The Affordable Care Act (aka Obamacare) and You— By Robert Perrone

The Affordable Care Act (aka Obamacare) and You

By Robert Perrone

Now that the electorate has settled the issue of whether the Affordable Care Act (ACA) will be repealed, the question is no longer if, but how and how much; that is, how will it be implemented and how much will it cost individuals, particularly those not covered by employer-provided medical insurance?Of all the federal laws touching upon health and social welfare policy, the ACA is considered to be the “most monumentally complex and challenging to comprehend.” That complexity is a reflection of the American health care system, which itself is complex and challenging to understand, in both its specifics and its very purpose. Is its primary purpose to provide health care to those who cannot afford it, or profits to those who provide it? Not surprisingly, the answer probably contains a little of both. We can ask that same question of the ACA—is its primary purpose to provide affordable care to a large percentage of the population that remains uninsured or under-insured, or is its purpose to provide enormous profits to insurance companies that will reap those profits as a result of the ACA? Once again, the answer is closer to “a little of both.”

The Issues of “Guaranteed Issue” and Community Rating
Guaranteed issue allows people to purchase coverage when they get sick, decreasing theneed to maintain insurance coverage. Thus, people with chronic illnesses and high medical costs will sign up for coverage, while healthy individuals will respond by dropping coverage and entering the market only when they need coverage. The result is the pool of enrollees becomes increasingly older and sicker.Community rating rules limit the factors that can be used by insurers to adjust premiums. Under the ACA, insurers will only be allowed to vary premium costs for family size, age, geographic location, and tobacco use. Community rating provisions prohibit the use of previous healthcare claims or health status as a factor in premium determination, and premiums for older Americans can be no more than three times that for younger Americans.Successfully addressing these two issues is a noteworthy accomplishment of the ACA, since potential solutions can lead to the nightmare of adverse selection, which can lead to undermining health care reform.In order for a health insurance market to function under guaranteed issue, the participation of healthy individuals in the risk pool is necessary. The way that the ACA addresses this issue is called the “individual mandate,” the requirement that all individuals have health insurance.

A little history of the individual mandate
The individual mandate may be the most controversial aspect of the ACA. This shouldn’t be the case, since virtually every advanced capitalist nation requires their citizens to obtain and pay for health insurance, either by being taxed to pay for government-provided healthcare (Canada, Great Britain, among others) or by purchasing through private insurers. And, it also shouldn’t be the case because the individual mandate has been a part of this country since the 18th century.In July of 1798, Congress passed, and President John Adams signed, “An Act for the Relief of Sick and Disabled Seamen.” The law authorized the creation of a government-operated marine hospital service and mandated that privately employed sailors be required to purchase health care insurance. It was also the first to mandate that privately employed citizens be legally required to make payments to pay for health care services.Fast forward to President Clinton’s first term. The individual mandate became a serious topic of discussion among moderate Republicans (Senator John Chafee (R-RI) and Bob Dole (R-KS)) and conservative think tanks, like the Heritage Foundation, mainly as an alternative to the proposals being put forward by Clinton.

The 30-hour Rule for Large Employers

The ACA requires large employers, those with 100 or more employees, to provide coverage to full-time employees or pay a penalty. For the purposes of the ACA, full-time employee would be defined as those who work at least thirty hours per week. Some large employers have been reducing the hours of employees in order to avoid having to provide coverage. Adjunct faculty in Los Rios should not be subjected to this rule, since thirty hours weekly would equate to 75% of a full-time assignment or .75 FTE, which is prohibited under the California Education Code for part-time temporary faculty.

Robert PerroneHow Much Will I Have to Pay?
Those who are covered by an employer-provided plan need not be concerned with cost, at least not yet. The ACA will not interfere with employer-provided health insurance. It is those without coverage who should be asking that question, which, in Los Rios means adjunct faculty. Of the 1,400 (more or less) part-time faculty in Los Rios, only about 200 are currently enrolled in one of the three health insurance plans offered by the District. Of the rest, many may be covered elsewhere, either through a spouse/partner, other employment or not at all. For those who are not covered by any policy, the ACA provides for premium subsidies and cost-sharing reductions. Of those two, Los Rios part-timers without coverage will probably fall under the premium subsidy category.A part-timer with an assignment of .40 FTE in Los Rios and no other employment, and paid at Class II, Step 4 of the salary schedule will have an annual income of approximately $14,780. Under the ACA, this individual can expect to pay approximately $754 annually of his/her income as a contribution to a health insurance premium or $62.83 monthly. Individuals earning up to $43,320 can expect to pay approximately $4,115 annually toward the cost of premiums.The District offers five different healthcare plans. The monthly cost of the two most popular plans, traditional Kaiser HMO and the Kaiser DHMO, for a part-timer with a .40 FTE assignment would be $500.50 for the former and $382.18 for the latter plan. Thus, if you are an adjunct with less than a .60 FTE assignment (the threshold for fully paid coverage), it would make more sense to take advantage of the health insurance exchanges that are part of the ACA.A Word About Those Health Insurance Exchanges
As you may know, California has taken significant steps in organizing its health insurance exchange. Those insurers that participate in those exchanges must offer coverage at four different levels, which correspond to the amount of cost sharing required of each coverage category. For example, the bronze level offers lower premiums, but with cost sharing averaging as high as 40% of the cost of services.

Final words
Not surprisingly, opinions of the ACA vary widely. You are no doubt familiar with the conservative assessment, since that is what has received the greatest amount of air time in the MSM. The left-of-center critique is that the ACA simply throws more money into a dysfunctional and unsustainable system, with only a few improvements at the edges, and it augments  the central role of the investor-owned insurance industry. (“Is the House Health Care Bill Better than Nothing?” by Marcia Angell, M.D., “The Huffington Post”, November 8, 2009) Others have claimed that the bill ensures that the private health insurance industry maintains its monopoly. (Congressman Eric Massa)What is clear is that many people in the individual market will finally have access to comprehensive health insurance and not the loop-hole-filled plans of the past.

McDonough, John, Inside National Health Reform University of California Press, 2011

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