Risk & Business Magazine Moody Insurance Spring 2017 | Page 30

CAPTIVE
INSURANCE
OBAMACARE
Obamacare:
BY: JIM SMALLWOOD
MOODY INSURANCE
What Repeal & Replace Could Have Looked Like
S
ome claim it’s an unmitigated
disaster; others claim it’s the
best answer to an inadequate
and even failing US healthcare
system. Regardless of your
political affiliation or opinion of the federal
government’s latest involvement in our
nation’s healthcare system (the Affordable
Care Act [ACA], i.e., Obamacare), there’s a
good chance that Washington is eventually
going to shape US healthcare and health
insurance for the next several years. I say
eventually because as of the time of this
magazine’s publication, the recent and much-
awaited Republican alternative to Obamacare,
the American Health Care Act (AHCA), has
already been put on the legislative shelf.
Even though the AHCA did not come up for a
vote in the US House of Representatives, it is
important to know as much as possible about
what that bill included as it is a likely starting
point when the issue of healthcare reform
once again commands the attention of
lawmakers. Also, it’s important to remember
that the Affordable Care Act was a law, not a
healthcare plan; it is over 900 pages long and
followed by thousands of pages of regulations.
Here are some major provisions of that law
that would have seen changes under the
shelved AHCA.
THE INDIVIDUAL MANDATE
Considered by many as the most
controversial part of the ACA, the individual
mandate requires Americans to purchase
health insurance or pay a penalty that is
based on their income. This mandate would
have been repealed and replaced with a
one-year premium surcharge (30%) for any
applicants who incurred a lapse in coverage.
Although the surcharge was being reported
as another mandate by the media, these two
30
different provisions were not the same.
The individual mandate is a penalty imposed
by the government on the individual for not
purchasing health insurance. The surcharge
was a premium increase to be charged by
the insurer for an insured having a lapse in
coverage, similar to what happens under
Medicare or auto insurance.
THE EMPLOYER MANDATE
Obamacare’s employer mandate requires for
the first time in history that any employer
with 50 or more full-time employees
must offer health insurance that meets
minimum value standards or face fees and
penalties specified in the ACA. The employer
mandate was set to be completely repealed
by the AHCA along with all of its reporting
requirements (Forms 1094 & 1095).
HEALTH PLAN REQUIREMENTS
It appeared that many of Obamacare’s health
plan requirements would have remained
intact in the Republican bill, such as the
guarantee issue provisions, dependent
coverage to age 26, and keeping all or some
of the essential health benefits provisions. All
of these are popular provisions and appear
to have mostly bipartisan support. The
subsequent restructuring of rate bands under
the AHCA might have lower premiums for
younger adults; however, older adults were
likely to experience an increase.
PREMIUM SUBSIDIES
Obamacare provides subsidies to low-
income individuals and families to help
pay insurance premiums. The Republican
alternative offered premium subsidies, but
they would have been based on the insured’s
age rather than income.
MEDICAID EXPANSION
For the 31 states like Colorado (and the
District of Columbia) that expanded
Medicaid, this might have been the biggest
issue in the proposed alternative. The AHCA
would have granted states federal funds
based on a capped, per-capita basis starting
in 2020. Additionally, there might have been
less federal money to pay for the expansion
population.
Colorado experienced an increase in
Medicaid coverage from 2009 to 2015, from
9.1 percent of the population to 19.9 percent.
These numbers are based on a 2015 Colorado
health access survey provided by the CHI
(Colorado Health Institute). This increase
represents over half a million additional
Coloradans who are now in the state’s
Medicaid program, originally designed as a
social program to