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Affordable Care Act: Health Care at the Crossroads

Leroy Hodge was devastated when he received a letter
notifying him that his health insurance was being cancelled. Six months
earlier, the Hamill, South Dakota, farmer had received preapproval for heart
surgery. That was in 1991.

Recently, several million Americans received health
insurance cancellation notices. On the surface, it may seem that the 2010
Affordable Care Act (ACA) hasn’t improved anything.

Hodge would disagree. Beginning January 1, arbitrary
cancellation is against the law. Companies cannot cherry-pick customers.

His prognosis was worse in yet another way. Hodge had
nowhere else to turn. “I would gladly have paid a premium if I could have had
health insurance,” he says. “I was uninsurable.”

The new round of cancellations is occurring now because
insurers chose not to renew policies through 2014 that don’t offer ACA’s
minimum health benefits. Today, the approximately 15.2 million Americans in the
individual insurance market have other options in the Health Insurance
Marketplace, as well as from their current insurance companies. In some cases,
higher premiums for expanded coverage may be offset by the ACA’s free
preventive screenings and the elimination of co-pays.

After 60 years of debate, health insurance reform has
reached a strategic crossroads. Farmers and other self-employed individuals
will play a significant role in the success of the final phase-in of the ACA in
2014. That’s because about 33% of farmers are insured in the private individual
market, compared with about 8% of all Americans, according to a 2007 Access
Project Report.

Farmers without employer-based insurance spend more on
health care than other households. Double-digit premium hikes have been common
in the individual market. A 2012 survey of Illinois Farm Business Farm
Management Association members pegs the average per-farm total health
care-related expenses, including insurance, at $10,100 for a family of three to
five.

“Premiums have been higher because farmers are in a
high-risk occupation and insurance underwriters know it,” says Joyce Lash, a
Cooperative Extension family finance specialist serving nine south-central Iowa
counties. “Charging a higher rate based on occupation is off-limits now.
Insurers can set rates only on geographic region, age, family size, and tobacco
use.”

An Agriculture.com poll conducted in early November
indicated that farmers had not visited their state Health Insurance
Marketplaces or HealthCare.gov. They cited a lack of time, a faulty website,
and a distrust of government as barriers. Many were aware they might receive
tax credits and subsidies. Most rated their understanding of the Marketplace as
very poor, poor, or fair. This mirrors the results of a University of
Nebraska-Lincoln poll taken last summer.

However, the 2010 passage of the ACA already has launched a
series of fundamental changes. Many families have taken advantage of reforms
that allow them to keep a child age 26 and younger on their insurance policy or
to eliminate preexisting condition exclusions for children under age 19. In
2014, adults with preexisting conditions (like hypertension, diabetes, or heart
disease) no longer can be denied insurance or charged more. Most preventive
health care services now are covered.

“The Affordable Care Act already has brought change to the
health care system, and more changes are still to come,” says Nicole Peritore,
University of Kentucky Cooperative Extension program coordinator for health
education.

 

ACA not your grandfathered plan

Some Americans are renewing their coverage through current
health insurance plans that are grandfathered in for one more year. “Our
insurer isn’t on the Marketplace but plans to participate next year,” says
Mandi Goretska, Corydon, Iowa. “We’re anxious to see what it will offer then,
and if we can do better or even qualify for tax credits.” (Read the Goretskas’
story on page 38.)

Grandfathered plans were in effect before March 23, 2010,
and haven’t changed in ways that substantially cut benefits or increase costs.
Insurers must notify people that their plans are grandfathered in through 2014
and may not include some ACA protections. (Premium tax credits and reduced
co-pays are only available through HealthCare.gov.)

Marketplace coverage began January 1 for those who met the
December 23 application deadline. March 31, 2014, is the deadline to avoid the
individual mandate fee for being uninsured. Exceptions to this fee include
people who don’t make enough income to file a federal tax return, or those
who’d have to spend more than 8% of their household income on the lowest-cost
Marketplace plan (even with available tax credits and subsidies).

The 2014 penalty is a maximum of $285 per family or 1% of
modified adjusted gross income, whichever is greater. “The IRS hasn’t issued
the rules,” Lash says. “I’ve cautioned farmers not to assume they’d only risk
paying the minimum penalty.”

W

orking to get the word out

For the past three decades, women have left the farm to work
at jobs that provided health insurance for their families. The ACA offers the
potential for women who want to work full time on their farm to have that
option – without losing their family’s health insurance. Others may choose to
change jobs.

“My job provided our insurance until recently,” says Carolyn
Sheridan, Spencer, Iowa. “Now, I’m changing jobs and won’t have employer
coverage. It looks like I’ll save on HealthCare.gov, although we don’t qualify
for tax credits.” 

Many of the self-employed and underinsured likely to benefit
from the Health Insurance Marketplace live in rural America. The top seven
counties in North Carolina with the highest rates of uninsured are among its
top 10 ag counties.

“There’s been so much controversy and confusion that many
people aren’t sure what to think or do,” says Robin Tutor, acting director,
North Carolina AgroMedicine Institute. “We’re here to help farmers wade through
the information.”

She adds, “So far, it’s similar to other experiences with
programs related to government. Many farmers don’t think it’s for them, or feel
there’s a catch, or say the personal and tax information are intrusive.

“Our most important message is that every situation is
different, and there are many caveats to the rules,” she says. “We encourage
farmers to at least look through the basic information, and if they think
there’s even the slightest chance they could be eligible for help through the
Marketplace, they should apply. Applying doesn’t mean they have to purchase.
Eligibility for tax credits or reduced co-pay policies is based on modified
adjusted gross income and may not be as restrictive as other asset-based
benefits.”

Under the ACA, a family of four with an income of $94,200
would be eligible for premium tax credits. The Kaiser Family Foundation
estimates enrollees who qualify for premium tax credits would receive an
average tax credit of $5,548 per family.

“There’s a lot of inertia,” says Lash, one of many Extension
specialists conducting health insurance workshops. “Many farmers worry they’ll
end up with worse coverage. Some are surprised that all the policies on the
Marketplace are offered by private companies.”

This Extension outreach will continue through 2014.

“We’ve offered educational information in over 40 Kentucky
counties and formed partnerships with larger organizations such as AARP,”
Peritore says. “Extension is a source of unbiased information, and we know our
communities. We’re a credible resource.”

Kentucky is one of 18 states that chose to set up health
insurance exchanges without any federal assistance. These states generally
reported a less rocky rollout. Kentucky had enrolled over 56,437 by December
10. Most of the new enrollees qualified for Medicaid coverage, but about 15,518
have purchased private plans. More than 41% are under age 35.

“The states with their own exchanges are meeting or
exceeding their numbers,” says Brad Gibbens, deputy director, University of
North Dakota Center for Rural Health, Grand Forks.

HealthCare.gov is much improved, but it’s uncertain when it
will receive a clean bill of health. January 1 is the next test of the online
system.

However, lack of competition in rural areas may hamstring
HealthCare.gov. The cost of insurance in rural counties may remain higher
because there are fewer insurers than in urban counties. This is especially
true in the South, according to a 2013 New York Times report.

The ACA includes provisions aimed at increasing health
professionals in rural areas. Rural hospitals in the 25 states that declined to
expand Medicaid will continue to pick up the tab for people unable to pay.

Lowering costs

The ACA also is aimed at reducing the cost side of the health
care equation.

“One of the most significant reforms is changing from a
fee-for-service system to a patient outcome value-based system,” Gibbens says.
“Providers will be paid based on improved patient outcomes – not per
procedure.”

The White House Council of Economic Advisers reports:

• Health care spending growth since 2010 is the lowest on
record.

• Medical price inflation is the lowest rate in 50 years.

• The Congressional Budget Office has cut 2020 projections
of Medicare and Medicaid spending by 10%.

It’s too soon to know if the trend will continue. The impact
of ACA reforms will emerge over the next decade.

“It’s a work in progress, and we don’t know all of the
unintended consequences,” says Peter Damiano, director, Public Policy Center,
University of Iowa.

What’s becoming clear is that the law is neither as good nor
as bad as its supporters and opponents argue. “Some will benefit greatly;
others may be let down,” says Lash.

As Americans enter this critical crossroads, many are using
a new navigation system to discover alternate routes to affordable coverage.

When the dust finally settles, ACA’s new rules of the road
may remain a bitter pill for some to swallow. For 7 million Americans, it may
be just what the doctor ordered.

Online Shop delayed

Farmers with fewer than 50 full-time employees aren’t
required to offer health insurance.

Online sign-up for the Small Business Health Options Program
(SHOP) has been rescheduled for November 1, 2014. Plans may be purchased
through an insurance broker or agent, using a paper application.

SHOP allows small businesses to buy insurance as one large
risk pool, which lowers their costs. Tax credits are available to those with
fewer than 25 employees who average about $50,000 per year.

“We think farmers who are eligible to receive tax credits
through SHOP will see it as a real advantage,” says Robin Tutor, North Carolina
AgroMedicine Institute in Greenville.

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