The Affordable HealthCare Act (ACA)

Previously, I covered the first seven of twenty key groups that will be affected by health reform. This time, we will look at an additional seven groups. First, however, I wanted to touch on the “individual mandate,” a term that you may have heard in reference to the ACA, but not fully understood.

The individual mandate, which will take effect in 2014, is a coercive measure of sorts to help increase the number of participants in the new state-based health insurance exchanges. Once it became clear to President Obama that many healthy Americans—insured and uninsured—were objecting to Health Reform and would more than likely opt out of it, he passed this mandate making it a legal requirement for all Americans to acquire health insurance and imposing a fine in the form of a penalty “tax” if they do not.

As critics vehemently resisted it, argued against it and forced it before the Supreme Court, the individual mandate received an affirmative nod by the members of that highest judicial body in our country in June 2012. They ruled that it was valid because it was just another “tax,” which made it constitutional under the federal government’s power to tax Americans. What made that ruling so controversial was that the word “tax” is nowhere in the language of the health reform legislation and the Obama administration to this day stresses that the individual mandate is a penalty not a tax.

Popular or not, the individual mandate stands as a viable part of the ACA, as it will add as many as 30 million uninsured people to the healthcare system. It’s no coincidence that most of those individuals are young and healthy and will inevitably need less from the system than they will have paid into it. That subsidy provided by them is necessary to balance out the increasing costs of caring for the poor and for the massive number of aging baby boomers.   

Now, for the good news and bad news of ACA for seven more groups of people…

For children under age 18

The good news is:

· children currently guaranteed coverage under Medicaid will not change.

· under the new law, private insurance companies will not be allowed to reject children due to pre-existing conditions.

The bad news is:

· children whose parents earn between 100 percent and 133 percent of the Federal Poverty Level (that’s approx. $23,000 to $31,000 a year for a family of four) will now be automatically covered under Medicaid. The only problem is that it forces those children who may already be covered by CHIP—a state run program that stands for Children’s Health Insurance Program—to now be covered by Medicaid. Nearly 8 million American children of families, whose income is modest but too high to qualify for Medicaid, are currently covered by CHIP, which provides private health plan coverage that is a lot better than traditional Medicaid.

For young adults ages 18 to 29

The good news is:

· individuals in this age range with pre-existing health conditions cannot be rejected by private health insurance companies

· dependent adult children can be covered on their parents’ health plan through age 26.

· there are no financial penalties for not having health insurance if you are uninsured for only a brief period of time (3 months or less)

· those under age 30 can purchase a catastrophic plan called the “Bronze plan” at a price even lower than the cheapest plan available for adults 30 and older.

The bad news is:

· this age group generally “lives for today” and is referred to by health insurance companies as “invincibles.” The new law’s individual mandate will force this group—who normally lives just above the poverty line—to now pay for health insurance or pay a penalty tax.

For illegal immigrants

The good news is:

· because illegal immigrants are officially outside of the eligibility factor, they cannot be held accountable to the individual mandate, which forces individuals to get health insurance or get penalized.

· illegal immigrants are now, and will continue to be, entitled to care through hospital emergency rooms. Funding to over 1200 community health care centers across the country, which generally serve this group, has increased.

The bad news is:

· illegal immigrants will not be allowed to buy health insurance through the state-operated exchanges, through Medicaid or through Medicare.

For those who own large companies

The good news is:

· health care exchanges can bring down the operating costs of companies that offer health insurance to their employees because with more plan options for those companies to choose from and the expansion of coverage to millions more people, insurance companies will be forced to be more transparent. In other words, insurance companies won’t be able to charge high premiums or raise rates without justifying their reason for doing so.

· non-compliance waivers are being offered to large companies now through 2014 by the Department of Health and Human Services. The purpose of the waivers is to allow these hard pressed entities to bypass the sudden increase in their operating costs until the health care exchanges come into play, ultimately lowering those expenses.

The bad news is:

· in the short run, increased operating costs due to the new mandates may “spook” owners of large companies into considering the alternative of paying the $2000 per worker fine charged to them for not providing coverage.

For those who work for large companies

The good news is:

· workers at large companies are generally assured of keeping their health care plans because many large businesses see health insurance benefits as a major tool for competing in the labor market. Often valuable employees are drawn to and stay at companies primarily for their benefits packets.

The bad news is:

· some large companies, despite the competition within their industry, may leave their workers uninsured since paying the fine would be much less than paying the premiums. Those would be companies such as McDonald’s, which typically provide barebones low-co
st health insurance referred to as “Mini-Meds,” because they don’t need incentives to draw employees.

For who own small companies

The good news is:

· small businesses—those described as having 25 or less employees—are given significant tax breaks under this new law to help them pay for their workers’ health insurance premiums and the administrative costs to manage those plans.

· health insurance exchanges will be available immediately to small companies in 2014; whereas, large companies will have to wait to be able to purchase through the exchanges, if it will be approved by their state at all. 

The bad news is:

· unfortunately, since substantial tax credits go to companies with 25 or fewer employees and full tax credit goes to companies with 10 or fewer employees, some small business owners may be reluctant to ever expand their staff beyond those numbers. Such a decision should be based on other personal choices as well, rather than strictly a financial one influenced by health reform. 

For those who work for small companies

The good news is:

· most small companies currently do not provide health insurance for their employees, so health reform is a great way for those employees to now be covered.

· employees will be able to select their insurance through their state’s health exchange at below-market price

· when an employee purchases an insurance plan through the exchange that plan stays with that person, not the job, allowing people to switch jobs without interrupting their insurance plan

The bad news is:

· some employees of small businesses may still never be covered by their employers even after health reform is in full swing. Nevertheless, in purchasing their own coverage, the health exchanges offer small business employees below-market prices and provisions to earn tax credits.   


Next time, I will cover the good news/bad news for the final six key groups. Stay tuned!