Home June 2013 Healthcare Reform

Healthcare Reform

Ask five of your closest friends what they think of the soon-to-be-implemented Patient Protection and Affordable Care Act, and the chances are that you will receive five totally different opinions.  Some will scoff at the idea that the word “affordable” would even be included in the name of the legislation, while others will sing the praises of our country finally addressing the elimination of the barriers that less fortunate Americans face when it comes to receiving adequate health care.  If it feels as if there is a deep chasm with regard to the possible interpretations of ObamaCare, then welcome to this year’s biggest understatement.

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ith the help of experts, Orange County Jewish Life addresses two questions:  How will the sea change in the healthcare landscape affect you?  What do Jewish ethics say about the Patient Protection and Affordable Care Act, aka ObamaCare?

The answer to the first question, like the bill itself, is not simple, but clearly, healthcare as we know it will never be the same.  Access to doctors and hospitals will change as the system in California alone attempts to absorb more than 5 million uninsured residents.  Coupled with that staggering number is the double-barreled impact that open enrollment and mandated benefits will have on insurance costs.  Subsidies aside, the average Orange County family will wake up on October 1 and find that monthly health insurance premiums look more like house payments.  That does not begin to address how to select the right plan and whether or not the exchange is the best place to get coverage.

So, what will the selection of an insurance plan look like in the post-healthcare reform world?  One way to look at it might be to consider something as mundane as buying a dozen eggs.  The dairy case has large ones, small ones, medium and jumbo.  Some are brown and others are white.  Some have omega three and are not caged, while others are organic, but you are just not sure what the chicken was allowed to eat.  When you walked up to buy the eggs, all you really were interested in was the end product.  Still, the decision became dizzying, and this is just about selecting the right egg.  The end result is probably not life changing, and when the dust clears, you can make an omelet.  Unfortunately, when it comes to selecting your insurance plan, the stakes are a whole lot higher, but the choices, or in some case the lack thereof, are indeed life changing.

Online health insurance marketplaces created by the law, known as exchanges, will offer private coverage at federally subsidized rates to individuals and families with low-to-moderate incomes, with enrollment set to begin October 1.  The law is expected to cover 15 million Americans next year through the exchanges and an expansion of Medicaid.  The government forecasts that the overall number will jump to 38 million by 2022.

Beginning in January, many of the 650,000 inmates released from prison each year will be eligible for healthcare by way of Medicaid.  Many of the nearly 5 million ex-offenders who are on parole or probation will also be covered.  While providing healthcare coverage to people who may have contracted diseases in prison or who may not have enough money to buy insurance under the current system may keep them and the people surrounding them healthier, it adds another element of cost to the package, according to Michael Ollove, writing in Jewish World Review (“Millions of ex-felons, parolees and those on probation are about to be entitled to tax-payer paid health coverage,” May 6, 2013).

Consumers will be able to buy plans in the exchange or out of the exchange.  In the exchange, five companies will be selected out of 38 that do business in California.  They will offer four plans: a platinum, a gold, a silver and a bronze.  The platinum, gold and silver will all come with a $2000 deductible and $4000 out of pocket maximums.  The difference will be the co-insurance, which will range at the top from 90%/10% in the platinum to 70%/30% in the silver.  The bronze, which was recently changed to address obvious price sensitivity, will have a $5000 deductible and a higher out of pocket maximum and with these adjustments, ostensibly, a lower premium.  All plans will have five options in each category, so with five companies competing, the consumer is looking at 100 different choices.  If you qualify, the only place you can get a subsidy is in the exchange.  Those subsidies will range from 100%, or a “free” silver level plan to as little as a small percent, or in many cases, nothing at all.

Cover California, the name of one exchange, has one objective: Sign up as many people as possible.  The exchange will employ certified enrollers, not licensed insurance agents, and these enrollers will only advise you on the plans within the exchange.  What they will NOT do, is tell you anything about the 38 companies (the five in the exchange carriers as well as the 33 that were not selected) that have plans out of the exchange.  These plans will most likely have smaller networks and higher deductibles, but they will also have lower monthly premiums and still come with all the mandated benefits that are now part of virtually every policy sold within the State of California.

What these plans will not include are subsidies, but for many families, the cost differentials will more than make up for that.  In addition, plans sold out of the exchange will not require the insured to complete an exhaustive 20-plus page application that has NOTHING to do with your health and everything to do with your personal finances.  This information will be shared with not only the Internal Revenue Service, but also Homeland Security and anyone else the government feels might benefit from knowing the intimate details of your life.

Beginning in 2014, the new law requires that you buy health insurance or face a tax penalty, with some exceptions for people with financial hardships, among others, as explained on HealthPocket.com.  The penalty starts at $95 per individual or 1 percent of household income, whichever is greater and rises to 2.5 percent of annual household income or a minimum of $695 per person, whichever is greater, by 2016.

According to Bruce Telkamp, CEO of HealthPocket, “The law will be most effective if consumers see real value in obtaining the insurance coverage.  Only insurers that offer high quality and affordable health plans should expect to see significant new enrollments this fall.”

However, two-thirds of people surveyed by HealthPocket, an online company that helps consumers find insurance, say a $95 IRS penalty for being uninsured won’t motivate them to buy insurance, nearly 30 percent are not sure whether the penalty will motivate them to buy insurance and only 8 percent say it would.  Some premium and out-of-pocket assistance is available for individuals making less than 400 percent of the federal poverty level or $45,960, but 63 percent of consumers who fall in this income range say a tax penalty will not motivate them.

In fact, proponents of the new law are worried about whether enough Americans will sign up to make the sweeping overhaul of healthcare a success, according to David Morgan, writing in Reuters (“ObamaCare Enrollment: Will Enough People Sign Up?” May 5, 2013).  “Some of the law’s main advocates fear that not enough of America’s 49 million uninsured will know about health coverage offered in their own states,” the article explained.  “Even if they do, new insurance plans may not be attractive to young, healthy consumers needed to offset an expected influx of older and sicker patients.”

The article cited several other challenges.  Big insurers are concerned about participating, raising questions about how competitive the exchanges will be.  Businesses are opposed to the use of federal subsidies in exchanges run by Washington.  Many states dislike the exchanges and the Medicaid expansion.  According to Paul Starr, a Princeton professor and former health adviser to President Bill Clinton, “The resources are too limited, the (law’s) penalties are too weak and elite opposition in much of the country will undermine enrollment.”  A Kaiser Family Foundation poll found that 77 percent of Americans know little or nothing about exchanges, while 40 percent erroneously think reforms create a government panel to make end-of-life decisions for people on Medicare,” the article said.

A new study by Families USA, an advocacy group, analyzed the Affordable Care Act’s provision for tax credits to be extended to people to help them purchase coverage beginning next year, according to Health Action Network (healthactionnetwork@wellpoint.com, April 26, 2013).  The study estimates that nearly 26 million people will be eligible for the new subsidies, and 88 percent of those qualifying for the tax credits will be from working families.  However, “those subsidies will run up a tab of about $350 billion by 2019…, and those who are not eligible for the subsidies – and even some of those that are – may still wind up paying more for their coverage due to other major provisions of the law, including new minimum essential health benefits requirements and restrictions on age-rating bands.”

“In the end, views of the law will depend on whether it works as promised, Republican pollster Bill McInturff agrees, according to an article in USA Today (“ObamaCare: 3 years in, it faces steep challenges,” May 16, 2013).  “If in fact this is a good and affordable product that works, it will work,” he says. “If what starts to happen is small employers start dumping people into the exchanges and they lose good private coverage; if healthy people would rather pay the penalty than sign up — then it’s going to immediately turn into a problem with demands to change it.”

Clearly, healthcare reform is an idea whose time has come.  Clearly, too, there are still many unanswered questions: Who really pays?  Can the government absorb the influx of new enrollees and sick enrollees if young, healthy people are not buying into the system?  Is the average person really better off?  We can only hope they get answered by the time the Affordable Care Act takes full effect.

Healthcare Reform
and Halakhah

What does Jewish law (halakhah) say about healthcare reform?  We asked Rabbi Dov Fischer, who is the rabbi of Young Israel of Orange County in Irvine, an Orthodox congregation, as well as an attorney, and Miriam Piven Cotler, Ph.D., visiting professor in the graduate Bioethics Institute at Loyola Marymount University, professor emeritus at CSUN where she served as department chair and directed the Center for Healthcare Ethics and Policy and consultant to ethics programs at several hospitals and the California Medical Association Council on Ethical Affairs.

Rabbi Dov Fischer

Halakhic Judaism sets forth guidelines for caring for others.  We are bidden unequivocally to be a compassionate people, explicitly commanded to care for the poor, to visit the sick, to help foster marriages where financial difficulties preclude them, to house and feed strangers passing through town, to care for those who have passed away.  However, the halakhah cannot honestly be leveraged to justify massive secular government programs that sometimes work, sometimes fail miserably and often generate major unintended adverse consequences that are far more severe than the problems they were supposed to solve.  Back in the 1960s, many rabbis went to great lengths to argue that Jewish law practically mandated all aspects of Lyndon Johnson’s “Great Society” agenda.  But, in truth, halakhah never did.  Over time, we have seen the great retreat from that agenda, as it unintentionally fostered — across ethnic, racial and religious lines — cultures of unemployment, fatherless households, increased crime rates and imprisonment among young men and many other social pathologies from which we Americans still are recovering today.

In terms of halakhah, we do not simply appoint government bureaucrats to adjudge treatment options based primarily on financial allocations of government resources.  Rather, every life is precious and holy, and seniors deserve the same opportunities for their lives to be made better and healthier as do other people.  To the degree that new government interference in the private healthcare operations of our country may also lead hundreds, if not thousands, of excellent private doctors to retire early, leaving exposed communities with fewer excellent doctors to treat newly expanded rolls of patients who will be consuming health resources more expansively — people who will be less inclined to conserve their use of that medical care because they are not paying for it to the degree that they once did — many Americans will find that the new paradigm results in their receiving dramatically worse physician care than before, almost assuring an eventual bifurcating of the market — with the richest people paying premiums to see the better doctors who remain practicing, while the less fortunate find themselves relegated to receiving dramatically worse care than before and having to wait longer than ever, as they do in Canada, to receive it.  None of these would be desirable halakhic outcomes.

Miriam Piven Cotler, Ph.D.

We don’t need to look beyond the notions of tzedakah (obligatory good deeds) and tikkun olam (repairing the world) to know that we must take care of those in need who can’t afford it.  According to Jewish values, we must take care of the needy and relieve pain and suffering while at the same time be good shepherds of resources.

The Affordable Care Act is not universal: it will not cover persons who are not here legally and will not provide certain aspects of care.  It’s a start, but it has several issues that give us pause.  There are 48 million uninsured and 50 to 75 million underinsured people in the United States, many in the working middle class.  Many bankruptcies have been caused or associated with medical bills.

The healthcare system has a marvelous ability to gain from the Affordable Care Act, although doctors worry that it will be at their expense.  Other than in HMOs, doctors have been paid a fee for service.  According to our concepts of social justice, the costs of realignment have to be fairly shared.  There are hospitals where the CEO makes $5 million plus bonuses and others where there is uncompensated care.  If the Affordable Care Act works as it should, people who are not currently benefiting from the system will not be forced to obtain care in the emergency room, where it comes at too late a time and too high a price.

ObamaCare Q & A

What is ObamaCare? ObamaCare, Obama Care and healthcare reform are all the same thing.  The official name for “ObamaCare” is the Patient Protection and Affordable Care Act, a bill signed into law to reform the healthcare industry.

What is the status of ObamaCare? Some aspects of ObamaCare healthcare reform are already enacted.  The Patient Protection and Affordable Care Act was signed into law March 23, 2010.  Over 100 million Americans have already benefited from the new healthcare law.

What does ObamaCare guarantee? ObamaCare requires that all insurance plans cover preventive services and stops insurance companies from dropping you when you are sick, as well as offering a number of other reforms and protections.  ObamaCare does not replace private insurance, Medicare or Medicaid.  ObamaCare gives 47 million women access to preventive health services and makes it illegal to charge women different rates than men.  ObamaCare gives seniors access to cheaper drugs, free preventive care and reforms Medicare Advantage.  The cost of insurance premiums must be 8% or less of your modified adjusted gross income, when insurance goes on sale via the health insurance exchanges in 2014, to be considered affordable.

What are ObamaCare’s goals? ObamaCare’s goal is to provide affordable health insurance for all US citizens and to reduce the growth in healthcare spending.  One in two Americans have a “pre-existing” condition for which they could be denied health insurance.  ObamaCare chips away at pre-existing conditions until 2017 when there are no more pre-existing conditions for anyone, including high-risk customers.  Fifty-four million Americans with private health insurance now have access to preventive services with no cost sharing due to the new minimum standards of ObamaCare.  ObamaCare reduces the growth in healthcare spending.  The current $2.8 trillion U.S. healthcare system costs almost $9k a year for every man, woman and child.

Does ObamaCare ration healthcare? ObamaCare doesn’t ration healthcare; it protects consumers from the healthcare rationing insurance companies have been doing for ages.  It enacted a number of consumer protections, including a rate review provision, where insurance companies have to justify rate hikes above 10 percent to your State and post details online immediately.  Yet, many Americans are still seeing their premiums rise at alarming rates.

What are insurance exchanges? Starting in October 2013, insurance companies will compete to be your healthcare provider via a health insurance exchange pool.  This helps to decrease insurance premiums for all Americans.  Nineteen million Americans (of the 23 million estimated to use the exchange) will receive tax credits to purchase insurance on the exchanges.  Due to tax credits and up-front assistance, Americans making less than 400 percent of the FLP (roughly $88k for a family of 4) could see up to a 60 percent reduction in the cost of health insurance premiums.  Employers can use SHOP, a part of the exchange, to purchase affordable coverage for their workers, saving employers up to 50 percent of low to moderate earning workers’ premiums in the form of tax credits.

Who will pay for this? ObamaCare means 21 new taxes.  If an you or your family chooses not to purchase healthcare through the Online Health Insurance Exchange, people can still buy private insurance, get insurance through their employer, Medicare or Medicaid. Those who chose to not purchase insurance will pay an income “penalty” tax to help cover the rest of us. In other words, it’s a tax, not a mandate; no one is actually forcing you to have health insurance.  Employers with more than 50 employees must insure their workers or pay a tax (like the current state run unemployment and workers compensation programs).

Source: ObamaCareFacts.com

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