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Moment of truth nears for health care reform

SoVaNow.com / July 29, 2013
In a little more than two months, Virginians will have enhanced access to health insurance, with low- and middle-income consumers able to receive federal subsidies to reduce the cost of their coverage.

Oct. 1 marks the opening of the health insurance exchanges, one of the major components of the Affordable Care Act (ACA), widely known as Obamacare. The opening of the exchanges will take place before the federal mandate kicks in Jan. 1, requiring most individuals to have health insurance or pay a fee, set at $95 for the first full year of implementation. (The penalty will rise to $695 by 2016.)

The how’s and why’s of Obamacare were the topic of a Farm Bureau Insurance seminar last week in Boydton explaining the basics of the health care law, which was enacted by Congress in 2009 and will be fully phased in by 2018. The debut of the health insurance exchanges is one of the most significant parts of the Affordable Care Act, and one that will have a much wider impact than provisions that already have taken effect.

Among the parts of the law already in place: a ban on insurance companies denying coverage to patients with pre-existing conditions, an increase in the age that children can stay on their parents’ policies, up to age 26, and reduced costs for senior citizen drug coverage.

What is a health insurance exchange? Described by the Kaiser Family Foundation as “a virtual mega-mall,” where uninsured persons can log onto the Internet to purchase or compare policies by private insurers, the exchanges can be run by either the states or — as in the case of Virginia — left to the federal government to handle.

Information about the federal exchange can be found at http://www.healthcare.gov; the Kaiser Family Foundation also maintains a website, http://www.kff.org/health-reform, that explains the law’s provisions.

According to Kaiser, about 1 in 7 Virginians does not have health insurance, even with Medicare paying for care for elderly citizens and FAMIS and Medicaid providing coverage for children and disabled and poor adults. The Affordable Care Act seeks to remedy this shortfall in two ways: by increasing access to and lowering the cost of insurance for individual and small business groups, and expanding Medicaid to cover more low-income individuals.

Virginia has not yet made a decision on whether to participate in the Medicaid expansion, leaving the fate of low-income individuals up in the air even as others with higher incomes enter the health insurance exchange. A General Assembly committee is studying whether to expand Medicaid in Virginia, and the issue has become a major point of contention in the governor’s race between Republican Ken Cuccinelli, who opposes the expansion, and Democrat Terry McAuliffe, who favors it.

The exchange, however, will open Oct. 1. It will allow qualifying individuals and small businesses — those with fewer than 100 employees — to apply for policies from an array of participating insurers. (In Virginia, Anthem, Optima, Humana and others are expected to offer policies on the exchange). The plans will come in four flavors: bronze (plan pays 60 percent of health costs), silver (70 percent), gold (80 percent) and platinum (90 percent). While cost-sharing between patient and insurance provider will vary according to level, all insurance plans will include similar benefits and coverage.

The key to making the individual mandate work, says policy experts, is making coverage affordable. Towards that end, the Affordable Care Act includes subsidies for individuals and families without insurance through work to purchase policies on the exchange. Anyone making from 133 percent to 400 percent of the federal poverty level is eligible for subsidies, which take the form of tax credits and subsidies. In most cases, the subsidy will directly lower the month-to-month cost of premiums for individual policy holders.

(For an individual, 400 percent of the poverty level equates to a 2013 salary of $45,960; for a family of four, the equivalent sum is $94,200 per year.)

In a typical scenario — a non-smoking family of four with annual earnings of $50,000 — the subsidies will lower premiums for a silver-level plan to $3,365 a year, less than 7 percent of household income. The same family could purchase a bronze-level plan, offering the same package of benefits but with higher out-of-pocket costs, for a little more than $100 a month. If the family of four had an income of $34,889 — the median household income in Halifax County for 2011, according to census data — the subsidies would lower the cost of a silver-level plan to about $113 a month.

The health insurance exchange also will market insurance policies for small businesses. Starting in 2014, businesses with fewer than 25 employees that purchase policies through the exchange will be eligible for tax credits up to 50 percent of their premium costs. Small businesses that already offer employee coverage will have options for migrating to the exchange in order to qualify for the tax credit. Small businesses that currently offer employee coverage are already eligible for tax credits up to a maximum of 35 percent.

While the health insurance exchanges are expected to bring down the overall number of uninsured Virginians, the state has yet to decide what to do with a group of people who are not eligible for subsidies — those making less than 133 percent of the poverty level. The Affordable Care Act envisioned that those individuals would be covered through a broad expansion of Medicaid. However, a Supreme Court ruling penned by Chief Justice John Roberts upholding the constitutionality of Obamacare also gave states the option of rejecting the Medicaid expansion, which would be funded largely by the federal government.

Many states with Republican-dominated legislatures and Republican governors have refused to go along with the expansion of Medicaid, creating problems for those who were supposed to gain coverage through the program. Virginia has some of the most stringent eligibility rules in the country — Medicaid in the Old Dominion is open only for certain individuals and families, and for a family of three, their income cannot exceed 30% of the federal poverty level, or $5,859.00. Childless adults are never eligible for Medicaid in Virginia.

The “no-coverage gap” — between those unable to enroll in Medicaid because their incomes are too high, while at the same time ineligible for subsidized insurance because they don ‘t earn up to 133 percent of the poverty level — applies to thousands of individuals in Southside Virginia. Estimates suggest that in Halifax County, 1,859 people will fall into that gap. In Mecklenburg County, the number is 2,081 people; 3,603 in Pittsylvania County, and 839 in Brunswick County.

The Farm Bureau Insurance seminar on the Affordable Care Act, timed for the run-up of the law’s implementation, was sponsored by the Mecklenburg County Farm Bureau and held July 23.

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