ObamaCare – Here Comes the Affordable Care Act!

The Affordable Care Act, also known as “ObamaCare”, is the law of the land. Now that all the legal and political hurdles have been scaled with the recent Supreme Court ruling and President Obama’s re-election, full implementation is coming, so let’s summarize where we’ve been and where we’re going. This is probably my most important blog post for those worried about health insurance in the future.

The A.C.A. is a four year plan. The government started implementation in 2010 and it will be largely completed in 2014.  Of the 88 points of policy to be put in place, 57 have already been accomplished, with another 31 coming in 2013 and 2014. And in the next two years the most important changes will take place.

Here’s a summary of what’s happened so far – these are provisions of the ACA already in place:

  • All health insurance companies must spend at least 80% of all insurance premiums on actual health insurance. Not marketing, not private jets, not $50 million salaries. Money must go for actual health care. Before this, many insurance companies were spending less than 50% on actual health care! If you or your employer received a refund from your insurance company this year, this is why – they fell below the 80% mark in 2011;
  • Adult children can be included on their parents’ health insurance policy up to age 26. This is extremely important for all the unemployed young people just out of college;
  • Health plans are prohibited from placing lifetime limits on the dollar value of coverage, and from denying children coverage based on pre-existing medical conditions;
  • The creation of a website to inform citizens of the plan itself: www.healthcare.gov;
  • A number of Preventative Care measures that were costly are now provided by your insurance company at no cost to you. The intent is, it is cheaper to keep us healthy than pay when we get sick;
  • Lots of changes to Medicare and Medicaid to stem the tide of inefficiencies, medical redundancies and curb fraudulent billing. These savings will be used for further start up programs of the ACA.

Here’s a summary of what’s to come in 2013 and 2014:

  • Individual states will start setting up health insurance “exchanges” to give their citizens great choice in picking an insurance company. This work will begin in 2013, for completion by January 1, 2014;
  • Starting January 1, 2014, every American will have a “guaranteed availability of insurance” regardless of age, pre-existing conditions and income. Those who truly can pay nothing for their insurance will apply to Medicaid. Those who can afford something will have lots of choice from the Insurance Exchanges;
  • Starting 2014, there will be no annual limit on insurance coverage. Some policies cap out at $1 million per year AND lifetime limit. Obviously those with critical head injuries or paralysis exhaust those limits fairly quickly with no other recourse than Medicaid;
  • In 2014, Employers may offer their employees a “reward” to enroll in Wellness Programs to maintain health that will reimburse employees for 30-50% of the cost of participation.
  • Most controversially, Employers must provide their full-time employees health insurance and if they do not, they face a $2,000 per year per employee penalty. There are some exceptions to this.

The rationale of 100% health insurance participation by our citizenry is it’s the only way to drive down cost.  With a greater base of citizens paying for insurance it spreads the risk around. Typically younger, healthier people are more likely to be uninsured, but they do get sick and get into accidents. By forcing them into the market, they are protecting themselves, preserving the tax base from Medicaid and helping to pay for an aging, more expensive population of insureds.

The result of the ACA will be that approximately 30 million of the nation’s 40+ million uninsured citizens will find themselves with health insurance. While this obviously comes with a cost to employers, self-employed people and the middle class, we are the only remaining industrialized first-world nation that does not offer some degree of subsidized health insurance to its citizens.

I encourage anyone more interested in this topic to visit the government’s website on this, www.healthcare.gov, for more information.

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