By Jan. 1, 2014, the Affordable Health Care Act, commonly known as Obamacare will be in full implementation. In an attempt to sort out how it will affect Connecticut citizens, we must first understand what this legislation is not. The 2100 plus page document signed into law by President Obama in the Spring of 2010 is NOT a national health insurance plan. It is a regulatory bill on every aspect of medical care from the patient to the manufacturer of almost any health related product. There are dozens of new taxes that will affect every citizen with no regard to their level of income.
First and foremost, every U.S. citizen is required to have health insurance by Jan. 1, 2014. This coverage for most of us can be obtained in one of three ways. First, if your employer provides health insurance, you may continue to be provided coverage in this manner. However, there is an enormous amount of uncertainty as to how employers will handle providing coverage after 2013. Every indication seems to be trending to much higher costs for any type of coverage in 2014.
Most small employers in Connecticut have already reached the breaking point of cost with the plans they are providing. These higher costs are driven by dozens of new government mandates requiring that many procedures be covered in full with little or no payment by the insured. This type of coverage will lead to much higher premiums in the future. Employers are also being burdened with premium taxes, new I.R.S. tax reporting and more complicated full disclosure to their employees about any potential changes in coverage. All of this and more, may lead many employers to discontinue providing coverage.
This result may be very widespread among smaller employers, where 80 percent of the American population works. This may leave many of us with the choice or going into the marketplace to acquire coverage as an individual. Most Connecticut citizens will be able to do this in one of two ways. Individuals can purchase coverage directly from any insurance company licensed to do business in Connecticut. There are only about six companies left in Connecticut selling coverage. Most of them have already been driven out of Connecticut by 25 plus years of state government regulation in requiring hundreds of mandates in every policy that have increased costs. It has been predicted, that family rates could be as high as $25,000 per year for family coverage. Please keep in mind that the law will require you to buy coverage. If you don’t have employer coverage or medicare, you will be forced to buy a plan or face scrutiny by the federal government, with the IRS as the enforcement arm.
The other alternative is to buy this coverage from an approved insurance company through the state-operated insurance exchange. Depending on your income, individuals may be able to get a federal subsidy to help pay for the insurance. This may sound like a solution for some, however it does have its own potential problem. Under the current law, the federal subsidy is only for a limited period of time, hardly a long term solution to a growing problem. In addition, it has been reported that the application process on the exchange may require an individual to complete more than a 20-page application. In my opinion, all of this will only increase cost and may ultimately leave more people without coverage. These were the two things your elected officials promised would not happen when this bill was signed into law.
There are free market solutions that could begin to solve the problem. There is no doubt that there will be enormous confusion and market disruption as this law phases in next year. Those of us in this industry fought hard to give our input to legislators, but frankly, nearly every idea was rejected. Every citizen needs to give feedback on this issue beginning now and in the near future. This legislation can be fixed to help us all if we let our political leaders hear our voices.
Tony Piccolo
Managing Partner, The Connecticut Health Insurance Exchange LLC