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Monday, September 30, 2013

Affordable Care Act?

September 30, 2013 will probably not go down as a hugely memorable day in history. Yet, it represents   a pretty momentous confluence of events. On the one hand, there is the threat of an impending government shutdown based on partisan squabbling predicated on the defunding of the Affordable Care Act, or Obamacare, as it is widely known. We are on the brink of ......well, brinksmanship.

On the other hand, we are also on the brink of the inauguration of Health Exchanges-one of the cornerstones of the Affordable Care Act. The Exchanges represent a pretty grandiose social experiment. The goals of the Exchanges seem pretty laudable: reduce insurance premiums, allow those with preexisting conditions to get coverage, allow small businesses and families to have the same kind of leverage with insurers that large employers have.

There are many unknowns as to how, in fact, this will play out. And people should probably use a great deal of caution before chucking whatever plan they currently have. One of the gigantic question marks about the exchanges is a very practical one-how much will the insurance plans offered cost the consumer, and will that actually represent a savings over their current plan?

The fact that patients with pre-existing conditions must be allowed to purchase insurance on the exchange leads me to believe that insurance premiums are bound to go up rather than down. Obviously, if an insurer has a pool of insured people that are highly likely to use a large amount of medical services, they have to charge more to mitigate this risk.  In addition,somehow insurers must pay for the  laundry list of services that must be included for plans offered on the exchanges, such as prescription drug coverage and wellness services, somehow that must be paid for.

It is estimated that only a small portion  of the population will be using the exchanges. If you have existing insurance through your employer, you are only eligible for the exchange if your portion of the premium is over 9.5% of your income. Furthermore, Medicare recipients are not eligible. Further reducing the eligible pool of participants in the Exchanges, is that some states have elected to opt out of creating Exchanges. Those states who do not have an exchange will have a federally run exchange starting in 2014.  The exchanges will probably be applicable to only about 20 million people-more or less.

If you do not currently have health insurance, and you are eligible for the Exchange and you fail to purchase insurance, you will be fined $95. This fine will gradually escalate to $695 over the next few years.

So how will insurers try to keep down the cost of insurance plans offered on the exchanges? Physicians are very fearful that their reimbursement for work done under the auspices of insurance plans offered on the Exchange plans will go way down. One physician organization indicated that reimbursement was a low as 70% below more conventional insurance plans.

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