ACA Title 1, Sec 1501 . Requirement to maintain minimum essential coverage: “Good” and “Bad” – Basic individual mandate requirement. This provision includes the legal requirement for individuals to maintain health insurance coverage, also known as the “individual mandate.” Congress made the case that health care is delivered and financed in an increasingly national market making it legally “interstate commerce” and extending legislative authority to require health insurance coverage. I personally support this requirement but not for the “interstate commerce” rationale. I believe that everyone should have basic health insurance coverage and should not create an unfunded liability because of their decision to not secure health insurance coverage. I believe that this is necessary to prevent employers and health plans who actively manage employee health care costs for their own populations from experiencing cost shifting from those who unfairly decide not to purchase health insurance coverage. However, I am also in favor of basic catastrophic coverage – for example everyone would be required to have publically provided health insurance that covers annual health care costs between $100,000 and $2,500,000 million each year per individual. I also believe that this coverage should be financed through tax payments for everyone who resides legally in the U.S. The coverage for the first $100,000 annually per individual should then be the responsibility of the individual and should be tax advantaged for everyone. Employers should have clear incentives to offer health insurance coverage to their employees and their family members.

This “first dollar” coverage should be highly competitive and employers would have a clear tax advantage to provide it to employees and their family members.

The annual penalty in 2014 of $96, 2015 of $350 and $750 IN 2016 is way too small to force healthy young adults to purchase health insurance coverage. This will further jeopardize the solvency of insurers and health plans and seriously undermine the implementation of the Law. Bad policy and bad approach to implementation.
Another provision that should be added to the Law under this section is the authorization for the reduction of premium contributions and penalties because of the personal wellness practices of each individual. In the absence of health plan specific wellness criteria a national set of wellness criteria could be used for everyone.

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ACA Title 1, Sec. 1421. Credit for employee health insurance expenses of small businesses: “Bad” – Needs to be better targeted and designed. This provision needs to be better targeted and simplified. It should allow businesses with less that 25 employees to qualify for a tax credit that is limited to 50% of the cost of health plan coverage for all employees. That 50% should decrease by 5% each year until in ten years it reaches 0%. The tax credit should be able to reduce federal withholding and provide a subsidy to small employers that disappears over time. This provision needs to be simple to understand and simple to implement and should provide financial support to small business organizations whether profit-making or non-profit.

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ACA Title 1, Sec. 1415. Premium tax credit and cost-sharing reduction payments disregarded for federal and federally-assisted programs: “Bad” – Further erodes individual role. This provision of the ACA smooths the federal and state eligibility process and simplifies the tax treatment of subsidies and cost reduction payments to beneficiaries. However, this overall provision still creates a very significant bureaucracy and makes the Law much more difficult to administer while having a minimal positive financial impact on eligible beneficiaries. Good administrative move for a largely unnecessary feature.

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ACA Title 1,Sec. 1414. Disclosures to carry out eligibility requirements for certain programs: “Good” – A necessary evil? This provision provides authority for the sharing of IRS individual taxpayer information among exchanges and the federal government for the purposes of determining the eligibility of the individual to receive subsidies, premium tax credits and cost reductions under the Law. I consider this a “necessary evil” because without it wholesale fraud would be rampant. At the same time I am certainly not comfortable with my own taxpayer information being placed in other federal and state hands, particularly when private business has such a difficult time keeping individual data secure, such as the Target data breach. Does this make you nervous?

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ACA Title 1, Sec. 1413. Streamlining of procedures for enrollment through an exchange and state Medicaid, CHIP, and health subsidy programs: “Good” – If it leads to simplification in program administration. This provision again makes sense on the surface. Let’s make the process of matching potential eligibles with the appropriate public program streamlined, but wouldn’t it be better if this also led to a simplification of those public programs? If Medicaid is undergoing a significant expansion and it already includes children why not roll the CHIP (Children’s Health Improvement Program) into it? The only reason we are maintaining it as a separate entity is so that a group of politicians/administrators can claim that they did something to help children. If the streamlining of eligibility determination can be carried out lets use it as an opportunity to reduce the sizable amount of duplication among health programs at the federal and state level. Make sense?

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ACA Title 1, Sec. 1412. Advance determination and payment of premium tax credits and cost-sharing reductions: “Ugly” – A bureaucratic nightmare. The bureaucratic machinery necessary to provide advance payments to a possible premium tax credit is another example of overkill. What about the old stand-by of providers carrying accounts payable until the individual or family financial condition changes?. It used to be a standard business practice. If the recipient’s financial condition is so precarious they need advance payments of a tax credit why not provide public subsidy for their health plan purchase. This does not make a lot of sense to me. Are we trying to have everyone in our society work for the federal government?

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ACA Title 1, Sec. 1411. Procedures for determining eligibility for exchange participation, premium tax credits and reduced cost-sharing, and individual responsibility exemptions: “Bad” – Way too easy to exploit. This section provides the basic rules for the procedures to determine eligibility, level of premium tax credits, level of reduced cost sharing and waiver of individual responsibility provisions. All these features seem to be set up to make it easy for the average person to claim eligibility for reduced cost sharing, premium credits and becoming exempt for individual responsibility provisions. For example, as long as someone vouches that the individual involved is a citizen and/or present in the U.S. legally he or she is considered as covered under these provisions. In addition any employee can claim that the employers’ health plan coverage is “unaffordable” and the employer can not access the employees’ tax return to validate their claim, but must pay the applicable tax for not providing “affordable” health plan coverage to every employee. The rules seem very skewed in the favor of the employee and not very balanced for the interests of the employer. Another example of bad policy that is very likely to lead to abuse and higher cost for employers and the system at large. This section also includes an explicit blanket prohibition against the Justice Department from filing any liens against employee offenders that try to “game” these requirements. Another example of bad government policy.

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ACA Title 1, Sec. 1402, Reduced cost-sharing for individuals enrolling in qualified health plans: “Ugly” – Removes most user out-of-pocket cost sharing. This section provides a fairly complicated “sliding fee schedule” for removal of out-of-pocket cost sharing for those whose income is up to 4 times the federal poverty limit. Why “4” times? Why not “3” or “2”, or just one times the poverty line levels? Also this provision sets a correspondingly complicated to administer maximum out-of-pocket cost limit (i.e., 100% reduction of out-of-pocket cost sharing for those below the federal poverty line, 2/3rds reduction for 100% to 200% of federal poverty limit, ½ cost reduction for those with 200%% to 300% of the federal poverty limit, and 1/3 rd for those with 300% to 400% of the federal poverty line. The federal government spent more than $80 million of research funds in the Rand Health Insurance Experiment to find out that removing out-of-pocket cost sharing was not a good idea and here we are providing a complicated way of calculating it and removing it. Also tying any cost sharing level to the federal poverty level is problematic. Are we using the individuals or families last year’s financial earning experience or this years? Bad policy leading to bad behavior and bad practices. “Bad” for user behavior and adds more unnecessary complexity to an already complex law.

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ACA Title 1, Sec. 1401. Refundable tax credit providing premium assistance for coverage under a qualified health plan: “Bad” – Here again… “overkill.” In my opinion this section creates more bureaucratic machinations that are fundamentally unnecessary. It covers the detailed rules, conditions and details of how tax credits for public premium subsidies will be calculated and applied. Why not just make an IRS ruling that premium subsidies from public sources under the ACA are not considered to be income to the beneficiary? We don’t need to add another convoluted feature and more complexity to a tax code that is already a nightmare. Come on…. don’t make things so darn difficult!

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ACA Title 1, Section 1343, Risk adjustment: “Bad” – Further undermines incentives for efficiency. This section provides a relatively easy way to avoid efficient claims administration while at the same time we as a nation are adopting and implementing ICD- 10 CM. This new set of diagnostic and procedural codes will triple to quadruple the number of separate possible diagnoses and medical procedures that insurers and health plans must adjudicate. The combination here is likely to further remove competitive forces from a significant percentage of the health plan and health insurers in the marketplace. Here again I would recommend triggers that are extreme just to limit the fairly adverse opportunity of using adverse selection to the health plans advantage.

Please let others know about this blog and have them “follow” @Wellness Czar on Twitter for the section topics. This information is also available in summary PDF form by making a request to [email protected].