When Debbie Smith retires later this month, she will no longer have health insurance.
The 54-year-old maintenance technical assistant for the Wichita public schools has had employer-issued insurance for the past 32 years.
But she was recently denied coverage for a new plan by Blue Cross Blue Shield for pre-existing conditions based on the medications she takes.
To stay on her current plan, it would cost $648 a month, an amount Smith says she can’t afford.
Now she’s waiting for the Affordable Care Act’s provision that prohibits insurance companies from denying coverage to people with pre-existing conditions to go into effect in January 2014.
“I just have to hope for nothing too major,” Smith said. “It makes me very nervous. I’ve never been without insurance. … It doesn’t feel like a smart move to make, but I’m without any other recourse at this time.”
In the meantime, she’s saving her money to pay for health care premiums once she can no longer be denied.
But the eight-month stretch will be stressful.
It already is, she says.
‘Brave new world’
The highly politicized Affordable Care Act is perhaps the biggest change to health care since the advent of Medicare and Medicaid in 1965.
It will have some impact on nearly every American.
But most people don’t even know what’s in the law or how it will affect them.
“There’s a lot of people who are wondering about this law,” said Kit Wagar, an Affordable Care Act specialist for the U.S. Department of Health and Human Services who is based in Kansas City, Mo. “There’s a lot of confusion out there.”
Although insurance companies can no longer turn away people based on gender or pre-existing conditions, they can still make you pay a higher premium based on family size, location, age and whether you use tobacco, Wagar said.
“No longer will being a woman be a pre-existing condition,” Wagar said.
Smokers can be charged up to 50 percent more than nonsmokers, and insurance companies cannot charge older people more than three times what they charge a young person for the same policy.
“It’s a brave new world,” Wagar said. “It’s a new market, and a lot depends on the competition out there. If insurers want to go out to get younger people, they’ll have to have an aggressive price on the other end, too.”
Because of that requirement, Wagar said it’s likely that younger people will tend to pay more in the new system than in the current system.
“The law says we’re all in this together, and yes, the younger people will probably have to pay a little more than (now),” Wagar said. “The thing with young people is they tend to age, and they will get the benefits of this when they’re older. They will have options when they’re older that older people in the current system don’t have.”
The individual mandate will require most people who don’t currently have health insurance to purchase a plan or pay a penalty starting in 2014.
Also known as the Individual Shared Responsibility Provision, the individual mandate would require those who do not pay for minimum essential health coverage to pay a penalty when filing a federal income tax return.
The penalty is $95 per adult and $47.50 per child (up to $285 per family) or 1 percent of the family income, whichever is greater, for 2014, according to the proposed rules on the IRS website.
That increases in 2015 to $325 per adult, $162.50 per child (up to $975 per family) or 2 percent of family income, whichever is greater.
For 2016 and beyond, the penalty increases to $695 per adult and $347.50 per child (up to $2,085 per family) or 2.5 percent of family income, whichever is greater.
After 2016, the amount will be increased by a cost-of-living adjustment.
The idea behind the mandate, Wagar says, is that if 30 million more people are in the system, the average price of health insurance should go down.
“What the law attempts to do is, you can’t keep having fewer and fewer people bear all costs of the entire system. The central theme of the law is no more free riders. You can’t expect to go to the hospital emergency room for your care and stick the bills on everybody else.”
Gary Gottschalk, a former Wichita accountant in the aerospace industry, said he’s not fond of the penalties that are part of the individual mandate.
“I just don’t feel that citizens should be fined or penalized for choosing not to take health care,” he said. “I just don’t think that’s right.”
And he’s not convinced that insurance companies won’t find ways to shift the burden of cost onto consumers.
“That’s what businesses do. They don’t tend to absorb the cost – maybe in the short term, but not in the long term,” he said. “They’ll find the means to re-shift the burden to get back to their Wall Street-expected return on investment.”
Barrick Wilson, a 68-year-old former health care marketing and communications manager who has worked for Wesley Medical Center, St. Joseph Hospital, Ronald McDonald House and Newton Medical Center, says he thinks the individual mandate is something that had to happen in American health care.
“If the politicians start trying to strip the universal coverage, they have to understand they’ll have to bow to the insurance industry, who’s going to want to take back those concessions,” Wilson said.
“People say they don’t want to pay for insurance, but they sure like that their kids can stay on or that there’s no pre-existing conditions. They don’t understand those concessions from the insurance industry were quid pro quo to keep everyone insured.”
According to the IRS, people are exempt from paying the penalty if they:
• Have religious beliefs that conflict with the law
• Don’t have affordable insurance coverage available
• Are members of federally recognized Indian tribes
• Fall below the minimum threshold for filing a tax return
• Go without coverage for less than three consecutive months in a year
• Are incarcerated
• Are unlawfully present in the U.S.
A related rule, known as “Pay or Play,” will require employers with more than 50 full-time-equivalent employees to offer health insurance or pay fines of $2,000 per employee, excluding the first 30 employees, according to the Kaiser Family Foundation.
Workers meeting certain requirements who can’t afford coverage from employers can take funds the employer might have contributed and use them to purchase a more-affordable plan in the online insurance exchanges.
Also known as insurance marketplaces, insurance exchanges will be online to allow consumers to compare and purchase insurance plans directly.
States have the option to have state-run exchanges or federally-run exchanges. Gov. Sam Brownback has opted for a federally-run exchange.
Enrollment for the exchanges will begin in October for coverage to begin in January 2014. The enrollment period for the exchanges will start Oct. 1 and go through March 31, 2014. Coverage would begin Jan. 1, 2014. In subsequent years, the enrollment period will be shorter.
Not all of the details have been released on the exchanges, Wagar said, in part because officials want to time the release closer to the enrollment period and because the government is going to train people called “navigators” to help others find plans that work for them.
People who meet certain income requirements will qualify for subsidies from the government to purchase plans on the exchange. The government will send the subsidy checks to the insurance companies who provide the plans.
Plans on the exchange will be rated as bronze, silver, gold or platinum based on how comprehensive the coverage is and how much they cost.
Wagar said the idea for the exchanges originally came from the Heritage Foundation, a conservative think tank.
“The basic idea is to find a way to provide more consumer awareness and give consumers more information to make the best choice,” Wagar said.
Small businesses also can buy coverage for employees through the exchange, Wagar said.
There are no estimates yet on the number of plans or insurance companies that will participate in the exchanges.
“The expectation is there will be a lot of companies,” Wagar said. “They’re selling a product to a whole lot of customers with premiums paid for by the government (if people qualify) and customer combined. The expectation is that the competition should be pretty fierce.”
The idea of Medicaid expansion for low-income residents is a key component of the Affordable Care Act.
Originally, the law required states to expand their programs, but that portion of the law was struck down by the Supreme Court in June.
Although Brownback has not yet decided whether Kansas will participate, the federal government is offering to partially pay for states to expand Medicaid programs.
States would receive 100 percent federal funding for the first three years, which phases to 90 percent after that.
The expansion would cover anyone who earns less than 133 percent of the Federal Poverty Level, about $14,856 for an individual and $30,656 for a family of four.
Opponents of expansion say they are not confident the federal government will hold up its end of the deal.“The goal is to lower the amount we’re already spending on this population … to get them into some kind of systematic care instead of going to the ER when sick,” Wagar said. “Really the goal is not to expand the social safety net but to lower the cost of treating people we’re already giving free care to.”
Wagar said the general population is already paying for that population’s medical care through higher health insurance premiums and increased hospital costs from patients who can’t pay their bills.
Providers are unsure of all the implications the law will have.
Many providers are anxiously awaiting the transition and its regulations, many of which will go into effect starting in 2014.
“It’s the beginning of a series of changes that will change the face of medicine,” said Jon Rosell, executive director for the Medical Society of Sedgwick County.
“Virtually all physicians and citizens and politicians recognize that the system we had or currently have is not ideal. It falls far short of what we deserve as a country and as a community. It’s absolutely not sustainable.”
Providers who receive reimbursement from Medicare will also see an impact through value-based purchasing, which is the idea that provider reimbursements for Medicare should be based on the quality of care provided.
The standards of quality care that are measured include things such as heart attacks, heart failure, pneumonia and surgical care, and those measures will likely be expanded over time.
Although the hospital portion of this began in fall 2012, payments to individual physicians will also be tied to quality measures instead of volume of patients starting in 2015.
Details of those measures have yet to be released by the government.
“Nobody minds being compared to their peers if you can make your practice better or more efficient. We’re all for that,” said Bart Grelinger, president of the Medical Society of Sedgwick County. “But right now the question is, ‘Who will judge that and how do we gather that information?’ ”
David Sanford, CEO of GraceMed, said that with health care reform, providers will likely be overwhelmed with increased demand for care that the community is not prepared to provide.
“A tsunami of demand for health care services is coming our way, yet we are figuratively playing in the pool next to the beach, unaware that we are going to get hit hard starting in 2014 and beyond,” Sanford said.
“There is a lot of talk about community priorities, but you seldom hear anything about the demand for health care being a top priority. … This is not just a federal and state issue, it is a local issue and needs local solutions and local private support.”