MINNEAPOLIS - With the Obama victory in the Presidential election, the reality of the Affordable Health Care Act (Obamacare) is ensured. Now, states, including Minnesota, are moving to comply with the federal law.
"We eat and drink and breathe this, but for people who do not, you know, it is really confusing," said Dannette Coleman, Medica Vice President of Individual and family business. Coleman is a member of the State Committee advising on implementation of Obamacare in Minnesota.
Lynn Blewett, Ph.D. is an acknowledged expert on the subject and also on the state group. She explained who will participate in the Health Insurance "Exchange" once the state plan is agreed to and implemented.
"It is really a one-stop shopping, where you would go on the web and you would see different plans and products," said Blewett. "The Health Insurance Exchange is really focused on a very targeted population. That is the currently uninsured, in Minnesota that is about 500,000 people, and those who purchase coverage in the individual and small group market."
The reality is about 39% of Minnesotans work for big companies that offer health insurance to their employees. Those people are not affected by the exchanges. Nor are Medicare recipients. Medicaid recipients may use the exchange to qualify for their benefits.
Individuals who meet certain lower income requirements will qualify for federal subsidies, to ease the cost of premiums for their insurance.
Blewett said individuals who contact an insurance provider lack the clout and leverage of a big company. In the same vein, small companies, those with 2-50 employees, do not have the ability of larger firms to obtain the most favorable terms.
Friday has been the deadline for states to present their "blueprint" for their exchanges to Washington. However, states have the option of deferring the decision for one month, if they choose. The state's first decision will be whether to establish their own exchange or use the federal exchange. Minnesota intends to establish its own exchange.
Next they will have to decide where to locate the exchange itself. Although consumers will access the exchange on-line, which state agency, if any, will oversee the process. At first, the Minnesota State Commerce Department was to administer the program, but now it is being overseen by the Office of Management and Budget. Should it remain there? Should it remain public or become private or a quasi-public private administration?
"In Massachusetts, they have an Exchange Board that is operating outside of state government," said Blewett. "It is a quasi-public/private group with a board that includes both plans and consumers and state representatives. So, that is one option."
Another decision, said Blewett, is to be "active" or "passive", a reference as to how involved in the actual plans the state's participation will be.
"The Utah model is a passive purchaser," said Blewett. "It basically organizes information for consumers, but it does not negotiate rates or choose one plan or another. An active purchaser is more using its leverage to select plans over other plans. That is another big decision that has been basically put on hold. (by the now December deadline for the states)"
Once the exchanges are in place, individuals will choose among "bronze", "silver", and "gold" plans offered by the insurance companies. The premiums, co-pays and benefits will vary based on the plan selected.
"If you are willing to pay more out of pocket, a broader, richer benefit set, (you want the Mayo Clinic in your network) you are probably moving up to the silver or gold plan," said Blewett.
The purpose of Obamacare is to include as many Americans as possible in health care coverage. In fact, there are penalties for those who fail to obtain health insurance.
"The penalty is through the tax system," explained Blewett. "When you go to file your taxes, there will be a new form, maybe 'schedule H', where you get, from your health plan, that says 'I have a qualified health benefit' and you attach it to your tax form. So, if you do not have that attached and you do not have a qualified plan, then you will be taxed. The penalty will come in the form of a tax."
"The penalty starts out, in the first year, to be a pretty small penalty," said Coleman. "For an individual, it is $95 per individual in the household. Compared to the cost of insurance, certainly that is not a very stiff penalty, but that penalty does, over the years, increase to a point where it is a more substantial amount ($700)."
It is no secret that big insurance companies were not happy with the Obamacare proposals. Now, however, they are becoming reality.
"One of our biggest concerns about the legislation that passed at the federal level was it did much more to address access to health coverage than it did to actually lower health care costs," said Coleman. "I do not think the exchanges, in and of themselves, are a vehicle to lower premiums. However, the subsidies will lower what people pay for those premiums, if they are eligible for them."
Coleman points out that the question of how much people and especially, small companies, will use the exchanges, is "still a bit in question." After the program has been in place for some time, the states will decide if they wish to let larger companies participate in their exchanges. At first, only individuals and companies with up to 50 employees will be eligible.
The insurance companies are to have their plans in the bronze, silver and gold levels ready by October, 2013. The Exchanges are to be open for business in January, 2014.
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