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AUSTIN, May 22, 2013-- The sweeping health care changes contained in the Affordable Care Act (ACA) will likely affect every American, regardless of how they obtain health coverage. Yet three years after the ACA was signed into law, most are still unsure what to expect: a recent Kaiser Family Foundation poll found that 57 percent of all Americans and 67 percent of uninsured adults say they don’t know how they will be affected when reform takes full effect next year.
Kelly Fristoe, president of the Texas Association of Health Underwriters, said that whether individuals and businesses are prepared or not, big changes are coming soon.“Health care reform will affect nearly everyone in the nation in some way,” he said. “These changes are sweeping, comprehensive and complex.”
On January 1, 2014, the law’s biggest changes take effect: the individual mandate, the creation of insurance marketplaces known as health Exchanges, and the employer mandate. The individual mandate requires individuals and families to obtain health coverage or pay an annual penalty. The penalties start small, but increase each year until capping in 2016 at $695 per person or 2.5 percent of family income, whichever is greater. A family with an income of $100,000 would pay $2,500 in annual fines and still lack coverage.
Individuals and families have several options that seem straightforward: they can obtain insurance through an employer, use Medicare or Medicaid if eligible, or purchase insurance on their own. But the ACA consists of 2,400 pages of law and 15,000 pages of new regulations — meaning no choice is as simple as it once was. Individuals will be required to take responsibility and make tough choices. Individuals and families that currently lack insurance but do not qualify for Medicaid will likely turn to the Exchanges to seek coverage.
These Exchanges, which begin enrollment in just six months, will be online insurance markets that will offer standardized benefit options and varying levels based on their actuarial value — the expected amount of expenses actually paid by the insurer. Individuals under 30 will be eligible for the catastrophic plan. But even the cheapest available plans are likely to stretch budgets: the Congressional Budget Office predicts average annual premiums of $4,500-$5,000 for an individual and $12,000-$12,500 for a family at the “bronze” tier of coverage. To help with these costs, federal subsidies will be available to Individuals making less than $43,320, or families making less than $88,200. The ACA provides for federal funding to expand Medicaid coverage to more Americans, but the decision to expand Medicaid is left to individual states. So far, Texas leaders are still searching for a Medicaid expansion solution for the state.
Even Americans who obtain coverage through their employer could be greatly affected by the ACA if health insurance premiums spike next year, as many insurers warn. Some insurers are suggesting that rate hikes of 40-50 percent may occur, largely caused by the ACA’s required inclusion of patients with preexisting conditions into the insurance market and by new restrictions on insurers’ ability to set rates based on patient age. This means young, healthy patients — and their employers — will shoulder far more of the overall burden of health care costs. The ACA includes an employer mandate that requires businesses to provide quality insurance or pay a steep penalty. But if insurance becomes too costly for those businesses, they may decide to drop their coverage anyway, forcing many Americans to fend for themselves in a confusing new health care reality.
Fristoe said he was concerned that consumers may lack the experience to navigate this new maze of tough health care decisions. “Health care decisions are going to become more complex and difficult than ever very soon,” he said.“With so much uncertainty and so much at stake, Texans need to do their research, talk to their employers or benefit professionals, and come up with a plan to protect them from the financial devastation that could result from an unexpected illness or accident.”
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