President Barack Obama signed the United States federal statute into law on March 23, 2010, marking the country’s most significant regulatory overhaul of the healthcare system since Medicare and Medicaid passed in 1965. It continues to cause heated debate amongst Democrats and Republicans. In addition, there are still approximately 33 million people in the United States who still do not have health insurance. To understand these issues, it is important to understand how exactly the Affordable Care Act affects the affordability of health insurance.
The Affordable Care Act is a document that is hundreds of pages long and is full of complex language that will put the average person to sleep before turning the first page. I am not sure about you, but if I am going to pick up something that is hundreds of pages long, I much rather it be filled with some adventure like one of the Game of Thrones books.
Fortunately there has been no shortage of content written about the Affordable Care Act, some of which has been sorted through and will be used in this article to highlight some of the things you need to know to understand how it may or may not affect your existing health insurance policy.
Provisions of the Affordable Care Act
The Medicaid website does a great job breaking down the provisions of the Affordable Care Act. The Act is meant to expand affordable Medicaid coverage for millions of low-income Americans as well as improve upon the Medicaid program and the Children’s Health Insurance program. There are several provisions summarized below:
The Act is meant to fill existing gaps in coverage for the poorest Americans. It does this by creating a minimum Medicaid income eligibility level across the country. Beginning in January of 2014, individuals under the age of 65 with income below 133 percent of the federal poverty level will be eligible for Medicaid.
Side note: According to research done by the Christian Science Monitor the 2013, federal poverty level is $11,490 for an individual and $23,550 for a family of four. Four times the poverty level amounts to $45,960 for an individual and $94,200 for a family of four.
When this kicks in, it will be the first time that low-income adults without children will be guaranteed coverage through Medicaid in every state without need for a waiver. It will also simplify the enrollment process for Medicaid and the Children’s Health Insurance Program.
Beginning in 2014, the federal government will fully fund coverage for newly eligible adults for three years and phasing down to 90 percent funded by 2020. There will also be additional federal funding for state Medicaid programs as well as primary care, preventative care, community-based long-term services and supports, and new demonstrations to improve quality of delivery systems.
Coordination with Affordable Insurance Exchanges
One thing that the Affordable Care Act does is it creates a system of coverage between Medicaid, the Children’s Health Insurance Program and Affordable Insurance Exchanges. These system is meant to allow individuals and families to apply for coverage using one single application and have their eligibility determined for all insurance affordability programs through one simplified process. To do this, there is federal funding provided through a variety of venues to help states improve their eligibility and enrollment systems.
Community-Based Long-Term Services and Support
The Affordable Care Act works to improve funding to help ensure that people can receive long-term care services and supports in their home or community. There are a few sub-categories under this provision including:
1) Home and community-based services: This will allow states to target home and community-based services to particular groups of people, to provide services accessible to more individuals and to ensure high-quality services.
2) Community First Choice: States that chose to provide person-centered home and community-based attendant services and supports to help improve people with disabilities’ ability to live in the community.
3) State Balance Incentive Payments Program: This encourages states to undertake structural reforms to increase access to non-institutional long-term care services, by providing grants to them.
4) Money Follows the Person: This provides individuals with long-term services and supports the ability to move out of the institutions and into their own homes or other community-based settings.
The Affordable Care Act makes various changes to the benefits provided to Medicaid recipients. People who are newly eligible for Medicaid will receive a benchmark benefit that includes the minimum essential benefits provided. The Affordable Care Act will guarantee that the coverage through Medicaid will include mental health services and prescription drugs.
Speaking of prescription drugs, the Affordable Care Act will change them by revising the average manufacturer price and establishing a new formula to calculate the federal upper limit for the drugs. This is meant to increase the rebate percentages for covered outpatient drugs, hopefully easing the costs for the prescription drugs, including for those who are HIV positive.
The benefits provision also will assure that children can receive curative treatment upon the election of the hospice benefit for children enrolled in Medicaid or the Children’s Health Insurance Program. It will also allow states to cover specified preventative services at no cost to Medicaid adult enrollees, such as immunizations.
Lastly, the benefits provision will also create an optional Medicaid State Plan benefit for states to establish Health Homes to coordinate care for people with Medicaid who have chronic conditions. Health home providers will likely integrate and coordinate all primary, behavioral health and long term services and support to treat the whole person.
Prevention of Chronic Disease
The Affordable Care Act wants to promote healthy living not only be increasing the number of people that have health insurance, but also by preventing chronic disease. With the Affordable care act there are provisions to prevent obesity-related services, encouraging states to expand and promote coverage of evidence-based preventative services for adults.
There is also a provision that provides Medicaid Coverage for tobacco cessation services including counseling for pregnant women trying to quit smoking. This provision will also provide incentives for the prevention of chronic diseases program. This nationwide program will test and evaluate the effectiveness of a program to provide financial and non-financial incentives to Medicaid enrollees of all ages who chose to participate in prevention programs to address at least one prevention goal.
The Affordable Care Act’s Affect on existing health insurance
The Affordable Care Act is complicated. You may get that it is meant to extend coverage to 33 million Americans who otherwise do not have health insurance. But what about the people that already have their own health insurance policy, whether it is through their employer or purchased independently through an independent insurance provider.
The Washington Post highlights how the Affordable Care Act affects business health insurance offerings as well as independent health insurance coverage. The first point the article makes is that Small Businesses that have fewer than 10 employees, average $25,000 in health wages and provide insurance for their workers will get a 50 percent tax credit on their contribution. The tax credit reaches up to small businesses with up to 50 employees and average wages of $50,000, though it decreases the bigger the business is.
Health Insurance Companies are not allowed to discriminate based on preexisting conditions. They are still allowed to discriminate based on age, premium rating area, family composition and tobacco use.
Starting in 2018, the law imposes a 35 percent tax on employer-provided health plans that exceed $10,300 for individual coverage and $27,500 for family coverage. This is meant to force businesses to avoid choosing expensive insurance policies, resulting in the insurers holding down their costs and making health insurance more affordable.
The Future of the Affordable Care Act
Based on the timeline for the affordable care act 2014 is the start of a number of changes for how health care works in America. Some of the highlights for what is coming include:
Increasing Access to Affordable Care: Expanding Medicaid Eligibility
Effective January 1, 2014 Americans under the age of 65 who have income less than 133 percent of the federal poverty line will be eligible to enroll in Medicaid. States will receive 100 percent federal funding for the first three years to support this expanded coverage, phasing down to no less than 90 percent funding in the years that follow.
Increasing Access to Affordable Health Care: Creating a System of Affordable Health Coverage
Also effective at the beginning of 2014, there will be a new system of coverage that makes coverage more accessible. People who cannot get insurance through their employer will be able to buy it directly in an Affordable Insurance Exchange.
There will also be a individual responsibility requiring people are able to afford it, to obtain basic health insurance coverage. If they chose not to they will be charged a fee to help offset the costs of caring for uninsured Americans.
Improving Access to Affordable Care: Increasing the federal matching rate for Children’s Health Insurance
Federal matching funds for the Children’s Health Insurance Program will increase 23 percentage points, up to a cap of 100 percent, in order to help states pay for coverage of uninsured children.
In 2015, Physicians will also be held accountable, with payments being directly tied to the quality of the care they provide.
In summary, the Affordable Care Act is an effort to decrease the number of Americans that do not have health insurance coverage. It does this by making health insurance more affordable and providing ways to hold insurance companies and businesses more accountable in lowering their costs. It is an ever-changing act and with the constant debate it may continue to evolve and change. If you have any specific questions regarding the Affordable Care Act and how it may impact your health insurance coverage please contact your local independent insurance agent.
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