What ObamaCare means for those who already have health insurance
by Kwaku Sraha
July 23, 2012
After much anticipation, the Supreme Court ruled to uphold the Affordable Care Act (ACA)—otherwise known as ObamaCare—by a 5-4 decision. While there is great confusion among the public about what the ACA will do to our nation’s health care delivery system, one easy way to understand the law is this: The ACA makes health insurance companies play fair.
No more denying you coverage because of pre-existing conditions; no more dropping your coverage when you get sick; no more billing you into bankruptcy; and no more annual or lifetime limits—just to mention a few of the many benefits.
As part of creating better overall value for consumers, the law requires insurance companies to use 80 percent of your premium to provide health care and quality improvements. Currently, an estimated 30 percent of every health care dollar goes toward non-health-related expenses, such as advertizing campaigns, bureaucracy, and paperwork. (In contrast, only about 3 percent of Medicare and Medicaid expenditures go to administering those two programs.) What’s more, insurance companies that don’t meet this requirement must provide their customers with a rebate or reduce their premiums.
The law also requires insurance companies to provide some preventive services—annual exams and cancer screenings such as mammograms and colonoscopies—with no co-pays.
Countless New Mexicans have already benefited from these new insurance company rules:
- Many hundreds of children with pre-existing conditions have been able to get insurance coverage.
- 26,000 young adults under age 26 have been able to stay on their parent’s policies.
- 285,000 seniors on Medicare have received free preventive services.
Of course, some of the biggest changes will come for those New Mexicans who do not have private health insurance:
- The ACA has already resulted in 1,059 New Mexicans—who were previously locked out of the insurance system because of a pre-existing condition—gaining coverage in the state’s high risk pool.
- More than 150,000 low-income adults will be newly eligible for Medicaid—the government health plan that currently covers low-income children, pregnant women, and nursing home patients—starting in 2014 if the state elects to expand the program. The expansion will be paid for almost entirely by federal dollars.
- More than 100,000 New Mexicans who earn too much to qualify for Medicaid will receive tax credits for helping cover the cost of a private insurance plan of their choosing.
- All New Mexicans needing to purchase private health insurance will be able to compare plans and premiums on the state’s health insurance exchange—an online marketplace that’s required by the ACA.
- Several experts have said that only a tiny percent of Americans who do not wish to purchase insurance will elect, instead, to pay a penalty (although the Supreme Court ruling declared that the penalty was constitutional if it was referred to as a ‘tax’).
New Mexico has received some $35 million for planning and creating the health insurance exchange, although implementation has been slow. New Mexicans participating in the exchange will get federal benefits to purchase insurance amounting to more than $4 billion over the first seven years (2014-2020). If state leaders elect to expand the state’s Medicaid program, New Mexico stands to receive between 4.5 and 6.2 billion in federal funding over the seven-year period. The ACA, including the Medicaid expansion, will create between 30,000 and 38,000 new jobs, stimulate the economy, and level the playing field for New Mexico’s businesses by making it affordable for small businesses to offer their employees coverage. The taxes generated by the new jobs and economic activity will more than cover New Mexico’s share of the cost of the expansion. The ACA expansion will also take the burden of uncompensated care (care provided—usually in emergency rooms—to people who don’t have insurance)—an estimated annual cost of $335 million—off of the hospitals, providers, and those who already have insurance.
Kwaku Sraha is NM Voices’ Finance Manager.