Obamacare

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Delivering on his campaign promise to nationalize American health care, President Barrack Obama signed the Patient Protection and Affordable Care Act (PPACA) into law on March 23, 2010. The law is commonly referred to as Obamacare. The bill first passed in the House of Representatives on October 8, 2009, and then in the Senate on December 24, 2009. On March 21, 2010, the House of Representatives voted to accept the changes by the Senate, and on March 23, 2010, the bill became law. The 2,700-page bill is a massive overhaul of our current American health care system.

  • Text of the bill here
  • Read all 1990 pages here
  • Timeline of events here

What is the Patient Protection and Affordable Care Act?

The Patient Protection and Affordable Care Act, often referred to as "Obamacare", establishes as its goal to dramatically expand health care coverage and nationalize the nation’s health care system. The bill expands coverage in a number of key ways:[1][2]

  • Allows children to stay on parents’ health plans until the age of 26
  • Mandates every American to purchase health care insurance by 2014
  • Prohibits insurers from excluding coverage for individuals with preexisting conditions
  • Prohibits insurers from imposing lifetime coverage limits
  • Limits age rating of insurance premiums to a ratio of three to one or smaller
  • Nationalizes one-sixth of the US economy

The current government program, Medicaid, will also be expanded to:[3]

  • Cover all individuals under 65 up to 133% of the federal poverty level
  • Provide 100% coverage for newly eligible Medicaid recipients from 2014-2016

States will be required to create Health Benefit Exchanges to allow individuals not receiving coverage through their employer or small businesses with fewer than 100 employees to purchase health insurance.[4] While these health exchanges were implemented with the goal of increasing competition, the Congressional Research Service reports that there is no language in the bill that prohibits the denial of certification of private health care plans. The Secretary of Health and Human Services has the final say on whether or not to declare whether or not this would be permissible. In effect, private health insurers are at risk.[5]

The new law expands the role of the federal government in a number of ways, including the creation of an Independent Payment Advisory Board (IPAB).[6][7] The IPAB will be:

  • Responsible for recommendations on Medicare payment policies with the purpose to reduce Medicare spending growth
  • Comprised of 15 members nominated by the President with Senate confirmation; these individuals may not take part in any other form of employment or vocation
  • Authorized to make decisions and proposals; the Secretary of Health and Human Services is required to uphold and prohibited from modifying any and all proposals
  • Above the law; PPACA prohibits any administrative or judicial evaluation of the Secretary’s implementation of IPAB recommendations

Tax Increases

In January of 2011, Americans for Tax Reform released a detailed list [8] of all new and increased taxes that PPACA imposes. One of the most contested is the Individual Mandate Tax, which is an income surtax on anyone who chooses not to purchase health insurance, starting in 2014. Other notable tax hikes include:

  • Employer Mandate Tax-As of January 2014, any employer who does not offer health coverage, and at least one employee qualifies for a health tax credit, must pay a non-deductible tax of $2,000 for all full-time employees
  • Medicine Cabinet Tax-Beginning in January of 2011, Americans cannot use their health savings accounts (HSA), flexible spending account (FSA) or health reimbursement (HRA) to purchase non-prescription medicine (except insulin)
  • Excise tax on charitable hospitals-Penalty of $50,000 if they fail to meet new "community health assessment needs"
  • 1099-MISC reporting tax-Beginning in January of 2012, will require business owners to send 1099 forms to corporations

Waivers

As of April 2011, the Department of Health and Human Services has issued over 1,000 one-year waivers to organizations that do not meet PPACA's new minimum requirement for annual coverage. More than forty percent of these these 2 million waiver recipients belong to unions.[9] A complete list of these waiver recipients can be found here.

Obamacare in Kentucky

Kentucky’s role

According to the Kaiser Family Foundation,[10] states have two primary roles in implementing the health care law: Medicaid expansion and the private insurance industry, including health care exchanges in 2014.

Kentucky's Exchange

Governor Steve Beshear has made it clear that Kentucky will establish a health insurance exchange. [11]The exchanges will be websites where individuals and small-business employees can find health insurance. Dr. John Garen [12] has pointed out some of the key features of the exchanges:

  • “minimum loss ratios” will require a new ratio of premiums to payouts. This will adversely affect popular catastrophic insurance plans that only cover major medical events. Combined with high deductibles and Health Savings Accounts (HSA), these plans make the insurance market more efficient by allowing consumers to pay out of pocket for anticipated expenses.
  • “community rating” will require premiums to be the same for most people. Before, premiums were calculated based on risk and pre-existing conditions. Now, only a few factors can alter your premiums, like smoking and age. Forcing companies to charge the same premium regardless of price will result in healthier people paying more and the less healthy paying less. In essence, this is a tax on the healthy and a subsidy to the unhealthy.
  • This could lead to the healthy avoiding overpriced insurance and the unhealthy actively seeking more underpriced insurance. This imbalance could lead to systematic underfunding of insurance plans. Such mandatory pricing also destroys the insurance benefits to being healthy: lower insurance premiums. Low premiums have acted as an incentive against conditions like heart disease and obesity.

Kentucky Health Care Cooperative

Co-Ops are designed to aid individual and small business insurance markets. Co-Op stands for for Consumer Operated and Oriented Plans. This program offers cheap loans to eligible non-profits focused on providing affordable insurance options. In late June 2012, the Department for Health and Human Services announced that Kentucky received a $58.8 million dollar loan to create the Kentucky Health Care Cooperative[13].

The Kentucky Health Care Cooperative is not the state health care exchange Governor Beshear plans on establishing. The exchange will be an online marketplace for individuals and small businesses quick access to insurance options and information.

Cost of Government-Run Health Care in Kentucky

According to a study by The Heritage Foundation,[14] PPACA will affect Kentucky in a number of ways, both in terms of costs and coverage limitations. Heritage estimates that in Kentucky:

  • Kentucky Medicaid/CHIP (Children’s Health Insurance Program) enrollment will increase by 31.4% from 938, 237 to 1,232,609 in 2014
  • It will cost $324.7 million in benefits and $183 million in administration costs, more than $507 million total to expand Kentucky Medicaid
  • Kentucky taxpayers will evantually foot the bill to pay for “Doc Fix” (exported cost to the state to reimburse primary care physicians for Medicaid)

The Heritage Foundation concludes its report as follows: "The enactment of the massive Patient Protection and Affordable Care Act will not only alter the relationship between individuals and the federal government, it will also alter the relationship between the federal government and the states. Under the terms and conditions of the act, the states would be reduced to mere agencies of federal authority, carrying out the policy agenda of the Secretary of the U.S. Department of Health and Human Services." [15]

The Heritage Foundation suggests: "While the law will deliver a health insurance entitlement to millions of individuals and families, many of its provisions weaken family choice of coverage, undermine parental participation in minor children’s health care decisions, penalize the decision to marry, and undercut family values in health care."

Impact on Health Insurance Industry

The new law requires health insurers to cover children with preexisting conditions. Many insurers believe that parents will wait to purchase health insurance until they are sick. As a result, major insurance providers are dropping child only policies, including Anthem, Blue Cross and Blue Shield, Aetna, Cigna, CoventryOne, Humana, and UnitedHealthCare.[16]

In Kentucky, health insurers have cancelled child-only policies. The Kentucky insurers responded in hearing on October 14, 2010, they would continue this policy unless required to sell child-only policies.[17]

One source of anticipated revenue for the PPACA are cuts in reimbursement rates for Medicare. This means health care providers will be reimbursed less for their services to the elderly. This will only reduce the incentive to serve and aid our seniors.

Kentucky’s U.S. Representatives and Senators [18]

Kentucky's response

2012

Fifty-nine Kentucky lawmakers joined the fight against the Patient Protection and Affordable Care Act by signing an amicus brief that targets the law’s individual mandate clause.

2010

38 states, including Kentucky, have filed or pre-filed the States Freedom of Choice in Health Care Initiative laws to their state legislatures, an initiative of the American Legislative Exchange Council (ALEC).

On March 2, 2010 Kentucky Representatives B. DeWeese, R. Crimm, D. Floyd, and D. Osborne introduced HB585, a measure to create a new section of the Constitution of Kentucky:

“Propose to create a new section of the Constitution of Kentucky to declare that a law or rule shall not compel any person, employer, or health care provider to participate in any health care system; that a person or employer may pay directly for lawful health care services and shall not be required to pay penalties or fines for direct payment for health care services; that a health care provider may accept direct payment for lawful health care services and shall not be required to pay penalties or fines; and that the purchase or sale of health insurance in private health care systems shall not be prohibited by law or rule.”[19]

To date, no bill has passed in Frankfort.

See Also

References

  1. PPACA Summary
  2. Kaiser Family Foundation Health Reform Source
  3. ibid
  4. ibid
  5. Health Exchange and the Public Option
  6. PPACA Summary
  7. Kaiser Family Foundation Health Reform Source
  8. ATR's Comprehensive List of All New Tax Hikes
  9. Waivers for Favors
  10. Kaiser Family Foundation Health Reform Source
  11. Ky. Gov. Steve Beshear alerts feds to his intention to form health insurance exchange
  12. [1]
  13. [2]
  14. Obamcare: Impact on the States- The Heritage Foundation
  15. Heritage Foundation - Impact on the Family
  16. National Review
  17. Kentucky Insurance Hearing-AP
  18. Voting Records
  19. Proposed Legislation in Kentucky
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