STEUBENVILLE - Americans are required under the Affordable Healthcare Act, commonly called Obamacare, to have insurance by March 1, with bargains for consumers, big changes for the insurance industry and possible peril for the insurance system.
Tracy McManamon of One Source Benefits and Suzanne Kresser of Tri-State Financial Services, both in Steubenville, and John Frankovitch, chief operating officer at Assure America in Weirton, all said they're advising small business groups to wait.
The federal government gave a one-year extension to employers of fewer than 50 people to push back meeting the full requirement to provide insurance or face fines. The three professionals say that's good because there is little to show to small groups now.
NOTICE — Workers should have received paperwork last week regarding their rights and responsibilities and the availability, or lack of availability, of health insurance under the Affordable Care Act. Three area insurance professionals say there is opportunity for business and consumers, but potential peril in the years ahead under Obamacare. -- Janice Kiaski
Frankovitch said employees should have received a notification form last Tuesday detailing their rights and responsibilities under the act.
"We're making sure our groups met the notification requirement to their employees, telling them that they are eligible and that the exchanges exist and walking the employees through it," said Frankovitch. "But every insurance professional will tell you there is a learning curve on our end, too. The first step is to meet the requirements of the bill. Then, once we see what the exchanges look like, we will be able to make more decisions."
The frustration at accessing the online exchanges raises concerns for Kresser.
"Overall, the implementation of the system, even the website, was not even tested. It all went live at midnight last Tuesday. Everything has been rushed. I think the way this has been rolled out is very complicated and confusing," she said. "As agents, when we call our carriers, even they cannot answer. It's all so confusing. But I do not think it will go away. Billions of dollars have been spent, but I think things will change."
She said small group plans are not finalized, which led to her telling clients to take the opportunity to push back the requirement for a year by renewing their current plans. She said while insurers were ready, the states didn't approve the new plans or rates, so there is nothing to show employers as an alternative yet. Those renewals come at a cost, however. She said renewal offers have ranged from 3 percent to 30 percent increases.
McManamon, whose company has a focus on individual, family and small group plans, said the volume of people looking for coverage increased substantially, both in and out of the exchanges.
"In the past, we had to decline roughly 35 percent of the applications we process for individual health insurance. Now, we underwrite 100 percent of them, due to the guaranteed issuance of coverage. There are no more ineligible or uninsurable people."
He and Frankovitch both said the success of the Affordable Care Act depends on getting full participation by the public, but McManamon said many younger people might choose to simply pay the fines. Both noted the fines increase from $95 to higher percentages of income based on income level, and will rise in the years ahead. McManamon said many people will be eligible for the subsidy, a tax break that comes off the front end of their premiums.
Frankovitch said if people with more money enroll in private plans, the result will be a two-tiered care system. He also said that, with two years to prepare, the government should have done a better job with the rollout.
McManamon said that in the Steubenville area, (the exchanges do not cross state lines) it is possible for people to obtain subsidized health care coverage without premiums at all, based on income. For instance, he said, there are 11 plans for a 22-year-old male nonsmoker making $25,000 a year without a premium, and three plans for a family of four earning $50,000 a year without premiums. All plans have co-pays and deductibles that are higher with the lower-premium plans.
Kresser said deductibles on the subsidized plans eventually will weigh on hospitals and doctors. A person who is struggling economically and gets the subsidy to buy insurance through the marketplace still will face potentially high deductibles for low-cost coverage plans. And, many people might simply not pay the deductibles.
"So, who gets stuck? The hospitals, the providers, the doctors," Kresser said. "They won't be getting paid. People who already are struggling are not going to pay those large deductibles. I can tell you that in the small group and individual market, I don't sell anything with under a $1,000 deductible and people can't afford that." She said failure to pay the deductibles results in people having their accounts turned in to collections agencies, so they will walk back into the hospital next time without insurance and still will receive treatment.
Still, she said, there are good provisions, such as the ability to keep a child on the family plan to age 26 if necessary, and the elimination of pre-existing condition denials. While people with catastrophic illness get the headlines, she said denials often were as simple as someone who is healthy except for high cholesterol changing insurers when changing jobs.
McManamon noted the only health issue that can be asked about and that would lead to higher premiums is smoking.
Frankovitch said the new system didn't change the illness-driven model.
"Providers still are not paid unless you get sick, and the incentives to bend the cost curve are not there," he said.
Frankovitch said one of the first changes this year was to eliminate the use of health care savings accounts to buy over-the-counter drugs at a substantial savings.
"That is contrary to bending the cost curve," he said. A person with acid reflux, for example, could have used their own health care savings account to buy their Prilosec in bulk at Costco at a substantial savings. Now, they have to go see their doctor, get a prescription, pay for the office visit and pay the pharmacy price for the prescription.
"Now, the $40 spent is $200 for the same amount of Prilosec with an office visit and the pharmacy," he said.
McManamon said another issue that could lead to increased costs to families will be employers telling spouses they no longer are eligible for company coverage if the spouse has coverage available where they work.
"We're seeing that already, with employers like Dell, Home Depot and Delta notifying employees that come Jan. 1, when there is open enrollment, the spouses are ineligible if they can be covered by their own employers."
He said workers who are notified that there is health coverage available through their workplace cannot use the subsidized marketplace to get lower-cost coverage.
None of the three say the system was implemented in a way that will result in long-term savings. McManamon questions the viability of the system in three or four years.
He had been participating in a system that paid for clients to go overseas to obtain surgery at lower costs than in the United States, so he has studied health care financing in other nations.
"In Europe, now, the national health care system is upside-down with claims.
They don't know what to do with them. What they are aggressively trying to do is get back to private health care. I've also studied health care in Asia and they're beginning to see that claims far surpass the costs and they'll have to do something drastic," McManamon said.
All three said the consumer will benefit in the short term, but McManamon said, "Yes, several years from now, the system is going to implode."
For now, he's expanded his office space and is hiring to handle the increased volume. His company offers the Obamacare plans and his website works, he noted.
McManamon said while most people in the individual and small group sector ran from the industry because of fears of the impact of Obamacare, he looked for opportunity.
"We embraced it from a technological standpoint," he said.
Kresser, frustrated by the government's lack of technological preparation for the traffic in the opening days of the marketplaces, said the system is going to drive most small insurance agencies out of the individual and small group sector.
She said some carriers will make it impossible for agents to earn commissions under the new system, which will drive more people to the marketplaces.
"People still need experts to explain the benefits of the plans," she said.