More Affordable Health Care, Easier Access: Health Reform Exchanges Take Major Step Forward

ObamaCareSavesLivesLast week, while a court of appeals was busy ruling that Congress did not have the power to tax or to regulate interstate commerce (or more precisely, to tax or regulate a commercial behavior - like not buying health insurance when one can afford it), the pace of implementing health reform did not slow down. The departments of HHS and Treasury announced awards and proposed rules to make the transition to and operation of the exchanges coming in 2014 smoother. Last week's implementation involved the following:
  • HHS announced $185 million in grants to 13 states and DC (bringing the total number to 16 states and DC) to start building the exchanges.
  • HHS also announced rules to coordinate Medicaid and SCHIP through the exchanges so that eligible individuals and families do not spend time in redundant paperwork.
  • Department of Treasury announced how the tax credits for purchasing health insurance would work.
Kathleen Sebelius has turned out to be a tremendous Secretary of Health and Human Services. She is truly striving for the exchanges to be a one-stop-shop for people who have to get health insurance outside of an employer plan as well as small businesses. Government streamlining is often poo-pooed by progressive intelligentsia, but they save tax payer money as much as they save headaches for citizens.

The grants to the states are for those states who have moved quickly to take advantage of the Affordable Care Act and establish their exchanges in law. California is not only the most populous state in the union but also was the first state to legislatively adopt the exchange, and California was awarded $39 million. I am really proud of my state for taking an early lead: the state is already slated to submit our application for a Level Two grant next spring to get our exchange ready. Incidentally, all elected branches of the California state government, including all eight statewide elected offices, are controlled by Democrats - coincidence? I think not.

The Largest Expansion of Medicaid and SCHIP Ever, and A One Stop Shop for Individuals and Small Businesses

Under the Affordable Care Act, everyone with incomes up to 133% of the federal poverty level ($14,500 in 2011 dollars for individuals, and about $30,000 for a family of four) will be eligible for Medicaid in 2014. Children in families with even higher incomes will be covered under SCHIP. A whopping 20 million Americans are expected to gain coverage in that way. This is the largest expansion of Medicaid and SCHIP in history.

But the challenge is to implement this in a way that is available, accessible and easy to get for people who would be eligible. What if you could go to a one-stop shop that could tell you that what you and your children are eligible for: whether it's Medicaid, SCHIP, or subsidies to buy private insurance, and if the latter, how much? What if, once you find out what's available to you, you could enroll right there?

Well, that is exactly what is going to happen:
The Medicaid and CHIP proposed rule would:
  • Establish streamlined, coordinated eligibility determination systems for premium tax credits, Medicaid and CHIP that allow people to apply on line, in person, by mail or by phone through one simplified streamlined application.
  • Create a system whereby Exchanges, following state-established Medicaid rules, will conduct eligibility determinations for Medicaid as well as for advance payment of premium tax credits.  The systems would also facilitate enrollment in to the appropriate insurance affordability program. 
Hmm, applying to Medicaid, waiting for them to tell you if you are eligible, then applying to a private insurance, waiting for them to tell you if they would even cover you and how much your premium is going to be, or just go to one exchange, fill out one application, and in most cases, get an instant feedback (as the system will be using updated electronic information to determine your eligibility) and enroll on the spot? Tough choice!

What if you are a small business and want to get your employees coverage through your state exchange? The new rules would not only allow you to buy insurance for your employees through the exchange's Small Business Health Options Program (SHOP) where you can see and compare plans and pick the best ones for your business and your employees while claiming a tax credit of up to 50%, you get one bill, not a hodge podge of paperwork.

The Largest Middle Class Entitlement Since Medicare and Tax Code Fairness

The tax credits available, under the rules released by Treasury, are pretty straightforward and set forth in the law. But I do want to re-stress two key points:
Broad Middle-Class Eligibility. The premium tax credit is generally available to individuals and families with incomes between 100% and 400% of the federal poverty level ($22,350 – $89,400 for a family of four in 2011), providing a crucial safety net for the middle class. The Congressional Budget Office estimates that, when the Affordable Care Act is fully phased in, the premium tax credit will help 20 million Americans afford health insurance. [...]

Credit Is Refundable So Even Families with Modest Incomes Can Benefit. The premium tax credit is fully refundable, so even moderate-income families who may have little federal income tax liability (but who may pay a higher share of their income towards payroll taxes and other taxes) can receive the full benefit of the credit.
This does two things: creates the largest middle class entitlement program since Medicare while establishing a public responsibility for paying for health care, and at the same time, makes the tax code more progressive by making the tax credit refundable. The greatest tax burden on the working poor is the payroll tax, a regressive tax. With the affordability tax credit being refundable - i.e. working as a subsidy, it actually cuts the total tax liability of the low and moderate-income Americans while the individual responsibility and the large employer responsibility provisions (big corporations must either provide coverage or contribute towards cost of coverage in the exchanges) shifts the cost towards upper income individuals and corporations.

There is simply no way of escaping this: if you are a progressive, care about health care, a public responsibility in health care and in making our tax code fairer, health reform is a major winner for you.