insurance

Clearing up health care confusion

E. Denise Smith, CPANext year -- for the first time in the nation's history -- nearly all Americans will be required to purchase health insurance.

What does this mean for the average citizen who already has health insurance? What will be the impact on the uninsured? How will it affect small-business owners?

Thus far, a large percentage of Americans likely would be unable to answer such questions. In fact, a recent Kaiser Family Foundation poll found that about 40 percent of Americans were unaware health reform was the law of the land.

E. Denise Smith, assistant professor of business administration and health care management at the Godbold School of Business at Gardner-Webb University in Boiling Springs, N.C., is trying to bring some clarity to the subject.

In the following interview, she explains health reform will mean different things for different people.

How will health reform affect people who don't have health insurance now?

The ACA (Patient Protection and Affordable Care Act) provides access to low-cost insurance for the uninsured, without penalty for pre-existing conditions and other things that insurance companies have used as an excuse to deny coverage in the past.

A premium tax credit is also provided to help pay for the cost of the premiums.

What effect will health care reform have on people who already have health coverage?

Most employees already covered by an employer-sponsored plan should not see any change.

If they decide to leave the employer plan for an individual plan through the ACA individual marketplace, they may not qualify for some of the benefits the uninsured have, and the employer will not have any obligation to help pay for care.

It would generally not benefit an employee to leave his or her employer-sponsored plan.

What are 'health insurance cooperatives,' and how do they work?

Health insurance cooperatives are not a new concept. Essentially "co-ops" (owned by the members) are groups of people who contract with insurers for better rates on coverage than individuals or small businesses could negotiate separately.

Although the health insurance exchanges are part of implementing the individual coverage mandate of the ACA, it is recognized that some states may exempt out of the Medicaid option, and that some states may have fewer insurance companies willing to participate in the exchanges. In those cases, it may be more advantageous for groups to form co-ops to provide themselves with affordable alternatives to the individual mandates or shared responsibility payment requirements.

Health reform seems to be controversial with small-businesses owners. Could you explain how health care reform will affect them?

Small businesses with fewer than 50 full-time equivalent employees are not required to offer health coverage.

If the small business chooses to offer insurance, it has several options to help: It can participate in a health insurance co-op; the Small Business Health Options Program, or SHOP, marketplace; or it can choose its own insurance company/plan. While any employer contributions toward employee insurance are deductible as a business expense (with future limitations), the ACA will offer tax credits for part of the cost of offering coverage if the SHOP marketplace is used.

How much will it cost the government to implement health reform?

The projected cost of health reform is much more difficult to answer. The estimates change constantly, and differ according to who is reporting. I have been unable to find a completely unbiased third party with a true estimate.

Also, since much of the cost is expected to be covered by so-called savings that are reductions in coverage and reimbursement to providers, it is not really a cost to the government.

This is one question without a clear or decisive answer.

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