New Health Insurance Policy: Understand What You Are Paying for
The Affordable Care Act (ACA) is a new government-backed health insurance policy that provides coverage to people with limited incomes and little or no access to health care. The ACA requires insurers and employers who offer health plans to provide a minimum set of benefits, including preventive services without out-of-pocket payments.
The problem with insurance is that there are so many details and fine print at play. Also, the ACA report on 2018 premiums has revealed that premiums are increasing by around 10% next year. More specifically, the report showed that the rate increases will be between zero and 50 percent. This is not something to be ignored, especially because this is on top of another increase in premiums that was reported in 2016.
Here's a summary of the changes introduced by the ACA:
• For better coverage: The ACA offers more comprehensive coverage at very little to no additional cost. This means that individuals will be able to enjoy health care benefits that are comparable to what corporations and companies enjoy. As an example, many plans before the ACA did not cover maternity expenses or mental health care needs. With the new law, insurers are required to provide these benefits.
• For less spending: With the ACA, consumers are now required to pay for a much larger portion of their health costs. This means that those who do not have employer-sponsored insurance will have to pay for their own health care in full. The law also prevents insurers from refusing to cover individuals with pre-existing conditions without charging them more.
• For less debt: With the ACA, those who carry insurance coverage will receive significant federal tax credits based on their income and family size. These tax credits are calculated within a means test that only pays for essential health benefits such as prescriptions, emergency services, maternity care and preventative care such as immunizations and screenings.
• For more choice: Under the ACA, individuals will be able to shop for insurance in new ways that were not possible before. This includes being able to compare health plans and choose the one that is best for them. As an example, healthcare benefits previously inaccessible or too expensive may now be covered under these plans.
• For more affordability: Health plans under the ACA are much less expensive than they were before. Unfortunately, the ACA did not cover dental care, vision care, hearing aids and many other types of medical expenses. The law only requires insurers to cover a very basic level of coverage with no additional annual cost sharing requirements.
• For more assistance: Under the ACA, low-income and unemployed individuals are eligible for federal tax credits to help pay for health insurance. This is a means-tested program that can help people who earn between 100 percent and 400 percent of the poverty level. Those who earn less than that may be eligible for Medicaid or the Children's Health Insurance Program (CHIP). Certain immigrants, including children, adults in school and noncitizens without documentation are also eligible.
• For a new type of plan: Many people will now be able to benefit from a high-deductible health plan with savings options, but these plans are not mandatory. These types of plans can help those who want to save money pay for out-of-pocket expenses.
It remains to be seen how the ACA will impact overall healthcare costs for both consumers and insurers over time. In the meantime, it's important that everyone understands the cost of each benefit they are receiving under the plan. As an example, people who choose a high-deductible plan with savings options will have to work hard to find ways to save money so they don't go over their deductible limit. Insurers have been marketing these plans aggressively as the best way to lower overall health care costs.
The report on 2018 ACA insurance premiums was released just a few days after the Congressional Budget Office (CBO) issued a report about federal deficits and the national debt. Between 2017 and 2027, the CBO predicted that federal deficits would total $10.5 trillion, but that healthcare spending on Medicare and Medicaid would account for $5.4 trillion of that deficit amount. This is almost four times more than any other major government program over the next decade, including Social Security and national defense. In fact, Medicare payments to hospitals (Part A) will account for $1 out of every $7 spent by the U.S. government over this time period.
This new report is alarming because it shows how the ACA has increased healthcare spending while the overall federal deficit continues to grow. This is despite a $1 trillion reduction in the cost of Medicare during this time period. As an example, Medicare Advantage was cut by $145 billion or 34 percent since 2013. Part D drug costs were also reduced by $123 billion or 14 percent from 2010 to 2013. The report also noted that Medicaid costs have grown faster than expected since 2010 and will continue to do so over the next decade.
The bottom line is that these costs will need to be addressed somehow, and this could result in even more ACA premium increases for 2018 and beyond.
Source: The Budget and Deficit, "By the Numbers," Mark S. Litow, Dec. 14, 2017
Newsmax
The new tax bill that was just signed into law last week contains a provision that will significantly increase the number of uninsured Americans over the next decade. This is especially true for those who live in states that did not expand their Medicaid programs under the ACA. Here are five important things to know about this new change to the tax code:
• The ACA reduced the federal deficit by $895 billion from 2010 to 2019 but will cost an estimated $230 billion more during this time period once adjustments are made for changes made by the new law.
• As a result of the new law, more than 20 million Americans will become uninsured in 2027. This represents an increase of almost 10 percent from the number that became uninsured during the same time period under the ACA. In addition, there will be an estimated 12 million more Americans without coverage by 2027 because most states did not expand their Medicaid programs.
• The number of people who do not have insurance coverage remains highest among middle-income families (35 to 54 years old). These families are expected to see their medical bills rise by about $1500 from 2016 to 2025.