Health insurance marketplace key to reform opens Tuesday

09/30/2013 7:54 PM

10/01/2013 7:45 AM

The Affordable Care Act’s insurance exchanges open Tuesday amid fierce political pushback, recent delays of important provisions and a whole lot of confusion among the public.

The online exchanges — also known as marketplaces — are the centerpiece of healthcare reform, and they will give consumers unprecedented power to examine an extensive menu of health plans and to compare prices and benefits side by side.

For Florida, where an estimated 3.8 million people live without health insurance, the exchanges could make an especially big impact. The state ranks near the top of the nation in terms of plan choices, with an average of 102 health plans to choose from on the state’s federally run exchange.

While much of the focus has been on the individual mandate — upheld by the Supreme Court in June 2012 and requiring most Americans to have minimum essential health insurance in 2014 — less attention has been given to the overall cost of the law.

With nearly 50 million uninsured Americans, the ACA aimed to insure nearly everyone — at an estimated cost of more than $900 billion over the next decade, from 2010 to 2019.

Who pays for that?

Many assume that, like most anything else, more or better healthcare equals more cost.

That assumption is not necessarily correct, said Steven Ullmann, a professor at the University of Miami School of Business Administration and director of its Center for Health Sector Management and Policy.

Ullmann offered an example of a hospital that improved the quality of patients’ health while also lowering costs. The hospital, which Ullmann declined to name , had experienced a large number of patients who were repeatedly admitted with asthma and respiratory distress.

Social workers who visited the patients spotted a trend: In almost every household visited, they saw air-conditioning units with vents full of dust and mold.

Hospital administrators bought new air-conditioning units, at $90 apiece, for the patients. The number of patients admitted for asthma and respiratory distress fell dramatically — saving the hospital the expense of caring for them and improving the health of patients.

“Much of healthcare can be provided much more efficiently and, in so doing, provide higher quality,’’ Ullmann said.

The law also is expected to lower healthcare costs in another way: by spreading the risk of insurance. By expanding health coverage to include both those least likely to become seriously ill and those already or likely to become sick, the law was projected to reduce uncompensated care, lowering healthcare costs for the country and even reducing the national deficit.

The Obama administration pledged that health reform would save more than $200 billion over 10 years, and more than $1 trillion in the second decade. More cost reductions are expected from emphasizing preventive services and rewarding providers that deliver positive outcomes for patients.

It will take more than healthcare savings to pay for it all, though.

New fees and taxes will be levied on individuals and businesses, including a 40 percent tax on so-called Cadillac plans, beginning in 2018, on high-cost, benefits-rich health plans. And new regulations will require doctors, hospitals and insurance companies to operate more efficiently, or pay penalties.

Budget cuts are also in the mix as federal funding will be reduced for hospitals that treat disproportionate numbers of uninsured individuals. The government currently sends about $11.6 billion a year to states to distribute to these hospitals — including Jackson Health System in Miami-Dade — but the health law called for payment cuts under the assumption that uninsured patients would enroll in insurance programs, including Medicaid.

And though Florida declined to accept $51 billion in federal funds over 10 years to expand Medicaid, which could have covered more than 1.1 million uninsured people, the cuts continue.

Over the next decade, funding for disproportionate share hospitals will be reduced by hundreds of millions of dollars per year, beginning with a scheduled $500 million nationwide reduction for the year ending October 2014.

The health law faces other tests as well, such as whether the projected seven million uninsured Americans will enroll for subsidized health insurance during the open enrollment period on the exchanges that begins Tuesday and ends March 31.

Another unanswered question is what effect if any the health law will have on the majority of individuals who get health insurance through an employer.

About 68 percent of Americans aged 18 to 64 in 2011 received employer-provided health coverage, and they do not need to enroll through the exchange unless they spend more than 9.5 percent of their annual income on health insurance and pay more than 40 percent of their total medical costs. Americans older than 65 who are covered by Medicare do not need to enroll.

But while Americans with employer-provided health insurance are not supposed to see any change in their coverage or rates due to the health law, that does not mean their employer cannot make a change.

In the past decade, many employer-provided plans have reduced benefits and raised costs for consumers — whether through the increasing use of co-insurance plans with high deductibles, or smaller provider networks that offer fewer choices of specialists and physicians.

Sal Barbera, a former hospital executive who teaches healthcare administration at Florida International University, said he will be watching to see whether the Affordable Care Act lives up to the promises made by the president and the law’s proponents.

“It will be interesting to see, when the dust settles, what does this all mean for consumers in regards to price of healthcare, the accessibility,’’ Barbera said. “A lot of people still remember the president telling everybody that if you’re happy with your insurance, you can keep it. Is that really true? I don’t know the answer to that.’’

Insurance companies must guarantee coverage to all individuals, regardless of pre-existing conditions, for plans beginning in January. They are no longer allowed to charge higher rates based on gender, and they can only charge their oldest and sickest members three times the amount they charge their youngest and healthiest members.

Those regulations are likely to drive up the cost of insurance for everyone, according to officials with Florida’s Office of Insurance Regulation.

Another potential challenge for the law’s success: Young people who rarely use medical services may choose to pay a penalty — starting at $95 or 1 percent of income but escalating after the first year — rather than buy health insurance.

Results of a Gallup Poll released Monday found that a majority of uninsured Americans, about 65 percent, plan to buy health insurance rather than pay the fine. Twenty-five percent said they would pay the fine.

Almost half the people polled by Gallup, 48 percent, said they planned to use the health insurance exchanges to shop for coverage; 17 percent were uncertain, and 36 percent said they would not.

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