David Peabody is looking upon the new health care law with apprehension. Ericka Haverkos sees in it signs of hope.
These two Ohio residents — one the owner of a small landscaping business in Columbus and the other a college student who works part-time as a cashier — are emblematic of millions of Americans who next year will have to adapt to the most sweeping changes in the delivery of health care since the establishment of Medicare and Medicaid during the height of the Great Society in 1965.
To Peabody, the new law will impose steep costs on his company and force him to decide whether to insure his 65 workers or pay a fine to the federal government that would eat into a third of his $180,000 profit last year. To Haverkos, who says she has a learning disability, it could mean access to a doctor who could prescribe the medication she needs.
All across Ohio and the nation, millions of people are facing the reality of a new era in health care. Signed into law in 2010 by President Barack Obama and known as the Affordable Health Care Act — often dubbed Obamacare — the law will extend health coverage to more than 20 million of the 47 million Americans currently without insurance.
“For people who haven’t been able to find affordable insurance, they are going to love it,’’ said Elise Gould, a health insurance analyst at the Economic Policy Institute, a left-leaning non-profit organization in Washington.
Yet to its legion of critics, the law is going to frustrate Americans with its complexities, wave of new regulations, and blizzard of fees and taxes that they claim will deal a major blow to a fragile economy still recovering from the 2008 financial crash.
When asked to describe how efficiently the new law is being implemented, Thomas Miller, a health policy analyst at the conservative oriented American Enterprise Institute in Washington joked, “Coming along just fine. Steady as she goes right into the cliff. Don’t mind that iceberg. The Titanic got past it.’’
A Kaiser Family Foundation survey in April found that 49 percent of Americans lack the information to understand how the new law works. Even more alarming to the Obama administration, a Wall Street Journal/NBC News poll last week showed that 49 percent of Americans believe the law is a bad idea while only 37 percent call it a good idea.
The law extends coverage in two ways. It expands the eligibility for Medicaid, which provides health coverage to low-income people. For those making too much money to qualify for Medicaid, the law offers federal subsidies for families of four earning between $33,000 a year to $94,000 a year to buy their own plans through new exchanges operated by the federal government or state government.
“I do believe folks underestimated the enormity of this law,’’ said Kevin Kuhlman, a Washington lobbyist for the National Federation of Independent Businesses. “In order for it to be a success, not only does the government have a massive project ahead of it managing and operating these exchanges, but private businesses also will have to come along and make a lot of drastic changes.’’
Haverkos, a student at the Columbus College of Art and Design, said she lost her health insurance more than two years ago after her mother’s term on the state Board of Education ended. The health law lets adult children remain on their parents’ health plan until age 26, but Haverkos said that’s not an option for her.
She said her employer doesn’t offer insurance to part-time employees like her. She said she has only emergency coverage through the college. Under the law, her insurance through the college will be upgraded if she remains enrolled there.
Supporters of the health care law say people like Haverkos can get access to coverage because government subsidies make the coverage more affordable. Comprehensive coverage would help relieve the symptoms of her persistent allergies and, she said, give her security — a sense of comfort knowing that it’s there.”
For some people, the subsidies would amount to considerable savings. According to the Kaiser Family Foundation, a single person at age 45 earning $28,735 a year would pay $5,733 a year in premiums under a typical plan. Using the ACA’s graduated scale, which calls for more subsidies for lower-income people, that same person would have $3,420 of the premium paid for by the government.
“Those people who have found it very difficult to have access to coverage will find it a good deal,’’ said Kenneth Thorpe, a onetime senior health official under former President Bill Clinton.
Others are scrambling to determine what the law will cost them. Many small companies that have not been offering insurance will have to under the new law. That will force some into a choice between providing insurance for their workers or paying thousands of dollars in federal taxes.
The ACA will require a company with 50 or more full-time workers to provide insurance or pay a $2,000 per-person fine for every uninsured worker. The only exception is the first 30 workers in the company are excluded from the fine.
Peabody, who years ago took pride in covering the entire cost of his employees’ health coverage, said he now has to calculate what he can afford.
Last year, his company paid $48,000 of the $119,000 in premiums charged by his insurer, with the workers picking up the rest.
Not all of his workers accept the company provided insurance, said Peabody. “A lot of people can’t afford health insurance,” he said. “That’s why they choose not to take it.”
Other businesses are facing similar choices. Jamie Richardson, vice president of White Castle, which has 406 hamburger shops across the country, said his company spent $36 million last year on health coverage for its 5,000 full-time workers. All told, the chain employs about 10,000 people.
Under the new law, White Castle must offer its full-time workers (or anyone working 30 hours or more a week) insurance within 90 days of their hire date. That’s a change from current White Castle policy, which offers health insurance to workers six months after they are hired. The company could reduce the number of hours for some workers — as a few companies have said they would do — but the chain said it does not want to do that.
“If someone’s full time, we want them to stay full time,’’ Richardson said. “We don’t want people to lose benefits.’’ He did say the additional costs could mean fewer people are hired.
Opponents argue that adding 20 million into the health care system along with requirements for minimum federal coverage is likely to cause premiums to rise for everyone insured in the United States. By contrast, supporters say the new law will restrain the growth rate of health care because insured people will not be flooding emergency rooms for care.
Jennifer Tolbert, director of state health reform for the Kaiser Family Foundation, said the true costs of the new law will be difficult to calculate.
“For most people with employer-sponsored coverage, the cost of that coverage has been increasing over the past decade,” she said. Determining how much of those costs are due to general trends as opposed to the new law will be “hard to disentangle.”
Federal assistance under Affordable Care Act
The new health care law provides subsidies to individuals who are not covered by employer-sponsored plans, based on size of household, smoking habits and household income. Here is an example:
Household: Family of four, parents are both 35 years old, and nobody in the family smokes.
Annual income: $40,000, which is 168 percent of poverty line.
Premium for typical policy: $11,209 per year.
Federal subsidies: $9,287 per year.
Family pays: $1,922 per year.
Source: Kaiser Family Foundation
Key changes starting Jan. 1, 2014
- Medicaid becomes available to cover individuals earning no more than $15,900 and a family of four earning no more than $33,000 a year. States have the option of accepting the federal government’s offer to expand Medicaid, which provides health care for low-income people. In Ohio, Gov. John Kasich has recommended expanding Medicaid, but the Republicans in the legislature have balked so far.
- With some exceptions, most U.S. citizens and legal residents will be required to have health insurance or pay a tax to the federal government. The exceptions include those with religious objections or whose incomes are below the federal poverty line.
- State-based health exchanges, which will be known as marketplaces, get underway, administered either by a governmental agency or non-profit. Small employers will be eligible to buy insurance through the marketplaces.
- Federal financial subsidies are available for families between 100 percent and 400 percent of the federal poverty level to buy insurance through the exchanges. To be eligible, people cannot have access to Medicaid.
- An essential health benefits package is created and offered through both the exchanges and the individual market. These new plans will include limits on how much consumers would have to pay.
- Employers with more than 50 full-time workers must either offer health insurance or pay a $2,000 per worker tax.
- New taxes imposed on health insurance companies.
- A 15-member board will begin considering ways to reduce the growth rate of Medicare, which provides health coverage for seniors. Board members have yet to be named and some analysts believe formation of the board will be delayed a year or two.
Source: Kaiser Family Foundation