Health reform update: Introducing health care like you’ve never seen before
With Obamacare just around the corner, Americans are about to go through what has been called the largest reform of our medical system since the implementation of Medicare. Yet according to a recent study, as of April, only 42 percent of Americans realized that the Affordable Care Act was actually law.
In March 2010, health care reform was signed into law and incremental changes have been taking place since, but by far the largest changes are set to occur on Jan. 1, 2014. The changes are sweeping — there is a mandate that with few exceptions all Americans must carry health insurance or face a penalty; but the changes don’t stop there. In 2014, many of the biggest changes will be both about how insurance policies cover people and how insurance policies are bought.
In Washington state, our insurance carriers currently use health risk questionnaires to determine a person’s eligibility for individual insurance policies and can impose pre-existing condition wait periods for the first few months of coverage. In 2014, there will be neither pre-existing condition wait periods nor health risk questionnaires — and you have what is called a guaranteed issue market. That’s a fancy way to say that if you apply for a policy, you are accepted without conditions. (Note: As always, there are some exceptions.)
Washington has a unique view of this since we tried to be a guaranteed issue state back in the 1990s, with disastrous results. People would wait until they were sick to pick up insurance, use the insurance to pay their claims, then drop the insurance policy when they were well. The insurance carriers would be paying out in some cases 10 times more in claims than they were getting in through premium dollars.
To make sure this doesn’t lead to the same massive rate increases of the 1990s, health care reform has implemented open enrollment periods. Open enrollment helps protect the insurance carriers because if individuals can only add insurance at set times, the insurance carriers hope to avoid having people pick up and drop insurance policies in an effort to play hot potato with the doctors’ bills.
We are fast approaching the initial open enrollment period, lasting from Oct. 1, 2013 to March 31, 2014. Next year, we are looking at a much shorter enrollment period; starting on Oct. 15 and lasting through Dec. 7. The obvious down side to this is that with so many Americans baffled about, or oblivious, to what health care reform means to them, I fear we will see an unacceptable number of people wake up May 1, only to find they are too late to get insurance and be forced to go uninsured for 2014.
The benefits side of insurance policies are changing too. The people who will see the most drastic change are those currently in today’s individual market with catastrophic insurance policies. Unless certain criterion are met, individuals over age 30 will no longer be allowed to purchase catastrophic policies, and those that do stay on catastrophic policies moving into next year will still have policies with increased benefits that come at a price. On the surface, most people will likely see their premiums increase. I say “on the surface,” because the premiums under health care reform do not necessarily match up to an individual’s monthly out-of-pocket cost; you have to take into account any possible subsidies available on the exchange.
So what is an exchange?
The exchanges are new online marketplaces for individuals, families and groups. In the simplest terms the exchange is an online comparison and application tool where people find what their government subsidy is, compare insurance plans, and apply for coverage. In Washington state, the exchange is named “Washington Health Plan Finder” and will primarily be relevant for individuals and families. To start the process, an individual fills in his or her personal information including income. They are then brought to a screen where they are able to enroll in Apple Health (the new name of Medicaid) if they are eligible, or select a broker to work with if their income is above 138 percent of the federal poverty line. (Obviously, I am biased, but it does not cost you anything additional to work with a broker and you get added customer service if your plan ever goes sideways.)
Next, individuals select if they want their subsidies to offset their end-of-year tax liability or if they want their subsidy to be sent directly from the government to the insurance carrier. Then, the comparison tool shows plan benefits compared side by side with monthly premiums. The plans that an individual would see at this stage are from many of the same carriers they know and recognize such as Group Health, Premera and Regence. Once they have selected a plan either on their own or with professional assistance, they can apply for the coverage.
Does it sound too easy? Don’t worry. With more than 2,000 pages of text to this massive bill, it has its fair share of conditions, exceptions and gray areas for legal teams to lose sleep over. Over the past few weeks, we have seen delays, revisions and clarifications. In the coming months and years, the only thing that seems to be true with absolute certainty is that this bill will both bring and will go through …Change.
– By Drew Toomey
Drew Toomey is a co-owner of Toomey and Associates, a small family-run business where he and his wife assist clients in sorting through the complexities of insurance contracts applied to every day life. He has worked with medical, dental, life and disability products, and has found his niche as a benefits consultant for more than seven years, focusing on the small group (under 50 employees) and individual/family markets. His most recent focus has been on understanding how health care reform will impact his clients and his industry.