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The Supreme Court's Health Care Decision and Your Pocketbook
Trudy Lieberman | April 5, 2012
Last week's drama at the Supreme Court and most of the media coverage that followed omitted crucial information:' how a decision either upholding or junking the Affordable Care Act (ACA) will affect ordinary Americans.' Because the health reform law is not well understood by most people, it's worth recapping what might happen.
Insurance Coverage Mandate
Most of the 160 million Americans who have health insurance from their employers won't be affected directly by the Supreme Court's ruling either way.' Most will continue to get job-based coverage.
A mandate for everyone to have health insurance is at the center of the Supreme Court case. If the individual mandate is upheld, every state will implement 'exchanges' where people without health coverage will be able to shop for insurance.' However, those with employer-sponsored coverage will not be eligible to purchase insurance from the exchange unless their share of the premium for their employer insurance is greater than 9.5 percent of their gross income.' ' If employer coverage is skimpy or too expensive, they'and their family members'are stuck.
If the Supreme Court upholds the mandate, then people who do not have coverage either from government programs or from their employers will have to buy it.' Those with incomes less than about $92,000 (about $45,000 for individuals) will receive subsidies that will help cover the cost of a policy.' Those with lower incomes will receive more help.' If the mandate is struck down, people without coverage are in the same fix they are now.' They will still be at the mercy of the individual insurance market where premiums are very high, and insurers often reject those with preexisting conditions.
Whether young adults will still be able to obtain coverage under their parent's insurance until they turn 26 will depend on whether the court strikes down the entire law or just the mandate.' ' The requirement to cover young adults is already in effect, giving coverage to some 2.5 million young adults.' If that provision goes, then this group will be in the same position they were in before the law was passed.' Some carriers might allow them to stay on their parents' insurance; others might not.' In that case, they, too, will have to shop in the individual market.
More on Those Exchanges
If the mandate stays, states will set up shopping exchanges where insurance companies would sell their policies in a kind of insurance bazaar.' Policies will have to meet minimum standards, but states will have a lot of discretion about what the basic plan will cover.' Consumers will be able to choose from among four types of policies:' bronze policies will be the cheapest and will cover only 60 percent of a policyholder's medical costs; the silver policy will cover 70 percent; a gold policy 80 percent; and the most expensive platinum policy will cover 90 percent and offer Cadillac coverage for a price, of course.' ' ' If the mandate goes, some states may operate their own exchanges similar to what Massachusetts does.' Those who will have to buy health insurance in the individual market and even those with employer coverage will find policies that will cover varying amounts of their medical expenses.' They won't be called bronze, silver, gold, and platinum, but they will be similar.
Rising Health Care Costs
The big pocketbook issue for consumers will be whether there will be a slow down in the increase of health care costs.' Those ever-rising prices are responsible for a large chunk of the premiums everyone pays, and they also make it tough to cover those high deductibles and coinsurance the newer models of skimpy coverage require.
The Affordable Care Act contains a number of measures designed to provide better care that will ultimately result in lower prices, or so the designers of these provisions have hoped.' These include so-called medical homes and accountable care organizations (ACOs), which are supposed to better manage patients' conditions.
The law also calls for rewarding hospitals with larger Medicare reimbursements if they give better care.' ' Some of these efforts will continue regardless of a Supreme Court decision to overturn the ACA. But it is unclear whether the ACA provisions can lower costs or improve care.' A study published last week in the New England Journal of Medicine ' found that paying hospitals to improve their quality of care did not appear to help patients live longer.' The health reform law calls for bonus payments to hospitals that show improvement.
No one knows yet what the Supreme Court will decide, but either way its decision will affect everyone's pocketbook.
More Blog Posts by Trudy Lieberman
Trudy Lieberman, a journalist for more than 40 years, is an adjunct associate professor of public health at Hunter College in New York City. She had a long career at Consumer Reports specializing in insurance, health care, health care financing and long-term care. She is a longtime contributor to the Columbia Journalism Review and blogs for its website, CJR.org, about media coverage of health care, Social Security and retirement. As a William Ziff Fellow at the Center for Advancing Health, she contributes regularly to the Prepared Patient Blog. Follow her on twitter @Trudy_Lieberman.
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April 17, 2012 at 2:14 PM
The following is incorrect for several reasons:
"A mandate for everyone to have health insurance is at the center of the Supreme Court case. If the individual mandate is upheld, every state will implement â??exchangesâ?? where people without health coverage will be able to shop for insurance. However, those with employer-sponsored coverage will not be eligible to purchase insurance from the exchange unless their share of the premium for their employer insurance is greater than 9.5 percent of their gross income. If employer coverage is skimpy or too expensive, theyâ??and their family membersâ??are stuck."
Here they are:
First it says that those with employer-sponsored coverage will not be eligible to purchase insurance in the exchange when what it really means is that those with employer-sponsored coverage will not be eligible to buy subsidized coverage in the exchange. [Anyone can purchase coverage in the exchange - the issue is always whether or not the cost of the coverage will be subsidized.] Also, in order to prevent its employees from qualifying for subsidized coverage, the employer-provided coverage has to satisfy the 60% standard - - i.e., it has to cover at least 60% of medical expenses determined on an actuarial basis. For the small group segment, for which minimum essential benefits must be covered, this is the same as the bronze standard of exchange coverage So, a small employer can make an employee ineligible for subsidized coverage in the exchange by offering employer-provided coverage that satisfies the bronze standard and not charging the employee more the 9.5% of household income for single coverage under the plan. The law does not require large insured group or any self-insured group to provide minimum essential benefits; however, the pegging of individual and small group coverage levels to "typical employer sponsored plans" suggests that the drafters' understanding was that large and self-insured plans do cover minimum essential benefits. (As a practical matter, this potential oversight in the drafting may not make much difference, because plans with no annual limit or lifetime limit but not covering essential benefits would not be of much value to anyone.)
If the employer coverage does not satisfy the bronze standard (i.e. is skimpy) or is "too expensive" (i.e. single coverage is more than 9.5% of household income), the employee may qualify for subsidized coverage in the exchange. What the last sentence quoted should say is "If the employer offers coverage that is not too skimpy and not too expensive, the employee and his/her family members cannot qualify for subsidized coverage in the exchange."
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