Gordon Ito, state insurance commissioner, may be feeling a bit under the gun these days.
Just around the corner lurks the implementation of the Patient Protection and Affordable Care Act, more commonly called the ACA or "Obamacare," so naturally people want to know from Ito how much they’ll be paying for health insurance in the near future.
At the earliest, people won’t see that bottom line until Oct. 1, when the Hawaii Health Connector, like other online insurance marketplaces developed in states nationwide, is due to open for business under the new federal law. And that will spell things out for individuals and small businesses that are eligible for the online exchange, not for people who get their insurance as most now do, through their employer.
Employer groups are still in discussions with insurance carriers about pricing for benefit packages under the new rules, which may hinge more directly on factors such as the age of the workers. But Ito does have one clear message he offers, meanwhile.
"When people ask about rates, the first thing I say is, ‘Don’t shoot the messenger!’" he said, drawing laughs from the attentive audience.
Cost is only one of the question marks hanging over Obamacare — in Hawaii there are some worries about provider shortages, for instance. But it looms largest.
The commissioner was a panelist at a recent roundtable, part of a regular series presented by ThinkTech Hawaii and the Hawaii Venture Capital Association. The event packed the Plaza Club meeting room with business executives and others anxious, or at least curious, about how the ACA is likely to play out.
Ito did have some actuarial estimates to share. A 35-year-old individual on average would pay a $329 monthly premium, according to the estimate, but his or her out-of-pocket costs could be much lower because of the subsidies ACA provides. Anyone earning up to 400 percent of the federal poverty level for their community would be entitled to some subsidy. At the low end, the 35-year-old earning 150 percent of the poverty level — about $19,000 a year — would actually pay only $67 a month, Ito said.
Such incentives are what ACA advocates hope will bring more of the uninsured into the market, especially younger people who tend to rack up relatively few medical expenses. Their premiums and lower costs will help to offset the higher costs incurred by older patients, and that ideally will help contain the rise of premium rates.
If younger people who tend to earn less income can use subsidies to purchase insurance affordably, it’s hoped that they will choose to do so rather than pay the $95 penalty assessed at tax time for remaining uninsured. President Barack Obama’s White House is turning its campaign savvy toward a new-media messaging effort targeting young people, seeking to persuade them that health insurance is a rational investment.
Will it work? Another question mark. However, there’s a little encouragement from the Kaiser Family Foundation tracking poll, taken last month, showing about 7 in 10 of those in the 18-30 age bracket describing health insurance as “very important” and “something I need.” About one-fourth considered themselves to be healthy enough to go without insurance.
The age ranges that help determine rates are changing. Because some young people will be in a broader age category than they are now, some could be folded in with older people in the insurance plan and end up paying a higher rate than they do now. Similarly, some older employees accustomed to higher rates may end up paying less.
Still, Ito said, the average premium for a 55-year-old worker was estimated at $601 a month. On the whole, a company with a relatively old workforce could expect a costlier plan from insurance carriers.
Panelist Hilton Raethel, executive vice president of the Hawaii Medical Service Association, has some concerns about the age calculations the ACA will require for employer-based health coverage.
“Yeah, there’s going to be some rate shock for some groups,” Raethel said. “We’re really concerned as we go out there to talk to employer groups. How do we work with them to ensure that they continue to provide coverage and don’t discriminate against individual employees?”
For small businesses buying coverage through the online exchange, the equation is further complicated because they will be eligible for tax credits that can help offset the cost.
“There are tax credits, which are actually a lot more challenging to get than on the surface,” Matt Delaney told the gathering.
Delaney is founder and CEO of The Hawaii Group, a company that provides human resources, finance and operational support to its clients.
Delaney joined others in the business community who drew a sigh of relief in recent weeks when Obama announced a one-year delay in the enforcement of the employer mandate. Under the law, any business with 50 or more full-time employees will need to offer health insurance as part of their compensation. But it was the enforcement element — employee details must be reported following complex new regulations — that now won’t be due until 2015. And lacking enforcement means effectively the mandate itself is being postponed.
While there’s been a hue and cry over the significance of the delay and whether companies will postpone offering coverage, policy analysts say most of the affected employers nationally already provide it. In Hawaii, employers have to provide insurance anyway, under the state’s 39-year-old Prepaid Health Care Act that will remain in effect. It extends the employer mandate even more broadly and requires better benefits than the federal law.
Still, Delaney said later in an email exchange with the Star-Advertiser, there remains some confusion about the employer reporting regulations.
“The initial IRC 6055/6056 reporting guidance is being worked on now and will most likely be released end of summer,” he said. “These are the tax forms that will need to be completed by everyone. These are all new forms that no one has had to fill out before.”
So, more time to adjust is a good thing, but a lot of people in business fervently wish the whole thing would go away. Ito held up a thin booklet that lays out the state’s Prepaid law and compared that with the thousands of pages of Obamacare.
Dr. Virginia Pressler, executive vice president and chief strategic officer of Hawaii Pacific Health, moderated the panel discussion. She asked if Ito couldn’t just ask “our good friend President Obama” to give the state a waiver from such regulations.
“Believe me, I wish we could,” he answered.
“Unfortunately, under ACA, it’s not until 2017 when they have what they describe as the State Innovation Waiver. We were hoping that they would move the date up … but unfortunately nothing was changed and 2017 was the earliest that Hawaii could perhaps seek a waiver.”
The expressions exhibited down the table were not all dour. Most agreed that Hawaii’s circumstances are less dire than that of other states, so the impact will seem gentler. Raethal pointed out that health care costs represent 13 percent of the state’s gross domestic product, compared to the 17 percent national figure.
Dr. Nadine Tenn Salle, president of the Hawaii Independent Physicians Association, said some groundbreaking partnerships among health-care providers are being forged that over time will produce a more effective and efficient system.
“We’ve got to get the patients involved,” she added. “The patients are going to be held responsible for some of this that we’re asking of them. We can’t shove it down their throat that they need to stay well; they have to buy into it themselves.”
Steve Robertson, Hawaii Pacific Health’s executive vice president, echoed that generally optimistic sense, citing the new information technology enabling better links among doctors and patients.
“That is what is happening today,” he said. “Patients can be actively engaged and get the tools and the education materials to be able to do that.
“The aim of the act is nothing less than to transform the health care system in this country, and ultimately to improve the health of the citizens of this country,” said Tom Matsuda, the state’s ACA implementation manager. “The No. 1 problem: complexity. It’s very hard to explain this to folks, and to have them understand how it’s going to impact them.
“The challenge for us right now is time. We have very tight deadlines to get the exchange and the other things up and running, so we are going full speed ahead. And I’m wearing a seatbelt myself.”
