Health Care Reform – A Closer Look

 

Health care reform is a hot topic at the moment, and the debate over its impact on health care is far from over. Some of the key issues being debated include the Affordable Care Act, Individual mandate, Exchanges, and Pay-or-play. Let’s take a closer look at these issues.

Affordable Care Act

Nurse listening to stethoscope on patient's chest

The Affordable Care Act (ACA) requires all American citizens to have health insurance. Under the law, anyone without health insurance will be fined by the government. The fine begins at $95 per person per year and increases every year. By 2016, the fine will be $695, or 2.5% of an individual’s annual income. The ACA also bans insurers from imposing unreasonable premium increases. Also, the law prohibits insurers from denying coverage to consumers because of preexisting conditions.

Under the Affordable Care Act, employers must offer their employees a plan that meets minimum requirements. The law prohibits certain exclusions for preexisting conditions, limits on coverage by coverage type, and limits on medical care benefits. It also prohibits discrimination based on health status, including smoking.

The law’s cost-sharing reduction subsidies are still in question. While the National Federation of Independent Business argues that these subsidies are unconstitutional, the Supreme Court agreed to hear the case and upheld major parts of the law. In addition, the law’s open enrollment period is considerably shortened.

Moreover, the law also requires a study on the affordability of health insurance coverage. This study must be submitted to the relevant congressional committees. Furthermore, qualified health plans must lower out-of-pocket maximums for individuals with incomes between 100% and 400% of the federal poverty level. This change in the law may affect the amount of money consumers will spend on health care in the future.

Despite the challenges faced by the health care system, the Affordable Care Act has made health insurance more affordable and expanded access to health care for a greater number of people. However, the implementation of the law has taken some unexpected twists and turns in many areas. In addition to making insurance coverage more affordable for more people, the ACA also funds community-based public health programs and supports research on key health measures. These changes will decrease disparities and lower the nation’s health care expenditures.

While the Affordable Care Act requires health insurers to provide plain-language SBCs, consumers still want more information to make informed decisions about which plan to choose. According to the National Health Council, most consumers find it difficult to understand coverage options and coverage choices. In addition, they lack confidence to apply for coverage.
Individual mandate

The individual mandate is a central feature of the Affordable Care Act. But the mandate also poses constitutional and policy issues. For one thing, the mandate could be problematic for people who are already in poor health. Moreover, some Americans live outside the United States and are exempt from this requirement. This means that the individual mandate could lead to even greater disparities in the health insurance market. If you are considering signing up for health insurance, consider all of these factors.

In the past, the individual mandate has been part of most health care reform proposals. It was part of President Bill Clinton’s original proposal in 1993. Its goal is to make health care affordable for everyone. The individual mandate is also designed to reduce the cost of individual health insurance policies, thereby lowering costs of uncompensated care. But it has been controversial and has received mixed reviews from experts. There is some evidence that the individual mandate has negative effects, though.

The individual mandate was one of the most controversial components of the Affordable Care Act. Opponents argued that the government had no right to penalize citizens who do not buy health insurance. But the Supreme Court ruled that the mandate was constitutional. As of 2019, the individual mandate will no longer be enforced under the new Tax Cuts and Jobs Act.

The individual mandate has two major components: a requirement to purchase insurance, and a penalty for not purchasing health insurance. Individuals who do not comply will face a penalty based on their income. However, Massachusetts has restored the state-based penalty for not buying health insurance. There is no penalty for noncompliance with the individual mandate in Massachusetts, though, if you are under 40 years old and are uninsured.

The removal of the individual mandate will re-shape the health insurance market. If the individual mandate is removed, the cost of insurance would increase by 6% to 8% for unsubsidized, off-exchange consumers. In addition, the removal of the mandate penalty will reduce the number of individuals enrolled in exchange plans by 2.8 million to 13 million. However, it would increase premiums for bronze-level plans by three to 13 percent. Furthermore, the effect on the federal budget is uncertain, but it is projected to increase by up to $3.6 billion between 2018 and 2020.
Exchanges

Although the Affordable Care Act calls for exchanges, the federal law leaves much flexibility to the states. While the exchanges must meet certain federal standards, the states will be able to establish the organizational structure and financing that will make them successful. For example, the federal law requires exchanges to certify health plans to participate in the exchange. The exchanges are also required to coordinate with the appropriate federal agencies.

In theory, health insurance exchanges would cut costs for consumers and insurers by providing lower premiums and better information about their options. The exchanges would also make insurers more accountable. By reallocating risk between insurers and their clients, the exchanges could guarantee that insurers sell comprehensive coverage, market plans fairly and respond to consumer complaints.

States are expected to launch their exchanges this year. They are required to be fully operational by January 1, 2014. Most states are planning now. The Department of Health and Human Services (HHS) announced federal grants in September 2010 and January 2011 to support the development of state exchanges. In February 2011, the agency also announced “early innovator” grants to reward states that are taking a leadership role in developing exchange technology capabilities. States are using this initial funding to advance their state exchange plans, and additional federal funding may be available as implementation proceeds.

Judge gavel, pills, laptop and stethoscope on wooden background. Concept of health care reform

Exchanges are important because they facilitate access to health care and control the growth of health care costs. The presence of a public health plan in an exchange encourages insurers to compete by offering competitive premiums. Furthermore, exchanges can provide discounts to insurers and negotiate with them to reduce premiums.

Public accountability is another key element for successful exchanges. Exchanges should be open and transparent, and they must provide accurate and timely information about the performance of their plans. In addition, they should have an automated comparison system, and they should ensure fair treatment of both business partners and consumers. They must also ensure that there are no conflicts of interest.

The nonmedical component of premium increases for the individual market is largely made up of taxes, government fees, and administrative costs. Approximately half of these increases are related to exchange fees and the other half is due to taxes on all products. These new fees should impact premium increases for one year, after which they should be integrated into insurer base rates.
Pay-or-play

The term “Pay-or-play” means an employer must provide health coverage for its employees or face a penalty. Pay-or-play applies to health insurance that costs more than a certain amount. Starting in 2014, employers who do not provide healthcare coverage will face a penalty. Employers can get help with the ACA by contacting experts.

In addition to the federal government, state governments are working to develop and adopt similar programs. These efforts could lead to a variety of different bills at the state and local level. The Massachusetts experiment is often cited as an example of how reform could work. Its success has sparked reformers across the country.

Moreover, many employers have done a quick analysis of the impact of the ACA on their organization and the financial situation of their employees. However, these calculations are only part of the equation. Companies are also reluctant to terminate their current coverage, as it is considered an essential part of their benefits package. Another concern is the possibility that a change in benefits could negatively affect employee morale, wellness and productivity. In addition, employers may lose tax advantages. Because penalties for non-compliance will not be tax deductible, they may not want to change their current benefits package.

Considering all the ramifications of Pay-or-Play, employers need to make sure they plan for implementation. This may require coordination with personnel from several company departments. For example, the payroll department, tax department, information technology, and finance department may all need to work together to develop strategies and processes to comply with the new regulations. Further, human resources must create systems for tracking variable-hour employees, develop procedures and policies to assess penalties, and develop internal audit capabilities.

If you don’t want to offer a health plan through the healthcare exchange, you can opt to “pay.” If you choose to opt for the “pay” option, you must offer your employees an affordable plan. Also, you must limit the cost of essential health benefits to avoid being penalized.

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