What Makes U.S. Health Insurance Exchanges So Complicated

By UWE E. REINHARDT

 

Uwe E. Reinhardt is an economics professor at Princeton. He has some financial interests in the health care field.

There is much coverage and commentary on news Web sites about whether the health insurance exchanges called for in the Affordable Care Act will be ready by Oct. 1 for enrollment by individuals seeking health insurance in the nongroup market. Insurance bought there takes effect on Jan. 1. I sense that many of those commenting would like the exchanges to fail.

Why is setting up these exchanges so difficult? After all, they are not a novel invention. The eHealthInsurance.com Web site, for example, has since 1997 functioned as an electronic exchange for private health insurance products sold in the nongroup United States market.

That exchange and similar existing private exchanges, however, are not suitable models for the exchanges envisaged in the Affordable Care Act. They function merely as passive brokers for whatever policies private insurers under contract with them choose to list. It is up to consumers to pore over the fine print of any particular insurance contract listed on an exchange for a detailed description of coverage benefits, limitations and exclusions.

There have been many reports on how coverage gaps in the fine print of such policies can leave people who believe they have health insurance in serious financial distress once they fall ill. See, for example, an analysis by Consumer Reports.

More relevant as a model in this context might be the health insurance exchanges in several European countries that operate social health insurance systems with multiple competing private insurers — Germany, the Netherlands and Switzerland prominent among them.

Let us therefore pretend that we are residents of Switzerland and rummage around in a Swiss health insurance exchange.

All Swiss residents are required by federal statute to purchase insurance coverage for a common, comprehensive benefit package prescribed in the statute. Individuals buy that coverage on health insurance exchanges whose architecture is broken down by canton and that facilitate easy comparisons of the community-rated premiums charged by the competing private insurance carriers active in the individual’s canton.

Individuals can purchase supplemental benefits — e.g., coverage for private rooms in hospitals or alternative medicine — from the same companies on the same exchanges. The premiums for these benefits, however, are medically underwritten, which means that they depend in part on the applicant’s health status.

Private insurers in Switzerland are not allowed to earn profits on the common, comprehensive, social-insurance benefit package they cover, but they can earn profits on the supplemental benefits.

The Swiss company Comparis, a general insurance broker, among other exchanges operates one for health insurance, and it is available in English.

To receive premium quotes from competing insurers, one enters the postal code of one’s residence (e.g., 3010 for a part of the city of Bern). One is also asked to identify one’s current insurance carrier in a pop-up list of carriers serving the canton. As if I were a Swiss resident, I randomly clicked on “Publisana” from that list. (A new resident would click on “Relocating to Switzerland.”)

Because basic benefits are standard across Switzerland, the only consumer choice with regard to the benefit package is the deductible, which can range from 300 to 2,500 Swiss francs. (At current exchange rates, a Swiss franc is about $1.06.)

At the bottom, one can choose comparisons among standard coverage, a gatekeeper model (with a general practitioner), health maintenance organizations and telemedicine (shown as Telmed). I recommend “standard,” offering free choice of provider.

Click on “Continue,” and up comes the comparison of premiums for one’s chosen deductible for policies sold in one’s canton. Monthly and annual premiums of the various insurers are shown, along with the savings one could achieve by switching insurers.

A click on “request quote” leads to a page offering supplementary insurance for various items. A click on the “i” in green provides information on each supplementary benefit. Note that generous maternity benefits are included in the basic coverage and one can opt for additional services. (European men do not seem to view being forced to pay for maternity care an affront. At least one critic of the Affordable Care Act in the United States, on the other hand, has denounced inclusion of maternity benefits among the basic benefits as “Obamacare’s War on Men.”)

Swiss insurance exchanges seem quite simple and user friendly. Presumably, no one needs the assist of an insurance navigator to work through this Web site.

So why can’t the insurance exchanges under the Affordable Care Act be as simple as those in Switzerland? Why would it take almost three years to set up the American exchanges? And why will American buyers of health insurance need specially trained navigators to help them navigate these exchanges?

There are several reasons.

For one, the exchanges are but one small component of America’s highly complex health insurance system and must be stitched smoothly onto its many facets — a challenge that would be just as demanding for anyone proposing to move toward universal health insurance coverage through private insurers, even in the absence of deliberate attempts to sabotage the effort.

Swiss exchanges do not determine the public subsidies to which lower-income Swiss residents are entitled. These subsidies are handled by a different, cantonal authority. Therefore the Swiss exchanges do not have to determine eligibility for insurance. By contrast, in the United States, state-based exchanges must coordinate with the Internal Revenue Service to determine eligibility for subsidies and their magnitude.

The American exchanges must also work with the state-administered Medicaid programs, to determine whether an applicant on the exchanges should be referred to Medicaid, and with small employers.

Furthermore, some American exchanges will be “active” — they will actually negotiate premiums with insurers.

Finally, the Swiss exchanges need to feature premiums only for exactly the same health benefits. Individuals have a choice only over the deductible in the policy. The Affordable Care Act does specify the basic benefits that must be covered, which each state can translate into its own basic benchmark package. There will be four levels of covered benefits (bronze, silver, gold and platinum) that are likely to differ mainly by the degree of cost-sharing (deductibles, co-payments and co-insurance). But some variation of covered services around the state benchmark package nevertheless will be possible within the same actuarial value of a policy, adding some complexity.

Benefit packages on the American exchanges will also vary by the degree of choice among providers that different policies permit. Presumably, the exchanges will have to ascertain the adequacy of the networks of providers attached to particular policies.

In short, comparing the various offerings on the American exchanges will not be nearly as simple as it is on the Swiss exchanges; hence the need for the specially trained navigators.

Americans insist on choice and pluralism among insurance products, enabling them to find coverage they believe will fit their personal needs. That choice, desirable though it may be, comes at a stiff price, with two dimensions.

First, it adds considerably to monetary outlays on administrative functions, which in the United States run about twice per capita what they are in other countries. And to make careful and responsible choices takes a great deal of a person’s time.

Article Link: http://economix.blogs.nytimes.com/2013/07/19/what-makes-u-s-health-insurance-exchanges-so-complicated/

Will Health Reform Law Make Premiums More Expensive or More Affordable?

Source link: http://www.pbs.org/newshour/bb/health/july-dec13/obamacare_07-18.html

Summary

President Barack Obama defended the benefits of the Affordable Care Act in a news conference, part of a broader effort to sell the law amid continuing criticism from Republicans. MIT’s Jonathan Gruber and Avik Roy of the Manhattan Institute join Jeffrey Brown to debate the cost of coverage under the health reform law.

 

ANALYSIS    AIR DATE: July 18, 2013

Will Health Reform Law Make Premiums More Expensive or More Affordable?

SUMMARY

Transcript

JEFFREY BROWN: Much of the public remains skeptical or unaware, an important component has been delayed, and Republicans continue their attempts to derail it.

But President Obama again today offered a strong defense of his signature health care reform law. His remarks came as deadlines approach for its implementation.

President Obama ratcheted up his campaign to sell the health care law today in a speech in the East Room of the White House.

PRESIDENT BARACK OBAMA: The Affordable Care Act is doing what it’s designed to do: deliver more choices, better benefits, a check on rising costs, and higher-quality health care.

JEFFREY BROWN: The president highlighted a relatively obscure part of the law, which he himself now regularly refers to as Obamacare, that requires insurers to spend 80 percent of premium dollars on medical care or send rebates to their customers.

BARACK OBAMA: I bet, if you took a poll, most folks wouldn’t know when that check comes in that this was because of Obamacare that they got this extra money in their pockets. But that’s what’s happening.

JEFFREY BROWN: Today’s speech was part of a broader effort to sell the law. It comes amid continuing criticism from Republicans and worry from some supporters about its implementation.

Health insurance exchanges, one of the law’s central components, begin to open Oct. 1.

BARACK OBAMA: New online marketplaces will allow consumers to go online and compare private health care insurance plans, just like you would compare over the Internet the best deal on flat-screen TVs or cars or any other product that is important to your lives. And you’re going to see competition in ways that we haven’t seen before.

JEFFREY BROWN: The president chose not to address the decision earlier this month to delay the insurance employer mandate until 2015.

Other major parts of the law, such as an individual mandate, will still take effect as scheduled.

But opponents have seized on the delay as a sign of greater problems with the law. Yesterday, the Republican-led House voted to delay the individual mandate that requires most Americans to get coverage next year or pay a penalty.

House Speaker John Boehner:

REP. JOHN BOEHNER, R-Ohio: Listen, this is about basic fairness. To say that, well, we’re going to — we’re going to relax this mandate for a year on American business, but we’re going to continue to stick it to individuals and families is strictly, and simply, unfair to the American people.

MAN: All those in favor say aye.

MEN AND WOMEN: Aye!

MAN: Those opposed, no.

MEN AND WOMEN: No!

JEFFREY BROWN: The House vote marked at least the 38th time that Republicans have tried to eliminate or scale back the Affordable Care Act.

Republican Representative Luke Messer of Indiana:

REP. LUKE MESSER, R-Ind.: Obamacare is not working. The American people know that. Now it seems that President Obama knows that, too. The president’s unilateral decision to violate the law and delay the employer mandate, postpone some of the law’s worst damages for businesses, fundamental fairness dictates that individuals get the same reprieve.

JEFFREY BROWN: Yesterday’s vote came on the same day New York State announced its insurance premiums on the individual market are expected to drop 50 percent.

Today, the Obama administration put out its own report on the expected cost of premiums once the new exchanges take effect. It concluded that 10 states, plus the District of Columbia, would be able to offer monthly premiums that will be 18 percent lower than initially projected by the Congressional Budget Office. Those estimates were for a lower-cost plan that would run about $320 a month for an individual.

But other states have come up with very different and higher numbers. Last week, Ohio issued its own estimate. It reported the average individual market health insurance plan would jump 88 percent next year.

The question of how much insurance will cost is a crucial one for the success of the law.

And we explore the issue further with Jonathan Gruber, an economist at the Massachusetts Institute of Technology. He worked with the administration on the health reform law and is a key architect of the Massachusetts law.

And Avik Roy, senior fellow at the Manhattan Institute, he served as Mitt Romney’s health care adviser during the 2012 presidential campaign.

Well, welcome to both of you.

Jonathan Gruber, starting as a sort of general starting point, is there a simple answer as to whether the health reform law will lower or raise premiums?

JONATHAN GRUBER, Massachusetts Institute of Technology: There’s never a simple answer with something as complicated as health care, but there’s a three-part answer.

The first part is, for most Americans who have private health insurance who get it from their large employers, nothing changes.

The second part of the answer is, for the second largest groups, those who get insurance from small employers, what they’re going to see is increased premium certainty. They won’t see their premiums jump 50 percent in the year because someone gets sick.

And on average, they are going to see rates basically stay the same. Some will go up some, some will come down some, but basically stay the same. The third group is individuals.

Now, the effect on individuals is going to vary a lot across states, because — depend on how regulated the individual market was before this law.

But what we are going to see is on average the premiums individuals face will go up, but that will be offset by the fact that the Affordable Care Act includes tax credits to cover the cost of health insurance. After you factor in tax credits, premiums will go down on average.

JEFFREY BROWN: All right, we will go through some of the details.

But first I want to ask Avik Roy the same question. The general proposition, what do you see?

AVIK ROY, The Manhattan Institute: So, I agree with most of John’s framework.

I would say that it’s important to understand that in the small group market and the large group market, you are still going to see insurance rates go up because insurance rates just go up every year with health care inflation, something that unfortunately the Affordable Care Act doesn’t do that much to dent.

In the individual market, he’s right that certain states will do OK because they are highly regulated already. They are regulated much the way the Affordable Care Act regulates the entire country.

But in unregulated or lightly regulated states, such as California, where today an individual who is say 40 years old can buy an insurance plan that is reasonably good for say $94 a year, they’re going to see substantial increases.

And the subsidies won’t offset increases for everyone. So, there will be a certain slice of low-income individuals who will benefit, but there’s — the majority will not.

Even if you get a partial subsidy, your rates will still go up. And if you’re not eligible for a subsidy, you get hit twice, because not only does your insurance rate goes up, but you are paying the taxes to fund subsidies that go to other people.

JEFFREY BROWN: Jonathan Gruber, respond to that. So, it’s different as opposed to what you were starting to talk about, the difference within different states.

JONATHAN GRUBER: Yes, it’s different in different states.

Look, the idea of insurance is that the healthy contribute more than they expect to get at the end of the year. The sick collect more than they contributed. And over time we are all both healthy and sick so it all evens out.

The problem is you can’t get insurance to work that way in the private market, because if you just leave the private market alone, what happens is insurance companies don’t want the sick guys, right? They’re not going to make money on them. They just want the healthy guys.

So, what they do in states like California and other states is they exclude the sick from coverage, and the healthy get very skimpy coverage. So, for instance, the $94 plan that Avik mentioned is not good coverage. It’s a plan with maybe a $10,000 deductible. These are really — or a plan which caps the benefits you can get.

What happens is states that are not regulated end up with insurance where the sick can’t get it and healthy get very skimpy plans. The result of the law will be the sick and healthy will pay same price. Plans will be more generous.

We both agree some are going to pay more. I think it’s a minority of people. By my estimates, after you factor in tax credits, about a third of those currently buying in the individual market will pay more, and about two-thirds will pay less.

JEFFREY BROWN: Avik Roy, first, I want to clarify. You said $94 a month, I think, as opposed to a year?

AVIK ROY: Ninety-four dollars a month, and that’s for a 44-year-old individual, single and childless.

JEFFREY BROWN: Let me ask you about that impact of tax credits that Jonathan Gruber was talking about. Doesn’t that offset — or to what degree does it offset any rise in premiums?

AVIK ROY: Yes, so two actuaries looked into this in the magazine “Contingencies,” which is published by the American Academy of Actuaries.

And they estimated that if you are between 20 and 30 years of age, 80 percent of people, even despite the impact of subsidies, will see increases. And for people who are 30 to 40, it’s about 30 to 40 percent of people will still see increases, despite subsidies.

So, the subsidies will have impacts for some people, but other people will see substantial rises. And here is the thing.

Jonathan had this framework where he said, well, the deal with insurance is that healthy people pay more, so that sick people can pay less. That’s one way to think of insurance.

Another way to think of insurance is the way we think of car insurance or auto insurance, which is I want to be protected. I want to protect myself if I get into a collision or my car gets stolen, but I don’t want to subsidize — I don’t want my rates to go higher because there are drunk drivers running around who are crashing their cars all the time.

So, if insurance is a bad deal for me, I have more of an incentive to drop out of the market, despite the individual mandate and some of the other factors in the law that try to dragoon people in, even though they’re being forced to subsidize people where they don’t actually benefit from the amount they’re spending on their health insurance.

JEFFREY BROWN: Well, Jonathan Gruber, feel free to respond to that, but I do want to clarify to both of you just so the audience understands, the population that we’re talking about in all of this, right? Do we agree on that, the size of the population and who is affected?

JONATHAN GRUBER: Yes. Yes.

I mean, the population is — first of all, it’s those who buy individual insurance now who’s really affected. That is currently about 7 percent of the U.S. population.

Second of all — of the non-elderly population — second of all it’s the young healthy group, individuals who are not poor, which is about a third of that group.

So, we’re talking about something like maybe 2.5 percent of people in the U.S. might see rates go up, something on the order of that.

AVIK ROY: I would add something.

JEFFREY BROWN: Go ahead.

AVIK ROY: … which is that, if you look at the Congressional Budget Office’s estimates and you add up all the people that the Congressional Budget Office projects will be shopping for insurance on their own, either through the ACA exchanges or through other means, it adds up to about 77 million people by 2016.

So it is a substantial number of people, because it’s not just the people who buy insurance today on the individual market. It’s the people who are uninsured who should be buying insurance on the individual market, but don’t, either because they think it’s a raw deal for them or because they can’t afford it or for some other reason.

JEFFREY BROWN: And, Jonathan Gruber, now that we’re getting close, things are starting to kick in and we are getting closer to fuller implementation, what are the key uncertainties here as we try to figure out what’s going to happen? What are you looking for?

JONATHAN GRUBER: Well, I think there’s really two big sources of uncertainty.

The biggest source of uncertainty is this issue of the Medicaid expansions. State policy-makers are making absolutely short-sighted, really there’s no other word but stupid decisions not to expand their state Medicaid programs, despite the fact it’s federally financed, leaving millions of Americans without health insurance coverage, and adding confusion in implementation, because if I go to an exchange tomorrow or in January and my income is 99 percent of the poverty line, they say, sorry, you’re out of luck if you’re in Texas or Florida, because there’s no Medicaid.

But if I’m 101 percent of the poverty line, I get great subsidies. I think that uncertainty, it’s going to be a problem.

The second source of uncertainty is people not really understanding the laws in place, understanding the benefits of the law. The misinformation that is being passed out is going to confuse people.

And unless people understand what the law could do for them, they might not sign up and that might limit the benefits of the law.

JEFFREY BROWN: And, Avik Roy, same question to you. What uncertainties do you see?

AVIK ROY: I would say that the biggest uncertainty is whether or not healthy and young people will sign up for insurance under the ACA exchanges.

And I think that is why you heard the president give that speech today. It wasn’t really so much for political reasons. It was because if young and healthy people don’t sign up for the exchanges, you will have a result that is a lot like the New York insurance market of today, where insurance cost $800, $900 a month for people. It’s unaffordable, because young and healthy people drop out of the market.

So, there’s a lot of concern I think among the administration and its officials that young and healthy people will see this as a raw deal — and I think correctly — and not sign up for the cross-subsidy, where they are spending a lot more for insurance to subsidize other people, where the money doesn’t benefit directly.

JEFFREY BROWN: Jonathan Gruber, just the last word on that one, on that specifically, on the young people, healthy people?

JONATHAN GRUBER: I think Avik is exactly right.

It’s critical that the young and healthy sign up. I think they will because there’s going to be low-cost insurance products available and many of them will get tax credits.

JEFFREY BROWN: All right, Jonathan Gruber and Avik Roy, thank you both very much.

AVIK ROY: Pleasure.

JONATHAN GRUBER: My pleasure.

Speaking Out for Health Care Act, Obama Says Millions Will Get Rebates

Doug Mills/The New York Times

Obama Defends Affordable Care Act: At a White House event, President Obama spoke about how his health care law is saving Americans money.

Source Link:  http://www.nytimes.com/2013/07/19/us/politics/speaking-out-for-health-care-act-obama-says-millions-will-get-rebates.html?partner=rss&emc=rss&_r=1&

By
Published: July 18, 2013

WASHINGTON — President Obama, slipping back into his episodic role as a vigorous campaigner for his new health care act, said Thursday that thanks to the law, more than 8.5 million Americans are getting rebates this summer from their insurance providers.

Mr. Obama was joined by families who have benefited from a provision in the law, which requires health insurers to spend at least 80 percent of the revenue from premiums on medical care rather than on administrative costs. Insurers who fail to meet that benchmark must reimburse customers, a process that began in 2012.

“Last year, millions of Americans opened letters from their insurance companies, but instead of the usual dread that comes with getting a bill, they were pleasantly surprised with a check,” Mr. Obama said in a midday ceremony at the White House.

The checks typically amount to no more than a few hundred dollars. But the president, recounting the stories of middle-class families arrayed on the stage behind him, celebrated these modest windfalls as an early sign of the tangible benefits of the law.

For Mr. Obama, it was a high-profile return to a debate in which his voice has sometimes seemed absent. For example, he has said nothing publicly about the administration’s decision to delay for a year a part of the law dealing with employer-provided insurance.

With the Republican-controlled House of Representatives voting yet again this week to repeal the Affordable Care Act, however, he seized on new statistics that demonstrate the law is driving down premiums in New York, California and several other states.

The Department of Health and Human Services released a report Thursday asserting that in 11 states and the District of Columbia, proposed health insurance premiums for 2014 were nearly 20 percent lower than the administration had projected.

“Today’s report shows that the Affordable Care Act is working to increase transparency and competition among health insurance plans and drive premiums down,” Kathleen Sebelius, the secretary of health and human services, said in a statement.

In New York, state insurance regulators said they had approved rates for 2014 that were an average of at least 50 percent lower than those now available. Administration officials attribute much of that decline to online purchasing exchanges, set up by the law, which they say encourage more competition among insurance providers.

Thursday’s choreographed event in the East Room was intended to put the White House back on the offensive on health care, after a messy period following its decision to delay requiring employers with more than 50 employees to offer health insurance, or pay a penalty.

The delay came after heavy pressure from businesses, which said the law was too complex and cumbersome to implement on time, and it provided critics with fresh ammunition for their claim that the law is putting unfair burdens on individuals and employers.

Republicans did not let up on Thursday, claiming that the benefits extolled by Mr. Obama would be more than offset by higher costs. In some cases, they did not even wait for him to speak.

“Even though we expect the president today to tout about $500 million of these types of refunds, what he won’t say is that next year, Obamacare will impose a new sales tax on the purchase of health insurance that will cost Americans about $8 billion,” said the Senate Republican leader, Mitch McConnell of Kentucky. “That’s a 16 to 1 ratio!”

In a statement after Mr. Obama spoke, Speaker John A. Boehner said: “The picture the president paints of his health care law looks nothing like the reality facing struggling American families. They know that the law is turning out to be a train wreck.”

Mr. Obama dismissed these arguments as political gamesmanship in Washington, belied by the statistics from the states. As for the House’s latest vote to repeal the act, he said Republicans were “refighting old battles” rather than confronting the nation’s problems.

“I recognize that there are still a lot of folks — in this town at least — who are rooting for this law to fail,” he said. “Some of them seem to think that this law is about me. It’s not. I already have really good health care.”

<img src=”http://meter-svc.nytimes.com/meter.gif”/> Source Link:  http://www.nytimes.com/2013/07/19/us/politics/speaking-out-for-health-care-act-obama-says-millions-will-get-rebates.html?partner=rss&emc=rss&_r=1&

A version of this article appeared in print on July 19, 2013, on page A14 of the New York edition with the headline: Speaking Out for Health Care Act, Obama Says Millions Will Get Rebates.

Obamacare pilot project lowers Medicare costs

By: Brett Norman
July 17, 2013 05:00 AM EDT
 

Source Link:  http://dyn.politico.com/printstory.cfm?uuid=81086AEB-BC65-4936-8901-F1E34EB14854

An ambitious program under the health law to change how care is paid for lost nearly a third of its participants after the first year, but not before all were able to boost the quality of care provided to patients in an experiment that some experts say holds promise to bring down health care costs in the long run.

The Centers for Medicare & Medicaid Services announced Tuesday that all 32 health care organizations had hit performance benchmarks for improving care in the Pioneer Accountable Care Organization program, and 13 had done so while substantially lowering Medicare costs. In part, that was by reducing hospitalization and rehospitalizations, CMS reported.

By health care standards, the savings claimed were relatively modest — $87.6 million in 2012. And two participants reported increasing costs by $4 million. Overall, for the 669,000 Medicare enrollees in the program, costs rose by just 0.3 percent compared with 0.8 percent for typical Medicare patients.

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“These results show that successful Pioneer ACOs have reduced costs for Medicare and improved the quality of care for their patients,” CMS Administrator Marilyn Tavenner said in a statement. “The Affordable Care Act has given us a wide range of tools to realign payment incentives in Medicare and Medicaid, and these efforts are already paying off.”

Mark McClellan, former CMS administrator under President George W. Bush and a leading accountable care expert, said the first-year performance is in line with similar undertakings in the private sector. Quality improvements typically precede savings because they can be accomplished more quickly while the savings sometime lag.

“Improving diabetes care now, you see benefits 18 months, 24 months down the road,” said McClellan, now at The Brookings Institution.

“This is a difficult journey,” he said. “It’s a marathon not a sprint, and some organizations are in a better position to do it faster, and others slower.”

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The Pioneer ACO program is among the health care law’s most aggressive experiments in improving care and cutting costs. Networks of doctors coordinate care for patients and share in both the savings they generate and — eventually — the risk of losses.

The Medicare Shared Savings Program is a risk-free version of the accountable care effort, but the share of the savings for the health care organization is also substantially smaller. Seven of the Pioneer ACOs are transitioning to that option this year, and two are opting out of the health law’s ACO programs altogether, although they may adapt their ACO investments for contracts with private insurers, Blair Childs, senior vice president for Premier healthcare alliance, said.

Presbyterian Healthcare Services in New Mexico is one of two Pioneers to drop out of the ACO program completely. The integrated health system, which also has a large health plan, faced two major challenges, according to Todd Sandman, its vice president for strategy and customer engagement. Part of the problem centered on using retrospective data, and part was that New Mexico is a “low-cost, low-reimbursement, low-health care utilization state” — putting it at a disadvantage to perform better than other Medicare providers, Sandman said.

“Frankly, what was hard for us getting out is we really do believe this is the right direction for health care providers,” Sandman said, describing the relationship with CMS as “very collaborative.”

More than 200 health care organizations are participating in the shared-savings program in addition to the Pioneer ACOs, and private insurers are employing the concept as well.

It’s one of several ideas, including bundled payments and medical homes, that are all likely to be part of reorganizing the payment model toward paying for quality, not volume, of care, McClellan said.

CMS should strike “the right balance between incentives and encouragement for change and getting participation in the program,” McClellan said. But the agency shouldn’t back off of rigorous goals — it “should continue to think of [the Pioneer ACO] program as pushing the envelope.”

Some participants had threatened to leave the program this spring over what they said was an overly ambitious set of 33 quality measures. CMS did not make the adjustments they sought. Health systems also have complained that the agency has not been fast enough in providing Medicare claims data that would help them keep track of whether their patients were filling needed prescriptions, for instance, or following up on referrals to specialists.

Jason Millman contributed to this report.

© 2013 POLITICO LLC

THE SMOKER DILEMMA FOR HEALTH INSURANCE

By Michelle Andrews Special to The Washington Post

July 17, 2013

Since smokers’ health-care costs tend to be higher than those of nonsmokers, is it reasonable for smokers to pay higher premiums when they buy insurance through the new state marketplaces that are scheduled to open in October? A handful of states and the District of Columbia say the answer is no.

“We decided it’s not in the good interests of our people” to charge smokers more, says Mohammad Akhter, chairman of the D.C. Health Benefit Exchange Authority, which is developing the District’s online marketplace.

Under the 2010 Affordable Care Act, health insurers are allowed to charge smokers 50 percent higher premiums than nonsmokers for new policies sold to individuals and small employer groups.

States have the option to reduce or eliminate the variation in rates, however, and six states and the District have opted not to charge smokers more, according to the Department of Health and Human Services. A few others have limited the premium differential to less than 50 percent. Virginia will apply the full 50 percent surcharge.

Consumer advocates say charging smokers more for health insurance may be counterproductive.

“There’s no evidence that charging someone a higher premium will discourage them from smoking,” says Dick Woodruff, vice president of federal relations at the American Cancer Society Cancer Action Network.

It might, however, discourage someone from buying health insurance, experts say. The health law requires many plans to cover FDA-approved smoking cessation services such as counseling and medication as a preventive benefit without charging consumers anything out of pocket. If health insurance coverage seems too expensive, fewer smokers will be able to take advantage of tools to help them quit, Woodruff says.

Experts say that smokers disproportionately have lower incomes, so that a premium surcharge will hit them especially hard. Tax credits to help pay for health insurance are available to people with incomes up to 400 percent of the federal poverty level ($45,960 for an individual in 2013). But the tax credit can’t be used for the tobacco surcharge.

What might this mean financially for a smoker?

The annual premium for a 40-year-old nonsmoker with a $35,000 income would be $3,857 for a typical plan that will be available on state exchanges, according to the Kaiser Family Foundation’s exchange subsidy calculator. This person would be eligible for a $532 tax credit, reducing his payment to $3,325.

But if that individual smoked, his cost would increase substantially. He would get the same $532 tax credit, but the premium would be 50 percent higher, or $5,786, meaning he’d have to pay $5,254.

The toll from the surcharge, however, may be tempered, at least temporarily, for some smokers. Last week, the Obama administration announced that some technical problems would make it difficult to process some older smokers’ premiums, and it told insurers not to charge older smokers more than three times what younger smokers pay, at least for now.

So how will insurers know if someone smokes?

“It’s going to be an honor system, basically, with people acknowledging that they’re a smoker,” Woodruff says.

If an insurer finds out that someone hasn’t told the truth, it can charge the policyholder for any surcharge amounts that should have been paid that year. But the insurer can’t rescind the policy or deny the liar continued coverage, according to the final rule governing the issue.

— 

This column is produced through a collaboration between The Post and Kaiser Health News. KHN, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health-care-policy organization that is not affiliated with Kaiser Permanente.

Article Link: http://normantranscript.com/community-news-network/x596949276/The-smoker-dilemma-for-health-insurance 

Consumer groups monitor Affordable Care Act hiring in California

Monday, July 15, 2013

SACRAMENTO, Calif. (KGO) — Consumer groups are worried about possible fraud or identity theft as California ramps up hiring for the new Affordable Care Act.

About 21,000 people are being hired to enroll Californians in the new Covered California program.

Just as the state begins implementing the federal Affordable Care Act to some 5 million uninsured Californians, Insurance Commissioner Dave Jones says not enough is being done to prevent fraud.

The Health Benefits Exchange, now known as Covered California, will start sending out thousands of enrollment counselors throughout the state in September. They will be asking for people’s personal information –like social security numbers — to sign them up for coverage.

“They can use that to perpetuate identity theft. They can also worm into your confidence and trust and sell you other insurance products and we’ve seen this time and time again where consumers get ripped off,” said Jones.

While enrollment agents will be fingerprinted and background checked, Jones would like to see them regulated like insurance brokers and agents where the bar is higher.

Covered California insists consumer information will be protected.

“We’re going beyond fingerprinting and background checking. I mean, there’ll be field monitors out there to make sure that the people who are taking this information are doing so in an appropriate manner,” said Covered California Spokesman Dana Howard.

Enrollment counselors will play a critical role in signing up traditionally hard-to-reach populations. Some criminal records for minor non-financial offenses maybe overlooked on applications because of their specific connections to neighborhoods.

“We also don’t want to preclude people who have paid their debt to society, who maybe are living and working in the communities now; who, you know, now finally have a chance to really redeem themselves and help their communities get covered,” said Vanessa Cajina of the Western Center on Law and Poverty.

The Health Benefits Exchange is paying more than 3,000 community organizations about $58 for each successful enrollment in the Affordable Care Act.

Training for enrollment agents begins next month.

(Copyright ©2013 KGO-TV/DT. All Rights Reserved.)

 

Article Link: http://abclocal.go.com/kgo/story?section=news/politics&id=9173551

 

Health care law opponents dominate advertising wars

Fredreka Schouten, USA TODAY 5:58 p.m. EDT July 10, 2013

 

WASHINGTON — Opponents of the 2010 health care law have out-spent supporters by nearly 5-1 on the airwaves — as conservatives seek to cast doubts about its effects and pledge to keep it at the forefront of federal, state and local races, an analysis shows.

Critics of the Affordable Care Act spent at least $385 million from March 2010, when Congress enacted the sweeping health care measure, through the end of last month, according to an analysis of TV advertising nationwide by Kantar Media.

The biggest spender among opponents: Crossroads GPS, a political advocacy group affiliated with Republican strategist Karl Rove. It pumped at least $40 million into advertising that mentioned the law. Backers, led by the U.S. Department of Health and Human Services, spent roughly $78 million.

Kantar’s Campaign Media Analysis Group predicts spending on the law will hit $1 billion by its fifth anniversary in 2015, according to the analysis released this week.

“There’s been no other law we can think of that has been the focus of this much ad spending” immediately following its passage, said Elizabeth Wilner, vice president of the Campaign Media Analysis Group. “The gap between enactment and implementation has created an opening for this to continue to be a point of attack for its critics.”

A new round of advertising hit the airwaves this week.

Americans for Prosperity, a non-profit advocacy group co-founded by billionaire industrialist David Koch, launched a $700,000 TV advertising campaign, largely in Virginia and Ohio, that features a pregnant mother worried that the law will restrict her family’s health care choices and drive up premiums.

The law’s proponents also are gearing up to defend the law and encourage uninsured individuals to begin seeking coverage in new state health insurance exchanges. Enrollment in the exchanges begins Oct. 1.

Organizing for Action, an advocacy group linked to President Obama, released an ad this week touting the law’s elimination of lifetime caps for health-insurance benefits. The ad, featuring Phoenix mother Stacey Lihn, whose young daughter has undergone multiple surgeries for a heart defect, is part of what the group says is a series of commercials over the summer that will cost a total of “seven figures.”

“When people understand the concrete examples of what this means for them, they like the law; they are excited about the law and they want to tell people about it,” said Jon Carson, the group’s executive director.

On Wednesday, two large health care companies — Walgreens and the Blue Cross Blue Shield Association — rolled out a new website to encourage enrollment.

“The overwhelming majority of the public is tired of the political back-and-forth contentiousness and really just wants to know how the Affordable Care Act will help them in the future,” said Ron Pollack, who is executive director of Families USA and a founder of Enroll America, a non-profit group promoting the law.

He said the groups have raised millions to promote enrollment and will target their efforts on counties with big populations of uninsured residents. They include Los Angeles County, home to about 2.2 million people who lack health care coverage — or nearly 5% of the nation’s 46 million uninsured.

The advertising flurry comes as Republican leaders on Capitol Hill vow new attempts to roll back key provisions of the law — emboldened by the Obama administration’s surprise decision last week to impose a one-year delay on the mandate that larger employers provide insurance to their employees or face penalties.

The law “is never going to be ready for prime time,” Senate Majority Leader Eric Cantor, R-Va., said on Fox News this week. “We need a permanent delay.”

In one sign of how volatile the issue has become, the National Football League recently declined to become involved in promoting the law. The league’s decision came after two leading Republicans, Senate Minority Leader Mitch McConnell and Texas Sen. John Cornyn, warned the NFL and other professional sports leagues that promoting the health care exchanges would “risk damaging” their “apolitical” brands.

Kantar’s analysis shows the issue also has reached contests for local offices that have little role in the law’s future.

Last month, the Republican State Leadership Committee ran ads that sought to tie the law to Democrat James Kay during a special election in Kentucky for a state House seat. Kay prevailed in the three-way contest, allowing his party to retain its 10-seat advantage in the chamber.

Kentucky Democratic Party Chairman Dan Logsdon said voters are “starting to block out” the health care attack ads. “Folks can distinguish between sending someone to the state Legislature … and supporting Obamacare,” he said. “People aren’t stupid.”

RSLC’s president, Chris Jankowski, said his group will press the issue in legislative races in Kentucky next year — a state Obama lost by more than 22 percentage points in 2012 — and other state and local contests across the country in the coming years.

“We believe there are gains to be made for Republicans in Kentucky,” he said. “We think President Obama definitely is going to be an issue at the state level in Kentucky in general, and we think the Affordable Care Act, specifically, is going to be front and center as it begins to affect the public more directly.”

Contributing: Kelly Kennedy

Article Link: http://www.usatoday.com/story/news/politics/2013/07/10/affordable-care-act-ads-nfl-president-obama-republicans-attacks/2506633

Brace for super-stripped-down online health insurance exchange

July 14, 2013 9:07 am by Morgan, David | MedCityNews (Orginally posted on Reuters)

 

WASHINGTON (Reuters) – With time running out, U.S. officials are struggling to cope with the task of launching the new online health insurance exchanges at the heart of President Barack Obama’s signature health reforms by an October 1 deadline.

The White House, and federal agencies including the Department of Health and Human Services (HHS) and the Internal Revenue Service (IRS), must ensure that working marketplaces open for enrollment in all 50 states in less than 80 days, and are responding to mounting pressure by concentrating on three essential areas that will determine whether the most critical phase of Obamacare succeeds or fails.

“The administration right now is in a triage mode. Seriously, they do not have the resources to implement all of the provisions on time,” Washington and Lee University professor Timothy Jost, a healthcare reform expert and advocate, told an oversight panel in the U.S. House of Representatives last week.

Current and former administration officials, independent experts and business representatives say the three priorities are the creation of an online portal that will make it easy for consumers to compare insurance plans and enroll in coverage; the capacity to effectively process and deliver government subsidies that help consumers pay for the insurance; and retention of the law’s individual mandate, which requires nearly all Americans to have health insurance when Obama’s healthcare reform law comes into full force in 2014.

Measures deemed less essential, such as making larger employers provide health insurance to their full-time workers next year or face fines, and requiring exchanges to verify the health insurance and income status of applicants, have already been postponed or scaled back.

“The closer you get to the actual launch, the more you focus on what is essential versus what could be second-order issues,” said a former administration official. “That concentrates the mind in a different kind of way, and that’s what’s happening here.”

But the risk of failure in the form of major delays is palpable, given the administration’s limited staff and financial resources, as well as the stubborn political opposition of Republicans, who have denied new money for the effort in Congress and prevented dozens of states from cooperating with initiatives that offer subsidized health coverage to millions of lower income uninsured people.

Any further delay could help Republicans make Obamacare’s troubles a focus of their campaign in next year’s congressional midterm elections and in the 2016 presidential race.

HHS denies that its strategy has changed and insists that implementation continues to meet the milestones laid out by planners 18 months ago.

“All of the systems are exactly where we want them to be today. They will be ready to perform fully on October 1,” said Mike Hash, director of the HHS Office of Health Reform.

White House officials acknowledge the approach of the open enrollment deadline has put a greater emphasis on priorities. They describe the strategy as a “smart, adaptive policy” and assert that delayed or scaled-back regulations demonstrate better policy decisions or flexibility with stakeholders, rather than a need to minimize distractions.

NO MARGIN FOR ERROR

Advocates point out that the reform, formally titled the Patient Protection and Affordable Care Act and informally known as Obamacare, constitutes the most sweeping healthcare legislation since the creation of Medicare and Medicaid, large successful government programs for the elderly and the low income that also faced fierce political opposition when they were created in 1965. Both required years of work after their launch to refine implementation.

The administration has already delayed or scaled back at least half a dozen health reform measures since last year. These include regulations involving star quality ratings for insurance company plans, the choice of insurance plans for small-business employees and a requirement that state Medicaid agencies notify individuals of their eligibility for federal assistance.

Other efforts that could still be delayed include deadlines for some health insurers to get their plans certified by HHS as well as requirements for how the insurance exchanges provide customer service.

House Speaker John Boehner and other House Republican leaders, warning of a “train wreck”, have called on Obama to defer an essential task: the individual mandate, which requires people to have insurance coverage in 2014 or face penalties that begin modestly, but rise sharply by 2016.

But experts say it is the other essential tasks – establishing the high-tech capabilities necessary to process government insurance subsidies and create online shopping and enrollment for consumers – that could be most vulnerable with such a compressed timetable.

“The biggest hurdle is to get the systems up and running,” said one health insurance official. “Nothing’s happened so far that prevents you from being up and running on October 1. But there’s virtually no margin for error.”

The administration is working according to an ambitious schedule for testing a technology hub and its ability to transfer consumer data on health coverage, income, tax credits and other topics between federal agencies, insurance companies and states. The hub is already exchanging data between the necessary agencies.

A report from Georgetown University’s Center on Health Insurance Reforms says state-run exchanges are on track for a successful October 1 launch and have exceeded federal minimum requirements in some cases.

Failure to have adequate systems in place by September 4, when HHS is due to give insurers final notice about which health plans are qualified to be sold on 34 state exchanges run by the federal government, could delay open enrollment by days or weeks but still allow the law’s core reform provisions to take effect on January 1, experts said.

Insurers will have several days in August to review plan data as it would be presented to prospective enrollees in side-by-side comparisons online. The administration also needs to test the system with a wider audience than the IT experts working on the exchanges to make sure they are consumer-friendly.

Michael Marchand, spokesman for Washington’s Health Benefit Exchange, said the state’s online marketplace had conducted frequent tests with the federal data hub, which had worked well so far. But any last-minute changes to the government’s requirements to its operations could throw a wrench into the IT system, he said.

“If you start adding or removing lines of code it could bring the whole thing down,” he said. “As you add or take away pieces, you have to re-test from the beginning.”

(Additional reporting by Patrick Temple-West in Washington and Sharon Begley in New York; Editing by Michele Gershberg, Martin Howell)

Copyright (2013) Thomson Reuters.

Article Link: http://medcitynews.com/2013/07/braced-for-super-stripped-down-online-health-insurance-exchanges/

California’s Obamacare Grants Will Help State Get The Word Out About Health Care Changes

Los Angeles Daily News  |  By Barbara Jones Posted: 07/11/2013 4:21 pm EDT

Funded by $37 million in state grants, four dozen diverse groups from around California — including labor unions, civil-rights advocates, medical clinics and the Los Angeles Unified School District — are preparing to launch education programs promoting Obamacare, the national health-care plan set to take effect in January.

The 48 recipients were selected from about 200 that applied for the grants, chosen for their access and ability to reach the estimated 5.3 million Californians in underserved communities who will be eligible for the subsidized or guaranteed health coverage.

“These organizations are well-established and well- known and trusted in their communities,” said Larry Hicks, a spokesman for Covered California, the state agency established to oversee a marketplace of insurance carriers. “They’ll take a more personal approach in explaining the programs and offerings through our health-insurance exchange.”

Covered California has tentatively chosen 13 commercial health plans to offer guaranteed coverage under the federal Affordable Care Act, commonly known as Obamacare. With enrollment opening Oct. 1, the agency hopes to get the outreach efforts started in the next few weeks.

“We’re taking a very targeted approach,” Hicks said. “We looked at characteristics like ethnicity, language, region and age, then partnered with organizations to reach out to those demographics.”

Cal State L.A. received $1.25 million to reach out to students at all CSU campuses, while the University of California got $1 million for its statewide campaign.

Of the $37 million total, groups serving metropolitan Los Angeles received almost $16 million. That includes the Los Angeles County Federation of Labor, which was awarded $1 million for an campaign that will extend to San Bernardino and Orange counties, and the Actors Fund, which got $435,000 to communicate with its members.

Loma Linda University Medical Center was awarded $990,000, while the San Bernardino Employment and Training Agency got $750,000. Ventura County Public Health received $700,000 to reach out to local Latino residents.

With its grant of $250,000, the nonprofit Valley Community Clinic in North Hollywood will take its message to farmers markets and athletic fields — places where working-class families often congregate — as well as state employment offices and its own waiting rooms.

“People need to know they can get coverage for themselves and for their families,” said Olga Duran, the clinic’s director of patient services. “They can have ongoing coverage with preventative care — not just acute care at an emergency room. We can get up close and personal to guide them through the process … help get them an understanding of the world they’re entering into and to facilitate that process.”

Covered California is finalizing its contract with Los Angeles Unified, which has been tapped to receive $990,000 to connect with students and families in the nation’s second-largest school district.

Dr. Kimberly Uyeda, LAUSD’s director of Student Medical Services, said information will be presented to students in the adult-ed division, which offers English-language, high school equivalency and vocational-training classes.

In addition, younger students who belong to after-school clubs with a health or medical focus will be trained and asked to convey information about the insurance-plan options to their families.

The grant money will help pay the salaries of district employees who are already working to coordinate health and social services for students. “We’ll be pulling from well-trained and skilled staff members who can really do this outreach plan,” Uyeda said.

Conservative bloggers have blasted LAUSD’s plan to use students as “messengers” for President Obama’s health-care reforms, but Uyeda insisted that any participation will be voluntary. “This is never going to be part of the curriculum or regular education,” she said. “It would never be mandatory.”

Hicks said Covered California will closely monitor the groups to ensure they’re spending the money appropriately and meeting their goals. Under guidelines for the grants, those receiving $750,000 must make contact with at least 99,000 people. A $1 million award raises that target to 132,450 people.

Covered California also plans to advertise its insurance exchange in television and radio commercials beginning later this summer, with detailed information available on its website, coveredca.com. ___

(c)2013 the Daily News (Los Angeles)

Visit the Daily News (Los Angeles) at www.dailynews.com

Distributed by MCT Information Services

Source Link:  http://www.huffingtonpost.com/2013/07/12/california-obamacare-grants_n_3580525.html?ncid=edlinkusaolp00000003

Minn. to test all 3 parts of new health care law

By: Catharine Richert, Minnesota Public Radio News 

MINNEAPOLIS — No state is set to embrace the Affordable Care Act as thoroughly as Minnesota, the only one that will implement the “big three” components of health insurance expansion.

That means Minnesota will expand the Medicaid program, develop an online insurance marketplace and offer a basic health program.

It’s the third component that really sets the state apart. Only Minnesota has committed to offering a basic health program, a safety net for people who have too much income to qualify for Medicaid, but not enough to afford private insurance. By enacting that third element of the act, Minnesota will take implementation of the federal health care overhaul further than any other state.

Advocates of Minnesota’s approach say moving forward on three of the health law’s biggest initiatives means far more Minnesotans will have access to affordable coverage. But it also means Minnesota will be a unique testing ground for the various moving parts of the ambitious and complex new system.

“We are really sticking our neck out there to take advantage of all the opportunities that come along with the Affordable Care Act,” said Christina Wessel, deputy director of the Minnesota Budget Project. “If we succeed, we can be a shining light for what the Affordable Care Act can do in a state. But that also means that if we don’t do it right, we can be a light for what can go wrong as well.”

So, what are experts and insiders going to be watching to gauge how well the changes are playing out?

MinnesotaCare: Minnesota’s basic health plan

MinnesotaCare, the state’s long-standing subsidized insurance program, will serve as the vehicle for the Basic Health Program.

State lawmakers agreed to fund MinnesotaCare through 2014 until 2015, when the federal government makes BHP funding available.

The Minnesota Budget Project’s Christina Wessel said the state’s decision to preserve MinnesotaCare with adjusted eligibility rules was critical to maximizing the number of Minnesotans who can afford insurance.

“We were already so far ahead [of other states] and if we went with the Affordable Care Act’s standard model, we were going to fall backwards,” she said.

The state predicts 160,000 more Minnesotans will receive health insurance coverage under MinnesotaCare, with an estimated 70 percent – or 112,000 – of them enrolling in 2014. That’s on top of the 35,000 people already in the program who meet MinnesotaCare’s new eligibility requirements. The question is whether the enrollment system can handle that large an influx with so many other changes afoot.

And Mid-Minnesota Legal Aid’s Ralonda Mason wonders if an “affordability gap” will remain for people who earn just a little too much to qualify for MinnesotaCare. Individual coverage sold through the exchange may still be too expensive for them, even with the help of government subsidies.

“People with that income level just don’t have much other money left for other necessities like health care,” she said. “So I’m very concerned that the assistance … won’t be sufficient to allow people to purchase policies that will really be useful to them.”

Another question is cost. The Minnesota Department of Human Services, which administers MinnesotaCare, estimates that federal dollars will cover about 85 percent of the program up from 50 percent, saving the state $157 million in fiscal years 2016 and 2017.

A separate study commissioned by the state confirmed that a BHP could save Minnesota money. But it also showed that the program could cost the state more than $300 million in 2016 depending on how many enroll, the health of enrollees, and how generous the coverage is.

The software

Minnesota plans to spend more than $100 million on developing the information technology that will be the backbone for MNsure, the state’s new online insurance exchange, according to MNsure officials. The online marketplace will act as a one-stop shop for Minnesotans seeking to buy their own insurance, for small businesses that want to offer group coverage to their employees, and for people enrolling in government health plans.

The technology will have to sort out whether a person qualifies for Medicaid, the Basic Health Program or commercial insurance. For people who don’t qualify for a government program the software also has to determine if their income makes them eligible for a public subsidy.

“This is a big gamble. I can’t say [if] it’s going to succeed or not,” said Gov. Mark Dayton last March on Minnesota Public Radio’s Daily Circuit program. “It’s a huge undertaking. It’s a gargantuan software issue to try to put all this information about all these providers … and have it be current and accessible, and understandable. It’s staggering.”

But so far, officials with big health insurers that are proposing to sell plans on MNsure are not expressing concerns about the technology working.

Enrollment

Persuading uninsured people to enroll in a health plan is key to achieving the primary purpose of the Affordable Care Act: expanding coverage to as many people as possible and making insurance affordable.

Enrollment also is the economic lynchpin for the new insurance exchanges. The more people who buy health coverage though the exchange, in particular the more healthy people who enroll in health plans, the more money there is in the system to pay for the health care services of people who need them. If only relatively sick people buy health insurance, premium rates could increase dramatically. Enrollment would likely decline in response, defeating the purpose of the law. That’s why the law includes the “individual mandate” requiring almost all citizens to have health insurance.

And some health insurers, including the nation’s biggest, Minnetonka-based UnitedHealth Group, have voiced concerns about the health of people enrolling. CEO Stephen Hemsley recently said the company will sell plans on only about a dozen state exchanges, and is otherwise taking a “watch and see” approach.

The first people to get subsidized coverage through the exchanges are likely to have “a pent-up appetite for insurance,” and may have “a higher risk profile,” Hemsley said.

Translation: We don’t like the economics of exchanges in the early stages.

It’s not clear how the carriers’ betting is playing out when it comes to Minnesota, but the market is apparently attractive enough for the nine insurance companies proposing to sell plans on MNsure. The state has not named the companies or released any information about their insurance policies, in accordance with state law.

The mandate

With a few exceptions, people who don’t qualify for Medicaid or MinnesotaCare are still required by law to get coverage, but there are questions about whether the law’s teeth are sharp enough.

Phillip Cryan, SEIU’s Healthcare Minnesota organizing director and former member of the state’s Health Insurance Exchange Task Force, worries that wealthier and healthier people who lack insurance — but who don’t qualify for large government subsidies — won’t sign up as a result.

“The carrots in the Affordable Care Act are really substantial for people who are low income to moderate income … and that will bring a lot of people into the new exchange and into health insurance coverage,” Cryan said. “The sticks, as it were, in the individual mandate – the penalty that people will pay if they do not buy coverage – are not very substantial.”

People who decide to remain uninsured will pay a fine of $95 or 1 percent of their household income next year, whichever is greater, and the fees increase every year before topping out at $695 per uninsured adult or 2.5 percent of household income in 2016.

Outreach

To convince 1 million Minnesotans to obtain health coverage, MNsure will spend roughly $1.5 million on advertising targeted at populations that stand to benefit most from the new law, according to MNsure.

MNsure also has grant funding for organizations willing to educate potential enrollees about the exchange, and help them navigate it.

But there are questions about whether that outreach effort will be sufficient or effective. MNsure will pay only $25 per enrollment in a government health plan, compared to $70 for enrollment in a commercial health plan, at least initially. Some organizations that already help people enroll in public health plans say the $25 payment falls far short of their actual cost, which can reach $300.

There have also been complaints that the outreach effort is excluding vendors with experience in marketing to African-Americans.

Also, market research indicates the uninsured are not necessarily favorably disposed towards health insurance.

“There’s a low level of trust among a lot of the uninsured, especially,” said market researcher Peter Mitchell who surveyed attitudes for the Minnesota Governor’s Health Care Reform Task Force in 2012. “So you have a skeptical public,” he said.

Small Business

Many businesses owners still aren’t sure what the exchange is all about, said Rhett Buttle, VP of External Affairs for Small Business Majority, a national advocacy group for small businesses. But when they learn more, he said, they like what they hear.

“Small business owners for a long time have really struggled with the rising cost of health care, and even just the ability to obtain health care for them and their employees, so the marketplace is attractive,” he said.

But that view is far from universal. Mike Hickey, Minnesota state director for the National Federation of Independent Businesses, an organization that filed a lawsuit challenging the constitutionality of the Affordable Care Act, said a lot will depend on whether a business is eligible for a tax credit. The subsidy is only available to some businesses that employ fewer than 25 full-time employees.

“I don’t think [others] will be interested in perusing the exchange,” Hickey said. “They could really accomplish the same through an independent agent.”

Employers with fewer than 50 employees face no penalty if they refuse to offer health coverage. And the Obama administration recently decided to delay a $2,000-per-worker penalty (after the first 30) on larger employers that refuse to provide health coverage.

Red Tape

Mason of Mid-Minnesota Legal Aid welcomes efforts underway to streamline the insurance application process. For instance, people seeking Medicaid, MinnesotaCare or federal subsidies for the individual market will use a single application, and that’s “a very good thing,” said Mason.

But she warns that the new application must be straightforward.

“We have the opportunity to simplify the application process,” Mason said. “Those are some decisions that are in the process of being made, so how well we do that will influence how successful we are in getting people enrolled.”

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Published July 10, 2013, 08:30 AM