Why the Insurance Industry Embraced Obamacare

Why the Insurance Industry Embraced Obamacare

With so much controversy surrounding the Affordable Health Care Act, many are confused about the overwhelming support the insurance industry afforded Obamacare.

ObamacareThere are three major reasons insurance companies supported the Act.

It gave them an estimated 30 million new customers, placed no caps on the cost of polices, and gave them more control over all aspects of the health insurance market.

More Customers

Despite assertions to the contrary, insurance companies found much to like in Obamacare. It opened the doors for 30 to 50 million new patients, all of which are required by law to purchase insurance or pay a fine.

Individual Mandate Tax

Obamacare penalizes those who don’t purchase insurance with the Individual Mandate Tax (IMT). Insurance industry officials believe the IMT is beneficial and ensures most will purchase a policy rather than pay the fine. It’s a win-win situation for insurance companies.

If consumers purchase a policy, it’s more money in the coffers of insurers.

Revenues from those who choose to pay the fine goes toward subsidies from the federal government to help people pay for Marketplace policies, which still goes to insurers.

No Price Controls

Obamacare places no limits on how much insurance carriers can charge for policies and there’s no accountability.

Insurers claim the cost of plans under Obamacare will rely largely on the number of young people that participate in the Marketplace, yet insurance companies have already increased co-pays, deductibles and premiums on many employer-provided policies for individuals that won’t even be purchasing through the Marketplace.

Industry officials indicate that if people choose to pay the IMT rather than purchase health insurance, costs will increase.

The industry can charge as much it wants and blame rising costs on provisions in Obamacare, primary of which is the ability to keep children on their parent’s policies until they’re 26 and the inability to refuse coverage to those with pre-existing conditions.

Government Subsidies

The Healthcare Marketplace was established to provide consumers with “affordable” insurance options, but affordable doesn’t mean cheap. It’s a relative term for consumers and is based on a government formula.

If Marketplace plans prove to be too expensive, Obamacare provides individuals with government subsidies to help them pay for their policies.

Insurance Monopolies

No insurance company will be required to participate in the Marketplace and many have indicated they won’t. The refusal to participate in the Marketplace will effectively create monopolies in some areas in which patients have only one or two providers from which to choose.

ObamacareNon-participation by insurers will limit consumer choices and the amount of their subsidy, while effectively creating monopolies.

According to the Kaiser Family Foundation, the cost of Marketplace policies will vary widely, some by as much as $200 or more.

The cost of Marketplace policies is tied to geographical area and the cost of healthcare within that location.

The size of the subsidy offered to patients by the federal government is dependent upon income and the two don’t necessarily equal out.

Obamacare provides insurance companies with an enormous financial windfall through more policyholders, subsidies from the federal government and no explicit price controls. Many fear Obamacare will eventually lead to price fixing, with no effective recourse to address such a problem.

Consumers are left with mandatory insurance policies requiring more out-of-pocket expenses that make the coverage too expensive to use, while insurance carriers continue to profit either way.

The Impact of Obamacare on Patients – Part 2

The Impact of Obamacare on Patients – Part 2

ObamacareIt’s been six days and the partial government shutdown is in effect. Hundreds of thousands of federal employees are affected, with some possibly receiving backpay.

October 1, 2013 marks the opening of the healthcare exchanges that are going to change the way the middle class purchases health insurance in America, and your patient’s attitude towards the skilled care that you offer.

More about that later in this article.

President Obama said:

“An important part of the Affordable Care Act takes effect tomorrow, no matter what Congress decides today.”

“Tomorrow, tens of millions of Americans will be able to visit HealthCare.gov to shop for affordable health coverage.”

So what’s Obamacare all about?

The Affordable Health Care Act, also known as Obamacare, is an ambitious attempt to establish a one-size-fits-all healthcare system. It’s packed with the right intentions, and it has tremendous potential to do good for the uninsured in America. It also has the potential to overwhelm a medical system that’s already strained to the limit.

The objective is that at least half the nation’s nearly 50 million uninsured people should get some form of insurance coverage through the Affordable Care Act.

This is achieved with the introduction of the new healthcare exchanges (which includes subsidized private healthcare plans), slated to be available online starting today, October 1, 2013. In some states, a version of Medicaid for low-income adults is also going to be an option (more about that shortly).

The Impact for Middle Class America

People who get insurance coverage through their employers will also see changes. Starting Jan. 1, it is going to be the legal responsibility of almost all Americans to carry health insurance or face fines. These fines will become larger as time goes by. Passing up the company medical plan in exchange for a bigger paycheck may no longer be an option. On the other hand, employees who lose their jobs, entrepreneurs starting their own businesses and people in between school and work could have an easier time getting coverage.

Also as of Jan. 1, a pre-existing medical condition will no longer be a barrier to getting health insurance. Yes, this sounds good, but when you take a closer look at the numbers (copays and deductibles) and benefits, there are a lot of things for a patient to consider.

How is Obamacare going to be implemented across the nation? For starters, the provisions of this act suggest the appointment of a panel of individuals who will establish guidelines and make decisions about which treatments are necessary, with an eye on savings that has the potential to lower costs and benefit patients.

Will this work out the way we all want – lower costs and improved quality of care? That remains to be seen.

The Act penalizes those with no insurance, and attempts to increase access to care for millions of Americans.

Deductibles, Co-Pays and Premiums

Some of the likely effects of Obamacare include higher premiums, co-pays and deductibles.

In some instances, co-pays have doubles while the policy offers fewer services. It’s up to the individual patient to shop around, compare benefits and make the right decision, based on available choices. With some plans, imited physician, specialist and pharmacy options are designed solely to cut costs for insurance companies, with a negative impact on patient convenience and quality of care.

The Act mandates all types of “free” preventative services and no one can be denied coverage due to a pre-existing condition. It allows parents to keep children on their policies until they turn 26.

This is excellent for the uninsured in America. It also has a flip side. This has the potential to overwhelm the current healthcare system in the United States.

In a thought provoking article on Obamacare on Foxnews.com, John Goodman from the National Policy Analysis in Dallas said it would take 7.5 hours of each doctor’s day to provide the free services mandated in Obamacare, leaving no time for paying patients. To make things even more challenging, Medicare reimbursements are already below the cost of care and continue to shrink.

Many practitioners are refusing to treat Medicare patients, opting for early retirement, or selling their practices, further reducing patient access to care. This is not what Obamacare intended, but it is the reality that patients (and clinicians) are facing in the Obamacare economy.

Taxes, Penalties and Limitations

The Act imposes a 40 percent tax on healthcare plans beginning in 2018, based on the value of the policy. The tax will be collected through income tax returns. The tax applies to those with a “Cadillac” plan worth $10,200 for individuals and $27,500 for families. Those without insurance face penalties of up to $695 per person for a family of three, or $2,085 per household.

Obamacare virtually guarantees that patients will choose the minimum amount of coverage as a means to avoid penalties and stay covered.

Having said that, the financial impact of a catastrophic medical event cannot be avoided, especially with a restricted healthcare plan. A major increase in bankruptcies is a very real possibility.

Hospital payroll taxes will increase to 2.35 percent, taking an extra bite out of employees’ take home pay. Obamacare restricts the amount people can contribute to a flexible spending account (FSA) to pay for medical expenses at $2,500. New limitations are now placed on the medical products that can be purchased with FSA funds and increases penalties for buying those items to 20 percent.

Healthcare Exchanges

Employers with 50 or more workers must provide healthcare plans that provide specific services, but there’s no limit on what insurance companies can charge for those policies. Employers are now looking at a potential increase in healthcare costs.

Employers insist they can no longer afford to offer insurance. Delta Airlines estimates that one clause alone will cost the company $8 million dollars a year.

Currently, it’s less expensive for employers to pay the government-enforced penalties than offer insurance. Their employees have no choice but to purchase federally approved policies from state healthcare exchanges, or they risk paying fines as individuals.

The exchanges offer three levels of healthcare plans offered by multiple providers. If you enjoy insurance from your employer, exchange plans can be a double edged sword. They may or may not be more affordable than the healthcare plan you have right now. Even for those who qualify for an exchange plan, there’s no guarantee that they will qualify for a subsidy promised by the government to help pay premiums. Many Medicaid patients will be removed from state rolls and forced to purchase plans from health exchanges.

Most People Don’t Understand Obamacare

According to an article in the Detroit Free Press, nearly three-fourths of the uninsured were unaware of the new insurance markets opening to serve them.

In states not expanding Medicaid, millions of uninsured people below the federal poverty level will likely be shut out of coverage. That’s the case in Texas and Florida — both of which have large uninsured populations — and in many, but not all, Republican-led states.

It’s because under the law, people below the poverty line — an individual making $11,490, a family of four $23,550 — can only get the new coverage through expanded Medicaid. And the Supreme Court gave states the right to opt out.

The other arm of “Obamacare’s” coverage expansion — subsidized private insurance through the new markets — is mainly geared to uninsured people in the middle class. The administration is hoping to sign up 7 million the first year. Young, healthy adults are prime customhealthcareers, since they’ll help offset the cost of caring for sicker people sure to sign up once insurers can no longer reject them.

Kevin Maass of Fairfax, Va., has been uninsured for more than a year, since he turned 26 and could no longer stay on his parents’ insurance. He’s got a background in statistics that he hopes to apply to criminology, but he’s been working temporary jobs while looking for permanent employment in law enforcement.

“Not having health insurance has made me a little bit more cautious,” said Maass. “I like to snowboard, but it’s given me second thoughts. Heaven forbid I should break my wrist or my arm.”

Maass thinks he might be able to afford $100 to $200 a month for insurance. Early indications are that he’ll find plenty of options. However, plans with the lowest premiums will have high deductibles and copayments, which means sizable out-of-pocket costs if he gets sick or has an accident.

Nonetheless, Maass says he’s definitely planning to check out the health insurance market. “My parents have been pushing for me to get health insurance,” he said. “I might as well at least get something rather than pay (a fine) to not have anything.”

The Bottom Line for Patients

Nothing is free – there’s always a cost to someone.

With Obamacare, it’s consumers and high income earners who will ultimately pay for healthcare.

A likely outcome is higher costs, less access to practitioners, and increased wait times for appointments and in the office.

The premise of Obamacare always has been to provide affordable healthcare to all while reducing costs, but it’s too early to tell the real impact.

Patients are paying more, practitioners are receiving less and easy access to services is a thing of the past.

It’s unlikely that’s going to change anytime soon.

In fact, with the increased personal responsibility (and financial burden) on most Americans, there is a very real possibility that the future of healthcare will see an unprecedented return to the use of home remedies by patients. Patients will have more important bills to pay (gas, electric and now health insurance) and penalties to avoid.

Does that mean that patients will choose to ‘stay home’ and try and heal themselves on their own, instead of paying a $40 copay and $1000 deductible towards physical therapy? It’s hard to tell, hopefully that won’t be the case.

The real outcome remains to be seen.

Special Announcement – BONUS Presentation at the 2013 Private Practice Retreat

I’m going to be doing a presentation on “Obamacare and how you can prepare your practice to deal with it” in the upcoming Private Practice Retreat from October 11-13 in Las Vegas. Only a handful of tickets remain. If you want to attend, register here for the 2013 Private Practice Retreat in Las Vegas.

Click here to register for the 2013 Private Practice Retreat.

Health Insurance Exchange 101 – The Backbone of Obamacare

Health Insurance Exchange 101 – The Backbone of Obamacare

Beginning Jan. 1, 2014, everyone in the U.S. will be required to have some type of medical coverage as part of the Affordable Health Care Act, otherwise known as Obamacare. Coverage can be in the form of Medicare, Medicaid or a typical health insurance policy.

ObamacareConsumers can purchase coverage through the Health Insurance Marketplace beginning Oct. 1, 2013.

The Marketplace is the backbone of Obamacare, designed to provide four levels of coverage at levels the federal government deems as affordable.

As part of the Act, individuals buying insurance through the Marketplace may be eligible for federal subsidies to help them pay for coverage.

Federal dollars are allotted based on income.

Who Should Enroll?

Open enrollment through the Health Insurance Marketplace runs from Oct. 1, 2013 to March 31, 2014. Patients who don’t qualify for Medicaid, Medicare and CHIP, or who don’t have an employer-based insurance plan, qualify for enrollment.

Individuals who haven’t enrolled in a plan by Jan. 1, 2014 or have received an exemption, will be assessed a fee when they file their income tax return.

Employees who have insurance through the workplace can’t use the Marketplace unless the cost of their insurance exceeds 9.5 percent of their income, or if the plan doesn’t offer the minimum services mandated by Obamacare.

Individuals can choose not to buy insurance and pay the Individual Mandate Tax (IMT) instead.

In 2014, the IMT is $95 per adult and $47.50 per child, or 1 percent of income, whichever is greater. The penalty increases to $325 or 2 percent of the family income in 2015. In 2016, the penalty will be $695 per adult and $347.50 per child or 2.5 percent of the total income.

Fines are based on a cost-of-living formula after 2016.

Preparation And Documentation

To create an account and sign up, consumers will need to provide some basic information including:

  • Social Security number or document number for legal immigrants;
  • Employer and income information for each household member;
  • Policy numbers for any current plan(s) covering household members;
  • A completed Employer Coverage Tool, available on the site, that lists all job-based plans for which household members are eligible.

Plans And Options

Patients can purchase four types of policies through the Marketplace – Bronze, Silver, Gold and Platinum. The plans pay 60 percent, 70 percent, 80 percent and 90 percent, respectively, of healthcare costs.

Bronze and Silver plan costs are capped at 9.5 percent of income. Gold and Platinum plans are capped at 12 percent of income. High-end plans may be subject to an excise tax of 40 percent of the total cost.

Visitors to the Marketplace can compare policies, deductibles, co-pays and costs. The online calculator allows consumers to find the plan that best fits their needs. They’ll be able to determine if they qualify for a federal subsidy to help them pay for Marketplace insurance and how to apply.

The Marketplace also offers “catastrophic” plans for people age 30 and low-income consumers, but different terms and rules apply and individuals won’t be eligible for subsidies and credits.

ObamacareAffordable Versus Cheaper

It’s important to remember that affordable doesn’t necessarily mean cheaper. There are no restrictions on how much insurance carriers can charge for coverage and other options may be more cost effective.

Families with incomes less than 15,302 will qualify for Medicaid.

Some may qualify for assistance with out-of-pocket expenses for government programs including Medicaid, Medicare and the Children’s Health Insurance Plan.

Obamacare dictates that each person must have insurance and the Health Insurance Marketplace offers plans to accommodate the law. Patients should evaluate each plan carefully and examine all their available options so they can make an informed decision that’s best for everyone in the family.


Patient and Employer Penalties with Obamacare

Patient and Employer Penalties with Obamacare

The Affordable Health Care Act, known as Obamacare, requires all Americans to have healthcare insurance. Employers that don’t offer insurance and those that refuse to purchase coverage will get hit where it hurts them the most – their wallet.

ObamacareObamacare employs fines as an incentive to persuade patients and employers to comply with the legislation.

People will be required to report their insurance coverage, or lack thereof, through their annual income tax returns.

Penalties will be levied on individuals without health coverage, as well as business owners that don’t provide it.

The Individual Mandate Tax

With the Individual Mandate Tax (IMT), in 2014, the fine amounts to $95 per adult and $47.50 per child, or 1 percent of income, whichever is greater. The penalty increases to $325 or 2 percent of the family income in 2015.

By 2016 penalties reach $695 per adult and $347.50 per child or 2.5 percent of the total income. Fines are based on a cost-of-living formula after 2016.

If the filer doesn’t pay the IMT, it’s carried over to the next year and interest continues to accrue on the total. Some will qualify for an exemption from the IMT. The Congressional Budget Office estimates that 30 million Americans will lack coverage in 2016 and 80 percent of that number will qualify for some type of relief.

Those qualifying for an exemption include inmates, people with religion-based objections, and members of Indian tribes.

Also exempt are individuals who can’t find an affordable plan, anyone that isn’t required to file a tax return, and those who are temporarily unemployed.

People living in states that have chosen not to expand Medicaid coverage and anyone paying more than 8 percent of their income for health insurance will avoid the IMT.

The Employer Mandate

Obamacare refers to the Employer Mandate penalty as a “shared responsibility fee.” The fines for businesses not offering insurance will be $2,000 per person, per year.

Companies that contribute 50 percent toward an employee’s insurance premium are eligible for tax credits of up to 35 percent of their contribution, provided the worker makes $50,000 or less per year and is a full-time employee.

The Employer Mandate affects approximately 5.8 million companies throughout the nation.

Business owners with 50 or more employees, or part-time equivalents, are required to offer their workers insurance.

Those that don’t will be assessed a fine. Full-time is defined as 30 or more hours a week.

ObamacareBusinesses don’t have to pay the fine for the first 30 employees.

The provision, set to take effect in 2014, has been delayed until 2015 to work out details on information reporting requirements for businesses.

The mandate stipulates that employer-provided healthcare must be affordable (no more than 9.5 percent of the employee’s wages.)

Employers offering unaffordable insurance, as defined by Obamacare, will be assessed a $3,000 penalty for each employee who receives the federal subsidy to purchase insurance through the Marketplace.

Policies must provide coverage for the employee’s children age 26 and younger. Plans do not have to offer benefits for spouses. The policy must provide “minimum value,” defined as paying at least 60 percent of the cost of covered services, including deductibles, co-pays and premiums.

The IMT is an incentive for individuals to purchase insurance and enforced through fines.

The Employer Mandate utilizes financial penalties as an inducement for businesses to provide insurance or be assessed costly fines that will substantially affect profits.  Obamacare places both workers and employers in the same position – get insurance or face the fines.

Increased Individual Responsibility with Obamacare

Increased Individual Responsibility with Obamacare

Devised by President Obama and endorsed by insurance companies, the Affordable Health Care Act forces individuals to accept more responsibility for the status of their health.

ObamacareKnown as Obamacare, the Act has many controversial elements, but it also contains a little known initiative designed to assist people live healthier lifestyles through recommendations by the National Prevention, Health Promotion and Public Health Council (USPFST).

The Council is tasked with managing the federal government’s national efforts to promote health and wellness.

The organization will study the issue and prepare a comprehensive list of recommendations on how the overall health of Americans can be improved to reduce serious health conditions and control the cost of healthcare.

Screenings And Services To Stay Healthy

Obamacare includes specific provisions to help achieve its goals. Under the Act, individuals have no co-pay when they obtain approved preventative testing that includes mammograms, colonoscopies, immunizations and medication to stop smoking.

Other services include screening for depression, high blood pressure and diabetes, along with cholesterol, HIV, STDs and free birth control. The full list has not yet been finalized.

The goal is to induce more people to undergo preventative testing in an effort to identify and treat diseases and health conditions in early stages.

The strategy is to avoid costly treatments later on and drastically cut medical costs.

The tests deemed the most effective will be available without co-pays and are those that meet the following criteria – non-invasive, easy to perform and highly accurate. Some healthcare plans have “grandfathered’ status and are exempt from the new Obamacare requirements.

Exemptions on these plans went into effect on Jan. 1, 2011 and will continue those exemptions into the future.

Paying For Healthcare

Part of the price for a healthier life is purchasing healthcare insurance. To facilitate the process, Obamacare has expanded Medicaid coverage for the poor, established a Marketplace where individuals can purchase multiple levels of coverage, and set up subsidies to help them pay for it.

Before Obamacare, those who couldn’t afford insurance or chose not to buy it typically went to emergency rooms for treatment. Obamacare requires every citizen to take responsibility by requiring them to purchase healthcare insurance.

The Rewards Of Good Health

Obamacare allows and encourages employers to offer workers financial rewards who demonstrate measurable efforts toward improving their health.

ObamacareEmployers can offer cash incentives and reduced premiums, deductibles and co-pays.

A different standard must be established for those unable to meet the wellness goals established in insurance policies.

Obamacare attempts to address many of the health and wellness issues currently affecting patients by providing free preventative tests and screenings.

Many have pointed out that health can’t be legislated. It requires better decision making on the part of consumers, access to healthier food, and the financial means to purchase it.

While many medical conditions can be prevented through a healthier lifestyle, the effect of genetics can’t be dismissed. Many patients are wondering if they’ll be penalized for a predisposition toward specific diseases and how they’ll find the funds to eat a healthier diet.

How Will Obamacare Affect those with Private Health Insurance?

How Will Obamacare Affect those with Private Health Insurance?

Many individuals without employer-provided health coverage have taken the initiative and purchased insurance coverage on their own. The Affordable Health Care Act, a.k.a. Obamacare, continues to change the health insurance landscape and could prove beneficial for those who purchase private healthcare insurance.

Obamacare on Private InsuranceOne of Obamacare’s goals was to ease the financial strain for workers forced to buy high-dollar insurance policies when they didn’t have access to employer-provided policies.

People without employer-offered insurance have traditionally paid more for their coverage on the open market.

They’re often faced with numerous restrictions, burdensome requirements and few protections against frivolous cancellations.

The Marketplace For Private Insurance

Those who buy their own insurance will benefit under Obamacare. It created Marketplaces where individuals can purchase their own insurance at rates comparable to workers with coverage through their employment.

Individuals with incomes below specified levels will be eligible to receive government subsidies to help pay for their insurance and they’ll receive tax credits on income tax returns.

A study released by Kaiser Family Foundation indicated that 48 percent of families that buy their own insurance would qualify for subsidies and tax credits. Health and Human Services Secretary, Kathleen Sebelius, estimates as many as 9 in 10 people will qualify for some level of subsidy.

Out-of-Pocket Increases

The downside for the privately insured is that the cost of Marketplace insurance policies will increase in accordance with the market.

Many workers with insurance through their employers are already feeling the sting of increased prices for premiums, co-pays and deductibles. Individuals who purchase private insurance through the Marketplace will also experience the higher prices, but it may still be less than they’re paying now.

The Marketplace opens for business on Oct. 1, 2014. Anyone can visit the website, compare plan prices and purchase their mandatory insurance.

Healthcare plans purchased in the Marketplace won’t take effect until Jan. 1, 2014.

More Marketplace Customers

Many businesses have indicated they plan to drop insurance for employees and pay fines imposed by the federal government. It’s a move that will push many workers with employer-provided health plans into the privately insured sector.

Employees insured through the workplace who are seeking lower pricing may find it in the Marketplace, but it comes with certain conditions.

Employees who give up their work insurance in favor of Marketplace coverage must complete a waiting period before it becomes active.

Obamacare on Private Insurance

Participating Insurance Companies

Many of the self-insured will be perusing plans on the Marketplace with companies with which their unfamiliar.

Some insurance carriers have opted not to offer Marketplace plans in all states or limit their participation to preserve current profit margins.

Obamacare doesn’t place limits on what insurance companies can charge, but some carriers have withdrawn from the Marketplace when state regulators ordered them to dramatically reduce their rates from their proposed levels.

Insurance companies cite Obamacare for continuing price increases. Carriers claim the following mandates are too costly to participate:

  1. Inability to cancel policies at their discretion;
  2. Required coverage for those with pre-existing conditions;
  3. A list of standard required benefits;
  4. Caps on out-of-pocket expenses;
  5. No caps on annual or lifetime benefits.

Obamacare offers those who purchase private health insurance with increased benefits, tax credits, and subsidies to help them pay for coverage. The Marketplace will offer the only option for many individuals to obtain coverage, but only time will tell if available policies are truly affordable.