What’s in the ACA anyway? [Part 3]

Welcome back! We’ve gotten through the general reforms and are ready to tackle the exchange. As always, you can follow along at congress.gov, which offers a (very dry) summary and a (even drier) full text version.

So. Taxes.

Can I be real with you guys? It’s at this point in the project that I begin to lose my nerve. My eyes are bleeding a little bit from picking apart the language, and we’re about to embark on the worst part. But this is work that needs doing, and the inauguration is tomorrow (as I write this, it’ll probably be today by the time it goes up), and I need to do something. So. I’m going to finish. But I just wanted to let you in on how I’m doing.

Individual Tax Credits

This does little to improve my mood: “Subtitle E: Affordable Coverage Choices for All Americans – Part I: Premium Tax Credits and Cost-sharing Reductions – Subpart A: Premium Tax Credits and Cost-sharing Reductions”

(You guys. That says SUBPART. They have SUBPARTS now. Ye nelly.)

The first subpart is a tax credit. This is called the “Premium Assistance Credit”. It is calculated according to your household income, specifically how it compares to the federal poverty line. I broke my brain for a while trying to figure out how to translate the word problem that is the tax calculations, and then I went and found an article that explains it all pretty well.The general goal here is to reduce the amount you’re paying for insurance for low-income families.

It also adds a mandate for a study to be done five years out that determines how well this kind of tax credit worked. Which is pretty useful I’d think.

This subpart also outlines a cap to the maximum out-of-pocket expenses for people with low income. If your income is between 100% and 200% of the FPL, your out-of-pocket-maximum is only 1/3 of what middle-class people pay; if it’s between 200% and 300%, the maximum is halved, and if it’s between 300% and 400%, it’s two-thirds of the baseline.

It also raises the amount the insurer will pay for procedures; if you make between 100% and 150% of the FPL, the insurance company has to pay 90% of the cost of procedures, and if you make between 150% and 200%, the insurance company pays 80%. Combined with the above, this would basically mean if you pay for a Bronze plan, you get Platinum-level coverage. Which is pretty cool.

There’s a special rule for Native Americans, that they don’t have to pay anything for their health care (the plan covers 100%). They also don’t have to wait for an open enrollment period.

There is a section about how people who are not “lawfully present” in the country do not count as family members when calculating family size (used in calculating what the FPL is for your family size), and they are exempted from the above benefits for the poor.

Subpart B is all about how to determine who qualifies for the above. It outlines the information you need to present, but punts to the Secretary to set up the actual procedure for submitting the info and validating it. There’s also information about how if you apply for the Exchange and you actually qualify for Medicaid, the program should send you over to Medicaid and get you enrolled there instead. The same applies to CHIP programs designed to cover children.

Subpart B also sets up a study to see if the FPL needs to be modified on a region-by-region basis. A salary that would let you buy a house in rural Kentucky would leave you homeless in NYC; the federal poverty line is a country-wide minimum, but it might not be a good indicator of poverty in a specific region.

Small Business Tax Credits

Then we reach Subtitle E: Part II: Small Business Tax Credit. This is a separate tax credit for small businesses. Any business with fewer than 25 employees and who pays an average of $50,000 or less per employee qualifies for a 50% reduction in the health care costs of insuring their employees. This makes health coverage more affordable for small business owners, increasing the number of employees who get coverage through their work.

That concludes Subtitle E. As you can see, it does quite a bit to make health care more affordable for those who often fell through the gaps: the poor, and those working for very small businesses. The Exchange already covers those who are self-employed, which is the third gap you usually hear about.

Shared Responsibility

Now on to Subtitle F: “Shared Responsibility for Health Care”. This is the flipside, the stick to the carrot, the great responsibility that comes with great power. This has two parts; the first is “Part I: Individual Responsibility”, otherwise known as the “individual mandate”.

Individual Mandate

This mandate is justified as a federal edict by stating that it is a commercial, economic requirement that affects interstate commerce. The following justification for the mandate was provided within the act:

• National health spending is 17.6% of the economy, at $2.5 trillion per year
• National health spending was projected to increase to $4.7 trillion per year by 2019
• Private insurance companies spend $854 billion dollars a year
• Drugs and medical supplies are shipped between states, making this an interstate issue
• Furthermore, most insurance companies serve an area larger than one state, making this an interstate issue
• The requirement was projected to add millions of new consumers to the health insurance market, increasing the demand for health care services and supplies
• 176 million Americans already had insurance; the goal was to achieve near-universal coverage. Today we have almost 319 million people, so that’s a massive increase in coverage.
• A similar system in Massachusetts, upon which this act was based, increased the coverage percent even during the economic downturn. They didn’t give numbers in the act though.
• Half of all personal bankruptcies were caused in part by medical debt. That’s right there in the act. Half.
• They cite two other acts as precedent for the federal government regulating health care: the Employee Retirement Income Security Act of 1974 and the Public Health
  Service Act
• If there were no mandate, people would wait to buy insurance until they were sick, which destroys the concept of a group pool: having enough premiums from healthy people to cover the people who are sick.
• Administrative costs make up 26-30% of the premium costs, at $90 billion per year. By putting people into fewer, larger risk pools, that cost can be reduced.
• Finally, the Supreme Court ruled that insurance is interstate commerce and thus regulated by the federal government.

So what does the mandate consist of? Any individual who does not maintain the “essential coverage” that is the core of any real insurance plan is subject to a penalty on their taxes. This penalty is a flat $750, and nobody can be charged more than three times that amount (so if you have six kids and none of them have insurance, you’re capped at paying $2250 instead of $4500).There was a phase-in period where it slowly raised, but as of 2016, the full penalty applies.

But this penalty doesn’t apply to everyone. Here’s a list of exemptions built in:

• Individuals who belong to a religion recognised as having a conscientious objection to the mandate. There is an existing list of religions that are exempt from medicare and social security, and they object to the ACA on the same grounds. These religions must have existed in 1950, and they have to have a history since then of providing food, shelter, and medical care for their members. This includes the Amish and the Mennonites.
• Individuals whose religion mandates that they have their own insurance pool and pay for each others expenses already. You can find more about these special plans at healthinsurance.org.
• Individuals who are not legally in the country
• Individuals who are in prison
• Anyone for whom the premiums would be more than 8% of their annual income, because they therefore cannot afford insurance.
• Anyone under the federal poverty line, for the same reason
• Anyone in a Native American tribe

The rest of this section outlines how the coverage will be reported and so on.

Employer mandate

Part two, “Employer Responsibilities“, covers the other side of it: what employers have to do to help reach the goal of full coverage. Employers must:

• Automatically enroll all new employees in health insurance, and give them a form to opt-out. This only applies to companies with more than 200 employees, but it basically turns the system from opt-in to opt-out
• Inform new employees about the health insurance coverage available when they are hired.
• Offer coverage if they are a large employer. There is a penalty mandated that scales with the number of employees, but it only applies to employers with more than 100 employees (on average in any given year).
  • By the way, states are allowed to decide that a large employer is one with more than 50 employees if they prefer. Yay federal/local weirdness.
• Cover employees within the first 30 days or pay a penalty for having an “excessive waiting period”. It’s a higher penalty if they don’t start coverage for 60 days. I’ve seen many jobs where you’re not applicable for coverage for the first 90 days of probation, so this is kind of a big deal.

Furthermore, a study was funded to investigate if this ends up with employers reducing overall employee wages.There are also reporting requirements laid out here. It’s also spelled out that if an employer is offering coverage through the Exchange, they’re exempt from the usual requirements to provide their own plan.

Other Stuff

Finally, we’re at the last section of Title 1: “Subtitle G: Miscellaneous Provisions“. This is the random assortment of other things added to encourage coverage for all Americans (remember, that’s what this Title is about: Quality, Affordable Coverage for All Americans).

• The Secretary has to publish on the Internet a list of all the things they’re now responsible for doing, for transparency reasons
• No health plan can discriminate against those providers who don’t offer assisted suicide
• No regulation can be created that:
  • makes it harder to get medical care
  • interferes with communication or full disclosure between the doctor and the patient
  • violates the principles of informed consent
  • limits how much care you can get
• Nobody is forced to participate in any federal insurance plan. I’m not sure what counts here, because the federal government isn’t creating the plans?
• There’s an alteration of an existing law about survivors of Black Lung to make it easier to get payouts from that law. This is a law that offers monthly payments to survivors who got the disease in our country’s mines.
• This act is specifically called out as not allowing anyone to violate existing nondiscrimination laws. This covers discrimination based on race, color, national origin, sex, age, and disability.
• There’s also some wrongful termination stuff here: you can’t be fired for receiving a credit or subsidy from this act (aka “being poor”), reporting a violation of the act or testifying about it (aka “whistleblowing”), or objecting to any job duties that would violate the law (which would protect HR individuals who are being asked to break the law)
• The Inspector General of Health and Human Services is given oversight over the act
• Nothing in the act can be construed to interfere with existing antitrust laws
• Hawaii’s Prepaid Health Care Act still stands and is not overridden by this law
• Universities are still allowed to offer health coverage to their students
• Rules are laid out for the internet stuff: how secure it has to be, how people’s identities have to be verified, how much money will be offered as a grant to pay for it. Again, we’ve all see healthcare.gov now.
• There’s a whole bunch of amendments to previous acts that this act would have been violating, to make them all play nice together
• The Comptroller General is instructed to review denials over time

The last thing in this section is the “sense of the Senate”, which appears to be what the Senate hopes to gain from the act, like a business goal in a project plan. They feel that:

• The deficit will reduce by 2019
• Medicare will become more solvent
• Social Security will have more surplus; the senate is not allowed to waste that on something else, but has to leave it in Social Security
• the CLASS program will pay for itself; the senate is not allowed to spend that money on anything else either

And that’s Title 1. Looking over the list of benefits, I honestly have to wonder if the Republicans will bother about the parts that aren’t as publicised? They don’t have a plan yet; will they just throw something together and let everything else slip through the cracks?

You might be assuming now that we’re done, or almost. We’ve covered the general improvements, the new plans, the exchange, the mandate. That’s all the bill, right? Well, you’d be wrong. Stay tuned for Title 2: The role of public programs.