by Craig Klugman, Ph.D.
In case you have not heard, the world is going to end on Tuesday. Like the Y2K bug and Harold Camping’s prophecy of the rapture in May 2011, the political media is predicting the end of modern civilization on October 1, when the Affordable Care Act Health Exchanges begin a 6-month period of signing up participants. The insurance is active on January 1, 2014. Opponents of the law, critically labeled “Obamacare,” are so concerned about the coming apocalypse that they are have voted to repeal the ACA over 40 times and are willing to shut down the federal government. After all, such great evil deserves nothing less than a full frontal attack.
What is there to fear? That most people in the U.S. will pay private companies to purchase health insurance? That a highly competitive free market of insurance plans has been created? That private insurers, doctors, and hospitals have 35 million new customers? Apparently the fear is that the economy will crash when employers stop hiring, companies will cancel their employee health insurance programs forcing employees into the private market, businesses that continue to offer health insurance will fail because of this burden, the stock market will free fall, and cats and dogs living together (homage to Ghostbusters). Not since passage of the New Deal and the Great Society has one-half of the elected government worked so hard to scare the populace to drum up opposition and fear of a law. (If you don’t believe me, check out this anti-ACA video.)
Many parts of the ACA have already gone into effect and are widely popular: Children can stay on their parent’s health insurance until age 26, elimination of lifetime caps, insurance must cover preventive care, companies cannot rescind coverage after-the-fact, cannot deny coverage for pre-existing conditions (children in 2010, adults in 2014), and insurers must spend 80% of premiums on patient care. Some parts of the law slated to come online in 2014 are being pushed to 2015 including the employer mandate and caps on out-of-pocket costs.
In this game of political chicken, one of the two parties in Congress is throwing a temper tantrum that if they don’t get their way, they will just take all of the toys off the table. Congress’s main job is to pass a federal budget each year before the October 1 beginning of the new fiscal year. In recent times, they rarely do this. Instead, they pass continuing resolutions to continue funding the government at some percent of the previous year’s budget. This year, however, the October 1 deadline has added significance since it is the date when people can sign up for the new health care exchanges.
Part of the enormous Affordable Care Act was the creation of state-based health care exchanges. Many people who have health insurance as part of their employment benefits pay a lower rate because they buy into a group plan. Group plans have buying power and thus get better deals for policyholders. But if you work for a small business, are self employed, work part time, or have an employer who does not offer health insurance, then you have to buy an individual policy at far higher rates. For example, before they reached Medicare age, my parents spent $1800 a month on their individual health policy. The goal of the exchanges, is to give this power of group buying to individuals. Insurers offer packages of insurance that people can buy through the exchange.
These new insurance plans fall into 4 levels: Bronze (the least expensive with the fewest benefits), Silver, Gold, and Platinum (highest cost, most benefits). For example, in Illinois, we have 5 insurers offering a total of 58 possible plans. As originally conceived, each state would run an exchange with the few states who opted out, having their exchange run by the federal government. In reality, 14 states and Washington D.C. have state-run exchanges, 10 states have exchanges jointly run by a state-federal partnership, and 26 have federal programs because the state chose not to set up an exchange.
This week, the federal government released premium rates for their programs. The state-run exchanges have pricing on their own websites. As it turns out, most Americans will be saving money.
|Monthly Premium||Family of 4, no subsidies||Family of 4 with subsidies*||Single, no subsidies||Single with susbidies*|
*Subsidies phase out at 400 percent of poverty
Some states have higher and others lower costs. My own state of Illinois has lower costs. There is also great variability on rates within states. Areas with a lot of competition have lower rates than areas with fewer insurers. Here in Chicago, I would pay a lower rate, in general, than people who live downstate in the more rural areas.
All of this is confusing. To assist, states and the federal government have created interactive websites (some features of which will not be ready in time for October 1). Although premium prices have been released, as of September 27 there is no information on copays, percent of covered services, the benefits, or the size and extent of care networks. Another effort is the training of thousands of health care navigators who will help insurance seekers figure out which of the plans is best for them.
The exchanges are important to make sure that every person in the U.S. has insurance covered (although 10 million people will still be left out of the program). Insurance is based on the notion of shared risk—everyone pays into the system but only a few will need to use it every year. This means that many people who pay into the system, do not use the benefit. But when you need the coverage, it is there. Thus, there is a need for young, healthy people to purchase insurance and support those who use coverage. This is also the group least likely to buy insurance and the reason for the “mandate” that all people purchase health insurance. This was the element that went before the U.S. Supreme Court and was upheld. For individuals who refuse to purchase insurance, they will pay a penalty of the greater of either $695 or 2.5 percent of annual income.
Despite the ACA being passed as law and its Constitutionality being upheld by the U.S. Supreme Court, many politicians are still trying to prevent it from existing. The ACA is far from perfect. It still leaves for-profit companies in control of paying for and distributing health care access. It still leaves in place a dizzying patchwork of different companies and rules and programs. If I were philosopher-king, we would have a single-payer system that covers everyone and health care industries would all be not-for-profit (the notion of making money off of people’s suffering is particularly distasteful to me). Given political realities, the ACA represents a good first step in creating a true U.S. health care system, rather than a patchwork of private interests.
In fairness, this is a big, expensive program. Opponents point out that the health subsidies are projected to cost close to a trillion dollars over 10 years. And when we have run away federal budget deficits, adding that much spending is hard to swallow. However, what is often overlooked is the amount of unfunded care that the federal government has traditionally covered. People without insurance wait longer to get medical help and are therefore sicker when they do seek it. And the only place they are guaranteed to be seen by a doctor is the emergency room, where care is very expensive. Newer estimates suggest that nearly 10 percent or $260 billion dollars is spent each year in emergency room care. The Congressional Budget Office has stated that the ACA will save money and reduce the deficit.
Ironically, a government shut down would not derail the ACA and its implementation since the navigators have been labeled as “essential personnel” who are not affected by the impending furloughs. Instead of crying over spilt milk, opponents should eat some humble pie and work to make the new fiscal health care landscape the best it can be to serve the needs of the public. In my mind this is a partial step toward the desired goal of a single-payer system.
Like Y2K and May 2011, the world will still be around and look pretty much the same when we all wake up on October 1 with the exception that large parts of the government are likely to be closed and 35 million more people will have health insurance options than did before.