Health Exchange Regs Leave Consumers Short Money, Care and Doctors

  • by: |
  • 03/13/2012
Where else but in Washington would the release of 600 pages of regulations be hailed as promoting greater choice, efficiency and reduce cost?

In this regard, the final rule regulating the establishment of "Affordable Health Exchanges" does not disappoint.

Most of the regs deal with how to qualify people living on Indian reservations and setting up systems to determine eligibility and award tax credits to the 9 percent of Americans who might actually get them.   But there are some interesting discussions that crop up which might surprise those who regard exchanges as another step towards utopia:

1.    If your income changes after you buy a health plan with some tax credits,  your costs will go up or down without warning.   And you may have the IRS knocking at your door asking for repayment of the tax credits you planned on having but no longer do as your income changes. 

2.    If your income changes so does your cost sharing.  Even a few bucks a month can make a huge difference.  Hence: A five percent decrease in income
from $47,018 is $44,667 (190 percent of the FPL), would correspond to a total premium, after advance payments, of $217 per month, for a total difference in premium of around $360 per year.  And there's more "... based on the same figures cited above, the difference in cost-sharing between a family at 190
percent FPL and a family at 200 percent FPL is $1,000 per year, due to the change in eligibility for cost-sharing reductions at 200 percent FPL. The difference is $2,000 around 250 percent FPL, which is the upper limit for cost-sharing reductions based solely on household income.

So if your pre-tax income goes up by $2351 you wind up paying an additional $1360.  That's an effective marginal tax rate of 68 percent.

3.   And since such changes do not keep up with tax information, exchanges will be required to create a system to monitor what we make in other ways.  To wit: "the Exchange must use information other than tax data to verify income in cases in which an applicant attests that a change has occurred or is reasonably expected to occur..."   What might that information be?  Bank accounts?  Pay stubs from employers?  Undercover informants?  

4.   If you or I decide to stop paying premiums for three months.  Under Obamacare, we still are able to receive health care services.  Coverage is terminated retroactively after three months and health plans don't have to pay doctors and other professionals for services rendered.   In otherwords, health providers are on the hook for the cost of providing free care if we stop paying premiums.  Or as the regs state: Qualified health plan (QHP)  issuers.. must notify providers who submit claims for services rendered during the second and third months of the grace period that any such claims will be pended, and potentially not reimbursed by the QHP issuer if the individual does not settle outstanding premium payments."

5.  There is other mind-numbing stupidity too.   HHS still hasn't figured out how to get accurate information about income and family size without tax information.  And it will take the word of people that they are poor enough to get tax credits without checking first. 

I am not making any of this up.   I wish I were.

Center for Medicine in the Public Interest is a nonprofit, non-partisan organization promoting innovative solutions that advance medical progress, reduce health disparities, extend life and make health care more affordable, preventive and patient-centered. CMPI also provides the public, policymakers and the media a reliable source of independent scientific analysis on issues ranging from personalized medicine, food and drug safety, health care reform and comparative effectiveness.

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