Photo Credit James Montgomery Flagg
It is hard to quantify what the Supreme Court upholding the largest piece of legislation passed in our lifetime is going to mean for all of us. There are innumerable variables to consider, and questions will remain years from now. The Affordable Care Act (ACA), commonly called Obamacare, will have an impact on all of us, so here are a few things to watch closely.
The law takes a bold step addressing a fundamental problem in our country – the fact the American health care system is in need of serious reform. America spends $6,500 per person on health care, and has sub-par outcomes compared to other industrialized nations. Whether this legislation is the right answer remains to be seen. But it is a step forward, and it is expected to cover almost 32 million individuals without health insurance if fully implemented. Health policy is based on three main themes- access, cost and quality. This legislation addresses mostly access, but some cost and quality provisions do exist.
Locally, tens of thousands will have access to health insurance. Those with pre-existing conditions can get coverage beginning in 2014. Younger Americans can stay on a parents plan until 26, senior citizens get help with the Medicare “doughnut hole,” and the list goes on.
While there are good things in the law, and there have been troubling reports for the 160 million of us carrying insurance through our employers. Experts predict up to one-third could lose this coverage if health care costs continue to rise, which they anticipate will rise at around 7% per year, and this has been happening for some time now.
Employers are seeing their margins squeezed by the rising cost of health care. This might be why you have not seen a raise lately. There is not enough money to offset the rising cost of health insurance premiums, and unfortunately it means less-take home pay for employees.
Employers may opt to drop coverage all together, and pay the penalty because it is about half the price of the cost of the average insurance premium. Individuals losing coverage from their employer will have to obtain their own insurance policy through a health insurance exchange or face a penalty enforced through the tax code.
Subsidies are available to help individuals who make below $42,000 per year, and families of four making less than $88,000 per year afford their premiums. Subsidies benefit those who cannot afford health insurance, but are troublesome for taxpayers collectively because they will be expensive if we are unable to bend the cost curve. One point to remember, at the end of the day somebody has to pay for it. The law is 2,700 pages, but about 90 percent of the cost comes from the first two titles, with public subsidies being the most expensive part of the bill.
A health insurance exchange will become a regular part of your vocabulary. Similar to an online shopping mall, and comparable to websites you use to book an airline ticket like Orbitz.com and Travelocity, exchanges will be set up for individuals, and small businesses to purchase coverage. The Affordable Care Act is in the third year of implementation, and one of the biggest challenges for state governments right now is what to do about setting up these health insurance exchanges.
Exchanges are state based because every state regulates their respective insurance market differently. Federal grant money is available to assist and is available until December 2012. To apply for further grant funding, states must have an infrastructure in place by January of 2013 to qualify. If states miss these deadlines, they have two choices — paying for the exchange on their own or ceding control to the federal government. According to the Lincoln Journal Star, Heinemann isn’t ready to build one “in light of what could happen with upcoming votes in Congress and the November election”
The Medicaid expansion is important to many in the metro, as well as those in rural areas without insurance. These individuals would have accesss to coverage which is beneficial to us collectively because many of these individuals are seeking care in emergency rooms which is much more costly, and those costs are passed on to those with private insurance through what is called cost-shifting.
About half the cost of the Affordable Care Act comes from expanding Medicaid to cover low-income individuals. This is troublesome for state governments because Medicaid spending is a huge part of their annual budgets. Federal funds are available to help the states with the expansion until 2016, but this help gradually phases over time presenting long-range cost problems. The Supreme Court ruled States could opt out of the Medicaid expansion, and not lose existing federal funding.
Many Republican governors plan to ignore the Medicaid expansion, and this will hurt individuals from lower incomes who makeup a disproportionate number of uninsured Americans. Many who were expecting to be covered under this law, may now see their new coverage in jeopardy because of the ruling.
Decades of poor management have left the United States government in tough financial shape, and both political parties share the blame. The number one driver of our debt is the rising cost of health care. We have an opportunity locally to make positive change, and that may be what it will ultimately take with all of the uncertainty in Washington. Remember we are the nation that landed on the moon, and while reforming health care may seem like a comparable feat, it is something we can and will have to come together to do.
Share ideas on fixing health care on 1110 KFAB radio with “America’s Healthcare Challenge with Sean McGuire,” airing Saturday’s from 10-11 AM and online at healthreformexplained.com.