A look at the implementation of the new healthcare policies in Georgia
By Pam O’Dell
On March 23, 2010, President Obama signed the Patient Protection and Affordable Care Act (Commonly known as the Affordable Care Act, or ACA). Accompanied by the Health Care and Education Reconciliation Act, the law represents a significant government expansion and reorganization of the American health care system.
The ACA was devised to address rising health care costs, health disparities, and unfair business practices on the part of insurance companies. It attempts to streamline health care delivery and improve healthcare. Its focus is prevention and cost saving.
The law will not be fully implemented until 2020.
Much of the law involves mandates directed at the health insurance industry and has already been implemented.
However, the primary goal of the ACA (to provide affordable health insurance for all Americans) is to be addressed beginning in 2014.
A patchwork of programs will be sewn together (building upon existing federal and private programs) to provide health care insurance for the estimated 18.4 percent of non-elderly Americans who lack insurance.
The largest programs include: a national health care exchange, expansion of the federal Medicaid system, and individual as well as employer insurance mandates.
Initially beset by significant legal challenges, much of the Act was upheld by the Supreme Court. The Court maintained, however, states’ right to opt out of some of the Act’s provisions- most significantly, the Medicaid Expansion program.
Medicaid Expansion in Georgia
The federal Medicaid program serves mostly low-income mothers and children, the disabled, and the elderly. According to the U.S. Census, the program served 48.6million (or 15.9 percent) of Americans in 2010.
As of June 14, 2013, twenty-six Governors had made the decision to expand their state’s Medicaid program. Governor Nathan Deal was not one of them. Deal has publically claimed that the state could not afford the expansion.
According to the Governor’s office, the addition of 650,000 Georgians (one in every five Georgians) would cost the state $4.5 billion over ten years. (The federal government’s contribution would be $36 billion.)
Proponents of the expansion claim Georgia cannot afford not to implement the expansion. Citing the state’s costs to keep health facilities afloat amidst a significant (and growing) percent of uninsured, proponents view the federal government’s investment in Georgia’s health care infrastructure as a necessary ‘jump start’ in the direction of prevention while stimulating the state’s economy.
According to the Selig Center for Economic Growth, the economic impact of expansion would result in an additional $72 billion to Georgia’s economy between 2014 and 2023. Hospitals and health care workers are expected to benefit significantly.
States can elect to opt into the program at any time.
ACA’s Health Insurance Marketplace
The ACA’s Health Insurance Exchange (HIX) offers a marketplace where individuals and small businesses can compare policies and premiums, and buy insurance (with a government subsidy if eligible).
According to the U.S. Department of Health and Human Services, 1,698,883 or 20 percent of Georgia’s non-elderly residents are uninsured. It is estimated that 94 percent of these individuals may qualify for either tax credits to purchase coverage in the Marketplace or for Medicaid if Georgia participates in the Medicaid expansion.
The exchange will be fully functional by January 1, 2014.
States were given the choice of whether to devise their own exchange or allow the federal government to do so. In Georgia, an advisory committee was tasked with deciding whether or not Georgia would operate its own exchange. The committee recommended that Georgia allow the federal government to operate the exchange and Governor Nathan Deal approved their recommendation.
The federal program can be accessed online now (healthcare.gov) in order to obtain basic information on the exchange. It will be fully functional after Oct. 1, 2013. After that date, citizens can use the internet to review insurance options and select an insurer. Actual insurance coverage will not begin until after Jan. 1, 2014.
Premium assistance subsidies reduces the amount that an individual (or family) pays for health insurance coverage by providing a tax credit. These subsidies are only available through the HIX. Subsidies are based on income. The subsidy is based on a basic plan. An individual or family who wants a more expensive or higher tier plan must pay the difference.
The ACA provides two forms of subsidies to help pay for health insurance.The first is a monthly ‘premium assistance tax credit.’ The credit will lower the premium amount an individual or family must pay. The second is a ‘cost-sharing assistance.’ This will limit a person's maximum out-of-pocket costs, and, possibly reduce other cost-sharing requirements (i.e., deductibles and co-payments).
ACA Employer Mandate -- Perhaps one of the most contentious provisions of the ACA, the law requires that businesses with over 50 employees provide health insurance for those employees. The mandate was intended to be implemented in 2014 but was postponed until 2015 by the Obama administration. ACA opponents claim that the postponement amounts to an admission that the mandate is unattainable for businesses. The Obama administration states that the postponement was necessary in order to make program changes within the Internal Revenue Service (IRS) and that the requirements are not unreasonable.
Private, for profit employers with less than 25 employees (each making less than 50,000 per year) and subsidizing at least 50 percent of their employees’ health plans can qualify for small business credits for up to 35 percent of the employees’ premiums. (Non-profit employers can receive a 25 percent credit).
Federal Subsidized Coverage for Underinsured Employed -- Individuals who are insured through their employer can obtain subsidized coverage in an exchange if their premiums are more than 9.5 percent of their household income, or the plan pays less than 60 percent of the cost of covered benefits.
The ACA Individual Mandate -- Beginning on January 1, 2014, individuals lacking ‘qualifying health coverage’ must pay a penalty, either a flat rate or a share of household income, whichever amount is greater. The individual ‘responsibility requirement’ was integrated into the law in order to spread risk throughout the health care insurance industry. The provision aims to add a majority of healthy participants in order to counter act the minority percentage of individuals with preexisting or costly conditions (such as diabetes or cancer).
The law provides subsidies for premiums and out-of-pocket expenses.
The flat rate penalty is phased in over three years beginning in 2014 at $95 per year, and increasing in 2015 to $325 per year, and then $695 in 2016. After 2016, the penalty increases annually and has a cost-of- living adjustment. The maximum flat rate tax per family per year is $2,085 per year.
The other penalty option is based on household income. Penalties start in 2014 at 1 percent of taxable income and increases to 2 percent in 2015. It maxes out at 2.5 percent of taxable income in 2016 and beyond.
‘Qualifying coverage’ includes: Most employer-sponsored health plans and individual market-based plans, public plans such as Medicare, Medicaid, and programs within the Veterans Administration. Also included are insurances provided within the HIX.
Exemptions -- The individual responsibility requirement does not apply to: Individuals who cannot afford coverage (defined as those who would pay in excess of 8 percent of their income for premiums); Individuals who are not required to file taxes (In 2009, citizens earning less than 9,135 and couples earning less than 18,700 were not required to file taxes; Undocumented immigrants; Individuals on travel out of the United States for more than one year; Incarcerated individuals; Native Americans; Individuals whose claim to have a conscientious objection