America,
a country where achieving dreams is a reality and opportunity is always within
grasp. A person works all their life in hopes of one day achieving that dream
when in a moment’s notice, it’s all gone. In the past, one serious medical
problem could be enough to throw away years of hard work saving money to attain
the American Dream. Medical expenses since the dawn of our nation forming have
always been daunting in cost. A remedy to this ailment was for a person to take
preventative action against the possibility of huge medical bills. This
preventative action was and is known as health insurance. Ever since America
has adopted its first health care system with insurance companies, the system
has been changing. The first president to attempt a more blatant and formal
healthcare reform comparable to a single pay system was Theodore Roosevelt. The
idea he held was for Americans to get the care they needed when they needed it.
On that platform he lost, and the next significant changes to the healthcare
system did not come until 1965. It was then that Medicaid and Medicare were
born. These systems worked to help the impoverished and the elderly get health
care for little to no cost. In 1985 the next dramatic changes to the health
care system occurred under the Reagan administration. COBRA became law
protecting employees who received health insurance through their work and were
fired or quit, then leaving them with few options for health insurance.
Although COBRA had a time restraint and was often costly, it offered an option
to prevent lapse in coverage which was important to those who risked being
denied in the future for health insurance due to pre-existing conditions.
Another mark in health care history would be the passing of the State
Comprehensive Health Insurance Plan or SCHIP. This allowed states to run a
health insurance program for children in families making under 200% of the
poverty level in annual income. This plan offered affordable health insurance
coverage for children with substantial benefits as compared to what was
previously available for those children. Most recently, in 2010 Barrack Obama
signed into law the Affordable Care Act, the most comprehensive program so far,
still being changed to this day. With this plan comes a total revamp of health
care coverage and reimbursement as we know it. With the exchanges having opened
October 1st 2013 and the enrollment period ending March 31st 2014 (dates
are subject to change with legislation reform), the whole world is waiting to
see how this system will affect the American people. The ideas behind the
Affordable Care Act (ACA), or Obamacare as most call it, is to do a couple of
things. The first goal is to expand access to ACA insurance through the opening
of the “Marketplace” containing government subsidy eligible plans. The second
goal is to over a course of time, improve the quality of health care services
through a better reimbursing system. Lastly, to increase consumer protection
from a variety of threats seen through the past healthcare system. With the
hope of these goals being reached, the American Dream is thought to be
strengthened as well. The question to ask oneself however is how health care
reform will, if at all, help the American People. Some things to consider is
what is the cost of this system both through taxes and through premiums.
Another question that has many worried is how providers of health care will
respond to different compensation and patient volume. A new concept never seen
before until the reform is the 10 Essential Health Benefits required to be
included in every plan offered. Also, let’s not forget the eagerly awaited
guaranteed issue as well, allowing those who in the past have been denied
coverage due to pre-existing conditions, the ability to purchase insurance with
no discrimination from the insurance company based on their health. That’s not
all that’s changed though, Medicaid has been expanded in states that opt to
implement the new requirement expansion with the idea of offering more
affordable coverage to those who need it. Controversial, health insurance has
now become mandatory as well, with the risk of continual tax penalties if a
purchase is not made. Yes that’s right, the I.R.S is going to be involved with
your health care and insurance. With that, some good does come as those who are
eligible can potentially receive tax subsidies to help pay the premium of their
health insurance policies. Without getting into great detail, the preceding
gives a general outline of what the ACA is going to bring to the American Health
Care System. These dramatic health care system changes will surely prove either
great reward or great lose, but no answer can be truly definite without closer
detail on all aspects of what the ACA does for the American people.
When
assessing the ACA and its effect on Americans, something that cannot be
overlooked is the change in premium amounts. Over the course of history, “insurance
companies have charged premiums to customers based on a slew of demographic and
health information” (DeVito). Under the new ACA, premiums are contingent only
upon a person’s age, zip code, and smoking status. While the list of factors
determining a premium have reduced, the cost has gone up substantially (Wiser).
This is partially to help compensate for those who would have in the past paid
more due to their own high medical costs. With the new way of calculating
premiums, younger healthy citizens are carrying the weight of the older
unhealthy citizen’s healthcare costs via premium increase, “Premiums for plans
in the exchanges will climb in 45 states compared to plans offered in the
individual market before Obamacare’s implementation, according to a study released
Wednesday by the Heritage Foundation” (Wiser). America’s youth are being
burdened with these high cost health insurance plans and are finding themselves
with even worse plans then they had in the past. People are left wondering how
this is at all an Affordable Care Act. A specific instance to give more clarity
to this problem is how “premiums in Arkansas will soar by more than 170 percent
to $285 per month for adults aged 27”. This is a direct example of what these
new plans will be demanding from the youth’s pocket books. Some might ask why
it is that these plans are so expensive for young healthy people and why older unhealthy
citizens don’t bear more of the financial burden, having cost more for medical
care. The answer is in the plans popularity with the public. “Although it is
mandatory to have, most healthy, strapped-for-cash individuals find themselves
still willing to opt out of the plans and pay the tax penalty” (DeVito). By not
having these young and healthy low-cost-high-premium contributors, the people
who are signing up for the plans (those who previously were denied health
insurance due to extensive medical costs) are driving up the costs of the
premiums for everyone. What the ACA needs is the risk pool to be diluted with
as many low-risk people as possible, without low-risk applicants signing up,
premiums for the few that do, will, and will continue to be immense.
With changing premiums, something
growing more common in today’s struggling economy is the now available subsidy
eligible health insurance plans for qualifying persons. What these subsidies do
for a person is essentially cut their premium costs down dramatically based on
their level of income, “Under the Affordable Care Act, if your 2014
income is between 138 and 400 percent of poverty level for your household size,
you can purchase health insurance on a state-run exchange (such as Covered
California) and receive a federal tax subsidy to offset all or part of
your premium” (Pender). All the subsidies are not the same as they vary
based on what your percentage of the poverty line is. Those closest to the 138%
mark will receive the highest subsidy amount and those closer to the 400% will
receive the smallest. Controversy over this new issuing of subsidies to the
public has risen as people are concerned with how these will be paid for. The answer
is very simple “those who make more than 400% of the poverty line will be
paying for it in addition to the new 3.1% tax on health insurance introduced as
well” (DeVito). How is this fair people are asking, the old system had somewhat
low premiums with no subsides at all. Actually, the old health care system
offered tax breaks to employers who provided insurance to their employees
“Government for decades has directly subsidized individuals’ costs of
employer-based health care, to the tune of roughly $250 billion every
year”(Kleinbard). Although premiums may have been lower, nearly 60 million
people found themselves uninsured (Glatter). With that, one must ask themselves
how this new system of subsidizing health insurance is not fair when the old
system only gave subsidies to groups and didn’t offer guaranteed issue
insurance to everyone.
With changes to our healthcare system
that we have never seen before, we are left to wonder how healthcare providers
will be compensated for their services. In the past, a person could have no
health insurance and end up in the E.R. racking up a large bill with no means
to pay for it, “EDs have traditionally carried the
majority of the economic responsibility for uncompensated care” (Glatter).
The result was often that the hospital had to take a loss on that patient and
in-turn led to higher healthcare costs for those that can afford to pay. Under
the ACA millions will be forced to sign up for health insurance allowing for more
reimbursements to healthcare providers. “The
Affordable Care Act is expected to expand insurance coverage to 30 million of
the 60 million uninsured adults in the United States by 2021” (Glatter). With
better reimbursement for hospitals, it is safe to say that healthcare will
improve for patients. A counter argument that has much ground is that those who
were previously not using Medicaid or were not eligible for Medicaid will now
be forced onto it “the Obama health law will grow the Medicaid rolls by
16 million” (Troy). For states that elect to incorporate it, the percentage of
the poverty line eligible for Medicaid has been raised to 138%. With this
influx of people going onto Medicaid the government will be the sole source of
reimbursement to doctors. With that being said, it is still in question what
each state’s Medicaid program will include or exclude with regards to
healthcare services, still then leaving reimbursement for health care in limbo
to hospitals and doctors servicing Medicaid patients. Overall will
reimbursement for health care services increase or decrease? Only time will
tell as the ACA grows into full effect.
Some of the new
implementations that the ACA holds show direct benefit to the public, most
obviously the new 10 Essential Health Benefits. These 10 Essential Benefits
will be included in all plans offered on and off the new healthcare exchanges.
In the past, insurance companies offered a variety of plans that did not always
have the best coverage’s for people. The coverage’s offered through certain
plans then, would now be considered far from adequate for the average person.
“Under the new ACA, the 10 essential benefits must be included in every plan
offered to the public regardless of the company offering it or the state they
are in” (DeVito). These 10 Essential Benefits include: maternity, prescription,
emergency, rehabilitative services, pediatric services, mental and behavioral
health, preventative and wellness services, hospitalization, laboratory
services, and ambulatory services. Now on any plan sold, any person, regardless
of cost and coverage amounts has these 10 Essential Benefits. This allows for
people to get the treatment they need without the concern of it not being
covered at all by their insurance. Some negative responses to these Benefits
have found their origin in the fact that people don’t need every one of the
benefits mandated, so they should not have to be paying the extra premium for
them, “The 10 Essential Benefits, although offering coverage for things that
may not have been covered otherwise, are not always desired by everyone such as
maternity care for men or pediatric services for adults” (DeVito). Taking the
good with the bad, these 10 Essential Benefits may soften the negative
responders when they find themselves directly benefiting from it.
Something never
seen before on a national scale, is the new concept of guaranteed issue adopted
by the ACA. In the past a person might find themselves unable to purchase
insurance based on their own pre-existing conditions. This was troublesome to
many, as they had to bear the brunt of the healthcare costs for their medical
conditions and often suffered financially as result. It did not matter how much
money a person had to purchase insurance, the insurance company could deny them
based on certain pre-existing conditions. The new guaranteed issue is by far
one of the best features of the ACA as it leaves no person uninsured based on
medical history and prevents financial ruin for millions. With this guaranteed
issue insurance, signing people up for health insurance was never easier, “all
that is required to get a premium price is a person’s age, smoking status, and
zip code” (DeVito). In the past, states could implement state healthcare for
those ineligible for private insurance, in Illinois it was called the Illinois
Comprehensive Health Insurance Plan. How this plan worked was simple in
mechanics, “the state-run plan collected high premiums and was not
self-sustaining as a majority of its users took more from the system then they
put in. To offset this loss, a mandate forcing private insurance companies in
the state to pool together a fund to cover the losses was made” (DeVito).
Although this system did accomplish the job in some states, other states did
not adopt this system and in turn lead to financial disparity for its citizens.
With the ACA almost in full effect, Americans will definitely see this
nationwide guaranteed issue as a serious pro towards the new healthcare system,
something much needed based on its other less popular parts.
One of the more
controversial aspects of the ACA is the individual mandate that is vital to the
ACA’s success. With a new healthcare system that grants guaranteed issue along
with subsidies to a large amount of the population (up to 400% of the poverty
line), question to how it will work is sure to surface. Something people are
also not considering is how they will now receive healthcare from their doctors
and hospitals. To understand how that care will be received and how it relates
to the individual mandate, a person must first understand in more depth how
doctor’s contracts with the insurance companies work. The popularity of these
networks with patients is based on the number of doctors available to them in
the networks and the steps to getting care required by the patient. An HMO
network is a more limited network and does not have as many doctors in it. If you
ever need medical treatment you must first see that doctor and only that doctor
can then refer you to other doctors for treatment unless there is a life
threatening emergency, then you may seek care from the nearest medical facility
(DeVito). In a PPO network, often the more popular, a person can change their
primary care physician as they please and have a much larger list of doctors
they are able to see. There are other networks that a company may have but
those two networks are the most common. How these networks relate to the
individual mandate is simple, when the insurance company goes to make
negotiations with the doctors on compensation and patient quantity estimates, a
huge bargaining chip is that everyone will be required to have health insurance,
this is enticing to doctors as it means more patients and more money, with the
insurance companies well aware of what the doctors stand to gain, they are able
to negotiate the doctors to take less compensation in exchange for more
patients (DeVito). By taking less compensation these doctors are placed in
networks made by the insurance companies that can be much more affordable to
the populous. This affordability that has now been created helps offset the
massive increase in premiums thanks to the guaranteed issue allowing
pre-existing condition patients onto the insurance and mass subsidy issuance.
For that reason along with better reimbursement for hospitals on patients who
once had no insurance, makes the individual mandate vital to the ACA’s success.
The one concern many have had with this
mandate however is that if a person does not sign up with a special government
approved health insurance plan, they will be kicked off of their old insurance
or tax penalized, “What the president said and what everybody said all
along is that there are going to be changes brought about by the Affordable
Care Act to create minimum standards of coverage” (Crawford). Millions of
Americans were happy with their plans and did not want to see a change to them,
but the government has made it mandatory that all the plans offered must have
minimum standards of coverage, these standards are often not found in almost
all of the old plans people currently have, thus making those plans ineligible
to be renewed. More recently, “President Obama has allowed individual’s to stay
on their old plans for one more year, but as of January 1st, 2015,
they must be on an ACA approved plan” (DeVito). Although beneficial for the new
healthcare system, “millions of Americans who are not subsidy eligible and who
had insurance in the past are not happy with having to change their plans to
higher deductibles while paying more” (Wiser).
With
the ACA growing into full effect, all of its bits and pieces are slowly being
exposed. As each bit of the plan is exposed to the public, there have been
instances of mass disapproval and eventual reactive endorsements to the plan as
well as some excitement and acceptance. That being said, nothing is set in
stone. In the past, movements have been made that have scared people and even
led people to believe that the world would change for the worst, civil rights
movement, creation of democratic governments, the American Revolution, etc.
After all was said and done however, almost all of those events that required dramatic
change to a way of life, did eventually lead to progression and positive
outcome. That is not to say that they didn’t come at a price, but in the end,
the ACA, like other historical reformations, will hopefully lead to a positive
outcome for the American people.
Michael F
DeVito II is Vice President of Sales and a Licensed Insurance Broker in all
Lines of Insurance at MyInsuranceGuy 407 West State Street Sycamore, Illinois. MyInsuranceGuy
is a family owned and operated Insurance Brokerage with a family heritage of
over 75 years in the Insurance Industry. Please address all comments to michaelfdevito@myinsuranceguy.com
or 815-239-6235 www.myinsuranceguy.com
Bibliography
Backer, Benji. “Obamacare’s Negative Impact on Young
People | FreedomWorks.”Obamacare’s Negative Impact on Young People |
FreedomWorks. Freedom Works, 11 Oct. 2013. Web. 05 Nov. 2013.
Crawford, Jan. “Obamacare: More than 2 Million People
Getting Booted from Existing Health Insurance Plans.” CBSNews. CBS Interactive, 29
Oct. 2013. Web. 06 Nov. 2013.
DeVito, Michael. “How Is the Affordable Care Act a Good
Thing for the American People?” Personal interview. 06 Nov. 2013.
Glatter, MD, Robert. “Can The Affordable Care Act
Reverse The Long Standing Trend In Uncompensated Care In Emergency
Departments?” Forbes.
Forbes Magazine, 29 Oct. 2013. Web. 05 Nov. 2013.
Kleinbard, Edward. “The Huge Health-care Subsidy
Everyone Is Ignoring.”www.washingtonpost.com. Washingtonpost, 15
Oct. 2013. Web. 06 Nov. 2013.
Pender, Kathleen. “Lower 2014 Income Can Net Huge Health
Care Subsidy.” SFGate.
SFGate, 12 Oct. 2013. Web. 06 Nov. 2013.
Troy,
Tevi. “How The Affordable Care Act Will Affect Doctors | The Health Care
Blog.”How The Affordable Care Act Will Affect Doctors | The Health Care
Blog. The Health Care Blog, 15 June 2012. Web. 29 Oct. 2013.
Wiser, Daniel. “Washington Free Beacon.” Washington Free Beacon Obamacare
Raising Premiums Hurting Middle Lower Class Comments. The Washington Free
Beacon, 21 Oct. 2013. Web. 05 Nov. 2013.
Click Here To Submit A News Tip Or Story