Brave New World of Affordable Health Care

Steve Cowherd, a  a partner with Jeffers Cowherd, a Fairfield law firm with expertise in health care law, and a Westport Sunrise Rotarian summarized and explained the Affordable Care Act to the club at its June 29 meeting at BobbyQ’s Restaurant in Westport.

Though the Supreme Court had issued its ruling the previous day, Cowherd said “I’ve been living the law since March, 2010... Now some of (it) will move forward.”

Cowherd said he would “stay away from politics,” and offer an overview of its contents “from the perspective of a small business owner.”

In a larger perspective, he said the Affordable Care Act is about “what will we as a society do?” He pointed out that the goal of the Act is to address the millions of uninsured Americans and avoid “a two tier system in which those at the top receive the best care while others don’t even have access to the latest MRI or cancer drug.”

The Affordable Care Act

Cowherd talked about aspects of the Act that are aimed at “small businesses [that] can’t or don’t provide health care coverage for their employees.” But, he added, the new law is designed to help small businesses provide coverage to employees and is built on the premise that the uninsured will obtain coverage through such plans or purchase affordable insurance individually on state-based health insurance exchanges.  The law also provides for an expansion in Medicaid coverage.

The law includes carrots and sticks that encourage broader coverage by employers, provide subsidies for purchases on the state run exchanges and cap administrative costs for insurance companies. Experts project these features will yield million of new insureds.

The way to full implementation was paved once the Supreme Court upheld the Individual Mandate. Chief Justice John Roberts led a 5 - 4 majority upholding that section. The Court ruled that the Mandate was constitutional under the government’s taxing power.  In so doing, a majority of the justices also found that the Mandate was overreaching and unconstitutional under the Commerce Clause since it forces people into buying a product they may not want.

The four progressives who sided with Justice Roberts in the majority opinion disagreed with him on this point.  Justice Ginsburg wrote their brief, saying the Mandate is, in fact, constitutional under the Commerce Clause. She argued there is no coercion because all Americans will, at some time, require medical care, so requiring each person to purchase that care is constitutional. Alternatively, they must pay an assessment to offset costs they impose on the care provider. 

Medicaid To Be Expanded

Cowherd also explained how the ACA broadens insurance coverage for those with the lowest incomes by expanding Medicaid eligibility. All non-Medicare eligible individuals with incomes up to 133 percent of the Federal Poverty Level ($11,170 for an individual in 2012) will become Medicaid eligible.

This will have a substantial impact locally as raising Connecticut's ceiling is forecasted to add 150,000 people to the Medicaid rolls.  On this point, Cowherd explained that the Supreme Court ruled that the federal government cannot withhold its existing Medicaid funding from states choosing not broaden their Medicaid programs to the 133% level. However, the government can withhold the new funding it has promised for purposes of this expansion from state’s that do not wish to participate.  The federal government will fund 100 percent of the costs for the new Medicaid recipients from 2014 through 2016, then gradually reduce its share to 90 percent by 2020.

While our state was the first to receive approval to expand Medicaid under the ACA, many governors, most of them  with Republicans, have said they will not expand their Medicare rolls due to their concerns that federal funding could be withdrawn.

The next step up, individuals and families earning between 133 and 400 percent of the federal poverty level), will be eligible for federal tax credits and reduced out-of-pocket limits if they purchase insurance on the state-based exchanges.

State Insurance Exchanges

Every state must have its Affordable Insurance Exchange operating by January 1, 2014. These online exchanges, Cowherd said, “will provide Qualified Health Plans in which covered services and cost sharing is standardized …. showing a common set of benefits with standard fees and co-pays to simplify comparison and to make the market more competitive.”

The exchanges will be initially reserved for individual purchasers working for companies with fewer than 100 employees (in Connecticut the state-based exchange will initially be open only to small employers with fewer than 50 employees). In addition:

• Those employers with 25 or fewer employees with average annual wages below $50,000 will be eligible for a tax credit of up to 50% of the cost of their company’s health care insurance.
• Companies with more than 50 employees are required to provide health insurance. Those that do not must pay an assessment for every non-covered employee after the 30th.

Cowherd outlined four levels of coverage the exchanges will provide: the least costly, bronze plans, will cover 60 percent of the projected costs of covered health care, while the most costly, platinum, will cover 90 percent. The difference will be paid by deductibles, co-payments and coinsurance.

The ACA, Cowherd said, also incorporates the concepts of Guaranteed Issue and Community Rating.  The former makes everyone who wants to purchase health insurance, including those with pre-existing medical conditions, eligible for coverage.  The latter limits premium differentiation to the following four risk categories:

• Age - The oldest person covered cannot be charged more than three times the youngest;
• Tobacco Usage - Heavy smokers may be charged no more than 1.5 times what non-smokers pay;
• Geography - Premiums will reflect the cost of service in the plan area; and
• Policy Type - Individual or family coverage.

Other features the new law are: the elimination of annual and lifetime coverage limits; preventive care services will be 100 percent covered; dependents may remain covered by their parents’ plans until they turn 26; and reductions in the Medicare Part D coverage “donut hole” and increased subsidies for brand name and generic drugs.

For those interested in learning more about ACA, the Kaiser Family Foundation is a good resource:
http://www.kff.org/healthreform/8061.cfm and
http://healthreform.kff.org/the-basics/Requirement-to-buy-coverage-flowchart.aspx

The Commonwealth Fund also offers substantial background information:
http://www.commonwealthfund.org/Blog/2012/Jun/SCOTUS/Nation-to-Move-Forward-on-Ensuring-Affordable-Access.aspx