The U.S. Department of Health and Human Services has churned out thousands of pages of regulations to implement the Affordable Care Act. The law was upheld with certain modifications as constitutional last year by the U.S. Supreme Court.
A linchpin of the Obama administration's health overhaul is the establishment of Internet-based health insurance exchanges. These virtual marketplaces are slated to begin operating on Oct. 1 -- offering an "open enrollment" period before the start of 2014.
In this restructured market, consumers will be able to make informed choices from clearly defined policies with no fine print -- using the exchanges to compare certified health plans with four different levels of coverage (certified as Bronze, Silver, Gold and Platinum), based on price and quality.
Individuals and families buying health insurance will be guaranteed coverage for pre-existing conditions, and the cost cannot vary based on a person's gender and medical history. But smokers can be charged more for individual insurance policies because of their heightened risk of cancer and other chronic diseases.
The plans also must include "essential benefits" such as hospital, emergency and maternity care, prescription drugs and mental health coverage, as well as certain preventive services such as mammograms and colonoscopies, without cost-sharing. There are prohibitions on lifetime and annual limits on coverage.
For small businesses, the exchange is a way to pool employees from many firms in the same geographic area to give them a better choice of plans and insurers at a lower cost.
Similarly, the health exchanges will place individuals in larger pools to increase their buying power and give them new choices of private insurance plans that have to compete for their business based on cost and quality. That could help, for example, lower rates for some adults who have not yet turned 65 and enrolled in Medicare.
Eighteen states and the District of Columbia are establishing their own insurance exchanges; seven states are creating exchanges in partnership with the federal government; and 25 states plan to rely on exchanges run by federal officials.
Missouri has no plans so far to open an exchange, so state residents will be able to shop on a federal exchange once it opens. Consumers can obtain preliminary information about federal-run health exchanges at www.healthcare.gov.
OBSTACLES TO PARTICIPATION
While exchanges hold the promise of greater accessibility to health insurance coverage, the realities could prove different. Participation in the exchanges will start slow, federal officials say, and increase over time.
In a report last month, the Congressional Budget Office estimated that 7 million people nationwide, including self-employed individuals and those who do not currently receive health insurance through work, will obtain coverage in 2014 through the exchanges. The budget office estimates that number will rise to 13 million people in 2015, and 24 million in 2016 as "individual mandate" penalties rise.
But according to health industry observers, several factors could drive up health insurance costs and decrease participation in the exchanges:
- A new federal tax on health insurance beginning next year will add to the cost of coverage for individuals, families and small employers.
- Federal tax credits may be insufficient for many small employers, individuals and families to purchase health insurance on the exchanges.
- The law's new "age rating" restrictions will make health insurance more costly for young adults than in previous years. And many healthy young adults in their late 20s and 30s might choose to ignore the law's "individual mandate" that anyone without insurance must purchase it.
- New rules for health plans such as free preventive care may cause some small business owners to drop out of the market, deciding it's too expensive to offer health insurance to employees, even with the aid of subsidies. Firms with fewer than 50 employees are encouraged yet not required by the law to offer insurance.
- Next year, insurance carriers will begin paying a new federal tax on health coverage. Critics say it will cost $8 billion in 2014 and be largely passed through to consumers and employers in the form of higher premiums. In the next 10 years, this tax -- whose funds will help pay for implementation of the Affordable Care Act -- will total $100 billion.