Affordable Care Act on the Horizon: What to Expect

February 19, 2013
The Affordable Care Act, or Obamacare, is on its way to becoming policy. On June 28, 2012 the U.S. Supreme Court ruled that “individual mandate was a valid exercise of Congress’ ability to levy taxes.” While I oppose the very idea of requiring citizens to purchase a service, nevertheless, this law is upon us. Given that our federal and state governments are moving forward, I want to update you on a few deadlines and important changes that will affect health insurance as we know it.

One of the main changes Obamacare did was require states to offer a health exchange portal--a marketplace where people and small businesses may purchase health insurance. Some have said it might be something like Expedia, a service that enables you to shop for an airplane ticket through several different airlines. In this exchange, consumers can compare products and prices. Some states elected to have the federal government operate their exchanges. New York, however, is one of 19 states that elected to operate its own health insurance exchange. This was decided by the Governor, by executive order on April 12, 2012.

All residents must purchase or be enrolled in a health plan by Jan. 1, 2014. Failure to enroll in a plan by Jan. 1, 2014 will result in a penalty levied by the IRS. The state has until October of this year to develop its health insurance exchange. Open enrollment through the health exchange begins Oct. 1. Within that exchange will be a number of “Qualified Health Plans” or QHPs. These plans must meet certain requirements, provide certain benefits and be within a cost framework. The state will be responsible for certifying each plan. The state has devised an informational website for the New York Health Benefit Exchange. It can be accessed at http://www.healthbenefitexchange.ny.gov.

One of the concerns I have about Obamacare is its cost. First, in order to make health insurance more affordable nearly 450,000 New Yorkers, with incomes up to $92,000 for family of four, or 400% above the federal poverty level, will be eligible to receive tax credits to offset the cost of buying coverage. They can also receive cost-sharing credits to reduce co-pays and deductibles. Obviously, providing credits to families with income levels this high will be incredibly expensive. Furthermore, Obamacare substantially expands those who will be eligible for Medicaid. A report out this month suggests that another 500,000 New Yorkers will be enrolled in the State’s Medicaid program due to Obamacare. This will only further increase what is already the state’s biggest budget item.

To help pay for those additional costs, Obamacare will assess a new tax on health insurers based on the total amount of premium dollars that they collect. This cost will have to come from somewhere and presumably it will be passed onto the consumer. Some estimate that this will add $400 to a family plan by the year 2016.

Since 2010, New York has received nearly $370 million in federal funds to establish the health exchange. Though people have little to say about the parameters of this program, the insurance industry is advocating “Core Principles” be included as the exchange moves forward. Core Principles put forth that: health plans offered be self-sufficient and that no state or federal subsidies or tax advantages be used to keep a plan viable. They also urge the health exchange not to become a future revenue source for the state, through taxes, assessments or surcharges. I agree with these principles.

We have yet to see how it will be fully instituted. There are a lot of questions, as regulations have not been fully devised, nor have the costs been fully realized. It is not known how much the health plans will cost within the exchange either. However, because Obamacare is now starting to take effect, it is important that everyone understand what it entails and that policymakers do not exacerbate what is surely going to be an onerous program.

If you have any questions or comments on this or any other state issue, or if you would like to be added to my mailing list or receive my newsletter, please contact my office. My office can be reached by mail at 200 North Second Street, Fulton, New York 13069, by e-mail at barclaw@assembly.state.ny.us or by calling (315) 598-5185. You may also find me, Assemblyman Barclay, on Facebook.