The Patient Protection and Affordable Care Act (PPACA) is planned to accomplish its goal that all Americans have health insurance through the extension of an existing service and the creation of another.
Step one is to extend the existing Medicaid program. Step two is to create an online marketplace with a sliding scale of federal subsidies based on income.
"(They're) going to take the Medicaid program and make it much easier to get into," healthcare economist Michael Bertaut said.
According to him, currently to be eligible for Medicaid, a person must be a pregnant woman, a disabled individual or someone who makes less than 15 percent of the Federal Poverty Level (FPL) and has no possessions valued at more than $1,000.
According to the United States Department of Health and Human Services, the current poverty level runs from $11,170 for an individual to $38,890 for a family of eight. Eligibility and/or subsidies for the different PPACA programs are almost entirely based on percentages of this number.
PPACA would extend Medicaid coverage to anyone who makes up to 138 percent of FPL, regardless of any other factors. According to Bertaut, the change would add approximately 600,000 people to the Medicaid system in Louisiana.
According to Bertaut, the majority of the 17.2 million uninsured, as described in the previous article, will be Medicaid eligible after the change.
Step two is to set up a consumer-friendly online marketplace where insurance policies may be purchased.
"For people who make between 138 percent of FPL and 400 percent, that's the federal government's way of saying a family of four making $90,000 a year," Bertaut said, "we're going to provide subsidies that will help you buy health insurance."
Insurance sold in the marketplace will be "guarantee issue coverage." This, he said, means that no one may be turned down for health insurance.
He said that the only factors besides income that can affect premiums are age and tobacco use. However, the existing premium gap between young and old would shrink significantly.
"This thing is like nothing that's ever been done before," Bertaut said. "The exchanges are going to launch on October first of next year, in 2013. So they've got to have everything ready to go.
"When you go online to shop there will be health insurance products there from carriers," he continued. "It'll be private insurance like Blue Cross, United, Humana and Cigna and everybody else will have their products up there. And based on your income, you'll get to see whether you have to pay for the whole premium or just a part of the premium."
There are some limitations, according to Bertaut. If an employer offers what's called a qualified health plan to its employees and doesn't charge them more than nine and a half percent of their salary in premiums, then they are not eligible for a subsidy on the exchange. They have to take their insurance from the employer.
Also, anyone in prison will not be eligible, nor will anyone with an income that exceeds 400 percent of FPL.
On the exchange, plans will be categorized as bronze, silver, gold and platinum; platinum being the most expensive and complete coverage.
"The fed wants everybody to have silver coverage," Bertaut said. "That's their goal is to push everybody into the silver bucket, which is about like having a $1,000 deductible PPO today, roughly."
The family chooses their coverage level, and then can choose the plan they prefer from all of the carriers that offer plans at their chosen level.
The online marketplace uses input from the family and their IRS tax filings to calculate the subsidies. The family's portion of the premium will be based on that information, and the federal government will pay the rest.
Bertaut said that a new tax form, possibly 1099-I, would be created so that insurance carriers can provide proof that someone is insured. That form would be used to calculate exactly how much of the premium the taxpayer actually owed. If the amount they were paying is different, they will either owe money or receive a refund.
For those who decide not to participate for at least nine months in a year, there are penalties,
"The first year is $95, Bertaut said. "By 2017, the fines have more teeth – $695 a person times up to three in a household, or two and a half percent of your income, whatever is biggest.
"Can't demonstrate you had health insurance for nine months out of the year?" he continued, "Then they're going to take that back out of your tax returns."
The next article will cover the recent Supreme Court cases brought by the states and their results. Louisiana's reaction to those rulings and the potential effects on the uninsured will also be discussed. A brief synopsis of how the federal government plans to pay for the new system without raising taxes will be given.