Brave New World of Affordable Health Care

Fairfield health care attorney Steve Cowherd presented the basics of the Affordable Care Act at Westport Sunrise Rotary on June 29

Steve Cowherd, a  a partner with Jeffers Cowherd, a Fairfield law firm with expertise in health care law, and a Westport Sunrise Rotarian summarized and explained the Affordable Care Act to the club at its June 29 meeting at BobbyQ’s Restaurant in Westport.

Though the Supreme Court had issued its ruling the previous day, Cowherd said “I’ve been living the law since March, 2010... Now some of (it) will move forward.”

Cowherd said he would “stay away from politics,” and offer an overview of its contents “from the perspective of a small business owner.”

In a larger perspective, he said the Affordable Care Act is about “what will we as a society do?” He pointed out that the goal of the Act is to address the millions of uninsured Americans and avoid “a two tier system in which those at the top receive the best care while others don’t even have access to the latest MRI or cancer drug.”

The Affordable Care Act

Cowherd talked about aspects of the Act that are aimed at “small businesses [that] can’t or don’t provide health care coverage for their employees.” But, he added, the new law is designed to help small businesses provide coverage to employees and is built on the premise that the uninsured will obtain coverage through such plans or purchase affordable insurance individually on state-based health insurance exchanges.  The law also provides for an expansion in Medicaid coverage.

The law includes carrots and sticks that encourage broader coverage by employers, provide subsidies for purchases on the state run exchanges and cap administrative costs for insurance companies. Experts project these features will yield million of new insureds.

The way to full implementation was paved once the Supreme Court upheld the Individual Mandate. Chief Justice John Roberts led a 5 - 4 majority upholding that section. The Court ruled that the Mandate was constitutional under the government’s taxing power.  In so doing, a majority of the justices also found that the Mandate was overreaching and unconstitutional under the Commerce Clause since it forces people into buying a product they may not want.

The four progressives who sided with Justice Roberts in the majority opinion disagreed with him on this point.  Justice Ginsburg wrote their brief, saying the Mandate is, in fact, constitutional under the Commerce Clause. She argued there is no coercion because all Americans will, at some time, require medical care, so requiring each person to purchase that care is constitutional. Alternatively, they must pay an assessment to offset costs they impose on the care provider. 

Medicaid To Be Expanded

Cowherd also explained how the ACA broadens insurance coverage for those with the lowest incomes by expanding Medicaid eligibility. All non-Medicare eligible individuals with incomes up to 133 percent of the Federal Poverty Level ($11,170 for an individual in 2012) will become Medicaid eligible.

This will have a substantial impact locally as raising Connecticut's ceiling is forecasted to add 150,000 people to the Medicaid rolls.  On this point, Cowherd explained that the Supreme Court ruled that the federal government cannot withhold its existing Medicaid funding from states choosing not broaden their Medicaid programs to the 133% level. However, the government can withhold the new funding it has promised for purposes of this expansion from state’s that do not wish to participate.  The federal government will fund 100 percent of the costs for the new Medicaid recipients from 2014 through 2016, then gradually reduce its share to 90 percent by 2020.

While our state was the first to receive approval to expand Medicaid under the ACA, many governors, most of them  with Republicans, have said they will not expand their Medicare rolls due to their concerns that federal funding could be withdrawn.

The next step up, individuals and families earning between 133 and 400 percent of the federal poverty level), will be eligible for federal tax credits and reduced out-of-pocket limits if they purchase insurance on the state-based exchanges.

State Insurance Exchanges

Every state must have its Affordable Insurance Exchange operating by January 1, 2014. These online exchanges, Cowherd said, “will provide Qualified Health Plans in which covered services and cost sharing is standardized …. showing a common set of benefits with standard fees and co-pays to simplify comparison and to make the market more competitive.”

The exchanges will be initially reserved for individual purchasers working for companies with fewer than 100 employees (in Connecticut the state-based exchange will initially be open only to small employers with fewer than 50 employees). In addition:

  • Those employers with 25 or fewer employees with average annual wages below $50,000 will be eligible for a tax credit of up to 50% of the cost of their company’s health care insurance.
  • Companies with more than 50 employees are required to provide health insurance. Those that do not must pay an assessment for every non-covered employee after the 30th.

Cowherd outlined four levels of coverage the exchanges will provide: the least costly, bronze plans, will cover 60 percent of the projected costs of covered health care, while the most costly, platinum, will cover 90 percent. The difference will be paid by deductibles, co-payments and coinsurance.

The ACA, Cowherd said, also incorporates the concepts of Guaranteed Issue and Community Rating.  The former makes everyone who wants to purchase health insurance, including those with pre-existing medical conditions, eligible for coverage.  The latter limits premium differentiation to the following four risk categories:

  • Age - The oldest person covered cannot be charged more than three times the youngest;
  • Tobacco Usage - Heavy smokers may be charged no more than 1.5 times what non-smokers pay;
  • Geography - Premiums will reflect the cost of service in the plan area; and
  • Policy Type - Individual or family coverage.

Other features the new law are: the elimination of annual and lifetime coverage limits; preventive care services will be 100 percent covered; dependents may remain covered by their parents’ plans until they turn 26; and reductions in the Medicare Part D coverage “donut hole” and increased subsidies for brand name and generic drugs.

For those interested in learning more about ACA, the Kaiser Family Foundation is a good resource:
http://www.kff.org/healthreform/8061.cfm and

The Commonwealth Fund also offers substantial background information:

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

Kristy Waizenegger July 18, 2012 at 01:58 PM
Still haven't heard anyone articulate one example of how the Affordable Health Care Act will make healthcare more affordable. So far all it's done is make healthcare insurance more expensive - premiums have already gone up due to the additional coverages insurance carriers are now required to afford.
Joan July 18, 2012 at 02:29 PM
For people who were previously uninsured--due to some pre-existing condition (major or minor), the loss of a job, or having been dropped by the insurance company when they became ill and needed the actual insurance they had been paying for--I'd say for those people, healthcare will now be affordable and very much appreciated. Those who think they are in the clear because they are lucky enough to have insurance coverage may not realize how all of us--prior to this healthcare act--were very vulnerable to falling into the ranks of the uninsured at any time, whether at the whim of the insurance companies or through a job loss.
Richard W. White July 18, 2012 at 02:33 PM
Kristy -- not really my area of interest, but I'll take whacks at your question: 1) I think both the 80/20 rule and 10% increase cap will have a positive impact on costs. 2) Increasing the general pool of insured citizens will provide early detection via annual checkups versus late detection in the emergency room. 3) More people being exposed to annual checkups as children will lead to visiting the doctor by "habit" and lead to more early diagnosis of serious issues. 4) Provisions that allow states to "experiment" and find savings. 5) HUGE reduction in paper with move to electronic. Note: How much of your doctor's front office space and staff is taken up with paper folders? Here's an interesting opinion piece about an actual study: http://www.forbes.com/sites/rickungar/2012/03/12/early-signs-that-obamacare-is-on-the-right-track-to-reduce-costs
Richard W. White July 18, 2012 at 02:36 PM
Oops, I meant to post this: http://www.forbes.com/sites/davechase/2012/07/04/obamacare-didnt-completely-ignore-costs-after-all
Kristy Waizenegger July 18, 2012 at 03:11 PM
Thanks Richard - I think it's fair to say that ER useage would go down if more people had insurance. Healthcare servcies will still cost the same but the hope is that certain, more expensive service such as ER, will be accessed less if people have insurance. I think a more apporpriate name for ths law may be the Insurance Access Act, since really that's all it is. And, as I've asserted before, I don't believe we've really gotten to the core cause of why medical care costs so much. While having insurance certainly makes the load easier to bear for some, it won't change the fact that the cost of healthcare services is out of control. In other words, the ACA is just one big band-aid. Government is once again asserting control where it shouldn't such as requiring companies with over 50 employees to provide insurance - this is completely contrary to Obama's assertion that health insuranace should be portable. It will also be insteresting to see how many small businesses keep their staff at 49. Ultimately, all the new regulations being put on carriers are already diving up the cost of health insurance since they are being compelled to provide additional coverages.
Richard W. White July 18, 2012 at 03:30 PM
Let's say a company with 49 employees is feeling a pinch, they might cut that insurance policy anyway. Increase in costs non-insurance items might cause those employees to loose their coverage. At least with Obamacare, they have somewhere to go via the state or federal pools. I think this is the "portable" aspect. I worked for many restaurants in my youth and most offered some sort of coverage that was normally tiered to what was best for the families of the owner of the restaurant. It never made sense for me to join those policies. The state / federal pool is a very interesting option to me. Maybe those companies will increase the hourly / salary of those employees in exchange for cutting the insurance. Not necessarily a bad thing as long as the switch is negotiated somehow. Also, with more of our population insured, each person, company, and state now has more incentive to work together to reduce costs and reduce the remaining free-rider you and MAC have been discussing. It's certainly lower under Obamacare.
Roy Fuchs July 19, 2012 at 06:13 PM
Kristy - Before people start lighting their hair on fire about an added burden on those who already have employer provided health care coverage, let me suggest that they look at the real world, hard dollar Massachusetts experience. It now spans five years, so the "flash in the pan" aspect is gone. Here's one reference, chosen at random: https://www.mahealthconnector.org/portal/site/connector/menuitem.d7b34e88a23468a2dbef6f47d7468a0c?fiShown=default I have no idea who mahealthconnector is, I chose it because it seemed to offer a wealth of factual information. It could be a big bunch of lefties, but one of its resources is the Blue Cross Blue Shield of Massachusetts Foundation. And, as one weighs Mr. Romney's accomplishment as governor, consider that the model system he helped design, supported, implemented and benefited from has the nation's highest rate of insureds - 98.1% - while adding only one percent to the state budget. This program stopped what BCBS Foundation said would have been a doubling of health care costs by 2020 - something that would have affected insureds, not the uninsured.
Kristy Waizenegger July 19, 2012 at 06:51 PM
Thanks Roy. I'll take a look. It's interesting to me that the measure used to gauge success is the % of people insured. The problem of the astronomical cost of healthcare is not solved by insuring more people. It just masks the problem.
Roy Fuchs July 19, 2012 at 07:41 PM
Kristy - Do take a look. What is the best measure of success? Reducing costs for those who are insured, or making insurance a self-paid right rather than a privilege? Yes, raising the Medicaid income cap puts more people on that plan. In this state Medicaid eligibility is capped at 68% of the poverty level. ACA raises it to 133%. But I don't know that there are studies saying either more recipients will raise the government's cost or lower it. Will new recipients be poor and healthy, or poor and sick - and remember if they're over 65 they're already covered? Here's a piece to look at that offers another indication of where the money goes: http://www.usatoday.com/NEWS/usaedition/2012-01-12-healthstats12_ST_U.htm. It's headline is "5% of patients account for half of health care spending." There's the money pit – those with chronic symptoms or illnesses who cannot or will not reduce their use of medical facilities, services and prescriptions. The implication is that addressing the other the other 95% has far less leverage than trying to get those with chronic symptoms to improve their health. Tort reform is another opportunity. Defensive medicine - the response to potentially catastrophic personal liabilities - adds only about 2.4 percent to health care costs. But every doctor's story expresses a "reverse lottery" mentality - a low probability of taking a big hit. Ergo, possibly excessive tests.
Roy Fuchs July 19, 2012 at 07:57 PM
Continuing, I would see the ability to keep children up to 26 on their parents' policy as a benefit, as is no banning for pre-existing conditions and requiring all plans offer free preventive care services. And the Act provides incentives for small businesses who do not provide coverage to do so. Does it raise their costs? Perhaps, but Uncle Sam eats part of the cost and employees gain insurance. Looked at another way, halving projected cost increases is lowered costs. So maybe the covered individual does get a real cash benefit. Again, I recommend to all that they look at two sources of the best information about what the ACA is and does: https://docs.google.com/viewer?url=http%3A%2F%2Fwww.kff.org%2Fhealthreform%2Fupload%2F8061.pdf and: http://www.commonwealthfund.org/Health-Reform/Health-Reform-Resource.aspx.
Kristy Waizenegger July 19, 2012 at 08:26 PM
I think perhaps we are using the word "cost" differently. When I use the word cost in my comments, I am referring to the fee charged for any particular medical service. In other words, the charges on your medical bills. Insurance helps people to foot the bill in a more manageable way but it doesn't change the fact that medical charges/billing is insane. Did you know that if you are given an advil at the hospital you are charged $40? Did you know that hospitals are allowed to charge you a "facilities fee" - the fee varies depending on the severity of your injury and is essentially a fee for taking up space and breathing the air in the hospital - I kid you not. So, my point is that insuring people doesn't change the fact that medical providers not only charge too much for many services but are also allowed to charge for ridiculous things. This is what needs to be fixed. Insurance is a good thing and we certainly want people to have access to medical insurance but insuring people does not solve the bigger problem of what medical services cost.
MAC July 20, 2012 at 07:53 PM
Article's info is irrelevant: "The law is now set to collapse."

 "Why buy insurance when you're healthy if you can get it for the same price later when you get sick?"...

 "Younger and healthier Americans would have very strong incentives to remain uninsured until they started to incur major medical expenses. Why buy insurance when you're healthy if you can get it for the same price later when you get sick? But of course, if healthy people don't buy coverage, insurers won't have the funds to pay benefits for the sick. They would have to raise premiums, which would only drive more healthy people out of the system, and a vicious cycle would emerge."...

 "In the wake of the Roberts decision, participation in Obamacare's insurance scheme is optional. Rather than a requirement to buy coverage backed with a penalty for violators, the law now offers Americans two equally lawful and legitimate options: buy expensive insurance (which Obamacare will make all the more expensive), or pay a modest (and still largely unenforceable) tax and just buy insurance for the same price later if you need it. 

'Presented as a choice, not a command, this provision will invite a straightforward comparison, and for many Americans the choice it would pose would be a very easy one.

' "Obamacare was always going to lead to a disastrous meltdown of America's health-insurance system."...

Roy Fuchs July 23, 2012 at 01:23 AM
MAC - The conservative National Review offered an interpretation at odds with the decision. The conversation over Roberts' decision was not about Constitutionality - which that decision settled in the affirmative, but about whether the penalty for not being insured is a tax or a fee. For all the concern about employers having to cover low wage workers, once the ACA becomes effective in 2014 the number of firms who will have to bear the full cost of providing coverage will be a minute percentage of all employers. The uninsured will not be the young and healthy working for companies with fewer the 50 employees - larger companies are required to provide insurance - but the older and unemployed. Many have pre-existing conditions and so cannot afford insurance today - a situation ACA will change. And raising the Medicaid cap will bring in large numbers low income people. Again, Governor Romney's first in the nation ACA model now covers 98.1 percent of Massachusetts' residents, the cost to the state has gone up some one percent and has helped residents avoid what insurers predicted to be a doubling of premiums by 2020. Romney should be trumpeting the success of his visionary plan.
kokopop July 24, 2012 at 03:57 PM
It's all a bunch of crap. Why not have the DR's and Hospitals charge fair prices instead of 35.00 for a tylenol. I have insurance through my employer. I don't go to the DR very often because....the insurance stinks and I have to pay the first 2500.00 out of pocket. Then the insurance company doesn't pay much more after that....I'm paying 75.00 a week in premiums already for crap coverage yet the DR & Hosp can charge outrageous amounts and nothing is done about that! I think I'll just drop this plan and go on the medicaid plan. No premiums and full coverage. My sister had three kids in braces and never paid a penny on medicaid. I had full coverage that my employer offered and paid 10,500.00 for the two kids i have to have braces.....how is this fair when I'm paying a premium I get 0% coverage and she who pays 0 premium gets 100% coverage
Alexander B. C. August 02, 2012 at 02:01 AM
obamacare left out one small, but important, expense: The added security at ERs when fights break out over rationing. Don't be stupid and don't be a fool expecting something for nothing.


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