The health care reform bill President Barack Obama signed into law March 23 makes substantial changes and offers substantial benefits, Kansas Commissioner of Insurance Sandy Praeger told Iola Rotarians and their guests Thursday.
Among the immediate benefits she outlined are:
— Businesses with fewer than 25 employees will qualify for a tax credit of as much as 35 percent of the amount they spend on health insurance for their employees. The annual benefit will remain in place until 2014.
— Families will be allowed to keep their children on their health insurance plans until they are 26, regardless of where the dependents live or even if they are employed, as long as the child’s employer does not provide insurance.
— Subsidies for health insurance for low-income persons will be increased.
— The so-called doughnut hole in prescription drug insurance plans for Medicare recipients will be gradually phased out and disappear entirely by 2020.
— High risk pools will be established by states and subsidized by the federal government to provide coverage for those with chronic illnesses and other pre-existing conditions. The pools will operate from this year until 2014, when it will become illegal to deny coverage to anyone, regardless of their health condition or history.
— Beginning next year, health insurance companies will be required to trim their profit margins. Those selling large group plans will be required to pay out 85 percent of their gross incomes in health care benefits. Those selling to individuals and small groups will be allowed a 20-percent profit margin. Making these calculations will be difficult, she explained, because regulatory agencies, such as her own, will be required to define what is an administrative expense and what is a medical benefit expense.
OTHER IMMEDIATE benefits include elimination of lifetime limits on benefits. All children, regardless of pre-existing conditions, will be covered. Insurance companies will not be allowed to cancel a policy when a person becomes ill unless they can give solid proof that the policy holder lied about their health or physical condition when the policy was purchased.
State-based exchanges will be set up to give individuals a place to compare policy coverages and premium rates. States may agree to set up joint operations, but if they do, they will be responsible for explaining which state is responsible for regulating the insurance company. Insurance will not be sold in the exchanges, she said, they will only be a place to get information that would otherwise be difficult to find.
Commissioner Praeger explained that it is not practical for individuals or businesses to buy coverage from other states because each state has its own set of requirements. Policies issued in states with minimum regulations may have lower premiums but also have substantially fewer benefits and weaker regulatory controls. If a policy holder has a complaint, they might find it difficult to get the insurance department of another state to provide a remedy.
She explained that the long-term goal is to get everyone covered with health insurance to spread the risk as broadly as possible and bring costs down as far as possible.
Much of the expanded coverage will come through expansion of Medicaid in all states. Medicaid provides health care coverage to low-income families and disabled individuals. At present in Kansas, those who earn below 40 percent of the federal poverty level qualify for Medicaid. The federal bill raises that eligibility level to 133 percent beginning in 2014. At that point the federal government will pay 90 percent of the cost of Medicaid and the states, 10 percent.
The split between the state of Kansas and the federal government at the present time is 70 percent federal, 30 percent state. In 2014, when coverage becomes universal, the federal government will cover 100 percent of the Medicaid bill through 2016. Its share drops to 95 percent in 2017; 94 percent in 2018; 93 percent in 2019 and 90 percent in 2020 and from then forward.
The expansion of Medicaid programs in the 50 states will be the primary way the currently uninsured are provided health care coverage and the largest single additional cost to government.
“WE HAVE decided how to get close to universal coverage,” she said, “we have not yet determined if we can afford it.”
Still, Praeger said she doesn’t subscribe to the notion that before this legislation Americans received adequate care.
Without health insurance, most citizens “don’t feel comfortable going to a doctor’s office,” where they would receive preventive care. The result has been that the uninsured waited until their conditions were in the critical stage, forcing them to use a hospital’s emergency room — “the most expensive place to get care,” she said.
The new health care reform “begins the discussion on how to get everyone cared for,” she said.
Praeger was accompanied by Cindy Hermes, who is director of Government and Public Affairs for the insurance department. Hermes is the cousin of Jim and Ken Gilpin of Iola and a former director of the former Iola Bank and Trust Co. here.
Thursday’s meeting was at the New Greenery restaurant and was open to the public.
