'A Whole New World'

The insurance marketplaces open for business Tuesday. Most Americans aren't affected; if you are, here's how to get started.

Posted: September 30, 2013

It may be the most contested law of our time.

Obamacare reaches its climactic phase on Tuesday, promising an Amazon.com-like experience to buy health insurance online.

Yet few people know what the law does, and a substantial number even think it has been repealed.

For all the hoopla, here's a tip: Most Americans won't be much affected. The online marketplaces that open Tuesday are focused on the roughly 15 percent of the population who are uninsured or buy plans individually.

Millions of low- to moderate-income Americans will be eligible for discounts, in the form of tax credits and other subsidies.

The marketplaces will also steer people into Medicaid, if they qualify.

"The development of these marketplaces . . . it's a whole new world we're going into," said Kevin Lucia, project director at Georgetown University's Health Policy Institute. "It's a new place where people can shop, compare, and buy health insurance in a way that was not available before the Affordable Care Act."

Many consumer safeguards come with the marketplaces. On Jan. 1, when the new plans take effect, insurers can no longer deny coverage based on health status or a preexisting condition. All plans must cover essential benefits, such as hospitalizations, maternity care, and mental health services. And insurers cannot drop coverage just because someone gets sick.

Small businesses will have more options for insuring workers, and get tax credits to pay for it.

Of course the law hasn't been universally embraced. Congressional Republicans are trying to defund the law in a stopgap government spending bill. U.S. Sen. Ted Cruz (R., Texas) spent 21 hours last week filibustering the law on the Senate floor. And some states and groups are interfering with navigator groups that will help people enroll. Videos on YouTube feature a creepy Uncle Sam urging young people to "opt out" of Obamacare.

Some even question whether the marketplace's computer system will work on Tuesday.

Backers, however, note that the law is based on ideas first pushed by Republicans in the 1990s. "This is not the government taking over health care," said U.S. Sen. Tom Carper (D., Del.), an architect of the law. "The federal government is in a facilitating role which really does allow competition and market forces to work."

Who will be affected

The online marketplaces are open to all legal citizens and legal immigrants. They are meant to help provide for the uninsured and people who have found individual insurance difficult or impossible to get.

"Anybody who has experienced it will tell you it's a challenging place today, especially if you're older, a woman of childbearing age, or have any kind of medical history," Lucia said. "The current individual market does not want them."

The marketplaces are also for people with employer coverage deemed unaffordable: Either their share of the monthly premium exceeds 9.5 percent of their income, or they pay more than 40 percent of the share of their total medical expenses.

This means many people will have access to more plans than before, often with help to pay for them. These include those who have been laid off from a job, denied coverage due to preexisting conditions, retired before Medicare starts at age 65, and work without coverage in a small business.

Even covered workers dissatisfied with their options may seek a plan on the marketplace, said Lucia, though they may not be eligible for subsidies or tax credits. It is also an option for employee spouses and dependents.

The marketplaces may open the door to new jobs, for entrepreneurs, freelancers, and contractors, since more options will be available outside of the employer-based system.

"It really is a fantastic thing that you won't have to stick in a job you don't like just because you need a benefit and can't get it all on your own," said Ezekiel Emanuel, chair of the Department of Medical Ethics and Health Policy at the University of Pennsylvania and a former White House health adviser. "You can take a job in a small company, or start your own company, or go more freelance."

Finally, there can be consequences for inaction. The law will require nearly every U.S. citizen to have health insurance by Jan. 1, 2014, or pay a penalty each year, and every employer with more than 50 workers must provide insurance by Jan. 1, 2015.

The mandate was to ensure that the marketplaces will attract younger, healthier people, making all the plans more affordable. Will it work? Signing up young people will be key.

Who won't be affected

Those with job-based coverage should be mostly unaffected.

Medicare beneficiaries will not need the marketplaces either.

Medicaid, too, remains available for low-income Americans and will be expanded in some states to cover anyone with income up to 138 percent of the federal poverty line, which is $15,856 for an individual and $32,499 for a family of four in 2013.

A 2012 Supreme Court decision let states opt out of the expansion. In states that reject it, marketplace discounts will be available to people with incomes starting at 100 percent of the poverty level.

New Jersey and Delaware will expand Medicaid, and Pennsylvania is negotiating with the federal government to do an alternative expansion.

Oct. 1 is just the start, experts say. People have until Dec. 15 to sign up to gain coverage by Jan. 1. And enrollment will stay open until March 31, 2014.

"People don't need to rush, they can explore their options," said Heather Howard, a former New Jersey health commissioner who heads the State Health Reform Assistance Network.

How it works

Using the marketplaces should be easier than getting insurance in the past. But like filing taxes, it may not be pleasant, especially for consumers unused to terms like deductible and coinsurance.

"My prediction is we will see a lot of confusion in consumers in choosing plans," said Stan Dorn, senior fellow at the Urban Institute's Health Policy Center. "But gradually, the [marketplace] will figure out ways to help people make choices and consumers will learn to do it better."

The marketplace will offer more choices, likely many more, than consumers have had before.

Southeastern Pennsylvania will have 48 plans and New Jersey will have as many as 31.

Each plan, in every marketplace, will be organized by tiers named for metals: bronze, silver, gold, and platinum. In general, the lower the metal, the lower the premiums, or what a person pays each month.

But cheaper plans typically have more cost-sharing, which means higher deductibles and copays, or fees, when patients visit a doctor or hospital. Patients may also be responsible for a higher percentage of the bill, the coinsurance. In general, plans cover 60, 70, 80, and 90 percent of the cost of care, as the metal quality improves.

Insurance rates and plans have not been fully released for Pennsylvania and New Jersey.

Insurers can charge smokers premiums as high as 50 percent more in many states, though most rates have been far less, according to a Kaiser Family Foundation analysis.

Insurers in many states may also charge older people up to three times more for premiums than younger counterparts, a narrower range than existed before the law.

But knowing just what premiums will be for an individual or family is not enough.

"You don't want to look at the overall sticker price," said Dorn. "You want to ask: 'What does this cost me after tax credits, based on income and family size?' It's not the sticker price, it's what's the discount price, which is on a sliding scale."

These discounts will be available to people and families earning between 100 and 400 percent of the federal poverty level. (New Jerseyans will instead get discounts beginning at 138 percent: Medicaid covers below that.)

Most people, up to 85 percent, will receive subsidies to pay for premiums, the Congressional Budget Office has estimated.

Getting started: How the discounts work

The first step on Tuesday is to go to the federal website ( www.healthcare.gov) and set up your account with a password. Contact information will be required as well as the names, birth dates, and Social Security numbers or legal immigration numbers for each enrollee.

To determine subsidy levels, consumers may need their most recent tax return, recent pay stubs, and details about other forms of income, such as alimony or rental earnings.

An estimate of 2014 income will be needed, and experts urge people to be as accurate as possible so they don't lose tax credits by overestimating or owe money at year's end from underestimating.

After entering their information, they will learn what kind of discount they will use in shopping for plans. Discounts are based on income, family size, and the premium cost of the second-lowest-cost silver plan in their area.

This means that even if the second-lowest-cost silver plan costs $211, an individual with an income of 150 percent of the poverty level will pay only $57.45 a month.

The difference between the cost of this silver plan and the premium limit is their tax credit, and that can be used on other plans.

The marketplace caps out-of-pocket maximums, or the most money anyone must pay for care, excluding the premium, to $6,350 for individuals and $12,700 for families.

All discounts are applied automatically based on the information consumers provide, and cost calculators will be on the marketplace to help people figure out what they will spend.

"It is important to remember this is potentially here a vastly improved consumer experience, especially if you didn't work for a large employer with an HR department to help you explore your options," said Howard.

How to choose

Experts are cautioning people not to focus on premium costs alone.

"You have to ask: 'Is my doctor in the network, will drugs I need be covered, what's it going to cost me to get care?' " said Dorn. " 'What is the deductible - how much do I pay before my insurance kicks in, what's the percentage of every visit that I have to pay? What's the copay amount, what's the out-of-pocket cost?' "

Some health plans, to keep costs low, will offer a narrower set of in-network hospitals and doctors.

"Think about things other people in your cohort are experiencing," said Georgetown's Lucia. "A 22-year-old is usually pretty healthy but lots blow out their [knee]. If it blows out, could you go to the hospital you want to go to? Would it cover the surgery, the treatment, the physical therapy and rehab for the amount of time you needed to rehab completely? And what would the expected cost-sharing be for a procedure that could cost $40,000?"

Dorn said insurance for some is a way to cut the financial risk of unexpected care. For others, it is about having access to key doctors and services.

The first person may want a plan with lower premiums and higher cost-sharing, while the second may want a higher-tier plan with lower out-of-pocket costs, Dorn said.

And regardless of which tier a person chooses, preventive care such as annual wellness exams and mammograms or colonoscopies will be covered free.




This story was produced in partnership with Kaiser Health News, an editorially independent program of the Henry J. Kaiser Family Foundation, a nonprofit, nonpartisan health-policy research and communication organization not affiliated with Kaiser Permanente.


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