The following analysis was prepared by my colleague, Rep. Mark Hamilton (R-Cumming) regarding the federal Patient Protection and Affordable Care Act (ACA), concentrating on the impact the health care exchange and Medicaid provisions would have on Georgia if implemented. With Rep. Hamilton's permission, I am sharing his analysis with you here:
A "health insurance exchange" is a set of state-regulated and standardized health care plans from which individuals may purchase health insurance eligible for federal subsidies. Under the ACA, all exchanges must be fully-certified and operational by January 1, 2014. The ACA allows states to create their own exchange or group together to create multi-state exchanges. Failure to perform one of these actions will result in the federal government creating an exchange for Georgia. The first open enrollment period of the exchange will be October 15 - December 7, 2013. Exchanges are expected to be the one-stop-shop for objective plan information, plan comparisons, eligibility determination for all public programs, and plan enrollment.
Major requirements in the individual exchanges are:
- Guaranteed issue - insurers will not be permitted to refuse to insure any individuals. The ACA's prohibition on denying coverage for pre-existing conditions will begin in 2014. Until that time, the ACA provides funds for state-run high-risk pools for those with previously existing conditions;
- Limit to price variations - prices will vary based on four factors and not beyond a total factor of approximately 10. Premiums in the individual private insurance exchanges could not exceed approximately 4.5 times the cost of the lowest cost premium plan. There are no cost factors for family size or smoking status;
- Four Tiers - Plans will be offered in four comparable tiers with limited out of pocket expenses. These tiers are designated from lowest to highest premium and labeled Bronze, Silver, Gold, and Platinum. The plans cover a range of the cost from 60 percent at the Bronze Tier and increasing by 10 percent increments up to 90 percent for the Platinum Tier. Each of these plans will limit out-of-pocket expenses at $5,950 for individuals and $11,900 for families;
- Tax credits/subsidies are available regardless of who manages the exchange;
- Tax credits/subsidies vary based on an income scale.
- Must be self-sustaining, to include Navigator expense;
- Rescission restrictions - strict regulations for rescinding coverage are effected with some provisions for intentional fraud; and,
- Lifetime and annual limits are eliminated.
Small Business Health Options Program (SHOP) Exchanges
The ACA gives states the option to combine or separate the small business Exchange from the individual Exchanges. Employers with 100 or less full-time employees will be able to use the SHOP Exchange. Until 2016, states can limit the small businesses that can use the Exchange to those that have less than 50 full-time employees. The intent of the SHOP Exchange is for employers to choose a plan tier and for employees to be able to choose the right plan for them in that tier.
In 2011, Governor Deal issued an Executive Order to establish the Georgia Health Insurance Exchange Advisory Committee. The Committee made preliminary recommendations to the Governor by September 15, 2011 and final recommendations by December 15, 2011. The Executive Order emphasized a desire to "develop an exchange that reflects a free market, conservative approach to expanding health insurance coverage in Georgia". The committee was composed of legislators, the commissioner of Insurance, the commissioner of the Department of Community Health, the chief operating officer of the Department of Economic Development, and others. Ultimately, it was decided to wait for a decision by the United States Supreme Court on ACA's constitutionality before moving forward. On June 28, 2012, the court upheld this provision of the ACA, and barring further action by Congress, health exchanges will play a significant role in implementing the ACA. The committee has not announced any new plans since the court decision.
As of June 2, 2012, 10 states and the District of Columbia have enacted legislation to establish state-based health insurance exchanges. Four states (IN, NY, KY, and RI) have established an exchange by executive order. Governors in New Jersey (2012) and New Mexico (2011) vetoed establishment bills passed by their legislatures. Governors in TX, LA, FL, SC, WI, NH, and ME have stated they will not create a state-based Exchange. Massachusetts and Utah established Exchanges by law prior to the enactment of the ACA. As of August, 12 states have already submitted their intent letters to CMS. The U.S. Department of Health and Human Services has distributed $850 million to 34 states and the District of Columbia for exchange establishment grants level 1 and level 2. Grants can be used for gaps in their IT infrastructure and start-up year expenses to include consumer outreach, testing, and necessary improvements.
ACA Medicaid Expansion Projected Impact on the State of Georgia
- The ruling from the United States Supreme Court affirming the constitutionality of the Affordable Care Act was handed down on June 28th. The Decision's main points include:
- A majority ruling of 5-4 to uphold individual mandate.
- The requirement to have insurance is a tax, and is therefore constitutional:
- "The Federal Government does not have the power to order people to buy health insurance. Section 5000A would therefore be unconstitutional if read as a command. The Federal Government does have the power to impose a tax on those without health insurance. Section 5000A is therefore constitutional, because it can reasonably be read as a tax," Chief Justice John Roberts said in his opinion.
- Roberts went on to write, "It is reasonable to construe what Congress has done as increasing taxes on those who have a certain amount of income, but choose to go without insurance. Such legislation is within Congress' power to tax."
- Regarding Medicaid, the Court states that the federal government may not threaten to take or withhold a state's entire Medicaid allotment because they decline to take part in the Act's Medicaid expansion plan.
- While the court finds the Medicaid penalty provision to be unconstitutional, they opine that the government can make an easy fix to that problem.
- The Court vindicates and affirms Presidential and Congressional power in an important issue like health care.
- It transforms the program into something it was not designed to be.
- "The Court today limits the financial pressure the secretary may apply to induce states to accept the terms of the Medicaid expansion. As a practical matter, that means states may now choose to reject the expansion; that is the whole point. But that does not mean all or even any will."
- The Court rules that the states can reject the law's Medicaid expansion because:
- Under the expansion outlined by the new law, anyone with an income of up to 138 percent of the federal poverty level, the equivalent of $15,400 for an individual or $31,000 for a family of four, would be eligible for Medicaid benefits.
- In 2014, that expansion would extend Medicaid to about 620,000 poor and low-income Georgians who do not qualify for the program today.
- The law calls for the federal government to cover 100 percent of the costs of the Medicaid expansion for the first three years and at least 90 percent of the costs thereafter.
- If Medicaid is not expanded, those Georgians would qualify for a subsidy to promote buying insurance through the exchange. This coverage would exclude Georgians from a federal tax they would have to otherwise pay but we presently do not what the cost of the subsidy would be.
Enrollment Growth Snap-shot
- An additional 620,000 people will be enrolled in Medicaid in 2014 growing to almost 695,000 by 2023 should Georgia accept this expansion.
- The addition of 620,000 new people in 2014 represents a 34% increase in Medicaid rolls
- ACA will increase the percent of Georgia's on Medicaid from 17.6% today to 24.2% in 2014. That is correct - 24.2% of Georgian's would be on Medicaid.
Projected State Fiscal Impact related to Medicaid and PeachCare if Expansion Accepted
- 2014 (6 months cost - effective January 1, 2014)
- State Funds Cost: Additional $76.3 million to Georgia tax payers
- Total Funds (State + Federal) Cost: Additional $1.9 billion to Georgia tax payers
- State Funds Cost: Additional $219.8 million to Georgia tax payers
- Total Funds (State + Federal) Cost: Additional $3.7 billion to Georgia tax payers
- 10 Year total (2014 - 2023)
- State Funds Cost: Additional $4.5 billion to Georgia tax payers
- Total Funds (State + Federal) Cost: Additional $40.8 billion to Georgia tax payers
Also, it should be noted that yesterday Governor Deal provided great news by saying "No, I have no intentions of expanding Medicaid, I think that is something our state cannot afford." State House Speaker David Ralston agreed, and stated "The costs are enormous and there is little faith that the federal government will live up to the funding requirements of Obamacare as it stands now."
I would like to thanks Margie Coggins from the Georgia House Budget and Research Office for compiling the data and providing it to me in a short and concise way that provides the clear potential impact of this legislation. I hope you will inform as many people as you can about the impact this law will have on Georgians so that they will understand the importance of casting their appropriate votes in November. Remember, elections do have consequences.
Many thanks to Rep. Hamilton and the staff of the House Budget and Research Office for their work in compiling this analysis. I hope you will find it useful.