The Affordable Care Act and What it Means for Michigan

The Patient Protection and Affordable Care Act, more commonly known as the Affordable Care Act (or “Obamacare”) was signed into law by President Barack Obama on March 23, 2010, and was most recently upheld in large part by the United States Supreme Court in National Federation of Independent Businesses v Sebelius. On the simplest level, the goal of the Act is to ensure that Americans have access to quality, affordable healthcare. Because this new plan will have a substantial impact on all of us, we’d like to provide you with some highlights of what the Affordable Care Act offers, and what it means to the people of Michigan.

Highlights of the Affordable Care Act
Although there are a number of important aspects within the new Affordable Care Act, the Act’s “individual mandate” seems to have drawn a substantial amount of media attention, and it was this mandate that formed the basis of the constitutional challenge to the act that was recently decided by the United States Supreme Court in

National Federation of Independent Business v. Sebelius, which was decided on June 28, 2012.

The “individual mandate,” which is officially known as the “shared responsibility payment,” requires individuals to pay a monetary penalty if they fail to purchase health insurance coverage through one of the Act’s insurance exchanges, or through a traditional insurance provider. The penalty is to be calculated as a percentage of that individual’s household income, but is capped at the average premium that an individual would pay for qualifying private insurance. Individuals whose household income falls below an established threshold are exempt from the penalty, as are members of Native American tribes.

Any assessed penalties will be paid to the IRS, but the IRS may not use criminal prosecution as a means to collect this penalty. According to the Supreme Court, “[w]hile the individual mandate clearly aims to induce the purchase of health insurance, it need not be read to declare that failing to do so is unlawful. Neither the Act nor any other law attaches negative legal consequences to not buying health insurance, beyond requiring a payment to the IRS.”

While this “individual mandate” has garnered a substantial amount of attention, other, lesser known sections of the act also provide important new coverage for the nation’s citizens.

A primary focus of the act is a new “Patient’s Bill of Rights” – a set of rules that will prevent insurance companies from taking advantage of those under their policies, and will force them to become more accountable to consumers. For instance, if insurers want to raise premium rates, they must publically explain why those rate increases are necessary. States have received as much as $51 million in grants in order to implement ways to review and prevent insurance companies from making unreasonable premium increases. Similarly, the act includes a requirement that insurers spend at least 80% of the amounts they receive from premium payments on the provision of healthcare to their insured. Any amounts in excess of this cap must be refunded back to consumers.

States are also receiving Consumer Assistance Program grants, which help to ensure that consumers receive their benefits under the Act. These grants are being used to educate individuals about their rights and options under the Affordable Care Act, and to ensure that they are able to take advantage of the benefits provided there.

Young adults also receive additional coverage options under the act. Many young adults who did not previously have access to health insurance through their employers are now allowed to remain on their parents’ health insurance until they reach 26 years of age, regardless of whether the child is in school, financially dependent, or married. Insurance providers cannot deny coverage to children because of pre-existing conditions, regardless of the age of the child or the medical condition that child suffers from.

Prior to the passage of the Affordable Care Act, individuals who did not otherwise have access to the insurance market because of a pre-existing condition were able to enroll in the Pre-existing Condition Insurance Plan. That plan is now scheduled to end sometime in 2014. Because the new Affordable Care Act mandates access to insurance coverage even for those with pre-existing conditions, the pre-existing condition plans are no longer necessary.

An insurer’s ability to cancel the insurance policies of individuals who become sick has also been greatly reduced. Insurers will no longer be permitted to cancel coverage based on an illness the insured may now have, or because the insured inadvertently made a mistake on an application for insurance. The Affordable Care Act further requires that companies wishing to cancel a policy must provide the insured with a 30 day notice, so that the individual may appeal the cancelation. If an insurance company alleges that there was an issue with the application for insurance in the first place, it must be shown that it was fraudulent and an intentional misrepresentation was made.

Many of the changes described in the Affordable Care Act apply to health insurance coverage on or after September 23, 2010, including any insurance purchased via the state operated insurance exchanges, which must be in place by 2014.

What the Affordable Care Act means for Michigan Residents
The passage of the Affordable Care Act marks a significant shift in the way American’s view medical insurance coverage, and the policies being implemented by this Act will have a substantial impact on the lives of Michigan’s residents.

Maybe the most important change is in the number of previously uninsured Michigan residents who will now have access to quality health care services. More than three million Michigan residents no longer have to worry about lifetime limits on coverage (in fact, these limits will be phased out over time). Almost two million Michigan residents will now have access to preventative treatments and care, such as vaccinations, check-ups, and cancer screenings. As of August 1, 2012, a number of women’s health care options, including mammograms, screening for cervical cancer, prenatal care, well-woman visits, and other vital services, are now covered without cost sharing for new health plans. More than one million Michigan women were previously uninsured in this vital area of medicine. Thousands of Michigan residents and families with existing private health insurance coverage with receive rebates from the health care providers that fail to spend at least 80% of their premium dollars on health care, and Kathleen Sebelius, the U.S. Secretary of Health and Human Services, estimates that Michigan families can expect average rebates of $214.

Tens of thousands of young adults have been permitted and will continue to take advantage of the Affordable Care Act by either remaining on or re-joining their parents’ health insurance. Over 1,200 Michigan residents who might not have had access to health insurance due to pre-existing or serious health conditions have been able to take advantage of the Pre-Existing Condition Insurance Plan described above.

Regarding premium increases, Michigan has received $5 million to help monitor and fight unreasonable and unjustified premium increases proposed by insurance companies. The state has also received approximately $10.8 in grants from the federal government to research and implement the insurance exchanges required to be in place by 2014.

For Medicare recipients, beneficiaries saved an average of $582 on prescription drugs in 2011, and many have seen an increase in savings this year as well. In addition, recipients who hit their gap in coverage for prescription drugs received a $250 rebate in 2010 to assist in covering the cost of their drugs. In the first few months of this year, over 20,000 Medicare recipients received a 50% discount on brand-name prescription drugs when they reached their gap in coverage. This gap in coverage, also known as the “donut hole,” will be phased out by law in 2020.

There are 189 community health centers in Michigan. The state received approximately $69.5 million to establish new health center locations in underserved areas, as well as to improve upon and expand the services provided at the centers already existing.