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 This mandate would have been repealed and replaced with a one-year premium surcharge (30%) for any applicants who incurred a lapse in coverage.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 The employer mandate was set to be completely repealed by the AHCA along with all of its reporting requirements (Forms 1094 & 1095).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