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Obamacare: How it impacts business, health care, patients and you

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Roberto Chavez, left, and Jeff Linteman, owner of the Country Inn in East Wenatchee, cook lunches at the restaurant on Jan. 18. Linteman says the health insurance policy he pays for his employees is beginning to be too costly for his business.

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Obamacare checkup: How it affects your business, your family and your bottomline

Editor’s Note: This month, we’ve got a very big Act to follow

Guest Column: An Affordable Care Act overview

Love it or hate it, Obamacare has arrived, and it’s likely to affect you.

If you own a business, have a job, raise a family, pay taxes, see a doctor, take pills, have insurance, have no insurance, suffer from illness or live healthy — basically, if you’re a red-blooded American — then you’ll feel the effects, good or bad, of this complicated medical overhaul.

That’s where we come in. With this package of stories and graphics, Business World hopes to take an early run at explaining, simplifying, personalizing and localizing this sweeping health care legislation as it moves closer to full implementation this year and in 2014.

Officially known as the Patient Protection and Affordable Care Act, the law aims to reduce overall health care costs and decrease the number of uninsured Americans.

It’ll do this mostly through subsidies and tax credits for individuals and employers, but also through extensive reforms over the next three years designed to streamline health care delivery and improve the outcome. In other words, faster and better medical attention for a healthier patient.

Critics argue that it’ll never work. Instead, the legislation will increase bureaucracy, blunt one of the world’s finest health care systems and, in the end, do the exact opposite of its intended purpose by increasing costs to many consumers.

Proponents say it’s the most comprehensive attempt so far to overhaul a broken system in a country with one of the lowest life expectancies in the industrialized world.

Right now, all we know for certain is that the new legislation’s mandates and policies will bring big changes in how we obtain, retain and pay for medical insurance. On the following pages are the basics, and how they might affect you today and in the future.

— Mike Irwin, Business World writer


AFFORDABLE CARE ACT IMPACTON BUSINESSES

PROFILES: A look at how the Act will affect you

Starting in 2014, everyone must get health insurance or pay a fine through their federal income taxes, or through reduced tax returns. The insurance exchange is called the Health Plan Finder, and will become available to individuals and small businesses on Oct. 1. Here’s how different groups will be affected:

Definitions

Health Plan Finder: Washington’s health insurance exchange, an online tool for individuals and small businesses to search and compare health insurance plans with comparable benefits, and rates. The website is scheduled to begin Oct. 1 for coverage beginning Jan. 1, 2014.

Uaffordable plans: An insurance plan is considered unaffordable if the cost for an individual is more than 9.5 percent of their entire household’s gross income, or if the plan pays for less than 60 percent of covered healthcare costs. Gross income is Line 1 on your W-2 form, plus any investment income.

• • •

SMALL BUSINESS OWNER

(50 employees or fewer)

You are not required to offer health insurance, but if you do, you could get a tax credit for 50 percent of your premium contributions for the 2014 income tax year. You can shop for insurance and get buying power of larger companies through the state’s insurance exchange.

SMALL BUSINESS OWNER

Who does not offer insurance:

You can shop for your own health insurance on the state’s insurance exchange, and get a tax credit up to 50 percent of your premium contributions for the 2014 tax year.

LARGE BUSINESS OWNER

(more than 50 employees)

Who does not offer insurance:

If any of your employees get a subsidy to buy a plan in the state’s exchange, you must pay a penalty of $2,000 times the number of full-time employees, minus 30 annually. (number of employees - 30 x $2,000)

Who offers health insurance but it’s not considered affordable:

If any employee gets a tax credit or subsidy to buy a plan in the exchange, you must pay a penalty of $3,000 for each full-time employee receiving a credit, up to a maximum of $2,000 times the number of full-time employees minus 30.

Who offers affordable health insurance:

You and your employees cannot purchase insurance in the exchange until 2017, when large employers can begin to purchase coverage through the exchange.

• • •

Small business owner fears being priced out of health care

By Christine Pratt, Business World writer

EAST WENATCHEE — Jeff Linteman, owner of iconic family-style restaurant Country Inn, worries that Obamacare will add to his business costs, even though as an employer of fewer than 50 full-time employees he won’t be required to provide health insurance.

And it’s not like health care hasn’t already been driving his business costs up.

A health-insurance policy he offers to his full-time employees — currently six of a total 22 — is currently costing him $45,000 per year.

Premiums have increased from about $235 per employee per month about 15 years ago to $1,200 per month for some of his employees.

To keep things affordable, he’s had to reduce the amount of coverage so much that he’s close to getting rid of it altogether, he says.

Minimum wage goes up every year, city taxes are higher, the Business & Occupation Tax — the state’s leading business tithe — is higher. So are food costs.

I’m scared. I’m seriously scared,” he said. “We’ve been in business since 1975. Obamacare could cause a bigger hardship on the community. I think we’ll survive, but others won’t. The pie will get smaller.”

And that’s not the way he wants to succeed, he said.

Under the Affordable Care Act, Linteman’s employees could become insured on their own through a state exchange. Or, if he chooses to offer them insurance, he could qualify for a tax credit to help pay for it. He said he hadn’t heard about the tax credit or the exemption due to his business size.

Too good to be true? Probably, he says.

I would hope and pray that it would be a good thing, but everything in my experience tells me that you cannot get something for nothing,” he says. “Somebody is going to have to pay for it.”

• • •

THE ACT: ATGLANCE

Small Business

(up to 50 employees)

Already in place

• Tax credits of 35 percent of premium contributions if health insurance is offered, if there are fewer than 25 full-time workers who make average annual wage of less than $50,000 per year.

What’s coming

• Tax credits for those that offer health insurance goes up to 50 percent of premium costs in 2014.

• In October, shop online for coverage through Washington’s Health Plan Finder, which provides greater purchasing power, similar to large employers. Employers will get “apples-to-apples” comparisons of plans, based on what’s covered, and what’s not.

Large businesses

(more than 50 employees)

What’s coming

• Employers with more than 50 employees (or 100 part-time employees) must offer affordable health insurance or pay a penalty.

• Two part-time employees count as one full-time employee.

• Seasonal employees who work fewer than 120 days in a year don’t count.

• An employer’s plan is considered unaffordable if the cost for just the employee’s coverage is more than 9.5 percent of their entire household’s gross income or if the plan pays for less than 60 percent of covered health care expenses.

• Businesses should be able to find out from the insurance company if a plan covers 60 percent of medical costs.

• If they don’t offer health insurance and any employees get a tax credit or subsidy to buy a plan in the exchange, the employer must pay a penalty of $2,000 annually times the number of full-time employees, minus 30.

• If the large business offers health insurance, but it’s unaffordable and any employee gets a subsidy to buy a plan in the exchange, the employer must pay a $3,000 penalty for each full-time employee receiving a tax credit, up to a maximum of $2,000 times the number full-time employees, minus 30.

• Starting in 2016, companies with up to 100 employees will be able to shop for health insurance through the Health Plan Finder.

• All large employers can begin to purchase coverage through Washington’s new Health Benefit Exchange in 2017, if the state decides to make the change.

• More detailed information for large employers can be found at: http://www.ncsl.org/documents/health/employerpenalties.pdf

Sources: Washington State Insurance Commissioner’s Office, Washington State Health Care Authority, the Washington Hospital Association and the Washington State Medical Association.


AFFORDABLE CARE ACT IMPACTON HEALTH CARE

Q&A with Patrick Bucknum: CEO at Columbia Valley Community Health

By K.C. Mehaffey, Business World

Business World: How will the Act affect the cost and revenue sides of Columbia Valley Community Health?

Patrick Bucknum: Since 2009 the number of uninsured patients served by CVCH has increased 65 percent, from 6,627 to 10,995 in 2012. The Affordable Care Act will help reverse this trend by allowing nearly half of the uninsured served by CVCH to become eligible under Medicaid or the Insurance Exchange.

We anticipate improved revenue due to the fact that 95 percent of the uninsured served at CVCH qualify as low income, and are not able to pay more than a nominal fee for their services. We do not anticipate any costs increases attributable to the ACA, and anticipate lower health care costs overall in the long term as more patients are covered for preventative care, and less charity care costs are passed onto private insurance contracts.

BW: What will it do to the prices you charge your patients and their insurance companies?

Bucknum: The ACA will have no impact on the prices CVCH charges patients and insurance companies.

BW: The Washington State Insurance Commissioner says federal funds will become available to expand Medicaid in Washington state, adding about 328,000 people to this low-income funded insurance. Do you think this will help or hurt health care facilities?

Bucknum: Medicaid expansion will bring needed coverage to low income families that currently lack health insurance benefits. I believe this will help health care facilities. A growing portion of these individuals are represented by the working poor. Their employer cannot afford to offer health insurance for them and their families.

Without health insurance they defer preventative care, and even delay treatment for needed care until they become severely ill and require inpatient care and experience loss of work while recovering. They are unable to pay for the costs of their care, and health care facilities must pass the costs of their care onto patients that have insurance, which raises their rates. Medicaid will make it affordable for low income patients to stay current on their preventative care, and will provide some reimbursement where there is currently little or no reimbursement.

BW: I’ve seen reports that doctors who accept Medicaid and primary care doctors may be eligible for huge boosts in income. Is that true, and if so, does this impact your facilities?

Bucknum: For the most part, Medicaid pays less than cost for most doctors. At best Medicaid pays at costs. There are no health care facilities, that I am aware of, that make a profit seeing a Medicaid patient, and most practitioners loose a little money each time they see a Medicaid patient. I do not believe it is true to state that doctors can expect a huge boost in income through Medicaid Expansion.

BW: Will patients notice a difference at Columbia Valley as a result of the Affordable Care Act?

Bucknum: CVCH provides enrollment assistance. Beginning October of 2013 we will start offering significant help for patients that become eligible for Medicaid and the Insurance Exchange. Several thousand residents in Chelan and Douglas County will need assistance navigating the enrollment process to complete the state’s application and select a benefit package that meets their needs in the Insurance Exchange. This process will be very similar to when Medicare began offering Prescription Drug Coverage in 2006.

• • •

Q&A with Dr. Peter Rutherford: CEO of Confluence Health, an affiliation of the Wenatchee Valley Medical Center and Central Washington Hospital

By K.C. Mehaffey, Business World

Business World: How will the Act affect the cost and revenue sides of Central Washington Hospital and Wenatchee Valley Medical Center?

Dr. Rutherford: This is a bit challenging to answer, as there are several pieces that will affect both cost and revenue. One of the benefits of the act is that some people who don’t currently have insurance will qualify for Medicaid coverage. However, there is a cost to providing the services. If the cost outweighs the reimbursement, then there is still a loss. With coverage, we hope some patients who are not currently getting care will now do so earlier when conditions are easier to treat, avoiding expensive care later, and that overall community health is improved.

The effect of exchanges is still unclear, and will depend on how many businesses decide to stop covering employees directly and move their insurance to the exchange. As a health care provider, the question we are asking is whether there will be a different reimbursement rate for commercial versus the exchange insurance programs.

BW: What will it do to the prices you charge your patients and their insurance companies?

Dr. Rutherford: There will be no change to the prices we charge. Currently, for our combined organizations, 44 percent (WVMC) and 54 percent (CWH) of patient visits are covered by Medicare and 13 percent (WVMC) and 15 percent (CWH) by Medicaid, which are a fixed payment. Approximately 35 percent (WVMC) and 23 percent (CWH) of patient visits are covered by commercial insurance payers, and those are contracted rates that will not be impacted by the new law. There are also 3.5 percent (WVMC) and 4 percent (CWH) of our patients who are self pay, and we have no plans to increase those rates, other than accounting for inflation.

BW: The Washington State Insurance Commissioner says federal funds will become available to expand Medicaid in Washington state, adding about 328,000 people to this low-income funded insurance. Do you think this will help or hurt health care facilities?

Dr. Rutherford: I believe this will help our facilities, because it will reduce the amount of non-reimbursed care, for which there is a cost. At this point, we do not know how much additional health care service will need to be provided to meet the needs of the 328,000 people who are presumably not receiving preventive care at this point. That could potentially increase our need for primary care providers.

BW: I’ve seen reports that doctors who accept Medicaid and primary care doctors may be eligible for huge boosts in income. Is that true, and if so, does this impact your facilities?

Dr. Rutherford: For two years, the federal government will subsidize Medicaid payments to make sure they are at the same level as Medicare payments for services. It is uncertain what will happen after two years. There are efforts being made in the Act to balance salaries between primary care physicians and specialists.

At Wenatchee Valley Medical Center, we attempt to pay median national salaries by specialty for median work done by the physician in that specialty. In this clinic at least, nobody is going to get a windfall in this deal.

BW: Will patients notice a difference at either the hospital or the medical center as a result of the Affordable Care Act?

Dr. Rutherford: A larger portion of the population will hopefully be covered by insurance, and preventative services are provided at no cost. The hope is that if people have insurance, they will seek outpatient care at the onset of the illness rather than deferring care and ending up in an emergent situation. If we can get people to receive out-patient, non emergency room care, then there is less cost to provide emergency services. That allows us to direct the money elsewhere to provide better care for patients.

• • •

THE ACT: ATGLANCE

Health care providers

What’s coming

• About one million Washington residents are currently uninsured. If the state Legislature opts in to a federal Medicaid expansion, about 261,000 people now uninsured will qualify for Medicaid, to be paid largely with federal funds.

• Washington hospitals will lose about $3 billion in federal funds for Medicare and Medicaid over the next 10 years under the assumption that more people will be covered.

• The Washington Hospital Association favors the Medicaid expansion because it will reduce the amount of uncompensated and charity care and because hospitals will lose the federal funds even if Medicaid is not expanded.

• An estimated 532,000 Washington residents will be eligible to buy a health insurance plan being offered through the state’s new insurance exchange. About 344,000 of them are likely to take advantage of the insurance exchange by 2015. That number could grow to 471,000 by 2017.

• All of the newly insured patients will need physicians, hospitals and other practitioners to care for them.

• Insurance companies are currently negotiating contracts with physicians and other health care providers. These negotiations are confidential.

• Physicians and other health care practitioners will assess whether they want to participate in the network for new products offered by health plans in the insurance exchange.

Sources: Washington State Insurance Commissioner’s Office, Washington State Health Care Authority, the Washington Hospital Association and the Washington State Medical Association.


AFFORDABLE CARE ACT IMPACTON PATIENTS

PROFILES: A look at how the Act will affect you

Starting in 2014, everyone must get health insurance or pay a fine. Here’s how different groups will be affected:

INDIVIDUALS

Medicaid and Medicare recipients:

No change or added benefits. Medicare recipients already got additional prescription drug benefits and free preventive services under the act.

Uninsured adult who has no children, earning less than $14,856 a year:

If Washington state accepts extra federal money for it, many of you will qualify for Medicaid. Most childless adults currently do not.

Uninsured individual with a gross income of $25,000 a year:

You must get health insurance or pay a fine. Under 2012 IRS thresholds, the penalty would be $155 for the first year, but would rise to $325 in 2015, and to $695 in 2016.

You will likely qualify for a subsidy to help pay your premiums and find a health plan through Washington’s new insurance exchange.

Individual insured through their employer, earning $25,000 a year:

You can keep the insurance you have. If you work for a small employer, they may be able to find you a better plan through the state’s insurance exchange.

If you work for a business with more than 50 employees, your employer must offer you affordable insurance. If it’s not considered affordable, you may qualify for a subsidy to buy a plan through the exchange. If you receive a subsidy, your employer may have to pay a penalty.

Uninsured individual earning $55,000 a year:

You must buy health insurance or pay a fine. Under 2012 IRS thresholds, that fine would be $455 for the first year, $910 for 2015 and $1,137.50 for 2016.

You will not qualify for subsidies to pay the premiums. You can buy insurance coverage through the Health Plan Finder, but won’t qualify for subsidies unless your income drops.

Individual insured through their employer, earning $44,680 a year:

If you work for a company with more than 50 employees and the plan is not considered affordable, you can buy a plan through the Health Plan Finder, but you won’t qualify for a subsidy unless your income drops.

Source: Stephanie Marquis, spokeswoman at State Insurance Commissioner’s Office.

• • •

An ‘uninsurable’ skeptic

By Christine Pratt, World staff writer

Cynthia Ward is all in favor of health insurance for everyone.

But she worries that Obamacare will not resolve the true problem with the U.S. health care business — everything costs too much.

It’s insurance reform, not medical reform,” says the 58-year-old substitute paraeducator with the Eastmont School District.

We don’t know enough about it. There’s so much we don’t know about hidden costs,” she said. “So many costs won’t become apparent until the coverage starts.”

Ward says that a host of medical conditions, including a now-past bout with cancer, have made her “uninsurable” under the conventional health care system.

She said she didn’t know that under Obamacare she couldn’t be denied coverage that paid at least 60 percent of her healthcare costs, but questioned if she’d be able to afford it, even with government subsidies.

She also worries that the costs of the new system could lead the country to financial ruin, when added to the already escalating costs of Medicare, Medicaid and Social Security.

Ward hasn’t had health insurance since an extended, private policy ran out more than a year ago. It was linked to her former job as a medical records clerk in Seattle. She says she heads to Columbia Valley Community Health, when she needs to, and pays on their “sliding scale,” based on ability to pay.

Even when she had insurance, she said, each year she had to pay “more and more and more,” yet the coverage remained the same.

I do worry,” she says. “If I don’t get a permanent job with benefits and I need surgery it would break me.”


AFFORDABLE CARE ACT IMPACTON PATIENTS

PROFILES: How the Act will affect you

Starting in 2014, everyone must get health insurance or pay a fine. Here’s how different groups will be affected:

FAMILIES

Uninsured family of two adults and two children earning $45,000 a year:

You must buy health insurance or pay a fine. Under 2012 thresholds, the fine would be $780 for the first year, $975 for 2015 and $2,085 for 2016. You will probably be eligible for subsidies to help pay your premiums.

Family of four (two adults, two children) with insurance through an employer earning $45,000 a year:

You can keep the insurance you have. If you work for a small employer, they may be able to find you a better plan through the state’s Health Plan Finder. If you work for a business with more than 50 employees, your employer must offer you affordable insurance. If it’s not considered affordable, you might qualify for a subsidy to buy a plan through the exchange. If you receive a subsidy, your employer may have to pay a penalty.

Uninsured family of four (two adults, two children), earning $100,000 a year:

You must buy health insurance or pay a fine. Under 2012 IRS thresholds, that fine would be $810 for the first year, $1,620 for 2015 and $2,025 for 2016.

You can buy insurance coverage through the state’s insurance exchange, but you won’t qualify for subsidies unless your income drops.

Source: Stephanie Marquis, spokeswoman at State Insurance Commissioner’s Office.

• • •

Exasperated young father: Everyone deserves insurance

By Christine Pratt, Business World writer

EAST WENATCHEE — An unexpected struggle to support his young family and pay health care costs is filling Jason Sims with exasperation and bitterness.

A veteran of six years in the army, which included 14 months in Iraq, Sims moved back to Wenatchee after earning a biology degree in August from the University of Washington.

The 29-year-old father of two young sons and husband to 27-year-old Darrah, who is pregnant with their third child, Sims can’t find a job, which he is counting on not only for a livlihood, but for employer-provided health insurance for he and his family.

His GI bill benefits have run out. His health insurance policy only covers himself. His two sons are on state health insurance for the medically indigent, and Darrah, a stay-at-home mom, is uninsured. The family is living with his mom.

The Affordable Care Act? “It’s a no brainer.”

Everyone deserves health care,” Sims says. “I understand everyone being upset about being strong-armed into buying insurance… but you weigh that against the cost of a regular doctor visit and it would almost pay for itself.”

He added, “You look at some of the happiest countries in the world — Canada, Sweden and other European countries — and they have socialized health care. You pay higher taxes, but you know if you get sick, you go, and you can get preventative care.”

Under Obamacare, the family could turn to a central exchange to get an insurance policy that covers at least 60 percent of their health care costs. Depending on their collective income, they could qualify for federal subsidies to help them pay for it. If they don’t get insurance, they’ll be subject to an escalating series of annual fines.

Sims has gotten some work through the local employment office and gets a little money each month from the Army. He’s looking for work with the Forest Service and other government agencies.

Even so, their frugal lifestyle is racking up a few hundred dollars of new debt each month, he said.

A “15 second” emergency room visit for his wife cost the family $1,500. Typical visits to the doctor cost nearly $200 — a lot of money for an unemployed family.

If I broke my arm, I’d be overwhelmed,” he said of the costs. “I wouldn’t know what to do. I’m not so ignorant to say it’s (Obamacare is) the best thing ever or that it will fix all the problems, but it’s a good start.”

Sims says his degree and experience in the Army will land him a job eventually. But he never imagined it would take this long.

I’m really embittered right now,” he said. “A few decades ago, you got your bachelor’s degree and you walked in and got a job… My last resort is to enter the military again, which I don’t want to do. I didn’t agree with everything we did over there, and I don’t want to be away all the time. I have a family.”

• • •

THE ACT: ATGLANCE

Individuals and families

Already in place

• No out-of-pocket costs for preventive services.

• Children can’t be denied health insurance if they’re sick.

• No caps on lifetime benefits.

• Young adults can stay on their parents’ plan up to age 26.

• Health plans can’t be canceled or rescinded, except in the case of fraud.

• A temporary health plan for people with pre-existing health conditions.

What’s coming

• Most people must have health insurance by 2014 or pay a fine of $95 for each household member up to three, or up to 1 percent of your household income, whichever is greater. Those fines go up dramatically over the following two years.

• Exemptions in the requirement include people who don’t make enough to file a tax return, who are members of a recognized American Indian tribe, who suffer hardships obtaining coverage, who are enrolled in a health care sharing ministry, who reside outside the United States, or who would have to pay more than 8 percent of their household income for the lowest-cost plan that pays 60 percent of health care costs.

• On Oct. 1, Washington will open its health exchange, called the Health Plan Finder, where individuals or families can shop for health insurance ranging from bronze-level plans which cover 60 percent of health care costs, to platinum-level plans which cover 90 percent of costs.

• Subsidies on premiums for individuals earning up to $44,680 and up to $92,200 for a family of four will help pay for coverage.

• All health plans in Washington must cover 10 essential health benefits: ambulance services, emergency services, hospitalization, maternity and newborn care, mental health and substance abuse treatment, prescription drugs, rehabilitation, lab work, preventive and wellness care including chronic disease management, pediatric services that include oral and vision.

• No one can be denied health insurance if they’re sick.

Sources: Washington State Insurance Commissioner’s Office, Washington State Health Care Authority, the Washington Hospital Association and the Washington State Medical Association.

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