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Blue Cross: Affordable Care Act gives more coverage at higher rates

Last Modified: Thursday, July 11, 2013 9:31 AM

By Natalie Stewart / American Press

The expanded access to health care coverage for millions of Americans through the Affordable Care Act brings with it significant changes in the health care industry and will likely increase costs for consumers, an official with Blue Cross Blue Shield of Louisiana said Wednesday.

Mike Reitz, Blue Cross president, said during a webinar that there will be a “significant amount of disruption and noise” in health care between now and Jan. 1. He said three key parts will affect premiums — new taxes and fees, new benefits and costs, and new formulas for what consumers will pay.

“Obviously, you can’t extend coverage to 30-50 million new Americans for insurance without there being some funding mechanism,” Reitz said. “The ACA contains eight new taxes and fees that will affect health insurance carriers, employers and individuals. These new government taxes and fees will directly impact premiums and drive the rates up.”

The eight taxes and fees: health insurer tax, exchange user fee, pharmaceutical fees, device manufacturer fees, patient-centered outcomes research trust fund, risk adjustment fee, reinsurance fee and excise tax for high-cost plans.

Reitz said the marketplace for health coverage is designed to be health-neutral, gender-neutral and “very heavily subsidized” by the federal government. He said about two-thirds of Blue Cross customers will continue to pay the same or cheaper insurance premiums, but only if federal subsidies are taken advantage of to offset the increase in costs.

“Your household income will determine how much the government will make available to you through some type of subsidy,” Reitz said.

Brian Small, Blue Cross’ senior vice president and chief actuary, said five ACA components will affect premiums: guaranteed issues, changes in the way premiums are determined, coverage and benefits, taxes and fees, and subsidies.

Small said the overhaul guarantees access to health coverage for all Americans, meaning the elimination of “traditional industry practices” of medical questions, pre-existing condition exclusion periods and rates based on health conditions. Insurers are required to accept all applicants.

He said the newly insured under the health care reform could drive up costs 32 percent nationally and 33 percent statewide. Medical costs for the previously uninsured will cost about 30 percent more than a person of the same age and gender who is now insured.

Small said the ACA also calls for a different rating system than what is now being used. The law only allows for limited rating factors, like geographic location, age and tobacco use. Health care rating based on health status and gender is no longer allowed under the overhaul.

Rates for younger males will generally be higher, Small said, while rates may decrease for older people and those with existing health conditions.

The new health care law orders insurers to provide a standard package of “essential benefits,” Small said, including a list of benefits in 10 categories. They are ambulatory service, emergency room, hospitalization, lab services, maternity care, mental health, pediatric vision and dental, prescription drugs, preventative wellness and rehab services.

“Basically, the ACA means more coverage, more benefits and more costs,” he said.

Mike Bertaut, Blue Cross’ senior health care economist, said people will experience the most change from the health care reform act in two areas.

“Their plans are going to become more rich, even if they don’t want them to. They are going to get more coverage than they had before,” he said. “Their benefits will be relatively rich. Essential health benefits cover everything.”

Subsidies to aid in health care costs will be available to households with an income falling between 100 percent and 400 percent of the federal poverty level, Bertaut said.

About 40 percent of the of 4.6 million Louisianians received coverage from a government entity at the end of 2012. Twenty-nine percent use the Medicaid system, 11 percent are covered through Medicare, and 45 percent are covered through a commercial source. More than 700,000 residents, or 15 percent of the state’s population, are uninsured.

Under the ACA, individuals are required to have health coverage in 2014. Those not covered face a penalty of $95 or 1 percent of actual income, whichever is greater. In 2016, the penalty increases to $695 or 2.5 percent of taxable income.

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