As Gwen McClelland walked out of Ubi Caritas, a clinic for the underinsured and uninsured in Beaumont, her two children fidgeted excitedly about being out of the clinic’s waiting room.
“I actually have four kids,” she said.
Despite having no insurance and no way to pay for any, McClelland is not an Obama supporter and said she’s against the Patient Protection and Affordable Care Act (ACA) otherwise known as Obamacare.
“They (her children) have Medicaid, thank goodness,” she said.
But when posed with the possibility of an expansion of Medicaid under the bill, McClelland softened her stance.
“I guess any kind of Medicaid reform or insurance reform would help anybody that needs it,” she said.
Despite undeniable cost savings to residents — especially seniors right here in Beaumont — many in Texas and across the country are calling for a full repeal of Obamacare.
Opponents of the law say it makes for an expensive, over-reaching, government-run healthcare system in the U.S.
As the election nears, the implications for millions of uninsured families and individuals hang in the balance.
Since its passage in 2010, through a series of modest tax increases, citizens of the United States have been paying for ACA and its final implementation in 2014. At that time, Americans will be required to buy private health insurance from a list of private insurers based on their needs and ability to pay (sliding scale). The Obama administration is hoping that increased competition among private insurers, who will add as many as 40 million uninsured Americans to their rolls as part of the health exchanges, will help lower costs and reduce insurance premiums. Those employers or individuals who forego the requirement to buy health insurance from the exchanges will pay an annual tax penalty enforced by the IRS. According to the non-partisan Congressional Budget Office (CBO), a number of “modest” tax increases and cuts to Medicare, as well as tax penalties from those who choose not to purchase insurance, are paying for the estimated $1 trillion the bill will cost over 10 years. The major cost provisions of the bill are as follows, according to the CBO:
• Sliding-scale subsidies for individuals and families buying from health exchanges
• Increased outlays for Medicaid and Children’s Health Insurance Program (CHIP)
• Tax credits for small employers who insure their workers
The largest cost, that of subsidizing middle class individuals and families ($686 billion between FY2013 and FY2022), will be paid by raising revenue (taxes) in these key areas, according to the CBO:
• Penalty payments from employers and uninsured individuals (those who choose not to purchase health insurance from the exchanges)
• Revenues from excise taxes on high-premium insurance plans (Cadillac plans)
• Reducing federal outlays, primarily for Medicare
• Increasing the Hospital Insurance (HI) payroll tax and extending it to net investment income for high-income taxpayers
• Fees and excise taxes on certain manufacturers and insurers
• Other net savings from coverage-related effects
Simply put, the healthcare reform law is funded by more than $500 billion in tax increases and another $716 billion in Medicare cuts. If ACA were to be repealed, the government would lose money — an estimated $109 billion, according to the CBO.
Additionally, ACA would reduce the federal deficit by some $210 billion, according to the Joint Committee on Taxation (JCT) and the CBO.
Seniors and Medicare
Much fanfare has been dedicated to ACA’s cut to Medicare of some $716 billion over ten years.
Under ACA, the $716 billion would cut payments for Medicare Advantage insurance plans, a private health insurance option utilized by roughly one in five seniors, according to the CBO. The cuts would reduce payments to doctors and hospitals, not benefits to seniors, and would include several pilot projects such as Accountable Care Organizations and medical homes the administration hopes will slow long-term growth in Medicare costs, which add some $300 billion to the deficit each year, according to the CBO.
Unlike most Americans, seniors don’t have to wait until 2014 to see the cost savings under ACA. Since its passage, ACA has closed the Part D “donut hole” for prescription drug coverage for Medicare recipients, saving seniors billions nationally. According to HHS, Texas’ seniors have saved more than $67 million on their prescription drugs in 2012 due to Obamacare. That’s an average of $616 for 109,222 Texans. Here in Jefferson County, 1,864 seniors saved approximately $1,227,828 on their prescription drugs under ACA in 2012.
ACA also provides Medicare beneficiaries free preventive testing including mammograms, colorectal cancer screening, bone mass measurement and nutritional counseling for those most at risk for diet-related diseases such as diabetes. A free annual wellness visit is also included in the law, which provides for a health risk assessment for no copay, according to HHS.
Perhaps the most important endorsement of ACA comes from AARP, which advocates for seniors and sustainability of Medicare.
AARP says the $716 billion taken from Medicare is not “raiding” the program, but rather controlling costs projected to grow unsustainably in the next 50 years.
“Before the ACA was passed, Medicare’s Hospital Insurance Trust Fund, which is used to pay hospital bills for Medicare beneficiaries, was projected to run out of money by 2017; after the law was passed, that date was pushed back to 2024,” the organization said, adding that opponents of the bill have been misleading when speaking of the spending reductions as “stealing” or “raiding” from Medicare.
“It’s simply not true,” said Beth Howard of AARP The Magazine.
Changes for the middle class
Among the most popular changes to America’s health care system under ACA are those that benefit middle class families across the country. According to the CBO, individuals making $47,100 or a family of four making $96,000 annually who choose to buy from the ACA exchanges are eligible for an annual tax credit of $5,490 to help pay their health insurance. The CBO estimates at least 19 million people will receive such tax credits instead of paying an average penalty of $600 per person for not purchasing from the exchanges.
Another provision that has garnered bipartisan support is preventing insurance companies from refusing to insure those with preexisting conditions. Insurance companies have long been criticized for their profit motive of only insuring healthy people, but under Obamacare, not only do insurance companies have to insure those with preexisting conditions, but they cannot drop such patients when they get sick, no matter how costly the affliction. Lifetime coverage caps if a child or family member becomes ill will also be banned.
Middle class families with children benefit from ACA as well. Families whose employer-based benefits provide care, as well as those who buy from exchanges, can keep their kids on their family insurance plan until they are 26 years old. This keeps the millions of healthy young adults who historically don’t buy health insurance paying into the system, thereby further offsetting the cost for the elderly and sick.
Lastly, a commonly overlooked provision of ACA called the 80/20 rule requires the largest insurance companies to spend at least 80 percent of premiums they receive from consumers directly in the form of care. Health insurance companies must now disclose how much they actually spend on care to consumers. According to the Department of Health and Human Services (HHS), on June 1, 2012, insurance companies nationwide submitted their reports to HHS for services provided in 2011. The disclosures revealed insurance companies would have to pay Americans more than $1.1 billion in rebates this year. In Texas, insurance companies wrote consumers and/or their employers a check totaling almost $167 million. That’s an average of $187 for 1,516,721 Texans, according to HHS.
Texas hold ‘em
After the most recent Supreme Court ruling upholding Obamacare, justices ruled that the crux of the health-care reform law, the individual mandate requiring citizens to purchase private insurance, was constitutional under Congress’ authority to tax. Justices followed historical precedent, however, when they said states would be allowed to opt out of Medicaid expansion under the bill. Gov. Rick Perry quickly asserted, along with six other states, that Texas would opt out of the Medicaid expansion and would not set up the exchanges required by the bill.
The latter, refusing to set up exchanges where consumers can choose what best meets their needs, is perhaps less important. The federal government will simply set up the exchanges if states refuse to do so.
The former, not expanding Medicaid — a joint federal/state insurance program for low-income families — has put hospitals like UTMB in limbo.
“Until the governor decides what we’re gonna accept or not accept, it put us and people like us in a very difficult position because we don’t know what monies are coming into the state,” said UTMB spokesman Raul Reyes. “We don’t know who’s going to be qualified under what programs.”
Reyes refused to comment directly on the positive or negative aspects of ACA as it relates to UTMB, saying the only way to know the good and bad is to wait until after the election.
If history is any indication, Texas will likely enroll in the Medicaid expansion, despite rhetoric to the contrary. As outlined in Obamacare, the federal government would pay 100 percent of the Medicaid expansion until 2017, lowering the federal share to 90 percent by 2020.
“Even if Republicans are elected, I’m not sure they’d be able to dismantle it,” said the executive director of Ubi Caritas Clark Moore, whose clinic is one of the few charitable health clinics in Beaumont. Clark said ACA is actually over-privatized, adding the bill is a huge giveaway to private insurers. He said the bill should have included a public option or should be reworked to include a Medicare-for-all type system.
Texas currently has the highest rate of uninsured families and individuals in the nation, 25 percent. The national average is 16 percent.
According to the Kaiser Family Foundation, the Medicaid expansion would cut the number of uninsured Texans by 49.4 percent, or about 1.4 million Texans.
Clark said Gov. Perry’s threat to opt out of the Medicaid expansion is simply political pandering.
“I think the reality is, after the election, if the bill is still intact, he (Gov. Perry) will opt in,” Clark said. “I think it’s a political ploy.”