Archive | Health Care Bill – Washington

Part-timers to lose pay amid health act’s new math

Many part-timers are facing a double whammy from President Obama’s Affordable Care Act.

  • The law requires large employers offering health insurance to include part-time employees working 30 hours a week or more. But rather than provide healthcare to more workers, a growing number of employers are cutting back employee hours instead.
  • The result: Not only will these workers earn less money, but they’ll also miss out on health insurance at work.
  • Across the nation, hundreds of thousands of other hourly workers may also see smaller paychecks in the coming year because of this response to the federal healthcare law. The law exempts businesses with fewer than 50 full-time workers from this requirement to provide benefits.
  • Overall, an estimated 2.3 million workers nationwide, including 240,000 in California, are at risk of losing hours as employers adjust to the new math of workplace benefits, according to research by UC Berkeley.
  • Employers say these cutbacks are necessary given the high cost of providing benefits. The average annual premium for employee-only coverage was $6,540 in California last year. Family coverage topped $16,000 a year. Those premiums have shot up 170% in the past decade, more than five times the rate of inflation in the state.
  • There has been widespread speculation that many businesses would drop health coverage entirely in favor of paying a federal penalty of $2,000 per worker. Benefit consultants and insurance brokers say many companies examined that scenario. But they say most rejected it because of the disruption it would cause for employees and the potential for putting an employer at a competitive disadvantage in luring talented workers.

Consider the city of Long Beach. It is limiting most of its 1,600 part-time employees to fewer than 27 hours a week, on average. City officials say that without cutting payroll hours, new health benefits would cost up to $2 million more next year, and that extra expense would trigger layoffs and cutbacks in city services.

But big restaurant chains, retailers and movie theaters are starting to trim employee hours. Even colleges are reducing courses for part-time professors to keep their hours down and avoid paying for their health premiums.

All this comes at a time when part-timers are being hired in greater numbers as U.S. employers look to keep payrolls lean.

One consolation for part-timers is that many of them stand to benefit the most from the healthcare law’s federal premium subsidies or an expansion of Medicaid, both starting in January.

The law will require most Americans to buy health insurance or pay a penalty. Yet many lower-income people will qualify for government insurance or be eligible for discounted premiums on private policies.

“For people losing a few hours each week, that’s lost income and it has a real impact,” said Ken Jacobs, chairman of the UC Berkeley Center for Labor Research and Education. “But many low-wage, part-time workers will also have some affordable options under the federal law.”

Bill Dombrowski, chief executive of the California Retailers Assn., said employers are reducing hours because “it’s the only way to survive economically.”

The full effect of these changes in the workplace isn’t known yet because many employers are still considering what to do. Many companies waited to see whether the landmark legislation would survive a Supreme Court challenge and the outcome of last fall’s presidential election.

Now many employers are scrambling to understand the latest federal rules on implementation and are analyzing what makes the most sense for their workforce and for running their business. Instead, pruning the hours of part-timers has attracted far more interest.

“That will be a widespread strategy,” said Dede Kennedy-Simington, vice president at Polenzani Benefits in Pasadena. “Employers will be making sure their payroll system can flag when part-time workers are getting close to the cap they set.”

Long Beach officials said they studied the various budget options and opted for a plan that should affect only a small portion of its workforce. The city estimates about 200 part-time workers will be among the most affected by a reduction in hours, representing about 13% of its overall part-time staff. The city calculated that the federal penalty for dropping coverage completely for its 4,100 full-time employees would have been about $8 million.

Some California lawmakers worry that the federal penalties for not providing health coverage aren’t enough of a deterrent. They have proposed additional state fines to prevent major retailers, restaurant chains and other employers from restricting hours and dumping more of their workers onto public programs such as Medi-Cal. Opponents say the proposal is unnecessary and could deter companies from adding workers.

Some supporters of the Affordable Care Act say they welcome a gradual shift away from employer-sponsored coverage if new government-run exchanges give consumers a choice of competitively priced health plans. Some low- and middle-income workers who qualify for federal subsidies may end up paying less by buying their own policy next year compared with their contribution toward employer coverage.

*Modified from a Los Angeles Times article

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The Coming ObamaCare Shock

Millions of Americans will pay more for health insurance, lose their coverage, or have their hours of work cut back.

In recent weeks, there have been increasing expressions of concern from surprising quarters about the implementation of ObamaCare. Montana Sen. Max Baucus, a Democrat, called it a “train wreck.” A Democratic colleague, West Virginia’s Sen. Jay Rockefeller, described the massive Affordable Care Act as “beyond comprehension.” Henry Chao, the government’s chief technical officer in charge of putting in place the insurance exchanges mandated by the law, was quoted in the Congressional Quarterly as saying “I’m pretty nervous . . . Let’s just make sure it’s not a third-world experience.”

These individuals are worried for good reason. The unpopular health-care law’s rollout is going to be rough. It will also administer several price (and other) shocks to tens of millions of Americans.

  • Start with people who have individual and small-group health insurance. These policies are most affected by ObamaCare’s community-rating regulations, which require insurers to accept everyone but limit or ban them from varying premiums based on age or health. The law also mandates “essential” benefits that are far more generous than those currently offered.
  • Single adults age 21-29 earning 300% to 400% of the federal poverty level will be hit with an increase of 46% even after premium assistance from tax credits.
  • Six million of the 19 million people with individual health policies are going to have to pay more—and this even after accounting for the government subsidies offered under the law.
  • In total, it appears that there will be 30 million to 40 million people damaged in some fashion by the Affordable Care Act—more than one in 10 Americans.

Determining the number of individuals who will be harmed by changes to the small-group insurance market is harder. According to the Medical Expenditure Panel Survey, conducted by the Department of Health and Human Services, around 30 million Americans work in firms with fewer than 50 employees, and so are potentially affected by the small-group “reforms” imposed by ObamaCare.

Around nine million of these people, plus six million family members, are covered by employers who do not self-insure. The premium increases for this group will be less on average than those for people in the individual market but will still be substantial.

  • According to analyses conducted by the insurer WellPoint for 11 states, small-group premiums are expected to increase by 13%-23% on average.

While some firms (primarily those that employ older or sicker workers) will see premium decreases due to community rating, firms with younger, healthier workers will see very large increases: 89% in Missouri, 91% in Indiana and 101% in Nevada.

Because the government subsidies to purchasers of health insurance in the small-group market are significantly smaller than those in the individual market, I estimate that another 10 million people, the approximately two-thirds of the market that is low- or average-risk, will see higher insurance bills for 2014.

Higher premiums are just the beginning, because virtually all existing policies in the individual market and the vast majority in the small-group market do not cover all of the “essential” benefits mandated by the law. Policies without premium increases will have to change, probably by shifting to more restrictive networks of doctors and hospitals. Even if only one third of these policies are affected, this amounts to more than five million people.

In addition, according to Congressional Budget Office projections in July and September 2012, three million people will lose their insurance altogether in 2014 due to the law, and six million will have to pay the individual-mandate tax penalty in 2016 because they don’t want or won’t be able to afford coverage, even with the subsidies.

None of this counts the people whose employment opportunities will suffer because of disincentives under ObamaCare. Some, whose employers have to pay a tax penalty because their policies do not carry sufficiently generous insurance, will see their wages fall. Others will lose their jobs or see their hours reduced.

Anecdotal evidence already suggests that these disincentives will really matter in the job market, as full-time jobs are converted to part time. Why would employers do this? Because they aren’t subject to a tax penalty for employees who work less than 30 hours per week.

There is some debate over how large these effects will be, and how long they will take to manifest. However, the Bureau of Labor Statistics reports on a category of workers who will almost surely be involuntarily underemployed as a result of health reform: the 10 million part-timers who now work 30-34 hours per week.

These workers are particularly vulnerable. Reducing their hours to 29 avoids the employer tax penalty, with relatively little disruption to the workplace. Fewer than one million of them, according to calculations based on the Medical Expenditure Panel Survey, get covered by ObamaCare-compliant insurance from their employer.

When that reality becomes clearer, the law is going to start losing its friends in the media, who are inclined to support the president and his initiatives. We’ll hear about innocent victims who saw their premiums skyrocket, who were barred from seeing their usual doctor, who had their hours cut or lost their insurance entirely—all thanks to the faceless bureaucracy administering a federal law.

The allure of the David-versus-Goliath narrative is likely to prove irresistible to the media, raising the pressure on Washington to repeal or dramatically modify the law. With the implementation of ObamaCare beginning to take full force at the end of the year, there will be plenty of time before the 2014 midterm elections for Congress to consider its options.

For those like Health and Human Services Secretary Kathleen Sebelius, who told a gathering a few weeks ago at the Harvard School of Public Health that she has been “surprised” by the political wrangling caused so far by ObamaCare, there are likely to be plenty of surprises ahead.

*Modified from a WSJ article by Daniel Kessler

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Survey: Fewer Calif. Firms Offer Health Insurance to Workers

The proportion of California employers that offer health insurance to workers declined significantly in the previous decade, according to a new survey by the California HealthCare Foundation, the Sacramento Bee’s “Capitol Alert” reports.

  • The survey found that the proportion of employers in the state offering health coverage to workers declined from 71% in 2002 to 60% in 2012
  • According to the survey, the cost of health insurance has increased by nearly 170% since 2002, which is more than five times the 31.5% increase in the state’s overall inflation rate
  • The survey found that the average premium for single-person health coverage was $545 per month in 2012, compared with the national average of $468. Meanwhile, the average premium for family coverage was $1,386 in California, compared with the national average of $1,312.
  • According to the survey, larger employers with high proportions of full-time workers were most likely to offer health coverage to employees. It also found that deductibles were more likely to be significantly higher among small employers than among large employers
  • Meanwhile, 21% of employers said that they increased workers’ share of premium costs during 2012, while 17% said that they reduced benefits or absorbed increases .

*Modified from a CaliforniaHealthline.com article

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Health Actuaries: Obamacare Rates Will Soar

  • Few aspects of the Affordable Care Act are more critical to its success than affordability, but in recent weeks experts have predicted costs for some health plans could soar next year.
  • A study published last month by the Society of Actuaries (SOA) predicting that, thanks to sicker patients joining the coverage pool, medical claims per member will rise 32 percent in the individual plans expected to dominate the ACA exchanges next year. In some states costs will rise as much as 80 percent, the report said.
  • Using predictive math, actuaries try to make sure insurers of all kinds don’t run out of money to pay claims. Many actuaries also work for consultants whose clients include insurance companies.
  • But health law supporters are pushing back, noting close ties between the actuaries making the forecasts and an insurance industry that has been complaining about taxes.
  • Even supporters of the health act worry about premium increases next year, when many of its provisions take effect. But the debate fits into a larger discussion about actuaries’ public role. Actuaries are self-regulated, which some say makes them unaccountable.

Undisclosed in the SOA report was the fact that about half the people who oversaw it work for the health insurance industry that is warning about rate shock. The chairman of society committee supervising the project was Kenny Kan, chief actuary at Maryland-based CareFirst BlueCross BlueShield.

Others on the committee work for firms with insurer clients. The report included committee members’ names but not their affiliations.

To perform the research, the society hired Optum, sister company of UnitedHealthcare, the country’s biggest private health insurer.

Society spokeswoman Kim McKeown said the project was overseen by credentialed actuaries “from a cross-section of industry organizations” and was “exposed for review and comment to the broad health care actuarial community.”

Their associations set conduct standards and investigate malpractice in confidential proceedings. During the previous two decades the Actuarial Board for Counseling and Discipline, which works with the Society of Actuaries, has recommended public disciplinary measures for fewer than two people a year, according to its annual report.

Yet actuaries play many public roles. By calculating the adequacy of employer pension contributions they affect the retirement of millions. And they’ll act as virtual referees for important aspects of implementing the health act.

While the Obama administration has developed a calculator plans must use for determining whether insurance plans meet the health act’s standards for benefits and value, recently finalized regulations give insurer-employed actuaries the power to override it by substituting one benefit for another.

Insurance company actuaries calculate rates when plans file with states, which act as the industry’s primary regulators. Charged with making sure the prices are justified, state insurance departments often have far less actuarial expertise at their disposal than the insurers.

Health-act supporters complained that that the actuary society’s study predicting a 32 percent increase in claims didn’t account for key factors, including the potential for competition to lower prices, the subsidies people will receive to buy the coverage and the fact that next year’s plans will be more generous than this year’s.
*Modified from a Everydayhealth.com and Kairer Health News articles.

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Humana CEO: Health insurance will go the way of pensions

The health care system of the future will likely come with fewer guarantees, said Bruce Broussard, CEO of Humana Inc.

  • In other words, rather than offering a health plan, employers will probably begin offering specified payments and telling their employees to buy their own insurance.
  •  “What happened to retirement is probably going to happen to health care,” Broussard told me Wednesday. The shift, from defined-benefit to defined-contribution plans, is exactly what happened when 401k retirement accounts replaced pensions.

Broussard figures that change will take a decade to kick in fully. Corporations will increasingly use wellness offerings, he said, to differentiate themselves in recruiting.

Questions that insurance companies already face, such as whether their customer is the employer or the individual, will be amplified. “Our role becomes a role around health more than just the financing of health care,” he said.

*Modified from a Cincinnati Business Courier article

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Obama Trims Details on Health Law as Exchange Cost Rises

  • The $1.3 trillion U.S. health-care system overhaul is getting more expensive and will initially accomplish less than intended.
  • Costs for a network of health-insurance exchanges, a core part of the Affordable Care Act, have swelled to $4.4 billion for fiscal 2012 and 2013 combined, and will reach $5.7 billion in 2014, according to the budget President Barack Obama yesterday sent to Congress. That spending would be more than double initial projections, even though less than half the 50 U.S. states are participating.

The unanticipated spending is a consequence of an ambitious timetable dictated by Congress and a complex new way of offering people medical coverage, say analysts, lobbyists and administration officials. Combine that with a majority of Republican governors declining to cooperate with a Democratic president and U.S. regulators are left grasping to get the 2010 health law up and running by a Jan. 1, 2014, deadline.

“Once you’re behind schedule, the way you solve problems is you write checks,” said Doug Holtz-Eakin, a former Congressional Budget Office director who is now president of the American Action Forum, which has opposed the health law.

  • For the areas that money can’t solve, the Obama administration is opting for delay. It temporarily backed off some provisions of the law, including restrictions on coverage for executives and a promise to offer small businesses greater choices of health plans.

The basic requirements of the health law must function by Jan. 1, even if all the bells and whistles aren’t complete, said Ron Pollack, executive director of Families USA, a consumer advocacy group that backs the overhaul.

Long-Term Strategy

“The Affordable Care Act is not a short term, temporary fix of America’s health-care system,” he said in an interview. “It’ll have long-term benefits, and so the administration clearly is making sure the most essential elements of the new law are effectively in place on a timely basis.”

Obama administration officials say the bulk of the health law will be up and running on time.

“There’s an awful lot to implement and we want to do it efficiently,” Ellen Murray, the assistant secretary for financial resources at the Health and Human Services Department, said in an interview. “It’s a big job, and we want to do it right.”

  • The government has warned that the exchanges, which are supposed to open in every state on Oct. 1, may not be easy for low-income people to navigate. In many states, people found to be eligible for Medicaid, the state-run program for the poor, will have to sign up through their state government instead of through the exchange.

Beyond Imagination

  • “It’s a lot more complicated than anybody imagined,” Joseph Antos, a health economist at the nonprofit American Enterprise Institute who advises the CBO, said by phone.

That’s because the federal government has been forced to build part or all of the exchanges in 34 states where governors or legislatures declined to do it themselves. The government expects to spend $1.5 billion this year on the federal exchange, Murray said.

In those states, connections between computer systems that run the federal exchange and state Medicaid programs are incomplete, said Caroline Pearson, a vice president at Avalere Health, a consulting firm based in Washington that is tracking exchange development.

The extra step required to sign up might discourage enrollment by low-income people, she said in an interview.

“You sort of always want to minimize the number of interactions you have to have in order to get people into the system,” Pearson said. These are “additional hurdles that could present a problem,” she said.

People Covered

  • The result is that the number of Americans projected to gain insurance from the law has already eroded, by at least 5 million people, to 27 million by 2017, the CBO said in February. In addition, as many as 8 million people will lose health-care plans now offered through their employers, almost three times more than the CBO initially projected.

The bulk of the Affordable Care Act relies on governors to build exchanges and expand Medicaid (USBOMDCA), the joint federal-state program for the poor. The law also required a myriad of regulations to be crafted and vetted by hospitals, insurers and other industry groups, all to be done within four years.

By comparison, President George W. Bush’s administration in 2003 was given three years by Congress to implement a new drug benefit in Medicare, a program whose scale is dwarfed by the health overhaul.

No Favors

“Congress did the administration absolutely no favors in setting the timetable,” said Neil Trautwein, vice president and employee benefits policy counsel at the National Retail Federation, a Washington-based lobbying group for retailers. “Because of a host of complications, the administration is behind in trying to catch up.”

For Obama that means delays. He’s pushing back a prohibition against companies giving their top executives better health plans than lower-ranking employees, and a requirement that they automatically enroll workers into the plans. Small businesses that had hoped to give their workers a choice of health plans in government-run marketplaces will instead have to choose one plan for their entire workforce.

A new program for states, called the Basic Health Program, won’t start until 2015, angering Obama’s allies. The Basic Health Plan was intended to be an option for states that want to cover more low-income people with a government health program, instead of private coverage sold through the exchanges. The provision was added to the law by Senator Maria Cantwell, a Washington Democrat, whose state operates a similar program and sought federal money to expand it.

Doing Triage

After the delay was announced in February, Cantwell threatened to oppose confirmation of an administrator for the U.S. Centers for Medicare and Medicaid Services, which is setting up exchanges. The senator questioned administration officials about the delay at three hearings, and won a letter on March 28 from Health and Human Services Secretary Kathleen Sebelius, promising to begin the program by 2015 and laying out a detailed timeline to set it up.

“It looks like what they’re doing is triage,” Holtz-Eakin said of the government. “If this isn’t going to work, forget it. If that’s not on time, forget it. Let’s get to the things that we can make work, and declare victory.”

*Modified from a Bloomberg.com article

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It’s easier to apply for green card than the Obamacare Application for new health exchanges

THE APPLICATION FOR THE NEW HEALTH EXCHANGES IS 21 PAGES, AND INCLUDES 61 PAGES OF INSTRUCTIONS

If you thought nothing could be more tedious than filling out your tax forms, just wait until you try to apply for health insurance through the Affordable Care Act’s new exchanges.

  • The draft of the paper application is 15 to 21 pages, depending on whether someone is applying individually or for their family. And the instructions for the application run no less than 61 pages. That’s nearly six times longer than the instructions for a green-card application.
  • The Department of Health and Human Services recently released the draft versions of the applications consumers will need to fill out in order to get insurance if they can’t get it through their employer or family. But while the point behind the law and the exchanges is to make it easier for Americans to get health insurance, some consumers are complaining that a major barrier now stands in their way: too much paperwork.
  • The forms bring to mind the IRS instructions for filing the 1040 tax form, which is 105 pages long. In fact, many of the questions have less to do with health matters than financial ones.
  • “It’s a lot of information that consumers are going to have to provide, and that could deter people from signing up,” says Laura Adams, senior insurance analyst at InsuranceQuotes.com.“That could be an issue for some people who don’t like paperwork. And who likes paperwork?”

“If you like IRS forms, you’re going to love this one,” says Ken Hoagland, chairman of Restore America’s Voice, a conservative organization that advocates for the repeal of the health-care law. “These are the kinds of things that are going to drive people crazy.”

Adding to the confusion from this new bureaucracy is that experts say most Americans are still largely in the dark about what the health-insurance exchanges — the new marketplaces for individual insurance stipulated by the health-reform law — even are. Though government officials are hurrying to set them up before open enrollment for 2014 begins this fall, a survey released today by InsuranceQuotes.com found that 90% of U.S. consumers don’t know that the exchanges open Oct. 1, and 22% said they thought the exchanges were already open now.

That lack of knowledge doesn’t bode well for how consumers will actually manage to sign up for insurance on their own, experts say — something they will have to do or else pay a penalty mandated by the health-reform law.

While the health reform law also provides for a support staff known as “Navigators” to help consumers sign up for insurance in the exchanges, experts worry that the Navigators will be overwhelmed with requests, and consumers who call their inundated phone lines will be stuck on hold for a while. “People won’t be able to get through,” Adams says. (Yesterday, HHS proposed training and ethics regulations for the Navigators, which don’t include specific provisions about answering phones in a timely fashion, but dictate that Navigators “will be fair and impartial and will be appropriately trained, and that they will provide services and information in a manner that is accessible.”)

Adams recommends that consumers start the application process right away when the exchanges open in October, because as 2014 approaches, the deadline for when all Americans must have health insurance, the rush of last-minute applicants may bring the enrollment websites crashing down. “Our fear is that people are going to put it off til New Year’s Eve, and by then the sites will be overloaded and Navigators will be overloaded,” Adams says.

*Modified from a MarketWatch.com article

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Millions Could Get Surprise Tax Bills Under ‘Obamacare’ If They Don’t Accurately Project Their Income

WASHINGTON — Millions of people who take advantage of government subsidies to help buy health insurance next year could get stung by surprise tax bills if they don’t accurately project their income.

  • Health care providers, advocates and tax experts say the vast majority of Americans know very little about the new health care law, let alone the kind of detailed information many will need to navigate its system of subsidies and penalties.
  • The Patient Protection and Affordable Care Act (PPACA) will offer subsidies — advanced premium tax credits (APTC) — to help people buy private health insurance on state-based exchanges, if they don’t already get coverage through their employers. The subsidies are based on income. The lower your income, the bigger the subsidy.
  • The vast majority of taxpayers won’t actually receive the subsidies. Instead, the money will be paid directly to insurance companies and consumers will get the benefit in reduced premiums.
  • But the government doesn’t know how much money you’re going to make next year. And when you apply for the APTC subsidy, this fall, it won’t even know how much you’re making this year. So, unless you tell the government otherwise, it will rely on the best information it has: your 2012 tax return, filed this spring.
  • What happens if you or your spouse gets a raise and your family income goes up in 2014? You could end up with a bigger subsidy than you are entitled to. If that happens, the law says you have to pay back at least part of the money when you file your tax return in the spring of 2015.  That could result in smaller tax refunds or surprise tax bills for millions of middle-income families.
  •  A draft of the application for insurance asks people to project their 2014 income if their current income is not steady or if they expect it to change. The application runs 15 pages for a three-person family, but nowhere does it warn people that they may have to repay part of the subsidy if their income increases.
  • The subsidies, which are technically tax credits because they are administered through the tax code, will help low- and middle-income families buy health insurance through the state-based exchanges.
  • The subsidies are available to families with incomes up to 400 percent of the poverty level. This year, four times the poverty level is about $62,000 for a two-person family. For a family of four, it’s $94,200.
  • If families get bigger subsidies than they are entitled to under the law, the amount they have to repay is capped, based on income and family size. If they get less than they qualify for under the law, the government will pay them the difference in the form of a tax refund.
  • “It’s potentially going to come as a shock to individuals who meet that criteria where their income hits a point where they owe money back,” said Rep. Charles Boustany, R-La., chairman of the House Ways and Means oversight subcommittee. “The fact is, with variations in income, people could end up owing money back and that will create consternation and problems for them.”

There are four thresholds for repaying the subsidies:

  1. A family of four making less than $47,000 would have to repay a maximum of $600.
  2. If the same family makes between $47,000 and $70,000, the amount they have to repay is capped at $1,500.
  3. If the same family makes between $70,000 and $94,200, the amount is capped at $2,500.
  4. Families making more than four times the poverty level have to repay the entire subsidy.

*Modified from a LifeHealthPro.com article

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Little hope seen for millions priced out of health overhaul

Millions of Americans will be priced out of health insurance under President Barack Obama’s healthcare overhaul because of a glitch in the law that adversely affects people with modest incomes who cannot afford family coverage offered by their employers, a leading healthcare advocacy group said on Tuesday.

  • In its rule making, or final interpretation of the law, the IRS said affordability should be based strictly on individual coverage costs.
  • Tax credits are a key component of the law and the White House has said the credits, averaging about $4,000 apiece, will help about 18 million individuals and families pay for health insurance once the Affordable Care Act takes full effect, beginning in January 2014.
  • The tax credits are geared toward low and middle-income Americans who do not have access to affordable health insurance coverage through an employer. The law specifies that employer-sponsored insurance is affordable so long as a worker’s share of the premium does not exceed 9.5 percent of the worker’s household income.
  • That means that, even if family coverage through an employer-based plan far exceeds the 9.5 percent cutoff, workers would not be eligible for the tax credits to help buy insurance for children or non-working dependents.
  • “It could mean the difference between being able to move in to purchasing private insurance and not purchasing private insurance.

“It’s an issue. It needs to be fixed,” Ron Pollack, executive director of Families USA, an influential healthcare advocacy group said on Tuesday, referring to what he called “the family glitch problem.”

“The tax credit subsidies are a game changer. They will help make health coverage affordable for huge numbers of uninsured families who would have been priced out of the health coverage and care they need,” Pollack said.

Speaking after the call, Families USA health policy director Kathleen Stoll told Reuters recent studies showed that anywhere between 2 million and 4 million people across the United States would be adversely affected by the federal rule limiting aid and the IRS interpretation of whether an employer’s health plan is affordable.

 

*Modified from a Reuters article

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Health Insurers Warn on Premiums

  • Health insurers are privately warning brokers that premiums for many individuals and small businesses could increase sharply next year because of the health-care overhaul law, with the nation’s biggest firm projecting that rates could more than double for some consumers buying their own plans.
  • In a private presentation to brokers late last month, UnitedHealth Group Inc., the nation’s largest carrier, said premiums for some consumers buying their own plans could go up as much as 116%, and small-business rates as much as 25% to 50%
  • Other carriers have also projected steep rate increases during private meetings and conversations with brokers. Brokers say they are being told to prepare the marketplace for small-business and individual rate increases as carriers get ready to file specific rate proposals and plan designs with regulators.
  • An official with Blue Cross & Blue Shield of North Carolina told a gathering of brokers last week that individual premiums could go up by as much as 40% to 50%, according to brokers who were present.
  • Aetna Inc., in a presentation last fall to its national broker advisory council, suggested rates on individual plans not being grandfathered under the law could go up 55%, on average, and gave a figure of 29% for small business rates.

The projections, made in sessions with brokers and agents, provide some of the most concrete evidence yet of how much insurance companies might increase prices when major provisions of the law kick in next year—a subject of rigorous debate.

Health insurers are privately warning brokers that premiums for many individuals and small businesses could increase sharply next year because of the health-care overhaul law.

The projected increases are at odds with what the Obama Administration says consumers should be expecting overall in terms of cost. The Department of Health and Human Services says that the law will “make health-care coverage more affordable and accessible,” pointing to a 2009 analysis by the Congressional Budget Office that says average individual premiums, on an apples-to-apples basis, would be lower.

The gulf between the pricing talk from some insurers and the government projections suggests how complicated the law’s effects will be. Carriers will be filing proposed prices with regulators over the next few months.

Part of the murkiness stems from the role of government subsidies. Federal subsidies under the health law will help lower-income consumers defray costs, but they are generally not included in insurers’ premium projections. Many consumers will be getting more generous plans because of new requirements in the law. The effects of the law will vary widely, and insurers and other analysts agree that some consumers and small businesses will likely see premiums go down.

Starting next year, the law will block insurers from refusing to sell coverage or setting premiums based on people’s health histories, and will reduce their ability to set rates based on age. That can raise coverage prices for younger, healthier consumers, while reining them in for older, sicker ones. The rules can also affect small businesses, which sometimes pay premiums tied to employees’ health status and claims history.

The law’s 2014 effect on larger companies is likely to be more limited. Many of the big changes coming next year won’t touch them as directly as individual consumers and small businesses, though some will have to grapple with the cost of covering more workers or paying a penalty.

The possibility of higher premiums has become the latest focal point of the political tussle over the health law, which marks its third anniversary Saturday. Republican lawmakers have held hearings on the issue, and six GOP members of the House Energy and Commerce committee wrote last week to more than a dozen insurers asking them to turn over internal analyses on the law’s impact on premiums and costs.

The insurance industry has also been talking publicly about big potential premium increases in lobbying for tweaks to the law.

The individual market includes about 15 million people, and around 18% of the roughly 149 million with employer coverage were at small companies, according to 2011 figures from the Kaiser Family Foundation. The individual market is expected to grow to around 35 million people by 2016 as a result of the law.

. The company said the estimates were driven in part by growing medical costs not directly tied to the law. It also cited the law’s requirements that health status not affect rates and that plans include certain minimum benefits and limits to out-of-pocket charges, among other things.

Jeff Alter, who leads UnitedHealth’s employer and individual insurance business, said the numbers represented a “high-end scenario,” not an average. “There are some scenarios in which a member could see as much as a 116% increase or over,” he said, though others, such as some older consumers, could see decreases. He said the company dwelled on the possible increases because it was trying to prepare brokers to speak with clients facing big jumps.

Insurers are “not being shy that premiums are going to increase in 2014,” and are urging brokers to “brace our clients,” said John Lacy, vice president of group benefits at Bouchard Insurance, a brokerage in Clearwater, Fla. His firm has been hearing from carrier representatives that individual premiums in Florida could go up 35% to 50%, on average, and small-business rates around 30%, though it hopes to find strategies to blunt the impact.

There has long been debate, even among insurance experts, over how the law will affect premiums. Because the effect is likely to vary, different measurements can arrive at different conclusions. The CBO analysis cited by the administration determined that average premiums for consumers who buy their own coverage would be 14% to 20% lower because of the law—if the law didn’t change the types of plans they purchased.

But the CBO also suggested the law would lead to consumers buying more expensive plans, largely because it requires coverage to include certain benefits and limit charges such as deductibles. When this effect was taken into account, the average premiums would go up 10% to 13%, the agency said, though subsidies would ease the bite for most people. The agency also said small-business policies were likely to cost within a few percentage points of the amount they would have without the law.

Health and Human Services officials say competition among insurers, as well as provisions to limit their financial risk from attracting high-cost consumers, will exert downward pressure on premiums, and point to the tax subsidies that will limit many consumers’ costs.

Subsidies will be available on a sliding scale for people with incomes of up to four times the federal poverty level—currently $45,960 for a single person and $94,200 a year for a family of four. More than half of the 35 million people expected to be in the individual market by 2016 are likely to qualify for credits. People whose incomes are around the poverty level could see almost all of the cost of their insurance subsidized, while people at the upper end will get only a small discount toward their premiums.

*Modified from a WSJ article

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