by Stephanie Sullivan, Consultant
The Affordable Care Act (ACA) was signed into law almost three years ago in March 2010 by President Obama with the goal of decreasing the number of uninsured Americans and reducing the overall costs of health care. ACA has been cited as one of the largest regulatory overhauls to date, and in order to fit in line with its plans to improve healthcare outcomes and streamline the delivery of care every state will be expected to have a new consumer marketplace for health insurance by January 2014.
Each state will be given the option to expand their healthcare coverage for the poor, and would receive federal support to do so. ACA’s flexibility allows for individual states to decide how they would like to approach insurance coverage and are given the option to either create their own insurance exchanges, or let the federal government take charge.
States will be eligible to expand their Medicaid programs to cover everyone living below 138% of the poverty level, or they can choose to decline federal funds and leave people uninsured. People with an annual income of up to 400% of the poverty line (approximately $45,00 per individual) will get federal subsidies to help defray premium costs.
Approximately 15 million Americans (6% of non-elderly adults) currently buy coverage on the individual market, but just over half of individual plans do not meet ACA standards. In the fall, those individuals will be able to enroll in health insurance through these developing state-based exchanges with coverage taking effect in January.
Most individual plans next year will likely charge higher premiums, but costs plan to be offset by lower out-of-pocket costs and more comprehensive coverage. According to the Congressional Budget Office, by 2016 an estimated 24 million people will receive health insurance through exchanges, while another 12 million will receive outside individual coverage. Consumers buying individual plans will have a choice between four levels of coverage: platinum, gold, silver, and bronze. Those with platinum plans will pay the highest premiums but pay the lowest out-of-pocket expenses.
There is a clear division in which states plan to build their own insurance exchanges based on political affiliation. The majority of Democratic states (18 out of 20) plan to build their own exchanges either individually or in partnership with the federal government (Montana and Missouri are the Democratic outliers and are letting the federal government lead the charge). The majority of Republican states (24 out of 30) are defiantly refusing to participate in the development of a health insurance exchange, but it could actually make it easier for the federal government to standardize exchanges in those states.