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What’s to come with Obamacare

Uninsured patients fill out paperwork.
Uninsured patients fill out paperwork. Starting Jan. 1, more people should have access to health insurance. Matt York

The Obama administration is still taking a political beating for its one-year delay of one major part of health reform – the requirement that all employers with more than 50 full-time workers provide health insurance for them.

That provision was going to go into effect in January. But it’s not the biggest provision, and the White House says the most important reforms are still on track.

The biggest, by far, is the opening of the health insurance exchanges – the online marketplaces where people can buy insurance if they don’t already get it from an employer, or from a public plan such as Medicare, Medicaid or the military.

Other changes yet to come: the requirement that most Americans get health insurance somewhere or pay a fine and new rules that prevent insurers from turning patients away just because they’ve been sick before and from putting lifetime caps on how much patients can run up in medical expenses. Also still to come are limits on the minimum coverage that can be provided, wider eligibility for Medicaid in some states, the formation of so-called accountable care organizations, rules meant to force hospitals to provide better care and, in 2018, a tax on “Cadillac” health insurance plans.

Here’s a rundown:

Exchanges. The exchanges are on track to start enrolling people on Oct. 1, the administration says, and to start paying for people’s health care on Jan. 1.

The Kaiser Family Foundation says about 18 percent of Americans under the age of 65 don’t have health insurance. The exchanges are one way that the 2010 Affordable Care Act aims to fix this. The Congressional Budget Office projects that 26 million people will buy health insurance on the exchanges by 2022.

Expect a big advertising campaign this summer. “We have a very long way to go on public awareness and education on what is going to be available,” says Caroline Pearson, a vice president at the consulting firm Avalere Health in Washington, D.C. “We are going to see a big push from state and federal governments and private groups to educate people.”

According to Kaiser, 79 percent of the general public and 87 percent of people who don’t have health insurance know little or nothing about the exchanges. Groups like Enroll America are planning to send volunteers door to door, while the Obama administration is looking to celebrities, local government officials, non-profit organizations and even public libraries to help spread the message.

Jay Angoff, who helped construct health reform at the Health and Human Services department before returning to private law firm Mehri & Skalet, says the health insurance companies are almost certain to start weighing in, too. After all, it will be private companies that will be providing the insurance – the so-called public option never got off the ground.

“They have been able to persuade people to buy lousy insurance at high rates,” Angoff told NBC News. “I am confident in the insurance companies’ ability to market to people. The main targets will be the healthy young adults who can pay premiums without filing too many claims. They’ll be needed to help provide a pool of cash to pay for the sick people who will sign up – and they’ll be the hardest sell because they know they don’t need the insurance as badly as others.

Individual mandate. This is a provision the insurance companies demanded, so they can be certain to have a big pool of paying customers. Just about everyone will be required to have health insurance starting Jan. 1.

Most Americans already do – through an employer, or via Medicare, Medicaid or Tricare for military families. People without will have to pay a small fine – as low as $95 the first year – if they don’t go either to Medicaid or the exchanges for insurance, or if they choose to skip whatever their employers offer. “The penalties the first year are very low and may not be enough to sway people,” Pearson says.

The federal government will help pay the premiums for anyone making up to about $46,000 for an individual, as much as $94,000 for a family of four.

Some people may fall through the cracks. About half of the states have declined to expand Medicaid to make more people eligible, and the federal government had counted on that Medicaid expansion. So in those states, people who make too much money to qualify for Medicaid but too little to qualify for the exchanges may have the uncomfortable choice of paying the full premium on an exchange, or breaking the law and perhaps paying a fine.

People who make too little to file for income tax are off the hook – tax returns are where people will be reporting their coverage or lack thereof.

Medicaid expansion. The original 2010 Affordable Care Act required all states to make Medicaid – the state-federal health insurance plan for the poor – more widely available. The federal government was going to pick up the full cost for several years. But the Supreme Court ruled that was unconstitutional in 2012. Now just 26 states say they’ll expand Medicaid, according to the Advisory Board Company.

So people who live in a state expanding Medicaid will start qualifying in January, while those in one of the states that is not will be left with the status quo. The CBO projects that 12 million people will become newly eligible for Medicaid in the states that choose to expand their offerings by 2022.

There may be a “woodwork effect” as well, says Pearson. All the publicity surrounding the Medicaid expansion may make people who were already eligible aware of the program, and they may sign up for the first time.

Guaranteed issue. This is just a jargony way of saying health insurance companies cannot turn you away any more because you have had a pre-existing condition. This is one of the provisions that has worried insurance companies, because they fear an influx of new customers who have not been insured and who have expensive conditions – and a pent-up demand for medical care. That starts with new insurance plans issued Jan 1. Companies can no longer stop covering people once they reach a lifetime limit, either. This provision removes one of the things people hated most about health insurance – they’d get cut off just as they were the sickest and needed it most.

Community rating. Another piece of jargon meaning the insurance companies can only charge a certain amount more for older people, and they cannot charge women higher premiums than men any more. They can charge smokers more, however. This provision also starts with new policies issued after Jan. 1.

Essential benefits. This kicks in on Jan. 1, also. It’s a list of conditions that health insurance must cover, from birth control to mental health care and dental care for children. Any insurance company offering a product on the exchanges has to cover this list.

Insurers and other experts say this list of provisions is what will make health insurance more expensive on the exchanges. “I think there definitely will be sticker shock,” Person says. “The premiums will be significant and for people (who currently buy individual insurance) they are going to be higher than what they are today.” It may take a while for people to appreciate that they are getting value for their money, Pearson says.

Wellness programs. Starting in 2014, employers can expand their wellness programs, offering discounts on premiums, cash rewards, gym memberships and other incentives for those who lose weight, take part in diabetes control programs, or similar plans to improve their health.

Hospital incentives. Starting in 2015, the administration hopes to encourage hospitals to drop some bad habits by lowering what it pays them for treating Medicare patients. Hospitals will get paid less when patients who get some infections, bedsores and other conditions while they are in the hospital. This starts with a 1 percent cut in 2015, and grows over the years.

Cadillac tax. You don’t have to worry about this until 2018. It’s a tax on some of the most generous health insurance plans and is meant to discourage unnecessary and expensive tests and doctor visits that are helping drive up health spending. “That one is certainly a big deal for unionized workers,” Pearson says.

“It’s a time bomb in the law,” says Adam Solander with Epstein Becker Green, a Washington, D.C., legal and consulting firm. Employers who offer health insurance plans worth more than $10,200 a year will have to pay a 40 percent federal tax on that. “Employers will have to figure out ways to make their coverage cheaper,” Solander says. “Hopefully, it will lower the cost of coverage.”

Expect confusion. The bottom line – expect some confusion and some bumps in the road over the next few years. Insurance companies don’t yet know if the exchanges are worth the effort, so companies may hop in and out of the market, and they may change the premiums they charge in different states. Big group insurers that mostly offer company-paid health insurance may not dip their toes into the exchanges immediately.

“The hope is the large insurers will see this is a profitable market and jump in over the next year or two,“ says Timothy Jost, a health law expert at Washington & Lee University in Virginia.

In smaller states without many choices, insurers may continue to hang back. “I think it is fair to say in many states there are not going to be that many insurers in the exchanges,” Jost says.