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Tag: Health Insurance Exchanges

Will You Receive a Tax Credit to Help You Buy Insurance in 2014? How Much?

Beginning in 2014, millions of Americans will discover that they qualify for subsidies designed to help them purchase their own health insurance. The aid will come in the form of tax credits, and many will be surprised by how generous they are.

Not only low-income, but moderate-income families earning up to 400 percent of the federal poverty level (FPL) – currently $44,680 for a single person and $92,200 for a family of four – will make the cut. Within that group, households bringing in less than 250 percent of the FPL ($27,925 for a single person, $57,625 for a family of four) also will be eligible for help with out-of-pocket costs.

If your boss offers benefits, you won’t qualify, unless …

If your employer offers health insurance you won’t be eligible for a tax credit – though there are two exceptions to this rule:

  • If your share of the premium for your employer’s coverage would exceed 9.5 percent of your income, or
  • If your boss offers a skimpy policy that pays for less than 60 percent of an average worker’s covered benefits, you will qualify for help.

If I qualify, how much will I receive?

The size of the tax credit depends on your income, your age, how many people are in your family, and where you live.

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State-Federal “Partnership” Exchanges: The Rarely Discussed Alternative Option

Beginning in 2013, states will begin rolling out health care insurance exchanges as required by the Affordable Care Act (ACA). To this point most legislators, policymakers and health care experts have discussed the state-based and federal insurance exchange options at length. However, there is another form of insurance exchange that states are beginning to explore: the “partnership”.

In a state-federal partnership, states will divide obligations with the federal government. For this partnership model there is no requirement for a 50-50 split of labor, and the states are actually more of a facade whereby the consumers (individuals and employers) merely interact with the state. The federal government, on the other hand, will essentially perform all functions of the exchange management except customer service and plan management. Moreover, states have the choice to run either one or both of those functions. According to former head of insurance exchange planning at HHS Joel Ario, “States that choose this option are ceding the more technical aspects of exchange activity to the federal government but can retain control
of insurer oversight and consumer assistance.”

In the state-federal partnership model, the federal government will operate everything from consumer eligibility and enrollment to financial management and risk corridors. This essentially means that the federal government will take on most responsibility for the exchange, while granting states many of the perks they would receive if they had created a state-based exchange.

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Repairing ObamaCare

In the aftermath of the recent election, virtually all commentators were quick to conclude that ObamaCare has been saved. The health reform law can now go forward and Republicans are powerless to stop it.

The trouble is: ObamaCare is a deeply flawed piece of legislation. Its defects are so huge that Democrats are going to want to perform major surgery on it in the near future, even if the Republicans stand by and twiddle their thumbs.

That raises this question: What changes need to be made in the legislation to turn it into a health reform that solves existing problems without creating even more serious new problems? Here are six essential short term fixes:

Subsidize all insurance the same way. The way the government subsidizes health insurance under the current system is arbitrary and unfair. Employees with employer-provided insurance get that benefit tax free — a subsidy that is worth almost half the cost of the insurance for middle-income families. However, there is almost no subsidy available for people who must purchase insurance on their own. They must pay taxes on their income and then buy the insurance with what’s left over.

Under ObamaCare the subsidies become even more arbitrary. Although the new law creates generous tax credits for low and moderate income families who must buy their own insurance in newly created health insurance exchanges, the subsidy in an exchange can be as much as $12,000 higher than the same family will get if the same insurance is obtained through an employer!

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Health Insurance Exchanges Will Transform Health Care. Magically Increase Transparency. Improve Access. And Maybe Even Lower Costs. But Only if We Get it Right …

NPR ran a story recently about how some retailers are retooling efforts to appeal to consumers in light of increased competition, particularly from online vendors.

Many are striving to be more “customer friendly”; Kohl’s department store was mentioned for adopting a “no questions asked” return policy with the idea that customer loyalty could be enhanced as the retailer made itself easier to do business with.

Comparisons between health care and retail abound, and while we say it is ideal for the consumer experience to be the same in both industries, in fact they are much different. The gap between the two industries was well-illustrated in this video of a shopper in a grocery store. We see them at the counter having their items rung up. But they aren’t told the prices and when they are given the receipt at the end, they’re told the final amount due may actually differ from what they see on the receipt.

Let’s take the analogy a step further: what if the customer expected the same “no questions asked” return policy from Kohl’s? Or a money back guarantee? In health care, only recently has the federal government taken steps to impose financial penalties in instances of poor care (which is the health care system’s equivalent of a “return policy” from providers).

When our team was at Subimo we initially focused on cost and quality (outcomes) information on hospitals. It was clear that – for the same procedures – there were both low cost and high quality providers as well as high cost and poor quality providers. Our efforts with transparency were designed to help people sort through the information so they could make more informed decisions and understand what quality outcomes might mean to them. We knew there was much variation in outcomes with certain procedures (e.g. aortic aneurysm repair) and less variation with others (e.g. normal vaginal delivery). Helping people understand when a poor outcome was more likely to occur helped them with their decisions (and presumably made them better shoppers).

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The (Not So) Affordable Care Act – Get Ready For Some Startling Rate Increases

What will health insurance cost in 2014?

Will the new health insurance exchanges be ready on time or will the law have to be delayed?

There Will Be Sticker Shock! 

First, get ready for some startling rate increases in the individual and small group health insurance marketplace due to the changes the law dictates.In a November 2009 report, the CBO estimated that premiums in the individual market would increase 10% to 13% on account of the health insurance requirements in the ACA. In the under 50 employee small group market, the CBO estimated that premiums would increase by 1% to a decrease of just 2% compared to what they would have been without the ACA. All of these differences in premium would be before income based federal subsidies are applied to anyone’s premiums.

In recent weeks, the Obama administration issued a series of proposed regulations for the health insurance market. Since then, I conducted an informal survey of a number of insurers with substantial individual and small group business. None of the people I talked to are academics or work for a think tank. None of them are in the spin business inside the Beltway. Every one of them has the responsibility for coming up with the correct rates their companies will have to charge.

Hold onto your hat.

On average, expect a 30% to 40% increase in the baseline cost of individual health insurance to account for the new premium taxes, reinsurance costs, benefit mandate increases, and underwriting reforms. Those increases can come in the form of outright price increases or bigger deductibles and co-pays.

Did the Election Save ObamaCare?

The morning after Tuesday’s vote, there is one thing every commentator agreed on. The election of Barack Obama guaranteed that his signature piece of legislation — health reform — can now go forward. Republicans are powerless to stop it.

Yet there is something all these commentators are overlooking. There are six major flaws in ObamaCare. They are so serious that the Democrats are going to have to perform major surgery on the legislation in the next few years, even if all the Republicans do is stand by and twiddle their thumbs.

Here is a brief overview.

ObamaCare is not paid for. At least it’s not paid for in any politically realistic way. As is by now well known, the legislation will lower Medicare spending over the next 10 years by $716 billion in order to fund health insurance for young people. This reduction will primarily consist of lower payments to physicians, hospitals and other providers — reductions that are so severe that they will seriously impair access to care for senior citizens.

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Obamacare Is Still Vulnerable

President Obama has won reelection, and his administration has asked state officials to decide by Friday, November 16, whether their state will create one of Obamacare’s health-insurance “exchanges.” States also have to decide whether to implement the law’s massive expansion of Medicaid. The correct answer to both questions remains a resounding no.

State-created exchanges mean higher taxes, fewer jobs, and less protection of religious freedom. States are better off defaulting to a federal exchange. The Medicaid expansion is likewise too costly and risky a proposition. Republican Governors Association chairman Bob McDonnell (R.,Va.) agrees, and has announced that Virginia will implement neither provision.

There are many arguments against creating exchanges.

First, states are under no obligation to create one.

Second, operating an Obamacare exchange would be illegal in 14 states. Alabama, Arizona, Georgia, Idaho, Indiana, Kansas, Louisiana, Missouri, Montana, Ohio, Oklahoma, Tennessee, Utah, and Virginia have enacted either statutes or constitutional amendments (or both) forbidding state employees to participate in an essential exchange function: implementing Obamacare’s individual and employer mandates.

Third, each exchange would cost its state an estimated $10 million to $100 million per year, necessitating tax increases.

Fourth, the November 16 deadline is no more real than the “deadlines” for implementing REAL ID, which have been pushed back repeatedly since 2008.

Fifth, states can always create an exchange later if they choose.

Sixth, a state-created exchange is not a state-controlled exchange. All exchanges will be controlled by Washington.

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Nine States to Watch for ACA Implementation

Healthcare reporters have been in a frenzy to report this week that the ACA is a done deal and states should get on with it. The election certainly changes the dynamic in the repeal effort, as Speaker John Boehner indicated in a recent interview with ABC News, yet the implementation battle is far from over.

The next interesting story line is developing out of an OK lawsuit pertaining to the legality of subsidies being made available in the federal exchange. To be more specific, it challenges an IRS rule that imposes an ACA employer mandate where the statute does not appear to authorize it. If this case were to prevail, it would undermine the “fallback” federal exchange that is going to be established for states that opt to forgo setting up their own state exchange.

Governors in SC, GA, FL, KS, VA, MO are on record that they will not set up a state exchange.  Most believe, minus the Democratic Governor of MO since a ballot question prevents him from unilaterally setting up an exchange, that the subsidies will not be available in the federal exchange, and will put the federal government between a rock and a hard place.

The election results at the state level also play into this story.

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The 2012 Elections and 2013 — A Daunting To-Do List

The Affordable Care Act (“Obamacare”) is now settled law.

It will be implemented. It will also have to be changed but not until after it is implemented and the required changes becomes obvious and unavoidable. We can all debate what those things will be (cost containment is on top of my list) but it doesn’t matter what we think will happen––time will tell.

There are and will be more lawsuits.

I wouldn’t waste a lot of time worrying about those. Anyone in the market will do better spending their time getting ready.

But, when will the Affordable Care Act (ACA) be implemented?

So far, only about 15 states say they want to implement health insurance exchanges. Some of those may not make the October 1, 2013 kick-off date.

Maybe now that it is clear the law will go forward, some of the conservative states who have said they would not build one will get into high gear rather than have the Obama administration do it for them. But they may not have enough time to be ready in less than eleven months.

The Obama administration says they will be ready on time with federal exchanges. But they have not been at all transparent about just what they have so far done and can get done in the eleven short months that remain.

Starting today, the big question is can the Obama administration really be ready or will the October 1 insurance exchange launch date have to be pushed back, at least in some states?

It’s time for some post-election transparency and honesty from the administration.

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The Future of Health Care in Obama’s Second Term

Although members of the Obama team are now celebrating their election victory, the next four years will not be smooth sailing. Ignoring the campaign rhetoric, there is still much more work to be done in order to reshape our health care system; the effect on academic medical centers and teaching hospitals will be significant.

The political conscience is still being driven by the fear of the fiscal cliff, which dominates most Washington conversations. Both political parties agree that health care is a significant contributor to our present and future deficit and that we have to figure out how to deliver more care at a lower cost. But, they argue about what to call it, who gets credit, and whether the solution is bigger government involvement or a dominant private market?The potential cuts to NIH funding and graduate medical education support do not go away with another four Obama years. We anticipate that the president will reform the tax code and transform how we deliver health care. The latter will be his lasting legacy.

However, in all this chaos, there are opportunities. While we no longer hope for a bipartisan middle ground on health care — and rancor will certainly escalate if President Obama is reelected — to many people, the Affordable Care Act is starting to look like a tangible business opportunity. Every insurer is looking at the 30 million uninsured people who will receive coverage through a mix of subsidized private insurance for middle-class households and expanded Medicaid for low-income people. These new markets could be worth $50 billion to $60 billion in premiums in 2014, and as much as $230 billion annually within seven years. The structure and implementation of these programs present specific challenges for AMCs.

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