How Would States Respond to Unsubsidized Obamacare?

The official sign-up season for President Barack Obama’s health care law may be over, but leading congressional Democrats say millions of Americans facing new tax penalties deserve a second chance.

Three senior House members told The Associated Press that they plan to strongly urge the administration to grant a special sign-up opportunity for uninsured taxpayers who will be facing fines under the law for the first time this year.

The three are Michigan’s Sander Levin, the ranking Democrat on the Ways and Means Committee, and Democratic Reps. Jim McDermott of Washington, and Lloyd Doggett of Texas. All worked to help steer Obama’s law through rancorous congressional debates from 2009–2010.

The lawmakers say they are concerned that many of their constituents will find out about the penalties after it’s already too late for them to sign up for coverage, since open enrollment ended Sunday.

That means they could wind up uninsured for another year, only to owe substantially higher fines in 2016. The fines are collected through the income tax system.

This year is the first time ordinary Americans will experience the complicated interactions between the health care law and taxes. Based on congressional analysis, tax preparation giant H&R Block says roughly 4 million uninsured people will pay penalties.

The IRS has warned that health-care related issues will make its job harder this filing season and taxpayers should be prepared for long call-center hold times, particularly since the GOP-led Congress has been loath to approve more money for the agency.

“Open enrollment period ended before many Americans filed their taxes,” the three lawmakers said in a statement. “Without a special enrollment period, many people (who will be paying fines) will not have another opportunity to get health coverage this year.

“A special enrollment period will not only help many Americans avoid making an even larger payment next year, but, more importantly, it will help them gain quality health insurance for 2015,” the lawmakers added.

[As] President Obama fights in Congress and the courts to preserve the nation’s sweeping healthcare law, the Affordable Care Act faces still another threat to its viability: Republicans in statehouses, many bucking governors of their own party eager to accept its flow of federal dollars.

When a group of Republican governors filed suit to overturn Obama’s signature achievement, Wyoming’s Matt Mead was among them, arguing the legislation was a vast overreach that violated the Constitution and trampled the right of states to set their own policies.

But after the U.S. Supreme Court rejected that argument, Mead decided it would be foolhardy to pass up tens of millions of dollars the act provided to expand coverage for Wyoming’s uninsured adults.

“We have fought the fight,” Mead told lawmakers last month in his State of the State address. “We’ve done our best to find a fit for Wyoming. We are out of timeouts, and we need to address Medicaid expansion.”

That argument failed to sway lawmakers in Wyoming’s GOP-run Senate, which voted 19 to 11 to reject Mead’s proposal; many of the opponents, said Phil Nicholas, the Senate president, had campaigned on a promise to block Medicaid expansion.

A similar dynamic is playing out in legislatures across the country, including Arizona, Florida and Utah, where conservative lawmakers remain a formidable hurdle to momentum building behind the Democratic goal of guaranteeing universal coverage.

Indeed, they have proved far more effective at thwarting the 2010 healthcare law than their Republican counterparts in Washington, who have voted more than 50 times to repeal all or part of the program many call Obamacare, largely to no avail.

Earlier this month, in Tennessee’s GOP-led Senate, a committee rejected a proposal to extend Medicaid coverage despite a strong push by the state’s Republican governor, Bill Haslam, and waivers from the Obama administration meant to allay conservative concerns.

“I said from the very beginning it would be difficult,” Haslam told reporters after his plan was shot down. “I think what you saw today is a measure of just how difficult.”

The [Indiana] HIP 2.0 plan is by far the most generous of the Medicaid expansion waivers. Not only does it offer more benefits than the original HIP plan, it reduces and in many cases eliminates the cost-sharing provisions that were supposed to make the HIP plan a model for “consumer-driven” Medicaid. Under the old plan, enrollees had to contribute a monthly amount to their POWER account based on income. Failure to make monthly payments resulted in a 12-month lockout, and enrollment was capped based on available funding. By contrast, HIP 2.0 has no funding or enrollment cap but much weaker cost controls. The mostly taxpayer-funded deductibles are higher ($2,500 compared to $1,100 under HIP) and the “basic” plan (for those below the poverty line) contains no penalties for failure to make monthly contributions while the “plus” plan relaxes the lockout period to six months and includes a host of loopholes for enrollees.

In addition, these more generous terms effectively make HIP 2.0 a poverty trap. Under the Pence plan, Hoosiers earning $16,104 (or 138 percent of the federal poverty level, the income limit for Medicaid expansion under ObamaCare) will pay a maximum of $322 a year for very generous HIP 2.0 coverage with no other out-of-pocket costs. If an enrollee’s income increases at all, he will no longer be eligible for Medicaid, lose his HIP account and be forced to buy coverage on the ACA exchange, where his health care costs will skyrocket to nearly $2,800 a year in deductibles and copays for the benchmark silver plan. Perhaps this is why HIP 2.0 contains no work requirement.

Indiana’s Medicaid expansion waiver might be more flexible than the others, but it lacks sufficient incentives for ablebodied enrollees to increase their income and reduce dependence on taxpayer subsidies, and at the same time offers far more generous benefits than traditional Medicaid. That combination makes HIP 2.0 perhaps the most pernicious of all the expansion waivers.

“Is this doctor in my insurance network?” is part of the litany of questions many people routinely ask when considering whether to see a particular doctor. Unfortunately, in some cases the answer may not be a simple yes or no.

That’s what Hannah Morgan learned when her husband needed surgery last fall to remove his appendix. When they met with the surgeon at the hospital emergency department near their Lexington, Ky., home, Morgan asked whether he was in the provider network for her husband’s individual policy, which he bought on the Kentucky health insurance exchange. The surgeon assured her that he was. When she got home, Morgan confirmed that he was in network using the online provider search tool for her husband’s plan.

But when she read the explanation of benefits form from the insurer, the surgeon’s services were billed at out-of-network rates, leaving the couple on the hook for $747.

The surgeon’s office later told her that he belonged to two different medical groups. One was in Morgan’s husband’s health plan network, the other wasn’t. Following multiple phone conversations with the surgeon’s office and the insurer, the in-network rates were applied and the Morgans’ share of the bill shrunk to $157.

“I did everything I was supposed to do,” says Morgan, 26. “You feel kind of hopeless. I thought I did it right, and there’s still another hoop to jump through.”

A few days after Christmas, Lisa Lovig’s doctor called with jarring news. The health insurer covering her cancer treatments had run out of money, and its future was at best uncertain.

“I was terrified,” said Ms. Lovig, 59, who has pancreatic cancer and relies on her insurance to cover frequent doctor appointments, tests and a litany of expensive drugs. “I didn’t know what was going to happen to me.”

Her insurer, CoOportunity Health, was one of 23 nonprofit cooperatives created under the Affordable Care Act to generate more competition and choice in insurance markets dominated by huge for-profit companies. Many of these newcomers to the industry, seeded with hundreds of millions of dollars in federal loans, struggled to attract customers after the law’s online insurance exchanges opened in 2013. But CoOportunity had seemed to flourish, with over 120,000 customers in Iowa and Nebraska – far more than the 15,000 it had anticipated – by the end of last year.

Its success apparently helped doom it. CoOportunity’s many customers needed more medical care than expected, according to Nick Gerhart, Iowa’s insurance commissioner, and it had priced its plans too low. After taking control of the co-op in late December, Mr. Gerhart decided last month that it could not be saved and asked a court to liquidate it. The co-op, he said at the time, faced more than $150 million in liabilities. That left its customers scrambling for new coverage, and providers wondering if millions of dollars in outstanding claims would ever get paid.

Every year at Open Enrollment, people can enroll regardless of health status. They also can switch plans. The bare-bones Bronze plans come with low premiums and high deductibles. In most cases, these deductibles range between $5,000 and $6,600 per person. They have very limited benefits for prescriptions and most don’t cover specialist visits until the deductible is met. More important, they don’t have broad physician and hospital networks.

Gold and Platinum plans have more comprehensive benefits and typically cover a more robust network of providers. These plans come at a higher price. A healthy 40-year-old making $31,000 could pick from the following plans …

He is healthy and purchases the most cost-effective plan for him, the Bronze option. During the year, he suffers a knee injury. He can’t afford the MRI and potential surgery so he puts the procedure off. At open enrollment, he changes his insurance and “buys up” to the Gold plan, which offers the most comprehensive coverage and least out-of-pocket (aside from premiums). As soon as his new plan is in place, he schedules his MRI and has knee surgery. Since he really can’t afford the expensive Gold plan, after his treatment he simply drops his insurance and “goes bare.”