The Affordable Care Act, AKA Obamacare, is essentially a three layer-cake, meaning a three-way interface between the 1) the Health and Human Services department of the federal government (HHS) which will oversee 2) online exchanges created by the states where 3) people can compare policies and even enroll in one. For a brief over view of these three elements and a hypothetical rate calculator, please join me below.
The HHS does two main things of interest here: It provides a minimum threshold those policies must meet in terms of what they cover, and a maximum threshold those policies will cost anyone out of pocket who enrolls in them. On the former, you've probably heard the policy cannot exclude or penalize for a preexisting condition and cannot have lifetime caps for the insurance company. They have annual caps of a sort, but they're to protect the consumer, not the insurance company bottom line.
Individual states only have to do one thing of note here: create and maintain a mega-website where residents of that state can find details on various insurance policies listed. This portion of the ACA is typically handled by that state's insurance regulation department. The exchange is where you will actually shop and compare policy features and choose the one best for you. You can see what one of the landing pages of the exchange for New Mexico may end up looking like here, when it's up and running.
The policies from private insurance companies come in various shapes and sizes, but all must meet the HHS-state mandated requirements. One important thing to understand right away, the out pocket premium cost for lower income people is not affected by age or preexisting conditions, it's a function of income and tobacco use. Tell your friends who are thinking about enrolling, if they want to save a big chunk of money, now is a good time to stop smoking. As you earn more, your age does become a factor, but the rates are still a big improvement and are calibrated to remain affordable for all tax brackets. Anyone earning less than federal poverty wages will be covered under the Medicaid expansion side of the Act, which we will cover in future posts.
The Kaiser Family Foundation has a great tool here, which has been rendered partially embeddable below, that you can use to generate hypothetical premiums and other costs. Keep in mind this is only a hypothetical illustration, the actual rates may vary, but it's a great place to get an idea of how this will work (Note that submitting data into the tool will take you offsite to the Foundation page to render results, and you will need to reload the page before putting in new parameters to get an accurate result, and there are some bugs or blank spots for some parameters). Read on, and you'll see we have already worked out a couple of hypothetical rates using it.
The ACA covers the rest of that $5,629 with a tax credit. The tax credit is advance-able, which means the premium is reduced to $20 a month or $240 a year from the get-go. Again, keep in mind these will be real policies, often referred to in three increasing levels of coverage as Bronze or Silver or Gold plans, with copays for in and out of network providers, and there can be no riders for lifetime caps or preexisting conditions.
In most cases, the cap you're going to care about is the one that can save you a fortune and may save your life; the cap on how much you have to pay out of pocket in a given year, i.e., the annual cap. A typical out-of-pocket annual cap would be about $1,500 to $5,000 a year for a single person. They won’t pay more than that for the entire year, even if they suffer a major injury or illness requiring hundreds of thousands of dollars worth of treatment. Estimated rates and caps for specific permutations of adults and kids covered can be generated using the same subsidy calculator, be sure and read the info posted below the summary of premium cost.
Here's one way to save money right off the bat. Play around with numbers in the subsidy calculator and you'll soon notice, if that 51 year old smokes, their out-of-pocket portion rises to $3,054 (about $251/month), which equals 25.45 percent of household income and covers 36 percent of the overall increased premium of $8,443. That’s still a great deal for the smoking 51-year-old compared to what’s out there in the private market now. But $251 a month will be a commitment for someone making 12K or $1000/month. A premium of $20 a month ($240 a year) for the 51-year-old who quits smoking on the other hand, is so low it seems almost surreal. It also means a whole bunch of people from all political corners are going to sign for this once they realize that simple fact.
In summary: the Affordable Care Act is is a massive undertaking by civil servants at the federal and state level, compliance officers and auditors from the insurance industry level, and developers and page designers in IT, all geared to bring comprehensive, affordable health insurance coverage to millions who are not currently insured, and to dramatically lower premiums for millions more who are insured. For the purposes of simplicity it can be thought of as a three-layer cake: 1) your cost and your benefits of coverage on an approved policy offered under Obamacare is regulated by the HHS; 2) people looking for affordable health insurance will go their state's website, called an exchange; 3) where they can compare features and enroll in listed policies.
Policies are more affordable overall, they are required to provide specific benefits such as birth control and preventative care, they cannot have riders for preexisting conditions, and they come with an annual cap to protect the insured against catastrophic injury or illness. The already affordable out-of-pocket premiums are subsidized for lower income earners, and those who earn less than federal poverty rates will be covered at little or no cost under the Medicaid expansion side of the ACA.
In future posts, we'll be writing about features of the policies, how some states are trying to impede access to healthcare in much the same way they are impeding access to voting, the Medicaid expansion side of the Act, showing screen shots of what exchanges might look like, and giving you the hard info and community support you might find useful for enrolling yourself or others. On the latter, this is one of those subjects where wonky info from experts and anecdotes from patients, up to longish comments and well researched diaries here or elsewhere, would be quite welcome. If you can learn the basics well enough to help friends and family navigate this system when it becomes available, help them enroll and get them covered, you will be doing a lot of good for them, good for their families, and good for the nation. It will make you feel good, too.
I believe that effort could be where community sites like Daily Kos shine brighter than ever. And be prepared to be hit in the gut emotionally as ACA-day draws near. When people begin to understand how affordable this insurance will be, and find they and their loved ones are finally able to get decent medical care after years or decades of medical neglect, misery will be reduced, in some cases lives will be saved, and some folks may break down in tears from the emotional relief.
Real relief is now in site for millions of uninsured and under-insured Americans. Make no mistake, this is a Big. Fucking. Deal.