Submitted by Illinoisnoki1 on Tue, 05/22/2012 - 10:13

Send to friend

Health Insurance Exchanges: Read the fine print

By Dr. Anne Scheetz, organizer for PNHP and ISPC

Implementation of the 2010 Affordable Care Act (ACA) requires that each state create an Insurance Exchange where people can purchase health insurance if they do not receive it through either a government program or an employer.

Illinois, like the majority of states, has so far not created an exchange; and a report by the Illinois General Assembly's Illinois Health Benefits Exchange Legislative Study Committee failed to produce recommendations.  New York's Governor Andrew Cuomo recently signed an executive order creating one for his state after the New York legislature failed to act.

Some Illinoisans have been circulating a petition asking Illinois Governor Pat Quinn to follow his example.

But what will these insurance exchanges do? They are essential to ACA, but are too complex for either providers or patients to fully understand. (See the links below for documentation of this.) Nonetheless, there are some serious problems with the exchanges that we can identify:

Since people cannot predict their future health care needs, even for the next year, they will not be able to choose from among the exchange plans the one that will best serve those needs, even if a "best" plan should be available and affordable.

The least expensive plans under the exchanges, the so-called bronze plans, will have an actuarial value of only 60%--meaning that patients will be responsible for 40% of the cost of covered services. Many services will not be covered, and the patient will have to pay the all uncovered costs. Just as under our current system, those who have the greatest health care needs will be penalized.

Silver, gold, and platinum plans will provide better coverage, but with higher premiums. Subsidies will be available only for silver plans.

While preventive services will be provided for free, the same services provided for diagnosis or treatment will be subject to out of pocket costs --a confusing and devastating problem for sick people. Thus, if a woman who has never had any problems with her breasts gets a screening mammogram (that is, she has no problems with her breasts), she will pay nothing. If she has a lump in her breast, the mammogram becomes a diagnostic procedure rather than a screening procedure and she will have to pay part of the cost.

If you tell your physician that you have been constipated, that can convert a free screening colonoscopy into a not-free diagnostic colonoscopy. Imagine being a physician who has to explain to a woman who expects a free mammogram that the lump she has noticed in her breast means she will have to pay.

Imagine being that woman. Imagine having been treated for breast cancer and having to pay every time you get a follow-up mammogram to monitor for recurrence of the disease.

Older patients can be charged premiums up to 3 times higher than those for younger people, whether they can afford them or not. (Click here for an explanation of this and twenty other features of the ACA, as well as further links.)

If people receive subsidies for the purchase of their insurance (the subsidies are paid at the beginning of the year), and then have an increase in income that puts the subsidy at a lower lever, they will have to pay back the excess subsidy on their next federal income tax assessment.

People may go back and forth not only between different levels of subsidy, but also between the exchange and Medicaid, possibly with different provider networks.

Undocumented immigrants are not eligible to purchase insurance under the exchanges.

The new estimate is 26 to 27 million people in the US who will remain uninsured after full implementation of the ACA.

Neither the exchanges nor any other provision of the Act can control rising premium costs.  According to the Rules issued by Centers for Medicare and Medicaid, up to 50% of the board members of the exchanges can be affiliated with the insurance industry.

The insurance exchanges do nothing about chronic underfunding of Medicaid, further cuts to services, and patients being forced into for-profit HMO's (as in Illinois).

Two speakers at the recent Labor Notes conference, Mark Dudzik of Labor Campaign for Single-Payer and Peter Knowlton of United Electrical Workers, predicted that the insurance exchanges will undermine the union health and welfare funds. Employers will find it advantageous to stop offering health insurance to current employees, leaving them to get insurance through the exchanges.

The health and welfare funds will be left with only retirees, who are older and sicker (called adverse selection). The speakers cited fears that most funds will survive less than 5 years.

Under Expanded and Improved Medicare for All program that we support, every person in the US will have access to all necessary care without financial barriers. There is no possibility of the ACA rising to this standard for reform. It will not provide everyone with health insurance; it will not provide even those with health insurance with access to all of the care they need; it will not make health care affordable; and it will not control health care costs.

Further analyses of how the ACA compares with Medicare for All are available on the website of Physicians for a National Health Program.