Co-op insurance companies.
These are gone, too. About $6 billion in federal start-up money for co-ops was supposed to spur their development as a lower-priced alternative to big insurance carriers; it was sort of a sop to the public option advocates. Twenty-four co-ops were funded even though the government had begun to reduce funding. Then came the New Year’s surprise. In final negotiations over the fiscal cliff deal, Congress killed the remaining funding for 40 more co-ops whose applications were in the pipeline. Insurers, it seems, were not keen on the new competition.
WHAT’S BEEN DELAYED?
The employer mandate.
This is in the big one in this bucket. In early July the Obama administration announced a one-year postponement until 2015 of the employer mandate, the requirement that businesses with more than 50 full-time employees had to provide health insurance or pay a penalty. The idea was to prod employers that did not provide coverage to do so. Again business complained about the record keeping and reporting requirements.
The law said they had to provide coverage to full-time employees working 30 hours a week. That was tough for firms whose workers’ hours fluctuated. Who was a full-time worker? Who was part-time? Many firms were threatening to cut worker hours to avoid the requirements. The delay means that workers in firms that don’t provide coverage might be offered so-called “skinny plans.” Such plans might cover some drugs and preventive services, but not hospital care or surgeries, for example. There’s little protection for catastrophic illness, but the premiums are cheap for employers and workers. The employee’s share may be as little as $40 or $50 a month.
Rules for smokers
These marketplaces for small businesses to buy insurance for employees, will offer only one plan in 2014 instead of an array of choices the law envisioned. The administration said there were “operational challenges,” and the choice option would be available in 2015. Most small businesses offer only one choice now, so the exchange won’t be of much value unless more carriers can sell their products.
Rules requiring smokers to pay more for their coverage. During debate there was little doubt that insurers would be able to charge smokers more money, because they present greater health risks and more potential costs for insurance companies. But now smoking penalties applied to policies sold through the exchanges are delayed a year because of what the administration described as a “system limitation.” The law says insurers cannot charge older people more than three times it charges a younger person, and it allows carriers to charge smokers 50 percent more. The problem, discovered a few months ago: the system cannot process a premium for a 65-year-old smoker that is more than three times the premium for a 21-year old smoker.
Verification: bumps in the road
Scaling back verification requirements for insurance exchanges. Because about 60 percent of people buying in the exchange probably will be eligible for subsidies, exchange officials needed a way to verify if they were indeed eligible; that is their income was low enough and they had no other insurance coverage. But the administration says that they have now encountered “legislative and operational barriers.” The upshot: the government will rely on the honor system to make sure applicants for insurance are telling the truth about their income and insurance status. The government will do a check when people file their income tax returns in 2015. If income and insurance status change during the year, a family could end up with a tax liability or a tax refund, depending on the subsidy they got and whether their incomes went up or down during the year.
WHAT’S IN LIMBOLAND?
The Independent Payment Advisory Board.
The law called for this 15-member board appointed by the president to advise Congress on actions Medicare could take to reduce the growth of healthcare spending. Congress could take an up or down vote on the recommended measures. The board, however, cannot recommend changes in premiums, benefits, eligibility, or taxes, or other changes that would result in “rationing” of care to Medicare beneficiaries. Nevertheless, it has become something of a political football, with Republicans charging that the board could lead to death panels and rationing, because seniors wouldn’t be able to get treatments, especially the costly ones.
The board is in virtually inactive right now. Members have not been appointed, but more relevant is that Medicare’s costs have slowed somewhat, and in April Medicare’s chief actuary declared that that medical cost inflation would not be high enough to trigger the work of the IPAB. It may not see action for a few years, and then what it does will depend on the political winds and the pace of medical inflation.