December 2014
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Health care

Dear Editor:

What is the Affordable Care Act (ACA, aka ObamaCare)? First it is not a policy you get from the government for a government run system such as the VA. The ACA is composed of several parts.

First is the expansion of Medicaid (the state run system for lower income people) to 138 percent of the Federal Poverty Level (a family of four is $32,913). We’re lucky here in Colorado to have a governor who accepted the Medicaid expansion.

Second, it sets up a system of state run exchanges where a person can buy health care insurance from companies that participate in the exchanges. These exchanges will very from state to state in both availability of insurance companies and policy costs. One drawback is rural areas have fewer choices than urban areas, however, that was true in the old system. Another drawback is that many states with Republican governors have refused to set up the state exchanges and people have to rely on the Federal website to shop for insurance policies. Those that earn 139-400 percent of the Federal Poverty Level will receive tax credits to help pay for those policies.

Third, the ACA regulates the current health insurance industry by requiring policies to have minimum standards. The standards include children remaining on their parents’ policies until 26 years old, no denying insurance for pre-existing conditions, no caps on lifetime coverage for essential care, more and standardized preventive care, limits on the insured’s lifetime liability (before the ACA, the largest, single cause of bankruptcy was debt incurred by health care costs). Another major requirement is that the insurance companies must use 80 percent of premiums collected on the insured’s health care. That means 20 percent going for administrative costs and profit (Medicare has a 2.9 percent administrative fee). The ACA also closes the donut hole in Medicare Part D, saving seniors money on prescription drug costs.

The ACA is paid for by a number of taxes, fees and penalties. Those include a 10 percent tax on tanning services. Some limits on HSA’s. An additional 0.9 percent medicare payroll and investment income tax on individuals making over $200,000/year ($250,000 for couples). Penalties up to 2.5 percent of income by 2016 for those not purchasing insurance. A 2.3 percent excise tax on medical device purchases. Health insurance companies will pay a fee on net receipts. In 2018, so-called Cadillac health plans that cost over $10,200 per individual annually will have a 40 percent excise tax imposed. Finally, fees and penalties will be imposed on some businesses that don’t provide coverage. It’s not a perfect system, it took Medicare six years to iron out the bugs, but the ACA is already providing care to millions that didn’t have it previously. It also lowers the deficit and lowers the increase in health care spending. As a liberal, I would like to see a Medicare for all option, but I believe the ACA is a good start in reducing health care costs. While the U.S. spends over 19 percent GDP on health care, most European countries average around 11-12 percent.

Dave Butcher

This story was posted on May 1, 2014.