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Brave New World

Steve Cowherd, a partner with Jeffers Cowherd, a Fairfield law firm with expertise in health care law, and a member of Westport Sunrise Rotary, spoke about the Affordable Care Act at the club’s meeting at BobbyQ’s on June 29.

His talk followed the Supreme Court’s ruling on the ACA by one day. He said “I’ve been living the law since March, 2010,” and added “now some of the law will move forward.”

Cowherd stated that he would “stay away from politics,” and offer an overview of its contents “from the perspective of a small business owner.”

He asked “what will we as a society do,” then noted that the “US has a two tier system in which those at the top receive the best care while others don’t even have access to the latest MRI or cancer drug.”

Affordable Care Act

The law is “built on the premise that the uninsured will join… (and is) designed to help small businesses.” It is built on broader participation, simplified coverage comparison and purchase, and reduced administrative costs that will reduce morbidity and make the U.S. healthcare system more effective and efficient.

The ACA is designed to help small businesses provide coverage for some 50 million uninsured, because, Attorney Cowherd said, “most can’t or don’t provide health care for their employees.” Consequently, it has an individual mandate, but no employer mandate.

The individual mandate has drawn the greatest discussion. Chief Justice John Roberts led a 5 – 4 majority upholding it. He deemed it a tax, not a penalty. He believes that were the mandate subject to the Commerce Clause Americans could be coerced into purchasing a service they may not want.

The four progressives with whom he sided disagreed. Justice Ginsburg wrote their brief and said that the mandate is subject to the Commerce Clause, and there is no coercion because all Americans will, at some time, require medical care, for which they must pay. Or they must pay an assessment to offset the costs imposed on the care provider. Citing the example used by Justice Scalia, buying broccoli, is a wrong analogy because Americans may live their entire lives without buying broccoli. But if they do, they must pay for it when they buy it.

Medicaid To Be Expanded

Cowherd said Medicaid will become more widely available. All non-Medicare eligible individuals with incomes up to 133 percent of the Federal Poverty Level ($11,170 for an individual and $23,050 for a family of four in 2012) will become Medicaid eligible.

The law applies a carrot and stick to encourage states to broaden their Medicaid enrollments. The Court, under the Spending Clause, said the federal government cannot withhold funds from states choosing not to do so. However, the federal government will fund 100 percent of the costs for all new Medicaid recipients through 2016, then reduce its participation to 90 percent by 2020.

Federal support notwithstanding, many governors, most of them Republican, have said they will not expand their Medicare rolls due to their concerns that federal funding could be withdrawn.

For those interested in Connecticut’s response, we were the first state to receive approval to expand Medicaid under the ACA: ( Fairfield County residents whose incomes are 68 percent of the federal poverty level are currently Medicaid eligible, so the state’s enrollment will increase once the floor is raised.

Those earning between 133 and 400 percent of the federal poverty level (maximums of $44,680 and $92,200) will be eligible for federal tax credits to offset the cost of their insurance.

State Insurance Exchanges

Every state must have an exchange in operation by the beginning of 2014 to facilitate the comparison and purchase of insurance plans by businesses and individuals. They will be “public or quasi-public entities” initially available to employers and employees in companies with up to 100 employees.

The exchanges, Cowherd said, “will provide Qualified Health Plans in which covered services and cost sharing is standardized for each, and shows a common set of benefits with standard fees and co-pays to simplify comparison and to make the market more competitive.”

Beginning in 2014 businesses employing 25 or fewer people with average annual wages below $50,000 will be eligible for a tax credit of up to 50% of the cost of their company’s health care insurance.

Companies with more than 50 employees, but fewer than 100 are required to provide health insurance. Those that do not must pay an assessment for every non-covered employee after the 30th.

It should be noted that 96 percent of U.S. businesses employ 50 or fewer workers (5.8 million employers), and that 96 percent of all businesses with 50 or more workers provide health care insurance, leaving 10,000 of the six million U.S. companies (0.2 percent) potentially subject to non-coverage assessments.

Companies with more than 100 employees are required to provide health care insurance. These businesses today pay premiums averaging 18 percent less than smaller employers. They will benefit under ACA’s rules requiring insurers to reduce their back office costs and will gain access to their state exchanges in 2017.

He said the exchanges will provide four levels of coverage. The least costly, bronze plans, will cover 60 percent of the projected costs of covered health care, while the most costly, platinum, will cover 90 percent. The difference will be paid by deductibles, copayments and coinsurance.

ACA, Cowherd said, incorporates Guaranteed Issue: everyone who wants to purchase health insurance can; and Community Rating: rate floors and ceilings are established for specified health risks. The ACA will regulate four risk categories, each with its own limits:
· Age – The oldest person covered cannot be charged more than three times the youngest;
· Tobacco Usage – Heavy smokers may not be charged more than 1.5 times what non-smokers pay;
· Geography – Premiums will reflect the cost of service in the plan area; and
· Policy Type – Individual or family coverage.
Among the other benefits the new law will provide are: the elimination of annual and lifetime coverage limits; preventive care services will be 100 percent covered; dependents may remain covered by their parents’ plans until they turn 26; and Medicare Part D reduces the “donut hole” and increases subsidies for brand name and generic drugs.

For those interested in learning more about ACA, the Kaiser Family Foundation is a good resource: and

The Commonwealth Fund also offers substantial background information:

Roy Fuchs