By James Perez, CLU, ChFC

Editor’s Note: With Obamacare now in The Law of the Land, Acadiana LifeStyle asked James Perez, a Certified Healthcare Reform Specialist, to review the provisions of this plan for our readers. Perez explains that there are some very clear winners and losers under this new sweeping law that effects the health insurance coverage for all Americans. 

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We are in the midst of the initial open enrollment, the culmination of the Patient Protection and  Affordable Care Act (PPACA), also known as the Affordable Care Act or Obamacare.  Americans must now decide whether or not to enroll.  Based on the latest reports, the “Health Insurance Marketplace” has made some progress as many of the glitches that initially plagued the website have been resolved.  

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As this electronic gateway to the “Marketplace” becomes more user-friendly, expect a steady increase in the number of enrollees especially after the benefits of the generous advanced tax credits and cost reduction subsidies become more widely known.  In order to facilitate greater participation, the open enrollment deadline may continue to be pushed back and a simplified, mobile device version of the web enrollment is eventually introduced.  

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The “Marketplace” (healthcare.gov) is, without question, the engine that will launch this titanic legislative juggernaut into uncharted waters.  Looming in its path however, ominous and growing, are health care costs.  The Affordable Care Act does nothing to curb health care spending which now represents 18% of our GDP. Although passed under the guise of health care reform, because the new law does not address the underlying causes of increasing health care costs, a more accurate description of its effect is health insurance reform. 

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While certain provisions of the Affordable Care Act will help some who previously could not afford health insurance or did not qualify for coverage, like any other special entitlement, it will come at a great cost and sacrifice to others.  

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Some Americans will benefit greatly from the Affordable Health Care Act. Those people fall within the boundaries of the following groups:

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Americans uninsured because of pre-existing health conditions.  This group is primarily those who are not eligible for employer-provided group health insurance and could not qualify for Medicaid, Medicare, or individual health insurance.  Because the majority of states, including Louisiana, offered a high-risk pool option, most people in this group did have access to coverage.  Since individual health insurance must now accept all who apply for coverage without exclusion or limitation for pre-existing conditions, state sponsored high-risk pools are no longer necessary and have been phased out effective December 31, 2013.  

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Taxpayers with household incomes of 400% or less of the federal poverty level.  If you fall into this category, as 68% of American households do, you will be eligible for a special tax credit to help you pay for health insurance if you are not eligible for affordable coverage that provides minimum value through your employer.  The lower your income, the greater the amount of tax credits.  Additionally, if your household income is 250% or less of the federal poverty level, cost reduction subsidies are available to lower your deductible and out-of-pocket costs.  

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Individual health plans with surcharged premiums.  If, when you applied for individual health insurance, you were accepted but were charged a rated-up premium because of a medical condition or BMI, you may be able to purchase similar coverage at a lower premium effective January 1, 2014.

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Some Individual health plan participants over the age of 40.  Depending on plan benefits and when you purchased your individual health coverage, you may be able to purchase similar coverage at a lower premium effective January 1, 2014.

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Small group health plans with a high percentage of females and historically high claims.  This applies mainly to fully-insured, non-grandfathered plans for groups of 50 or fewer employees.  Many in this category will see substantially lower premiums with their plan renewals in 2014.

The above groups, and there may be some overlap among them, will enjoy greater access to coverage and lower costs through a scheme of redistribution of tax dollars and premiums.  Anytime the government forces the redistribution of funding to benefit a certain group, it will always be to the detriment of another group.  Those at the losing end of the Affordable Care Act include:

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Taxpayers with household incomes greater than 400% of the federal poverty level.  This is generally middle class Americans.  Examples include a single person making more than $47,000 per year or a family of 4 with a household income greater than $96,000 per year. If you fall into this category and are not eligible for affordable coverage that provides minimum value through your employer, you can expect to pay a much higher premium for individual health insurance beginning in 2014.

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Group health plan participants with spousal coverage.  Because the Employer Shared Responsibility Requirement measures affordability based solely on employee only premiums and includes only children under its dependent coverage mandate for group health plans, spousal coverage in many cases will be much more expensive or no longer available.

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Healthy males under the age of 40.  Because of small group and individual health plan rating reform and essential health benefit mandates, young healthy males will probably see a big jump in health insurance premiums unless covered under a plan that is grandfathered or is a self-funded large group plan.

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Females not interested in maternity coverage.  The essential health benefits mandate forces every non-grandfathered health plan to include maternity coverage.  Females with non-grandfathered individual health plans without maternity coverage will be mapped over to a compliant plan that includes maternity coverage with much higher rates.

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Catastrophic and non-grandfathered high-deductible health plans.  If you chose these types of plans because maybe you are healthy and prefer to pay the lowest available premiums, you are in for a hefty dose of sticker shock when you are eventually forced to shop for new coverage or when your plan is automatically mapped over to the closest “compliant” plan in 2014.

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Small group health plans with a high percentage of males and historically low claims.  It will be a common occurrence for fully-insured, non-grandfathered plans to experience a rate increase of 30% or more in 2014 due to the rating reform provisions and essential health benefits mandate.

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Large employers with a high percentage of part-time and lower income employees.  Because the Employer Shared Responsibility Requirement redefines full-time employment as 30 hours and imposes coverage and affordability mandates, many large employers will be forced to scale back hiring and reduce hours in order to avoid increased costs.

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Medical Providers.  Health care providers throughout the country will be forced to operate under more restrictive standards with substantially reduced reimbursements.  

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Health Insurance Companies.  Health insurance companies, especially the newly formed insurance co-ops, will also suffer as a result of lackluster enrollment of young, healthy Americans.  By mid-2014, taxpayer funded insurance company bailouts will be a topic of controversy as the Obama administration, through a little known provision in the Affordable Care Act, will be required to mitigate insurance company losses due to the forced assumption of greater risk. By the time this article is printed, we will be hearing about serious issues with the tax subsidy payment system between the treasury and insurance carriers that will cause policy delays and cancellations.  During the 2014 tax year filing period, the advanced tax credits and cost reduction subsidies will have to be reconciled among the IRS, tax-payers, and insurance companies, resulting in a chaotic mess that will further strain the resources of insurance carriers.

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Although the stated goals of the Patient Protection and Affordable Care Act is to expand coverage to more people and make premiums more affordable, in the long run it will accomplish neither.  Premiums are already sky-rocketing for many Americans and the Congressional Budget Office estimates that more than 30 million people will still be without coverage following the laws final implementation.  

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The special tax and cost reduction subsidies, insurance company bailouts, website implementation and maintenance costs, grants to fund Navigator organizations and other escalating costs will fuel the government’s appetite for increased taxes, fees and penalty revenue. The 2000 plus page bill accompanied by tens of thousands more pages of regulations has become such a confusing helter-skelter, it will be indigestible by what’s left of our free-market health care system.  

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The repercussions of this conflict will force a choice: either repeal the Affordable Care Act or reject our free-market health care system and replace it with one that is completely controlled by the federal government.  As recent history has proven, regardless of the sentiment of the majority of Americans, this decision, which will establish America’s future ideological trajectory, will be determined by the controlling political party.  The decisions we make during the 2014 congressional elections will have long-lasting significance for us all.