ll raise premiums, change reimbursement amounts to doctors, and make other creative cost-cutting moves. Have doubts? Let’s look at the mounting evidence:
Higher Premiums: The non-partisan Congressional Budget Office (CBO) has already issued a statement that individuals’ healthcare premiums will increase (11).
California is one of the states that have gone full speed ahead with setting up the state health insurance exchange. ”Under a new rating map approved by state lawmakers, the Department of lnsurance estimated that premiums for similar coverage could increase as much as 25% in West Los Angeles, 22% in the Sacramento area and nearly 13% in Orange County” (7).
Less Doctor Reimbursement: Blue Shield recently announced: “Anticipating an influx of new customers, Blue Shield of California….providers will get lower reimbursement but will get access to more patients” (8). In other words, Doctors will be forced to see more patients and make visits shorter to make what they’re making now. A good history lesson: “A paper by the CMS Actuary found that when Medicare decreased its prices in the mid-1990s, specialists on average increased the volume of their services 31%” (8).
It’s simple economics. If you want to move to the front of the line, bring cash.
8. $716 Billion in Medicare Cuts
These cuts will be largely in the form of lower hospital reimbursement rates and the removal of Medicare Advantage, the very popular alternative to original Medicare due to its offering of a wider array of drug benefits than original Medicare (10). However, Medicare Prescription Part D offers many of the same drug benefits and Obamacare is actually fixing one of its biggest flaws, the coverage doughnut hole:
“The Affordable Care Act would gradually increase coverage within the doughnut hole, so that it’s actually closed by 2020. According to the Department of Health and Human Services, seniors who fell into the doughnut hole saved an average of $641 in the first eight months of 2012. (15).
Similar to Rising Costs above, these cuts will be felt by patients in the form of fewer hospitals and doctors taking Medicare due to lower reimbursement.
9. Finally, Lots More Medicaid
The funding for Medicare Advantage is being transfer to an expansion of Medicaid to cover anyone with an annual income of up to 138% of the poverty level, about $15,42 per year for an individual (9). Unfortunately, states can opt out of this expansion due to the Supreme Court Ruling, so check with your state if this applies.