The Patient Protection and Affordable Care Act, H.R. 3590, passed in Congress March 21 will affect Mainers differently than it will those in other states, according to insurance broker Joel Allumbaugh. That’s because many measures in the federal bill that are designed to protect consumers already exist in Maine law.

Allumbaugh is an insurance broker who represents the National Worksite Benefit Group and is president of the Maine Association of Health Underwriters. He said March 22 that provisions that will prevent insurance companies from dropping and refusing coverage for patients with certain medical conditions, as well as those creating a high-risk pool, might mean more competition in the state’s insurance market. But he said the bill doesn’t address the rising costs that he believes are at the bottom of the country’s health care crisis.

“I think it’s a travesty,” Allumbaugh said. “I wanted to see the ability to purchase across state lines.” He said he also hoped for tort reform and restraints on frivolous lawsuits.

Allumbaugh said employers will need to look carefully at how they structure their contributions to employee coverage and define eligibility during annual renewal periods. He said that is because fines could be imposed if the insurance product offered is deemed unaffordable. Allumbaugh said the threshold for affordability is 8 percent of income in the Senate version of the bill.

“That may change during reconciliation,” he said of the process whereby the two houses of Congress create a uniform law from two separate deliberations. “You may find employers adjusting their work force to have more part-time workers than full-time, in order to make it more affordable for the employer.”

Accountant Jim Bowers watched the March 21 debate on the bill online and called it “good theater.”

“It’s amazing how congressmen will repeat lies and misconceptions to make a point,” he said. “It’s shameful.”

Bowers said H.R. 3590’s mandates for employers won’t affect 97 percent of Maine businesses, because they are too small. Bowers has four part-time employees who work seasonally and receive periodic bonuses, but no benefits.

Bowers said he didn’t think Maine would see more competition among insurance providers, but other states are in the same situation.

Guidelines in the new federal health care bill will provide subsidies to help consumers pay for mandated insurance.

According to the Maine State Planning Office, the median household income in Maine’s first congressional district is $41,585. In the second district the median household income is $32,678.

The new law caps health insurance premiums at the annual income levels based on federal poverty guidelines. Federal subsidies will pay the balance of the cost. Out of pocket expenses will be linked to limits on health savings accounts. The figures below are for a family of two. For each additional family member, add $3,740.

  • Up to 133 percent of poverty level – $19,378 – premium capped at 2 percent of income.
  • From 133 to 150 percent of poverty level – $21,855 – premium capped at 4 percent of income.
  • From 150 to 200 percent of poverty level – $29,140 – premium capped at 6.3 percent of income.
  • From 200 to 250 percent of poverty level – $36,245 – premium capped at 8.05 percent of income.

Premiums will be capped at 9.5 percent income for all households with incomes above 300 percent of poverty level – $43,710 for a family of two.

“Every market is controlled by one or two carriers,” Bowers said. “Anybody who thinks there is competition is delusional.”

Bowers said provisions in the health care bill to protect consumers are good.

“At least there won’t be a lifetime cap if I have a couple of heart attacks, or something like that,” the 57-year-old Washington resident said. He said the only way to provide competition would be through a publicly financed insurance option that was discarded in congressional negotiations, and a national health care plan would stop insurance company executives from overpaying themselves.

“I would buy into a public plan just to stop the [executives] from getting excessive salaries,” he said.

“Because we live in a small market, we also don’t see competition among health care providers,” Bowers said. He said he’d like to see more walk-in clinics in the area. Despite the flaws he described, Bowers said he was glad the health care bill was on its way to becoming law. Bowers said those with preexisting conditions would be protected and those who became ill wouldn’t see their coverage dropped.

“It helps protect lots of people,” he said.

Health care bill will set timetable, help Mainers buy insurance

Provisions in the Patient Protection and Affordable Care Act will go into effect over a staggered timetable.

Beginning this year, the following changes will take place:

  • Medicare prescription drug benefits will increase.
  • A high-risk insurance pool will be created for people with preexisting conditions who have been turned down for regular coverage.
  • Lifetime limits on benefits will be prohibited.
  • Coverage cannot be rescinded if a person becomes sick or disabled, except in cases of fraud.
  • Dependent children will remain covered on family policies until the age of 26.
  • Tax credits will cover up to 35 percent of premiums for employers with 10 or fewer workers and average wages of $25,000 or less.
  • A 10 percent tax will be imposed on the purchase of indoor tanning services.

 

Starting next year, low-income and middle-income seniors will receive a 50 percent discount on brand-name drugs and insurers will be required to spend at least 80 percent of their revenue on medical claims.

Beginning in 2013, the following changes will take place:

  • The federal government will reimburse states that increase payments to primary care doctors in the Medicaid program to match what is paid under Medicare. These subsidies will expire in 2015.
  • The Medicare payroll tax rate will be adjusted according to income, with a higher rate on incomes above $200,000 for individuals and $250,000 for couples.
  • Tax-free medical savings will be capped at $2,500.

 

The largest number of changes will take place in 2014:

  • Regional insurance exchanges will be created to replace high-risk pools.
  • Subsidies for employers will climb to 50 percent of premium costs, and then phase out as a firm’s number of employees and average wages grow. The credit will end once a company has more than 25 workers or average wages of $50,000 or more.
  • Individuals will be required to buy insurance or face penalties beginning at $95 a year or 1 percent of income.
  • States or regions will organize new insurance exchanges for people who cannot find coverage in the private market and two national plans will begin enrollment. Insurers will be required to justify rate increases or risk being barred from the exchange.
  • Insurers will be prohibited from charging older people more than three times what they charge younger people.
  • Insurers will be required to offer minimum benefits, covering 60 percent of costs and limiting out-of-pocket expenses to about $6,000 annually for individuals and $12,000 for families.
  • Tax credits will become available for low and moderate income people who buy through the exchange.
  • Employers with more than 50 employees will pay a fee of $2,000 for every worker who uses the exchange, after the first 30 employees. Employers that do offer coverage will pay a fee if workers opt for insurance sold through the exchange.
  • Medicaid (MaineCare) will expand to cover everyone with incomes up to 133 percent of the poverty level, or about $29,000 for a family of four.
  • States that cover children through federal programs for the working poor will see higher reimbursement rates, from a current average of 70 percent to 93 percent in 2014.

 

Finally, in 2018, the tax on individual plans costing more than $10,200 a year and on family plans costing more than $27,500 will rise to 40 percent.

 

filed under: