Reform Realities: Impacts

Those vehemently against health care reform, and those passionately in favor, usually share one large swath of common ground – neither knows much about what it actually means for them.

Some cry that it will send costs sky-rocketing and grow into a massive, unwieldy government entitlement program. Others claim it will bring costs down and lower overall health care expenditures by changing the way care is delivered to 32 million previously uninsured Americans.

After many conversations with those involved in the insurance industry, business owners, and state agencies, it seems clear that both sides of the debate are leaning heavily on speculation. We set out to find out what the Affordable Care Act (refereed to broadly as health care reform) means now – how it’s affecting costs and impacting people today – and how it will change health insurance in the future.

Rather than serve as a massive federal program, Rachel Currans-Sheehan of the Wisconsin Department of Health Services said, “What health care reform does is put decision-making power in state hands. There is no government-run health care plan.”

While the federal government will provide much of the funding, the shape of what health care will look like is largely up to individual states. That means that new Wisconsin Governor Scott Walker will have a lot of influence in shaping health care, particularly through his appointments at key state agencies and departments, and through budget allocations. Walker has already indicated his wish to make big cuts in BadgerCare Plus, which covers over 700,000 Wisconsinites, to help balance the state budget.

Sara Finger, Executive Director of the Wisconsin Alliance for Women’s Health, said the election was really about “who gets to organize and implement health care reform.”

The Affordable Care Act calls on states to create Health Insurance Exchanges that will allow small businesses and individuals to pool together for insurance to drive down rates. Small businesses currently pay premiums about 18 percent higher than large businesses because of their lack of purchasing power. States must come up with a framework for the exchanges by January of 2013.

“It could be a government entity, a quasi-government entity, or a private company that runs these exchanges,” Finger said. “We get to define what the essential benefit packages should look like and how they’re run.“

Pete Wickman of Stoneman Schopf Insurance Agency in Sturgeon Bay said that much remains up in the air today, two months after the first major provisions of reform took effect.

“There are a lot of things that a lot of folks don’t know. In a nutshell, it’s confusing,” he said.

Wickman said he gets updates from various insurance companies each week, and he tries to stay on top of changes through those. Premiums, he said, are now jumping due to the new mandates that preventative care be covered in all plans.

“Most group plans already have a lot of the mandates in there, so they may be the least affected by the new rules,” Wickman said. “Individual plans may be more affected, those rates may shoot up. A lot of the impacts come when you get a new plan.”

The Congressional Budget Office, the non-partisan office that evaluates costs of legislation, said premiums for the non-group market would be affected most, but premiums in the group market would be relatively unaffected, representing about five-sixths of the market.

Finger indicated it could take years before the full benefits of reform show up in dollar figures.

“A big part of this is getting people into the system on the preventative side to save money on the Medicare side down the road,” she said. In the meantime, insurance companies will raise rates to cover for those unknown future expenses.

Unfortunately, few people have the patience to judge a business, let alone a government program, on decades-long returns.

“It’s a lot easier to say ‘No No No’ than it is to give an hour and a half talk about what it really means,” Finger said.

Wickman said there are several provisions that won’t affect costs significantly.

“The elimination on lifetime caps doesn’t affect the rates a lot, because 99.9 percent of Americans won’t hit the $5 million level anyway,” he said. He also said that mandating that children under 26 be allowed to stay on their parents plan won’t have much affect. “They will still have to pay premiums, and they generally don’t use the system much.”

When reform is fully implemented in 2014, rates will change more because of the clause that prohibits insurance companies from denying coverage due to pre-existing conditions.

“That’s why you have the mandate that everyone has to buy some level of coverage,” he said. “Otherwise people would just buy insurance when they got sick. That doesn’t work. Now, nobody knows if that mandate will be enough to offset the cost of covering pre-existing conditions. That’s the big question.”

Other key provisions not outlined above include:

• Insurance companies are required to cover preventative services for all people, such as cancer screenings, immunizations, and colonoscopies.

• Failure to report past health history is no longer a reason to rescind coverage except in cases of fraud.

• Individuals now have the right to appeal to a third party when coverage of a procedure is denied, rather than appealing to the health insurer who denied coverage the first time.

• No more pre-existing condition denial for children, and for all Americans in 2014.