The Individual Mandate: Has the Obama Administration Silently Repealed the Rule that Virtually Everyone Must Have Health Insurance?

Obamacare’s critics continue to argue that the Affordable Care Act (ACA) will self-destruct.  Now, some claim that the mandate that uninsured Americans must purchase coverage– or pay a stiff fine— is so riddled with new “loopholes and exemptions,” that it no longer exists.

                                            14 New Waivers

When the ACA passed Congress in 2010, it offered a handful of basic exemptions to the mandate that everyone must be insured. For example, if the only comprehensive coverage available would cost more than 8% of a household’s income, the fine would be waived. Individuals who were in jail, or belonged to a recognized religious group that objects to all insurance, including Medicare and Social Security, also would be excused.  

But then, late in 2013, the administration quietly added some 14 new ways that uninsured Americans could dodge the fine. “This latest reconstruction” of the ACA received zero media coverage,” a Wall Street Journal editorial declared, “and the Health and Human Services Department (HHS) didn’t think the details were worth discussing in a conference call, press materials or fact sheet.”

Yet if the new waivers went largely unnoticed, reform’s opponents claim that the swelling list of escape clauses will have a huge impact. By 2016, they say, almost 90% of the nation’s 30 million uninsured will be able to ignore the mandate that they buy insurance—without paying the piper.  So much for universal coverage.

Just last week Bloomberg reported that some Republicans politicians now refer to the new list of loopholes as a “stealth repeal” of the individual mandate. To her credit, Bloomberg’s Caroline Chen points out the contradiction in the GOP’s arguments: the same critics who, in the past, argued that the mandate represented “unwarranted government coercion” now criticize it for being too “wimpy.” Can they really have it both ways?

                                       “Hardship Exemptions”

The new waivers were designed to help those who are facing hard times.  Some exemptions will suspend penalties for 3 months—others for a year.

Perhaps the most important waiver bails out low-income Americans who have the bad luck to live in a state that has refused to expand Medicaid.  Originally, the ACA stipulated that states must extend Medicaid to adults earning less that 138 percent of the federal poverty level ($27,310 for a family of three), with the Federal government paying the lion’s share of the extra cost. At the same time, the ACA set out to help low and middle-income families earning more than 138% of the FPL, by providing government subsidies designed to help them purchase insurance in their state exchanges.

But then, two years after the ACA passed Congress, the Supreme Court blind-sided reform’s architects by ruling that states could opt out of expanding the federal/state. program. No surprise, politicians in Red states saw this as an opportunity to undermine Obamacare.

Today, twenty-two states still are refusing to open the Medicaid umbrella to cover some of their poorest citizens. As a result, in many cases, only parents earning less than 50% of poverty ($9,893 for a family of three) qualify for Medicaid, while childless adults remain ineligible in almost all of these states.  (When Medicaid passed Congress in 1965 legislators decided that only “the worthy poor” should be covered. People who didn’t have children were not considered “worthy”.)

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Obamacare Fines: How to Escape a Hefty Penalty If You Really Can’t Buy Insurance

Already, the fear-mongers are sounding the alarm: If you don’t purchase exactly the type of health insurance that the Affordable Care Act (ACA) requires, come tax-time the IRS will slap you with a stiff penalty.

As I explain in the post below, the ACA mandates that if you’re not already covered, you must buy insurance that includes “essential benefits” such as hospitalization, maternity and newborn care, and mental health services. Ignore the mandate this year, and you will be fined when you file your taxes next year.

                                 How Much Would You Owe?

If  you opt out of purchasing insurance that covers you and your family in 2015, the penalty will equal Either:

“Whichever is greater” means that wealthier taxpayers will be required to pay 1% of their income, and as a result can easily wind up owing significantly more than $285. This doesn’t mean that millionaires would be fined tens of thousands of dollars. An affluent family’s penalty also is capped, at the average cost of bronze plans sold in state Exchanges nationwide.

In  2014, nationwide, the average bronze plan premium was $2,448 per individual and $12,240 for a family with five or more. This year, across the nation, average premiums were slightly higher, so a family of five earning more than roughly $145,000 would have to fork over a little more than $12,240.

                         If This Sounds Complicated, Turbo-Tax Makes it Simple

If, at this point, your eyes are glazing over, the good news is that you can calculate your penalty, quickly and easily, on Turbotax’s online calculator. Just type  in your income, zip code, and  the size of your household, and in about three minutes, TurboTax will tell you  the size of your fine—and, most importantly, whether you might qualify for an exemption to the penalty.

                                 How You Might Escape the Fine

The  chances that the IRS will fine you are slim. What the fear-mongers rarely mention is that, thanks to the many exemptions built into the law, only about 10 percent of the uninsured will owe a penalty. The Congressional Budget Office (CBO) estimates that in 2016,  just 4 million uninsured Americans will face fines, while 26 million will qualify for waivers. 

Recently, I wrote a piece for Consumer Reports listing some of the most common exemptions:

  •  if the lowest-priced coverage available to you, even after applying  a government subsidy, would cost more than 8 percent of your household’s income, the fine is waived;
  • –if you earn less than $10,150 (or $20,300 for a married couple) and so are not required to file income taxes you owe no fine and don’t even have to apply for a wavier;
  • if you were uninsured for less than 3 consecutive months, you will not be fined.

(As I explain in the post below,  this means that if you sign up for 2015 coverage by February 15 you will be insured as of March 1, and will not owe a penalty for 2015.) 

                       Little Known “Hardship Exemptions”               

On the Consumer Reports website, I also point out that late in 2013, the government added 14 new waivers

 

for people who have experienced personal hardships such as domestic violence, substantial property damage from a fire or flood, from a fire or flood, the death of a close relative, a utility cut-off, or bankruptcy.

Perhaps most importantly, the government is offering a one-year waiver to people who don’t qualify for Medicaid because they live in a state that has refused to expand the program under ACA rules.

To learn more about the hardship exemptions, how to apply for any exemption, and information on how you might escape the penalty, but still buy catastrophic insurance, read the rest of the post on Consumer Reports.org.

 

 

 

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It’s not too late to sign up for Obamacare- But if you wait much longer you could face a fine

 Note to HealthBeat readers: I have recently begun writing posts about healthcare and healthcare reform for Consumer Reports. Below, an excerpt from my latest post. M.M

It’s still not too late to sign up for insurance in your state’s marketplace. Open enrollment for Obamacare continues until Feb. 15. Meet that deadline, and you will be insured on March 1, with no penalty.

And if the plan you purchased in 2014 was automatically renewed on Jan. 1, you can still change your mind, comparison shop, and pick a new policy in February. There are lots of good reasons to shop around, as plans change from year to year.

Even better news: It’s not too late to apply for a tax credit that can help slash premiums. This year, nearly 9 out of 10 people who purchased insurance in state marketplaces have qualified for financial assistance. Last year, tax credits cut the average premium by 76 percent—to just $82 per month. Almost half of those who received subsidies wound up paying $50 or less. See if you might qualify for a subsidy.

Who has to pay fines?

Even if you don’t have insurance in January and February, you won’t have to pay a fine as long as you have health insurance in place by March 1.

How much will you owe?  Compare penalties to premiums in your zip code

Turbotax has created an online calculator that tallies the fine if you don’t buy insurance by Feb. 15.

To compare the fine to the cost of coverage, after subsidies, use the Kaiser Family Foundation’ premium calculator.

You will find links to both when you read the rest of this post on Consumer Reports.org.

 

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How Much Will You Pay for Health Care in 2015? What You Need to Know About Healthcare Inflation-Part 1

 

Probably you have seen headlines like this one: “O-Care premiums to skyrocket.”

The warning, which was posted on The Hill, seemed designed to cheer conservatives distraught by Obamcare’s enrollment numbers. It began by announcing that next year, “premiums will double in some parts of the country. The sticker shock will likely bolster the GOP’s prospects in November and hamper ObamaCare insurance enrollment efforts in 2015.”

Where did the reporter get her information?  The story is based on interviews with “health insurance officials.”

Why would they issue such dire predictions? Perhaps they are trying to soften us up so that when insurance rates rise by “only” 7% to 10%, we’ll be surprised and grateful? (This is just a thought.)

The truth is that there is absolutely no reason to believe the same old, same old, fear-mongers who claim that in 2015, rates will spiral “by 200% to 300%.”

But what about those who predict double-digit hikes?  Wellpoint, the biggest commercial insurer in the Exchanges, recently told Bloomberg that it may ask for “double-digit plus” increases when it proposes 2015 rates sometime next month.

Wellpoint can propose whatever it wishes, but I very much doubt that state regulators would accept such stiff increases. A combination of regulation and competition will keep a lid on premiums both in the Exchanges, and off-Exchange, just as it did this year.

My guess is that, in most states, rates will rise by no more than 2% to 4%. Meanwhile, government subsidies will climb to cover those increases for most who buy policies inside the Exchanges. (This year 80% of shoppers who purchased insurance in the state marketplaces received tax credits to help with premiums.) Folks who purchase coverage off-Exchange won’t receive subsidies, but carriers selling policies to individuals outside the government’s online marketplaces will have to compete with prices inside the Exchanges.

Why am I so optimistic?

The Underlying Cost of Medical Care Is Slowing

Americans have become so accustomed to hearing about “runaway health care inflation” that most do not realize that we have finally “broken the curve” of rising health care costs.

Granted, for most of this century, rates soared: “From 2000 to 2009, health insurance  premiums climbed 84%,” Zeke Emanuel, a former White House healthcare adviser and author of Reinventing American Healthcare: How the Affordable Care Act Will Improve Our Terribly Complex, Blatantly Unjust, Outrageously Expensive, Grossly Inefficient, Error Prone System., recently told NBC’s “Meet the Press.”

By contrast, “for the past three years, health care cost growth has dramatically slowed and is just about even with growth in the economy. Some of this is due to lingering effects of the recession in 2008,” he added. “But a part of it is undoubtedly due to the ACA.”

Drew Altman, president of the Kaiser Family Foundation, points out that, despite the aging of the population, “the Congressional Budget Office projects that Medicare will cost significantly less in the future than previously thought,in part because of the ACA’s changes to Medicare’s payments. ”  (As I have explained, those cuts do not reduce benefits, but they do force hospitals to cut waste and provide better value for our Medicare dollars.

Both in the public sector and in the private sector, “Overall health spending is growing at the slowest rate in 50 years,” Altman observes,  (dating back to when the government first started tabulating health expenditures.)”

“The key for the future is not to eradicate premium increases entirely,” Emanuel adds. The goal “is to make sure [that these increases] aren’t Excessive.”

He stresses that there is still much to be done to rein in healthcare spending. But for the moment “the exchanges are stable,” says Emanuel. “Premiums are likely to rise a little but not excessively.”

If you don’t believe Emanuel and Altman, take a look at the graph below, comparing outlays for all medical services (the orange line) to the PCE (personal consumption expenditures–the blue line) from 2009 to 2014. As you can see annual spending on healthcare services is now growing by well under 1% a year. (For a larger version of the graph, click on the link above.)

ifi0rzbQK9cU   bloomberg chart

Bloomberg News used the graph earlier this week, to illustrate a story that lays out some critical and little-known facts:

Prices “for medical services, which make up the biggest share of health care costs, have eased in the past two years. From February 2013 to February 2014 physician fees edged up just “0.2 percent–down from a 1.6 percent rise 2012,” Bloomberg reported, and “the cost of nursing home care rose by only 0.3 percent,” compared with “1.8 percent two years earlier.”

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How Many of Obamacare’s New Enrollees Were Uninsured Last Year? Why It Doesn’t Matter

Charles Gaba, the enrollment guru who has been tracking Obamacare sign-ups since October, now estimates that by April 15, some 17 million Americans will have purchased their own insurance policies either in the Obamacare Exchanges (8 million) or off-Exchange (9 million)

But how many of them were uninsured and how many were simply replacing policies that Obamacare had forced insurers to cancel?  This is the question conservatives ask.  After all they argue, if most of these folks already had coverage, we have just wasted a great deal of time and money moving them from a policy they chose to one that President Obama prefers.

There are two answers to their question. The first is that while we don’t have an exact number as to how many of the new enrollees were uninsured, we do know that, thanks to Obamcare,  the percent of Americans who are “going naked” has declined. New Gallup data shows that the uninsured rate fell from 18.1% in the third quarter of 2013 to 15.6% in the first quarter of 2014.

That said, Gaba offers a second, even better, answer: “It doesn’t really matter.” 

I agree. As he explains:

“It doesn’t matter because every one of those new policieswhether on-exchange or off-exchange; whether it went to someone who didn’t have insurance before, someone who had their old policy cancelled or went to someone who voluntarily made the switch to a new one…which  . . is a LOT of people, by the way…is still a fully ACA-compliant, full-coverage healthcare plan.”

Gaba points out that “the primary point” of his website (ACASignups.net) “is to track how many people are now enrolled in a “QHP certified” plan regardless of whether they had insurance before or not. Some moved from no plan at all to a QHP. Others moved from a ‘junk’ policy to a QHP (some have argued that there aren’t that many of these, but there were still a lot of them). Still others yet (myself included) have moved from a decent plan to a QHP. . . . The point is, they’re all ACA QHPs now.” [his emphasis]

This is critical to understanding the purpose of health care reform. From the beginning the goal of the Patient Protection and Affordable Care Act (PPACA) was not simply to insure the uninsured, but to protect the under-insured by making certain that everyone has comprehensive coverage.  Whether a carrier is peddling policies in a state marketplace or off-exchange all plans now must comply with the ACA’s rules by:

–covering the ten essential benefits

–offering free preventive care, and

–capping how much a patient can be asked to pay out-of-pocket.

In addition, carriers can no longer discriminate against customers suffering from pre-existing conditions by charging them exorbitant premiums, and they cannot set a limit on how much the insurer will pay out, over the course of a year or a lifetime.

The second goal of the Patient Protection and Affordable Care Act is to make sure that the price of such high quality insurance is not beyond reach. Government subsidies help low-income and median-income families, but the only way to make sure that everyone else can afford policies that meet the ACA’s high standards is by asking all of us to share in the cost.

This is why the ACA mandates that everyone purchase insurance. When more people pay into the risk pool, the costs decline for everyone. It is only then that universal coverage becomes possible

 

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Obamacare Enrollment, Including Medicaid, Heads for 14-20 Million

Revised: April 12

Charles Gaba, who has become the go-to-guru for Obamacare enrollment numbers, now predicts that by April 15, 7.09 to 9.75 million Americans will have purchased health insurance in the Exchanges. 

This is in line with the back-of-the-envelope estimate that he offered a week ago: “a nice round 8 million.”  (In parentheses, he suggested:  Perhaps a little higher (1M even?)., and then struck that thought.  “As always,” he noted, “I’ll be more than happy to be proven wrong, as long as I’ve undershot the mark.”

 

To that 7.09 to 9.75 million, he now adds 2.09 million who he is certain have bought comprehensive coverage outside the Exchange, plus an additional 5.7 million who, according to a Rand study published earlier this week, may have signed up  off-Exchange. Finally, Gaba estimates that 5.23 million to 7.29 million Americans have enrolled in Medicaid or CHIP. 

As of April 12, this brings the total number who will have insurance that meets the Affordable Care Acts (ACA’s) high standards to roughly 14 million to 20.2 million.

When Gaba first reported on the Rand report, he acknowledged that Rand’s numbers “were based on a survey” and “surveys include margins of error.”

Gaba has gained his reputation by being meticulous—and cautious. Typically, his estimates have been conservative. Given that track record, I suspect that by April 15, we will find that well over 14 million people have benefited from Obamacare. If pressed, I would guess 17 million.

At this point, you may be wondering: But don’t we need the new enrollees who are purchasing policies off-Exchange to join the state marketplaces in order to spread the cost of coverage among as many people as possible?

The answer is “No.”

A little-known provision in the ACA stipulates that if a carrier sells policies to individuals both in the state marketplace and in the private market, the insurer must view those customers as part of one risk pool, and price their policies accordingly. Together, they will  share the risk of becoming sick, while also sharing the cost of insurance that guarantees everyone access to care. All other things being equal, the larger the pool of people who buy coverage both on and off the Exchanges, the lower the risk– and the lower the cost for all of them.

“All other things being equal” includes whether the new people jumping into that pool are healthy. Recent evidence suggests that the new entrants are, in fact, younger, and as a result, more robust than those who signed up earlier.

In future posts, I’ll take a closer look at that pool, and explore how much you are likely to wind up paying for insurance next year.

 

 

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Obamacare Enrollment Hits 7 Million, Putting Downward Pressure on 2015 Premiums; Word-of-Mouth Spreads the Truth

(Updated March 31)

As the “train wreck” called Obamacare pulls into the station it’s becoming clear that some 7 million Americans are signing up to purchase insurance in the Exchanges. Ten days ago I went out on a limb and predicted that we would hit 7 million, if not by March 31, by early summer. Now it appears that we’ll break through that target by midnight.

Seven million was the Congressional Budget Office’s (CBO’s) initial estimate, but when the roll-out proved rocky, the administration lowered its expectations to 6 million. Reform’s opponents groused that this still was too optimistic, and before long the consensus estimate fell to 4 to 5 million. (Conservatives, who had helped lower the consensus, then accused Democrats of moving the goal-post to make it easier to claim success.) 

                             Younger Americans Join the Pool

Who are these last-minute shoppers? According to the Wall Street Journal,carriers are beginning to report that many are under 40.  Today, more insurers confirmed the trend. This should come as no surprise.

We always knew that people in their 50s and 60s would join the Exchanges first. Healthy 20-somethings and 30-somethings who rarely see a doctor would be in no rush to sign up. Why begin paying premiums before you have to? 

                                          Momentum Builds

Now, younger Americans are  jumping into the pool, and, most importantly, the pace of enrollments is building. Friday, March 28, Charles Gaba, the “numbers Geek” who has correctly predicted earlier enrollment milestones, wrote: “We’re in uncharted territory. . . Things are moving VERY quickly now, and events are quickly overtaking my ability to keep up.”  Yesterday (Saturday, March 29), Gaba hiked his March 31 estimate to 6.7 million, up from 6.22 million earlier in the week.

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Breaking News: As of Today Top Analyst Projects That Well Over 6 Million Will Enroll in Obamacare by March 31

 

Charles Gaba, the  health care guru who has become widely known as the “Nate Silver of Obamacare”. is now projecting that by March 31 6.22 million Americans will have signed up for insurance in the Exchanges. 

And that is what Gaba is projecting today.  I suspect that as we approach the deadline,  enrollments will snowball.

As young people who have signed up talk to those who haven’t, more and more 18-34 year olds will learn about the subsidies that not only  cut premiums, but slash deductibles.

Spread the word: the subsidies are so generous that roughly 6.5 million Americans will be able to buy $0 premium plans. That’s right—the insurance will cost nothing. Half of those 6.6 million will be under 39. 

.7 million anyone?

Keep in mind, after March 31 people can sign up if they experience a “life-changing” event: get married, have a baby, lose a job, get divorced.

A great many of them will be under 40. Young Americans will continue to sign up throughout the summer.

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Single-Payer Health Care: Is That What Makes France So Different? (The French Way of Cancer Care – Part 2)

In “The French Way of Cancer Treatment,”  Anya Schiffrin writes eloquently about the care that her father, Andre Schiffrin, received when he was diagnosed with stage-four-pancreatic cancer, and decided that he wanted to go to France, his birthplace, for treatment. Schiffrin had been undergoing chemotherapy at New York City’s Memorial Sloane Kettering, and his family was concerned: how could a public hospital in Paris compete with a world-class cancer center?

To their amazement, they discovered that “the French way” of caring for a cancer patient was much better suited to Schiffrin’s wants and needs—and this was not because he had been born in France.

At the end of her essay, Schiffrin suggests that “the simplicity of the French system meant that all our energy could be spent on one thing: caring for my father.”  Back in New York, she confides, “every time I sit on hold now with the billing department of my New York doctors and insurance company, I think [of] all the things French healthcare got right.”

                                      A Hybrid Public/Private System

 Many readers might assume this means France has a single-payer system, and that is the key to its simplicity and success. But in fact, France relies on a hybrid system that is not unlike Obamacare. The government picks up the tab for only about three-quarters of the nation’s healthcare bill.

(In 2013 the U.S. government paid for roughly 48% of medical care, though, this year, with the expansion of Medicaid, and millions of uninsured and under-insured Americans joining the Exchanges where the majority will receive government subsidies, Washington will cover more of the bill.  And in the years ahead, as baby- boomers age into Medicare,  government’s share will grow.

In France, “everyone is covered to a certain extent by the government’s Assurance Maladie,” explains Claire Lundberg, a New Yorker now living in Paris where she recently had a baby. “But most people also have private insurance, called a mutuelle that is either offered through their employer or bought on the private market. There’s a thriving private insurance market in France. . .  Private medical insurance is advertised on the sides of buses and alongside movie previews in theaters.”

Ninety-two percent of the French have supplemental private insurance. Many are insured through their employers, as they are here.  Patients pay 7 percent of all health care costs out of pocket.

In France payroll taxes, paid by both the employer and the employee, along with income taxes help finance the 73% of the  bill that the government covers. All told, French workers contribute around 13% of what they earn to the public sector healthcare fund.

Government Regulation Means Lower, Transparent Pricing

 While the French government does not pay all healthcare bills, it does regulate prices. Because it sets fees for medical services, pricing is transparent

This is why, in France, Schiffrin didn’t have to spend hours on the phone talking to her doctors’ and insurers’ billing departments. There was no uncertainty as to what doctors and hospitals would or should be paid.

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Subsidies: Would You Qualify? Consumer Reports Has A User-Friendly Tool That Will Tell You

 

Check out this online tool from Consumer Reports. It allows you to quickly and easily find out if you–or a relative–would be eligible for a subsidy. A great many young people don’t realize how little insurance would cost after applying the tax credit. Do them a favor, and find out for them. https://www.healthtaxcredittool.org/

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