Affordable Care Act Primer

Yesterday, on Facebook, I posted a little comment about my experiences at the "Open Enrollment Heath Fair" sponsored by my county here in California.  In part, I noted that:
"...as I walked around the Fair talking to the health insurers, I saw that the premium for our county's most-popular plan is DOWN 15.64% this year. The 2nd-most popular plan is DOWN 16.88% and a 3rd is DOWN 35.7%!! Only two plans saw increases, one a significant 31% and the other a more modest 9%. The two others...unchanged. 
I asked the reps what gives with the rate drops, and each one said they were a consequence of the Affordable Care Act."
Well, this visit to the fair prompted a lot of questions from people wondering what else I had learned about how this new way of looking at health care coverage -- admittedly a bit overwhelming and perhaps a lot scary -- will work.  Now, I'm no expert by any means -- and experts please correct me experts if I get something wrong, but I think I have this thing boiled down to its barest essence.

1) Since I already get my insurance through my employer, nothing substantive will change, except for the above noted reductions in premiums and an expansion in coverage that includes (as required by the ACA) free preventive care, a cap in annual out-of-pocket expenses and no lifetime cap on the amount of coverage I can receive. Hey! Those are all good things! Bottom line, if you work for a large employer (>50 people) with an existing company health plan you'll see little change, save for the positives noted above.

2) If you are a small business (fewer than 50 employees), you are not required to offer your employees company-based insurance plan.  This is an important point, as it is one of the most strident arguments against the ACA that you will hear, i.e. "Obamacare is going to strangle small businesses!!"  From what I was able to gather, small business owners are encouraged -- but not required -- to join what's called the Small Business Health Options Program (SHOP), which offers a raft of resources aimed at helping employers to help their employees get health coverage.  The incentive? A "small business health care tax credit" that could be worth up to 50% of the cost of the coverage the employer chooses to provide.  More information on the SHOP Marketplace can be found here.

As mentioned, small business are not required to join the SHOP market.  What happens to employees who work for firms who don't join?  They will be able to acquire their own health coverage at "Health Insurance Marketplaces," which are run by, depending on where you live, your state or the federal government.

The Health Insurance Exchanges are the place to go if you are an individual or family that buys your own coverage outside of an employer-based plan.  These exchanges offer a three-tiered plan structure (known as "Gold," "Silver" and "Bronze"), with varying levels of coverage (generally 80%, 70%, 60% of costs, respectively).  The plans are still offered by the same insurance companies you're used to dealing with (Kaiser, Anthem, Aetna etc...), but because the government is now requiring all Americans to have insurance, it is also offering tax credits to help offset the cost. By my way of thinking, this is the key component of the Affordable Care Act.  In some instances, the tax credit itself will cover the entire cost of the annual health insurance premium.

There are a couple of sites that have ACA Calculators that may make this more clear.  An easy one that I found was at the NBC News webpage.  I ran a few test scenarios I'll detail below, but you can easily click through to the "Calculate Your Costs" page to enter your own specific information to see how you'll fare.  Here's how various individuals would be impacted:

Silver plan (pays 70% of costs): Premium $6097/yr, less tax credit of $4298/yr = premium cost: $1799/yr ($150/mo).
Bronze Plan (pays 60%) :  Premium after tax credit = $206/yr or $17/mo 

Silver plan: Premium $2,877/yr, no tax credit ($239.75/mo)
Bronze plan: Premium $2385/yr, no credit ($198/mo)

Silver: Premium $10,843, less tax credit $5930 = $4913/yr ($409.42/mo)
Bronze: Premium after tax credit = $3057/yr or $254.75/mo.

Silver: Premium $11,188, less tax credit $4671 = $6517/yr ($543/mo)
Bronze: Premium after tax credit = $4602/yr or $383.50/mo

Silver: Premium $5070/yr, less tax credit $3942 = $1129/yr ($94/mo).
Bronze: Premium after tax credit = $261/yr or $21.75/mo.

Silver: Premium $3098/yr, less tax credit of $2077 = $1021/yr ($85/mo)
Bronze: Premium after tax credit = $491/yr or $41/mo.

Silver: Premium $11,751/yr, no tax credit, $979.25/mo.
Brone: $9739/yr or $811.58/mo.

The sticker shock, of course, falls squarely on the shoulders of those who have chosen, until now and for whatever reason, not to buy health insurance.  These are the people who are feeling overburdened by the ACA's requirement that they purchase insurance or face a penalty.  

The logic behind the requirement (it's known as the "individual mandate") is that one of the reasons health care premiums have climbed so high over the past decade or more is that too many "healthy people" are opting out of the system.  This leaves insurance companies with a pool of sick people drawing resources out of the system, and not enough healthy contributors putting money in.

In some ways, the "individual mandate" is the linchpin of the entire ACA, because it compels generally healthy individuals to contribute to the program [I know...socialism...the horrah!]  Fear not, however, rugged individualists and helmet-less motorcycle riders, you have the option of purchasing a "catastrophic care plan," which has much lower premiums than the Gold, Silver or Bronze plans. If that's still not good enough for freedom-loving cliff-divers, you  can opt out of the Affordable Care Act altogether.  There is a penalty though, and while it is relatively modest in the initial years of the ACA ($95 per person per year in 2014), it could climb to as much as $685 per person per year in 2016.

When I look at these numbers they appear daunting, but one has to view them in comparison to one's present situation, what with steadily rising premiums, increasing deductibles and shrinking benefits. 

The fact is, this is program, the Affordable Care Act, a good first step.  And that's all it is.

I still firmly believe we'd be better off with universal, single-payer health care -- like 90% of the rest of the civilized world -- and I fervently hope that 3 to 5 years down the line, when the previously uninsured are getting the care they need and the previously [and still] insured realize things are a whole lot better than the naysayers predicted they would be, we'll take another few tenuous steps toward a health care delivery system predicated more on bettering the health of the patient rather than the portfolios of CEOs and stockholders.

Obamacare: "It's the F*cking law!

In California go to Covered California.

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