Affordable Care Act (by David Nather @ DavidNather)

7/27/2019 Affordable Care Act (by David Nather @ DavidNather)

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Understanding Obamacare: POLITICOs Guide to the Afordable Care Act 1

Table o Contents

What the Fights Really About 2

I.The Big Change: Covering

Pre-Existing Conditions 8

II.The Tradeo:The Individual Mandate27

III.How Youll Get Health Insurance 36

IV.How Obamacare Aects

Businesses Large and Small

53

V. What Doctors May Not Know About

Obamacare and What They Need to Know 74

VI.Beware o the Obamacare Talking Points 92


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Introduction

What the FightsReally About

I you want to cut through all o the noise and just get

to the bottom line o what the ght over PresidentBarack Obamas health care law is really about, you

can learn a lot through the stories o two Georgia Re-

publicans.

One wants to wipe Obamacare o the books. The other says

he needs it to stay alive.Clint Murphy is a real estate agent in Savannah who used

to be a Republican political operative. Hes also a survivor o

testicular cancer, which means he cant get health insurance

now. The only way hell be able to get it, he says, is through the

Aordable Care Act otherwise known as Obamacare.When open enrollment or Obamacare coverage begins on

Oct. 1, Murphy will be able to sign up or health insurance,


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and the insurer wont be able to turn him down or having

a pre-existing condition. Thats why he has been telling his

storyto media outlets and working with the laws biggest sup-

porters to make sure Obamacare survives. Hes tired o being

uninsured.

Tom Price is one o the House Republicans who keeps vot-

ing, over and over, to get rid o the law or starve it to death.

But Price doesnt want to just be a wrecking ball. The ortho-

pedic surgeon is the author o one o the only ully developedRepublican alternatives to Obamacare, and he has been talk-

ing it up every chance he gets.

Price has heard Murphys story, and has total sympathy or

him. Its terrible, Price says, to be locked out o the health

insurance market like that. But Price says he has a better an-swer or Murphy: create special health plans that would be

oered through membership associations.

I we made it a goal that [people with pre-existing condi-

tions] would have access to pools o health insurance with

millions o others, then youve solved the problem withoutputting Washington in charge, Price said.

Murphys response: Thats nice, but Obamacare is already

the law. Its time to move ahead and make the law better be-
http://www.ajc.com/weblogs/political-insider/2013/aug/17/two-changing-views-top-and-bottom-gop-health-care-/http://www.ajc.com/weblogs/political-insider/2013/aug/17/two-changing-views-top-and-bottom-gop-health-care-/http://tomprice.house.gov/sites/tomprice.house.gov/files/HR%202300%20Section%20by%20Section.pdfhttp://tomprice.house.gov/sites/tomprice.house.gov/files/HR%202300%20Section%20by%20Section.pdfhttp://www.ajc.com/weblogs/political-insider/2013/aug/17/two-changing-views-top-and-bottom-gop-health-care-/http://www.ajc.com/weblogs/political-insider/2013/aug/17/two-changing-views-top-and-bottom-gop-health-care-/


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cause everyone knows its not going away.

Get o o this my way or the highway, Murphy told PO-

LITICO. This stagnation theyre creating, it has a real cost to

the rest o us. The stakes are literally lie and death.

That pretty much sums up the battle lines the entire na-

tion aces as Obamacare opens or business. Part o the nation

wants to throw the law out. Even i they dont want to shut

down the government or deault on the debt limit, they hate

the law and see it as an expensive disaster. The other part issiding with the Democrats: Enough, already. Get on with it.

But even now, the reality is that much o the country still

doesnt understand the law. In aWashington Post poll in Sep-

tember, 62 percent o Americans said they dont have the in-

ormation they need to understand the law. Its just too mas-sive or most people to untangle everything in it.

Thats why POLITICO has put together a new guide to the

health care law, timed to the launch o open enrollment

when Obamacare will nally become real to millions o Amer-

icans.POLITICOs guide to Obamacare is designed to be a reality

check on how the law is supposed to work and how it might

actually work. Its intended to serve two goals: explain the law
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and help you read between the lines o the most common talk-

ing points to nd the truth.

The Obama administration is still convinced the law will

become more popular when people see it in action but right

now, its still divisive and unpopular. In the Post poll, 52 per-

cent o Americans said they oppose the law while just 42 per-

cent support it.

That doesnt mean they want to stop it at all costs. Only a

third o Americans in a Pew Research Center poll in Septem-ber wanted to shut down the government to stop Obamacare

driven largely by the strong support o tea party Republi-

cans while 57 percent said Washington should compromise.

But thats not going to help the White House close the sale

on the law itsel. The challenge or the Obama administration,over the six months o open enrollment and the years to

come, is to win converts rom the millions o Americans who

are skeptical about the law and make sure all o the moving

parts work the way theyre supposed to.

The new health insurance marketplaces have to sign up theright mix o people. The subsidies have to ow to the right

people. The spending cuts and taxes have to be enough to pay

or them. Employers have to understand the new rules and
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not get crushed by them.

Its no wonder that people are still trying to understand how

the law will aect their lives, because the debates they hear

in Washington and at political rallies throughout the coun-

try tend to be completely one-sided. You either hear that

Obamacare is a lieline to millions o uninsured people, and

anyone who has a problem with it is cold-hearted, or that its a

huge headache or businesses and doctors everywhere.

The reality, though, is that its possible to see how the healthcare law could help millions o Americans who need help

and how it can still be a huge headache or businesses and

doctors everywhere.

That way o understanding the law may not change anyones

mind. But it may make the debate better inormed, and lessshrill, than it is now.

And either way, youll have a better sense o the impact the

law will have not just the statistics, but the way it will aect

peoples lives.

Earlier this year, Murphy said, he went to see his doctorabout breathing problems. The doctor wanted to him to have

an angiogram, which is used to check the ow o blood in an

artery. Murphy couldnt aord it hes uninsured. He could


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pay or a visit to the doctor but not an expensive test. He said

no and walked out.

Everything turned out OK in the end, but it could just as

easily have ended badly especially or someone who has

survived cancer and is hoping no other disaster strikes. The

episode got Murphy more red up about the Obamacare de-

bate than ever.

Theyre treating it like a game, like theres no people in-

volved, Murphy said. They need to start looking at what re-ally happens. Im not a statistic. Im a real person.

Theres no chance o the Obamacare debate ending anytime

soon. But i any debate ever needed a reality check, its this

one.


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I

The Big Change:Covering Pre-Existing Conditions

I youve listened to President Barack Obama and the

Democrats talk about the need or Obamacare, it maybe hard to tell what the law is about.

Lower costs? Whacking the insurance companies?

Covering young adults? Covering contraceptives?

The sales pitch has changed over the years, sometimes rom

speech to speech.But perhaps the biggest change or consumers, as the law

becomes part o their everyday lives, is also the benet that

may give the Obama administration its biggest chance o clos-

ing the sale: the coverage o adults with pre-existing condi-

tions.This is one o the biggest pieces o the law that is supposed

to start in 2014, and it will be a huge selling point when Demo-


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crats talk about the benets. When you sign up or Obamacare

coverage which is aimed at people who dont get health in-

surance through the workplace or other sources the insur-

ers wont be able to turn you down i you have health prob-

lems, or charge you more because o them.

Children with pre-existing conditions are already covered

that part o Obamacare took eect in September 2010. But

adults with health problems are more expensive to cover, be-

cause people are more likely to develop chronic conditionsor other issues as they get older. Thats why adults couldnt

be covered until the rest o the law was in place, so the cost o

their illnesses could be spread among a larger population o

sick and healthy people.

There are a lot o things or critics to hate about the law the individual mandate, the cuts in Medicare payments and

every problem with the rollout will get a harsh spotlight. But

most Republicans arent complaining about the pre-existing

condition coverage. Thats because pre-existing conditions

aect enough people rom all political parties, in all partso the country that its hard or them to attack the law on

those grounds.

Theres no broadly accepted estimate or how big the prob-


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lem is. A2011 studyby the Department o Health and Human

Services said the number o people with pre-existing condi-

tions could be as low as 50 million non-elderly Americans or

as high as 129 million, which is a pretty wide range. But even

i you use the lowest number, 50 million, thats almost one out

o ve Americans under age 65, including 25 million who are

uninsured.

Conservatives dont think that many people have actually

been shut out o coverage. The American Enterprise Insti-tutes Tom Miller, or example, estimates that only 2 million-4

million Americans have been blocked rom getting coverage

because o their health. He says a lot o the uninsured people

identied by HHS might lack coverage or reasons that have

nothing to do with pre-existing conditions.Still, the prospect o not being able to get coverage because

o a health problem is deeply scary to people o all political

stripes. Thats the message Clint Murphy, a ormer Republi-

can operative in Savannah, Ga., who survived testicular can-

cer, sent in his widely publicized Facebook post aimed at Re-publicans who want to deund Obamacare.

Id say theres a lot more o us than people think, Murphy

said. When someone has been through an illness like cancer
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But a House vote on Prices bill or other GOP alternatives,

like the one by the conservative Republican Study Committee

would present its own problems, since Republicans dont

all agree on whether its smart to oer an alternative. Many

would rather just keep the ocus on Obamacare and see i it

collapses. So that leaves Obamacare as the only real player on

pre-existing conditions.

So, given that Obamacare aces no serious prospect o being

derailed or replaced at the moment, how would the law actu-ally work? Here aresome key points:

The new coverage rulesYou cant just wait until you get sick and then sign up

youll have to join a health insurance plan during one o theopen enrollment periods, just like you would i you get

health insurance at work. For this year, thats Oct. 1-March 31.

I you dont sign up then, youll have to wait or the next

open enrollment. Theyll happen Oct. 15-Dec. 7 every year,

although you can sign up at other times i you have a qualiy-ing lie event, like getting married, changing jobs or moving

to another state.

The two big parts o the new rules to know: Under guar-
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anteed issue, people who get health insurance on their owncant be turned down because o pre-existing conditions. The

insurer also has to let you renew your coverage rom year to

year, with a ew big exceptions, like i you didnt pay your pre-

miums.

And under community rating, the health insurance com-pany cant charge you higher premiums i you have health

problems. It can only change the price o your coverage or a

ew other reasons such as whether your plan covers just one

When people buy health coverage on their own and in small groups,

as of Jan. 1, 2014, health insurers wont be able to charge them more

if they have pre-existing conditions. Theyll only be able to charge

people different prices based on other factors.

THE NEW COVERAGE RULES

BANNEDALLOWED

Insurers cannot

consider: Health status Gender

Insurers can consider:

Whether its individualor family coverage

Where the person lives

How old the person is*

Whether the personuses tobacco**

Source: Final rule, p. 13436

* Prices cant vary by more than 3 to 1

** Prices cant vary by more than 1.5 to 1


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person or the whole amily, whether you use tobacco and how

old you are. But it wont be able to charge older people more

than three times as much as it charges younger people.

Its supposed to x one o the main problems people have

aced when they buy health insurance on their own. I you get

covered through the workplace, youre usually OK even i you

have health problems you get your coverage, maybe with a

waiting period.

But under pre-Obamacare rules, i you had to buy healthinsurance on your own or any reason like you have your

own business, or youre an independent contractor or your

employer just doesnt oer it you could be rejected or con-

ditions as common as asthma or high blood pressure. Or youd

just be given a price so high you couldnt aord the coverage.So whats the downside? I the health insurance companies

cant charge you more or your heart murmur, thats great

news or you but they can just charge everyone a little more

to cover their costs. So dont be surprised i insurance or

healthy people is more expensive than it was beore. Thatsthe tradeo or making sure sick people dont have to pay

huge amounts more than everyone else.


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The other goodiesPre-existing condition coverage isnt the only goodie in

the law. Its also making sure that health insurance covers

more stu. For example, all health plans or individuals and

small groups like small businesses will have to cover at

least 10 categories o essential health benets. Theyll in-

clude basics like emergency care and prescription drugs, but

also benets that werent always covered by individual health

insurance beore, such as maternity care and mental healthand substance abuse services.

There are also other benets that have already taken eect

like requiring health plans to cover recommended preven-

tive services, like vaccinations and blood pressure, cholesterol

and certain cancer screenings. Theres the rule that allowsyoung adults up to age 26 to stay on their parents plans. The

new law phases out annual limits on those minimum benets,

too.

Those benets have given Obama lots o other talking points

about the law. Another big selling point: those rebates con-sumers get when health insurance companies spend too

much on overhead and not enough on actual medical care.

I they dont spend at least 80 percent o your premiums on
https://www.healthcare.gov/what-are-my-preventive-care-benefits/https://www.healthcare.gov/what-are-my-preventive-care-benefits/https://www.healthcare.gov/can-i-keep-my-child-on-my-insurance-until-age-26/http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/mlrfinalrule.htmlhttp://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/mlrfinalrule.htmlhttps://www.healthcare.gov/can-i-keep-my-child-on-my-insurance-until-age-26/https://www.healthcare.gov/what-are-my-preventive-care-benefits/https://www.healthcare.gov/what-are-my-preventive-care-benefits/


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medical care or individual or small-group insurance or 85

percent or large-group insurance they have to write you or

your boss the rebate check.

Obama is also getting a lot o mileage out o the laws Medi-

care benets which include the closing o the doughnut

hole, the big gap in Medicare prescription drug coverage that

used to require seniors, ater theyd racked up enough costs,

to spend $3,610 on their own beore their coverage picked up

again. The law is phasing out that gap, and its supposed to begone by 2020.

And yes, Obamacare requires health plans to cover FDA-ap-

proved contraception, as prescribed by a doctor, without cost

to the patient. Theres an exception or religious employers,

and nonprot religious organizations that object to the cover-age dont have to pay or it directly the Obama administra-

tion is working around that by sticking the insurance compa-

nies with the bill.

But that hasnt stopped the steady stream o lawsuits rom

religious groups that say the compromise doesnt really takecare o their moral objections, and rom businesses that dont

count as religious employers but say they still object on reli-

gious grounds.
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As you try to gure out the impact Obamacare has on

you and your amily, youre going to be treated to all kinds

o claims and counterclaims about what the law does and

doesnt do as well as its consequences, intended or not.

Some common arguments, with our truth-squadded analy-

sis:

What youll hear: All o these new Obamacare rules are go-ing to lead to rate shock.

Reality check: The threat o big increases in health insur-

ance premiums isnt made up, but its usually exaggerated.

The idea is that Obamacare requires health insurers to

cover so many new things not just pre-existing conditions,but the new benets and the other goodies that the price o

health insurance or individuals is going way up. Ohio says its

average premiums or individual coverage will be 41 percent

higher in 2014 than they were in 2013. Indiana says its aver-

age premiums will be 72 percent higher.And Georgia? Its insurance commissioner says some people

could pay as much as 198 percent more than they used to

although even the insurance commissioner, Ralph Hudgens,
http://www.cleveland.com/metro/index.ssf/2013/08/ohio_insurance_department_clai.htmlhttp://www.cleveland.com/metro/index.ssf/2013/08/ohio_insurance_department_clai.htmlhttp://www.indystar.com/article/20130718/BUSINESS/307180100/http://www.ajc.com/news/news/state-regional/insurance-chiefs-claim-health-care-law-will-inflat/nY8NT/http://www.ajc.com/news/news/state-regional/insurance-chiefs-claim-health-care-law-will-inflat/nY8NT/http://www.indystar.com/article/20130718/BUSINESS/307180100/http://www.cleveland.com/metro/index.ssf/2013/08/ohio_insurance_department_clai.htmlhttp://www.cleveland.com/metro/index.ssf/2013/08/ohio_insurance_department_clai.html


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admitted that was an extreme example.

But yes, health care experts say, some people who buy health

insurance on their own will get a higher sticker price than

they used to. Its likely to be the healthiest people, though,

and usually the ones who had skimpier health insurance that

barely covered them. And that doesnt count the Obamacare

subsidies that will bring the prices down or a lot o people.

The spin across the states varies a lot more than the rates

do, said Larry Levitt, a senior vice president at the KaiserFamily Foundation, who has studied the insurance rate lings

throughout the states. Overall, he said, the rates look quite

reasonable or what insurers have to cover and the rules they

have to ollow.

Mark Pauly, a health economist at the University o Penn-sylvania, says theres going to be a bump or healthy people

who wont get discounts anymore but I dont think its go-

ing to be as humongous as the numbers some people are quot-

ing.

Astudyo 10 states by the RAND Corporation, sponsoredby the Department o Health and Human Services, concluded

that there wouldnt be huge price increases across the coun-

try, but that some states would see some pretty big rate hikes.
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It depends on how many uninsured people the state has, the

study ound, because states where most people already have

health insurance wont be able to add as many new, healthy

people to pay or the sick ones.

Ohio was one o the states that would see big increases,

RAND ound, because it doesnt have a lot o uninsured peo-

ple. But ve states Florida, Kansas, Pennsylvania, South

Carolina and Texas werent expected to see any increases,

and two Louisiana and New Mexico could actually seetheir prices go down.

In some ways, its hard to compare the old prices with the

new ones, because many people in the pre-Obamacare indi-

vidual market could get cheap, bare bones plans that were

only useul in real medical emergencies. Some had a $10,000deductible, meaning coverage wouldnt kick in until you had

paid that much out o pocket.

People who bought that kind o health insurance might have

to pay more now, but only because they had coverage that

doesnt cover a lot o the things they think it will, accordingto Austin Frakt, a health economist at Boston University.

There will be people like that. Well be able to nd them,

said Frakt. But the idea that most Americans will see huge
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price increases, he said, is overblown and distorted.

Obamacare critics, however, say that tradeo o better ben-

ets or higher premiums still violates the deal Obama o-

ered voters when he ran or president in 2008 that amilies

would save as much as $2,500 on their health insurance.

Candidate Obama did not promise that you will pay more

or insurance, but you will get a better health plan in return.

He explicitly promised that you will pay less, Chris Jacobs,

a senior policy analyst at The Heritage Foundation, wrote in acritique o Obamacare premiums.

Remember, though, that many people arent going to pay the

sticker price. Obamacare provides subsidies or low-income

people to help them buy health insurance, and theres some

help available or people with incomes as high as 400 percento the ederal poverty level, which is a bit more than $90,000

or a amily o our. So those subsidies could mask some o the

rate increases.

Theres little question that the sticker prices under Obam-

acare will be higher than what people pay today. The cover-age, in many cases, will be better, and people with pre-existing

conditions will be able to get coverage, which they cant to-

day, said Levitt. And ater the subsidies are actored in, he
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said, those prices will, on average, go down.

What youll hear: Itll draw all the sick people, raise

healthy peoples premiums and lead to a death spiral.

Reality check: The death spiral is an outcome critics say

is bound to happen i people wait until theyre sick to sign up

or health coverage, since the health insurance companies

have to accept them. That makes everyone elses premiums

go up, so the healthy people leave, and premiums go up evenmore because only the sick people are let.

But this scenario doesnt account or Obamacares contro-

versial individual mandate, which requires everyone to

get health coverage. I the individual mandate does its job, it

should bring in enough healthy people to cushion the blow.Some Obamacare critics have warned about the spiral, be-

cause pre-existing condition coverage has led to disastrous

premium hikes in states that have tried it beore. Thats what

happened in New York, which guaranteed coverage or ev-

eryone with pre-existing conditions and now has some o thehighest individual health insurance premiums in the country.

But Massachusetts did that too, except it also had one thing

the other states didnt have: an individual mandate. That was
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the ormula o the states 2006 health reorm law the one

signed by Mitt Romney.

A2011 studyby three health analysts including MITs

Jonathan Gruber, who consulted on the Massachusetts law

ound that there was a huge increase in enrollment by healthy

people right ater the Massachusetts mandate took eect,

even bigger than the number o sick people who signed up or

coverage.

Will Obamacare work out the same way? Not necessarily the studys authors noted that the subsidies to help people

buy health coverage are larger in Massachusetts than they are

with Obamacare. So theres less o an incentive or the healthy

people to sign up or Obamacare.

Theres still one big incentive the other states didnt have,however the kick in the pants that you get with the individ-

ual mandate. Based on the Massachusetts experience, though,

that could be enough to save Obamacare rom the death spi-

ral.

What youll hear: There are other ways to cover pre-exist-

ing conditions.

Reality check: Most Republicans dont think the entire
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Obamacare overhaul was necessary to solve the problems o

people with pre-existing conditions. Thats why they like the

idea o covering them through separate high-risk pools, one

o the ideas Romney highlighted in his presidential campaign.

But those are expensive and not even all Republicans agree

that theyre the right answer.

And even i they did, Obamacares own experience shows

what happens i Congress doesnt give them enough money.

The law set up a program called the Pre-Existing ConditionInsurance Plan, which set up high-risk pools specically to

cover people with health problems. Those were layered on top

o the high-risk pools that were already being run by 35 states,

under dierent rules. The idea was to give people with health

problems a temporary source o coverage between 2010, whenObamacare was signed into law, and 2014, when theyd be able

to get into regular health insurance plans.

The problem was, Congress only budgeted $5 billion to und

Obamacare high-risk pools or that whole time and it wasnt

enough, since people with pre-existing conditions have ex-pensive health needs. In February, the Obama administration

stopped taking new applications.

So how much money would it take to get thriving high-risk
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pools up and running in all the states, in place o Obamacare?

Miller gures it would take somewhere between $5 billion

and $10 billion a year, depending on how theyre designed

how generous the coverage would be, how much reedom the

states would have to design the rules, and whether customers

would have to prove theyd been rejected by another insurer.

That may be more than decit-minded Republicans would

want to spend, though. Romneynever got specic about

how much money he would have put into the risk pools. AndPrices bill sets aside $300 million a year or three years or

the risk pools and related measures way less than Obam-

acare spent.

Thats too low, Miller said. He says he has told Republican

lawmakers that you need to put more money in i you wantto have a credible high-risk pool solution.

But Price says theres a reason he didnt put more money

into the risk pools: He doesnt think they really work. Theyre

just a stopgap measure, he said, and the real goal should be

to set up new ways or people with health problems to get in-surance through larger groups not dump them all into risk

pools with other sick people.

Price says his bigger goal is the creation o the individual
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membership associations, which would let people join larger

groups that they might join anyway like civic groups, trade

associations or churches and spread the cost o their care

that way. These organizations would be able to get group

health plans that couldnt turn people down or pre-existing

conditions, and theyd be cheaper than others because they

wouldnt have to oer all the benets many states require

them to oer, Price said.

Price acknowledges that the reason its hard or people toget their arms around [the idea] right now is that it doesnt ex-

ist yet. But the biggest practical problem with the idea, critics

say, is that people dont voluntarily join a group health plan in

big enough numbers to cover the costs o sick people. Thats

why it takes stronger measures to get the right mix o sick andhealthy people.

I you just put up a sign that says, Groups orm here so?

Theres nothing magic about that, said Karen Pollitz o the

Kaiser Family Foundation, a ormer Obama administration

ocial who has studied the individual insurance market oryears. The notion that we can somehow get a health plan to

pool itsel because its nice, that has never happened in the

individual market. Weve been at this or a long time.


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As or Murphy, he doesnt think its a bad idea. He just thinks

its something Republicans should put on the table as a way to

improve Obamacare not get rid o it.

You have to address the whole problem, Murphy said. No

one should be excluded or pre-existing conditions. End o

discussion.


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II

The Tradeof:The Individual Mandate

So you want that pre-existing condition coverage?

Theres a price or it: the individual mandate.Thats the way Obamacare was designed. The

mandate requires nearly everyone to get health

coverage whether its through their employer,

through Medicare or Medicaid or on their own or risk pay-

ing a penalty. The goal: Make sure enough healthy people signup or coverage to help pay or the sick people.

Thats the way the Obama administration deended the indi-

vidual mandate to the Supreme Court, and the court decided

to let the mandate stand. So starting in 2014, most Ameri-

cans will be required to have health insurance. Most o them as many as 86 percent already have health coverage that

counts. But i they dont, theyll have to get it.


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There are some real penalties i you ignore the mandate.

And by the time its in ull orce, in 2016, the best ocial pro-

jections show that more than 6 million Americans will have to

pay the nes because they didnt get health coverage, accord-

ing to the Congressional Budget Oce, which did all o the

detailed analysis o the law or Congress.

Health insurers pushed or the mandate when Obamacare

was passed, to balance out the new requirements to cover sick

people, but now theyre holding their breaths. The adminis-tration has never been able to convince all health experts or

insurers that theyll pull in enough healthy people to cover

the new costs or sick people.

The penalty really is quite small compared to the premi-

ums, said economist Mark Pauly o the University o Penn-sylvania.

Sure, the individual mandate worked in Massachusetts

the state that passed the health care reorm law that was the

model or Obamacare. It got a big inux o healthy people

right ater its own mandate went into eect. But even econo-mists who think the Obamacare mandate penalties are strong

arent sure other states will react the same way.

Ater all, will Texans really rush out to embrace the man-


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date? What about in Missouri, where voters approved a ballot

measure rejecting the mandate?

The cultural climate is very dierent in other states, said

health economist Austin Frakt o Boston University. I dont

think the individual mandate is going to be strong enough to

overcome the cultural resistance in some o the states.

For all the screaming about the individual mandate, it isnt

going to touch the lives o the vast majority o Americans.

You dont have to worry about the mandate i you alreadyhave health coverage, and 86 percent o Americans under age

65 have one o the kinds o coverage that satises the man-

date, according to the Urban Institute, a liberal think tank.

That includes people who have health insurance through the

workplace or get it through Medicaid or the Childrens HealthInsurance Program, all o which count under the law. And se-

niors are covered through Medicare, which also counts.

And o the 30 million Americans who will still be uninsured

in 2016 the group that might have to worry about the man-

date the Congressional Budget Oce says some will be ex-empt rom the ne, because o low incomes or other reasons,

while others are undocumented immigrants who are arent

eligible or Obamacare anyway.
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There will be exemptions available or Native American

tribes, people who had nancial hardships (like a death in

the amily or bankruptcy), those who were only uninsured

or short period o time and people who belong to religious

groups that reject all insurance benets, among others.

How the fnes workThat brings us to the 6 million who will pay the ne i they

dont get health insurance. The penalties arent going to giveanyone night sweats or the rst two years. Ater that, the

nes will grow but the chances are, itll still be cheaper than

buying health insurance.

When the nes start in 2014, people who dont get health

coverage would pay $95 or 1 percent o their household in-come, whichever is greater. That rises in 2015 to $325 or 2

percent o their household income.

The ull penalty doesnt start until 2016. By then, its $695

or 2.5 percent o their income, whichever is greater. Theres

some ne print and limits in dierent situations, but thatsthe easiest way to understand it.

That can lead to some pretty hety penalties, but only or

people who earn a lot o money so it would have to be, say,


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the lawyer or consultant whos raking it in but just doesntwant to buy health insurance. Heres how the IRS describes

it in the regulations: I youre a single person with no kids,

and youre earning $120,000 a year, youd pay a $2,700 ne,

because thats based on your income and its higher than the

$695 you would have paid otherwise.But all o the IRS examples are based on people with high

incomes way higher than the average American. To nd out

what the nes would be or a normal person someone living

Heres what the penalties will be for people who dont have health insurance thatsatises the mandate (workplace health insurance, individual coverage, small-

group coverage, Medicare, Medicaid, CHIP, etc.) and dont get an exemption:

HOW THE INDIVIDUAL MANDATE FINES WORK

2014

The greater of:$95

or 1% of

householdincome*

2015The greater of:

$325or 2% of

householdincome*

2016The greater of:

$695or 2.5% of

householdincome*

* The ne is based on the excess income, which means everything

over the ling threshold the level at which people have to le taxes. Source: Individual mandate final rule, pp. 69-70
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in, say, Ohio and earning the median income POLITICO did

its own calculations o more realistic scenarios. The calcula-

tions, conrmed by Larry Levitt o the Kaiser Family Founda-

tion, show that the more typical penalties would range rom

hundreds o dollars to the low $2,000 range.

For a single person in Ohio earning $45,000 a year rough-

ly the median income in the state the individual mandate

penalty would be $875. Thats the income-based ne, and

thats the one that would be charged because its higher thanthe at-rate penalty, which would be $695.

For a amily o our in Ohio, however, the math works di-

erently. A amily that earns $73,000 a year which is about

the median income or a amily o our would be charged

$2,085, the at-rate penalty. In that case, its higher than theirincome-based penalty, which would have been $1,325.

Theyd pay the penalty when they le their tax returns, but

what can the IRS do i some scoaws dont pay it? Not much

there are no criminal or civil penalties in Obamacare, and

all the agency can really do is withhold money rom their re-unds, i they happen to have one coming.

Some o the common complaints about the mandate and


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their level o accuracy:

What youll hear: It wont work, because its cheaper or

young adults to pay the ne than buy coverage.

Reality check: Its true its probably going to be cheaper

in most cases to just pay the penalty. And that may be what

some people do. But the jury is still out on whether thats what

most uninsured people will do.

In Caliornia, or example, a 40-year-old single mother withthree children who gets by on $35,000 a year would likely

have to pay$1,368 a year or the second-cheapest level o

Obamacare plan called a silver plan ater Obamacares

subsidies are actored in, according to Covered Caliornia, the

states new health insurance marketplace. But a 45-year-oldsingle person who earns $50,000 could expect to pay $3,984 a

year in premiums, and he or she wouldnt qualiy or any sub-

sidies.

So it could be more attractive or some people to just pay

the ne. But then theyd have to decide whether thats reallybetter than spending more money and actually getting health

coverage or it, according to Levitt.

The penalty will always be less than the cost o coverage,
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but you dont get anything or the penalty. Its kind o money

down the drain, Levitt said.

Insurers around the country are having to make their own

predictions about whether the mandate will bring in enough

healthy people to ofset their costs. But Pauly notes that in

Caliornia, insurers have priced their premiums with the ex-

pectation that the mandate will work. Theyre betting on it,

he said.

Others are just crossing their ngers.Theres always been a concern that, given where the man-

date penalties are, there is an incentive or some healthy

people to pay the ne and buy the insurance ater they need

it, said Robert Zirkelbach, a spokesman or Americas Health

Insurance Plans, the main trade group or health insurancecompanies.

But rather than pushing Congress or bigger nes, the

groups lobbying agenda is now ocused on whats needed to

keep health insurance premiums as low as possible because

i an uninsured person can get health insurance or not muchmore than the cost o the ne, theyre more likely to make the

jump and buy the coverage.

The more aordable the coverage is, the more eective the


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mandate is, Zirkelbach said.

What youll hear: Now that the government can make you

buy health insurance, get ready or the broccoli mandate.

Reality check: That was the rerain during the lawsuits

over the individual mandate, ater Judge Roger Vinson one

o the judges who ruled that the mandate was unconstitu-

tional, beore the Supreme Court upheld it asked whether

the ederal government could make everyone eat broccoli be-cause its powers would be endless.

The reality, though, is that no one in Congress is coming

anywhere close to mandates again. The slippery slope argu-

ment only works i lawmakers become emboldened to require

people to do more and more things. Right now, everyone is soexhausted rom the Supreme Court ght that the only time

the individual mandate comes up is when House Republicans

attack it, like they did with the recent House vote to delay it.

Most Democrats still deend it when pressed, but theyre

not pushing or anything more. Even health insurers knowits a dead issue. Do you know what theyre going to do i it

turns out the mandate penalties really arent strong enough?

Theyre going to live with it.
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III

How Youll GetHealth Insurance

When the Obamacare law was being

drated, Democrats had to give thestates a big role in carrying it out be-

cause otherwise they never would have

gotten the votes o the moderate Sen-

ate Democrats they needed to pass it.

So how did that work out? Pretty much as youd expect whenone party creates a major new social program. The blue-state

governors are trying to make it work. The red-state governors,

with a ew exceptions, are sitting it out meaning the eds

have to come in and get it done.

That means the system youll use to get health insurance, iyou dont have it already, will be under a lot o strain.

The centerpiece new state-based marketplaces o health


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insurance across the country arent so state-based ater all.

Only 16 states and the District o Columbia are running their

own. Another seven are sharing the work with the ederal gov-

ernment. The eds are running the rest all by themselves.Its one o the biggest surprises to Democrats, considering

that they always thought the marketplaces also called ex-

changes were one o the most Republican-riendly ideas in

WHOS RUNNING THE HEALTH ExCHANGES

* Mississippis insurance commissioner, Mike Chaney,

is talking to the Obama administration about setting

up a state-run exchange just for small businesses.

Conn.

N.J.

R.I.

N.C.

Mass.

N.H.

Wash.

W.Va.

Maine

Del.

Md.

D.C.

S.C.

Vt.

Va.

Fla.

Ga.

Hawaii

Ohio

N.Y.

Pa.

N.D.

Texas

Iowa

Minn.

Mo.Kan.

Neb.

S.D.

Ark.

La.

Okla.

Ala.Miss.*

Ill. Ind.

Mich.

Ky.

Tenn.

Wis.

Alaska

Ariz. N.M.

Calif.Colo.

IdahoOre.

Mont.

Nev.

Utah**

Wyo.

State Exchange Partnership Federal Exchange

** Utah has a federal exchange for individuals

and a state exchange for small businesses only.

JULIA HASLANGER POLITICO


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the whole law. Theyre based on the idea o competition and

choice among private health insurance plans, the thinking

went, and theyve already had a successul trial run in Massa-

chusetts under Mitt Romneys health reorm law.

None o those were strong enough arguments to overcome

the practical challenges o building the exchanges in time

which is why some have aced a series o last-minute technical

delays.

This is one o the biggest IT projects ever initiated by theederal government, said Dan Schuyler, director o exchange

technology at Leavitt Partners, which has been consulting

on the development o the marketplaces. When the rst set

o ederal rules came out, Schuyler said, the rst thing I said

was, Three and a hal years is not enough time to do this.But even without the logistical challenges, there was al-

ways going to be a huge political obstacle: Many leading Re-

publicans believe that even i exchanges are a good idea, they

shouldnt be required under a national law.

Even Florida Sen. Marco Rubio, one o the most hard-coreopponents o Obamacare, tells POLITICO hes not opposed to

the idea o health exchanges to give people easy-to-compare

choices o health plans. He notes that he even endorsed the
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idea as part o his book, 100 Innovative Ideas or Floridas

Future. But when its part o a national requirement thats

a problem, he said.

How the exchange worksThe general idea is this: I you dont get health insurance

through the workplace or another source, youll have a new

marketplace o choices, something like an Expedia or health

insurance, with private health plans or most people and aneasy way or low-income customers to sign up or Medicaid.

And or people who earn too much to qualiy or Medicaid,

but not enough to buy coverage without draining their bank

accounts, there will be subsidies to help them buy it.

But wait, you say arent there already some websiteswhere you can do that? Like eHealthInsurance? Well, yes,

but those were just listings o whats already out there. They

didnt set any rules or the health coverage, and they didnt

give any nancial help to people who cant aord it.

And even then, all they could do was quote you some stan-dard prices that you might get or a health plan. Once you

actually applied, and lled out that lengthy medical question-

naire the one where they ask you to remember all the times
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youve been sick over the past ve years the actual price you

get might have been very dierent, i you get accepted at all.

Now, since you cant be rejected because o your medi-

cal history and the exchanges cant price you based on your

health, its much more likely that youll get a price quote that

reects what youll actually be charged. (There will be a role

or eHealthInsurance in the new world: Its going to sell in-

surance plans or the ederally run health exchanges.)

That will be a major change, said Larry Levitt o the KaiserFamily Foundation. It wont be point and click, but you wont

have the kinds o hidden surprises that you nd today.

There will be a lot o dierences between the websites o

the states that are running their own exchanges, especially in

the design and the way the dierent tools are set up. In the 26states where the exchange is being run by the ederal govern-

ment, there will be more o a cookie cutter eel, Schuyler

said.

But theyll have a ew things in common. Youll be able

to compare prices or our dierent levels o health plans:bronze, silver, gold and, in some states, platinum, de-

pending on how much o your costs you want the health plan

to pay. Youll be able to apply or coverage, and nd out how
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much o a subsidy you could get to help pay or it, depending

on your income. And i youre poor enough to qualiy or Med-

icaid, it should steer you toward that rather than a private

health insurance plan.

The trick, or most people, will be to guess how much cover-

age theyll need. The bronze plan, or example, will have the

cheapest premiums, but it will also cover the lowest amount

o costs, so its a better choice or a healthy person than some-

one who goes to the doctor all the time. Its all based on howmuch it will cover or an average population: a bronze plan

would cover 60 percent o the costs, a silver plan would pay

or 70 percent, a gold plan would cover 80 percent, and a plat-

inum plan would pay or 90 percent.

Youll be able to apply or coverage online, but youll alsobe able to get help rom navigators groups that are get-

ting ederal unds to help explain peoples health insurance

options in the new exchanges. Theres a wide range o groups

that will be doing the work, everyone rom community health

centers and hospitals to nonprots, universities and chari-ties. In some states, there will also be in-person assisters,

individual employees or volunteers o community groups who

will help people gure out how to sign up.
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Some will offer more choices than others, but theyll all give customers the ability

to compare health plans and pick one, with subsidies available to reduce the price

for people with low incomes. Heres a sampling of plans that will be available

in the California health exchange, which will have one of the widest ranges ofchoices. These examples show the range of prices in each category, from low end

to high end.

WHAT YOULL FIND IN A HEALTH ExCHANGE

For a family of four in East Los Angeles, annual income $50,000:

Low

BronzePlan

SilverPlan

GoldPlan

PlatinumPlan

Company L.A. Care Health Net Health Net Health Net

Total Monthly Premium $362 $450 $509 $574

Tax Credit $202 $202 $202 $202

Customer Pays $160 $248 $307 $372

High

CompanyAnthem

Multi StatePlan

L.A. CareAnthem

Multi StatePlan

L.A. Care

Total Monthly Premium $419 $494 $604 $613

Tax Credit $202 $202 $202 $202

Customer Pays $217 $292 $402 $411

Source: California exchange premium calculator


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You may run into a situation where theyll have to hand you

o to a licensed health insurance agent or broker i you want

someone to recommend a plan or you because theyve

been putting pressure on states not to take that job away rom

them. In Idaho, or example, you may be able to nd an in-

person assister to explain how all the health insurance op-

tions work, but once you ask a question like, Which plan is

best or me, theyre going to hand you o to an agent or bro-

ker.

What i you cant aford it?So how do you pay or the coverage? The subsidies are in-

cluded to cushion the blow o the individual mandate. I the

eds are going to require everyone to buy health insurance,the thinking went, theyve got to help the low-income people

pay or it. And some middle-income people, too, while theyre

at it.

The catch, o course, is that theyre going to drive up ederal

spending, and right at a time when Democrats and Republi-cans are butting heads over how to get spending under con-

trol. The Congressional Budget Oce says the Obamacare

subsidies will cost about $1.1 trillion over 10 years.
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Thats not the whole story, because the budget oce also

says Obamacare will reduce the overall decit by putting the

brakes on Medicare payments and raising various health-

related taxes. But Republicans arent convinced that the bud-

get oces math is right, especially i the Medicare savings

dont all come through and they point out that the estimate

doesnt look beyond 10 years.

Heres how the subsidies work: I your income is low

enough, you can apply or a tax credit that will cover a shareo the health premiums, with the tax credit getting smaller

as your income goes up. Its designed to make sure you dont

have to pay more than a certain percent o the premiums or

a benchmark plan which is supposed to be the second-

cheapest silver plan in your area.The tax credit starts or people earning 133 percent o the

ederal poverty line $15,282 or an individual in 2013,

$31,322 or a amily o our. Anyone at that level would get a

tax credit big enough to guarantee that they wouldnt have to

pay more than 2 percent o their income or their premiums.The credit phases out as people earn more money, though.

By the time theyre earning 400 percent o the ederal poverty

line $45,960 or an individual, $92,200 or a amily o our
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theyd have to pay 9.5 percent o their income or their pre-

miums. And once theyre earning more than 400 percent o

the poverty line, theres no subsidy anymore.

To get an idea o how this would work, a amily o our in

east Los Angeles earning $50,000 a year would have our

choices o silver plans, and theyd pay between $248 and

$292 a month depending on which plan they choose, accord-

ing to the premium calculator on the Caliornia exchange

website. The real cost o each plan would range rom $450and $494 a month, but that would be reduced by the premium

tax credit, which would be $202 a month.

Theyd also be able to get a bronze plan or as little as $160

a month although that wouldnt cover as much o the costs

or a gold plan or $307 a month. Or they could splurge ona platinum plan or $411 a month.

Expanding Medicaid or notThe other option, or the people with the lowest incomes, is

Medicaid. The original plan under Obamacare was to expandMedicaid to cover everyone up to 133 percent o the ederal

poverty line lling in the gaps so the health exchanges could

cover the rest. But now, some states are going to take a pass on
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expanding Medicaid, leaving those gaps largely unlled.

The Medicaid expansion was supposed to be mandatory

or all states, but the Supreme Court ruled that it had to be

optional that all the ederal government could do was o-

er them incentives to expand. Under pre-Obamacare rules,

Medicaid only covered people up to 100 percent o the ed-

eral poverty line, and even then, there were gaps within that

group. Most adults without kids and some low-income par-

ents were excluded, even i they were very poor.The goal o Obamacare was to get rid o the holes in cover-

age, and as an incentive, it oers to cover most o the states

Medicaid bills paying or 100 percent o the costs or the

rst three years, and then gradually scaling back to 90 percent

o the costs by 2020. But at least 16 states have said no to thatdeal, and several others are on the ence.

Why would so many states say no to so much ederal mon-

ey? For some, like Texas Gov. Rick Perry and Louisiana Gov.

Bobby Jindal, it was the need to keep up a pure anti-Obam-

acare stance, at least in public (although Perry did quietly tryto get some Obamacare undingor a lower-prole health pro-

gram).

For others, it was the suspicion that no matter what the law
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says now, Congress could cut the Medicaid unding down

the road and the states would have to pay or the new people.

Thats why even some Republican governors who wanted to

expand Medicaid, such as Floridas Rick Scott, couldnt close

the sale with their legislatures.

The Congressional Budget Oce has estimated that 3 mil-

lion ewer people will gain Medicaid coverage now that the

states dont have to expand. And a RAND Corporation analy-

sis concluded that those states were shooting themselves inthe oot because the 14 states that led the Medicaid opposi-

tion will have to spend an extra $1 billion to reimburse hospi-

tals or medical care or uninsured people.

Some common gripes and misconceptions about the lawsimplementation and their level o truthulness:

What youll hear: The law is alling apart because every-

thing is being delayed.

Reality check: There have been delays in the rollout othe law, and the one everyone has heard about is the biggest

employers with 50 or more ull-time workers wont be pe-

nalized or not covering their workers until 2015, a year later
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than scheduled. That doesnt prove the law is alling apart be-

cause it may not matter much in the long term but it does

suggest that the Obama administration was less than com-

pletely ready to implement the law.

The administration delayed two important requirements

or employers: the inormation theyre supposed to report on

what kind o health insurance they oer their workers (i they

oer any), and the penalties or large employers that dont o-

er what the law considers to be minimum coverage. The de-layed penalties also include nes i their coverage is so skimpy

that even one o their workers goes into a health exchange

instead and gets a subsidy or it.

The ocial story, when the Treasury Department an-

nounced the delay in a blog post, was that the administrationwanted time to work with employers to simpliy the require-

ments.

Most experts say the delay wont have a big practical eect

it wont prevent the health exchanges or subsidies rom go-

ing ahead, and it wont lead to a big increase in the number ouninsured people, since most large employers already oer

health coverage.

But the University o Pennsylvanias Mark Pauly and Adam
http://www.irs.gov/pub/irs-drop/n-13-45.PDFhttp://www.treasury.gov/connect/blog/Pages/Continuing-to-Implement-the-ACA-in-a-Careful-Thoughtful-Manner-.aspxhttp://www.treasury.gov/connect/blog/Pages/Continuing-to-Implement-the-ACA-in-a-Careful-Thoughtful-Manner-.aspxhttp://www.irs.gov/pub/irs-drop/n-13-45.PDF


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Leive warned o another danger: i there are no nes or large

employers who dont oer coverage, and the exchanges are

available as a new source o coverage, some o them could

have an incentive to send their workers to the exchanges and

make up or the lost benet by paying them higher wages.

Thats called crowd-out, and even though its only an issue

or a year, its exactly the kind o disruption to peoples health

coverage that the nes were supposed to prevent.

What youll hear: There are too many rules in Obamacare

exchanges, and thats why so many states took a pass.

Reality check: Republican governors complained that their

hands would have been tied by too many rules i they built the

exchanges, and some like New Jersey Gov. Chris Christie said the administration didnt answer their questions about

the costs to their states. The real reason so many states sat on

the sidelines, though, is that there wasnt a strong enough rea-

son or them to own the political risks.

I the Obamacare exchanges work well, you can buy into ita couple o years later. I it blows up, its not your ault, said

Pauly. The more you negotiate, the more you own it, and

most governors decided they didnt want to own it.
http://www.nejm.org/doi/full/10.1056/NEJMp1308934http://www.rga.org/homepage/gop-govs-ask-hhs-for-changes-to-healthcare-exchanges/http://www.rga.org/homepage/gop-govs-ask-hhs-for-changes-to-healthcare-exchanges/http://www.nejm.org/doi/full/10.1056/NEJMp1308934


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The law does set a lot o constraints on exchanges they all

have to oer certain kinds o benets, they have to provide the

standard levels o health plans, and they have to give the kinds

o subsidies described in the law, with complicated systems

or veriying whos eligible. But theres still room or variation,

especially on whether the exchange will be active in seeking

only health plans that meet their standards like Caliornia

or just oering inormation on whatever health plans want

to sell the coverage.And the Department o Health and Human Services did

show another kind o exibility it postponed deadlines sev-

eral times and even created a new category o exchanges, the

ederal-state partnership, that wasnt even mentioned in

the law.But Brett Graham o Leavitt Partners, the consulting rm,

says those moves were mainly intended to prod more states

into building exchanges, once it became clear that most o

them didnt want to do it.

They read the tea leaves, and they saw that the stateswerent moving. Even blue states werent moving ast

enough, Graham said.


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What youll hear: There will be lots o raud with the subsi-

dies.

Reality check: Republicans are worried that people will be

able to get subsidies by saying theyre poorer than they really

are. The Obama administration says it will have a good veri-

cation system in place, but it also has a allback: people who

get the tax credits are supposed to pay the government back i

they werent eligible or them.

The health exchanges are supposed to check with the IRSand the Social Security Administration to make sure peoples

income is what they say it is when they apply or coverage.

The issue is what happens when the income someone puts

on their application is more than 10 percent lower than what

those ederal agencies show in their records, and the personwhos applying or coverage doesnt have a good explanation

or it.

At rst, it appeared that the exchanges werent going to have

to check those applications in 2014 because they might not

have the resources to do it. Now, the Obama administrationsays the ederal exchange will check all o those applications

by asking people or more documents. The states wont have

to check all o them, though just a statistically signicant
http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/income-verification-8-5-2013.pdfhttp://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/income-verification-8-5-2013.pdf


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sample.

The Congressional Budget Oce and the Joint Committee

on Taxation, which analyze Obamacares tax issues or Con-

gress, were OK with that: They wrote in September 2013 that

a program is currently being put in place that seems to sat-

isy the laws requirements.

I thats not enough to prevent raud, theres always a back-

stop. People who get Obamacare subsidies will report their

current income when they le their taxes, and i it doesntmatch what they guessed when they applied or coverage,

theyll owe taxes to pay back the extra subsidies they got. That

provides a built-in incentive or people not to overestimate

their income, the Obama administration and its allies say, be-

cause no one wants to be hit with a big tax bill.Theres a catch, though: the lawlimits the amount the gov-

ernment can get back. It can recover anywhere rom $600 to

$3,500, depending on a persons income, but conservatives

worry that some overpayments will be higher than that. So

theres a built-in protection against a certain amount o raud,but its not oolproo.
http://www.cbo.gov/sites/default/files/cbofiles/attachments/hr2775.pdfhttp://www.politico.com/story/2013/07/obamacare-primer-how-is-it-going-to-work-94242.htmlhttp://www.politico.com/story/2013/07/obamacare-primer-how-is-it-going-to-work-94242.htmlhttp://www.cbo.gov/sites/default/files/cbofiles/attachments/hr2775.pdf


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IV

How Obamacare AfectsBusinesses Large and Small

When Congress was writing Obam-

acare, its biggest backers said the newlaw would help small businesses. In-

stead, theyre complaining about it.

It was also supposed to take the cost

pressure o businesses in general. Instead, they say its just

adding more pressure.Its one o the biggest political ironies o the health care law:

Some o the loudest gripes are coming rom the employers

who were meant to benet rom it. But the reality is, rom the

smallest startups to the largest corporations, employers have

a lot o new rules and reporting requirements to keep track o.And in some cases, there are new costs, too.

Its the only way to make the law work but its also a head-


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ache or many employers.

Obamacare was sold as a way to give small businesses new,

cheaper sources o insurance through their own health ex-

changes. But most o those small-business exchanges wont be

able to oer workers a choice o health plans in 2014 which

undermines one o the main purposes o having them. And its

harder or small-business owners to ollow the new rules and

requirements than it is or bigger businesses, since they dont

have big human resources departments to help them out.Its very dicult or small-business owners to keep up

when the rules o the game keep changing, said Kevin Kuhl-

man, a lobbyist or the National Federation o Independent

Business.

For large employers, Obamacare was sold as a way to rein inthose runaway health care costs. But it also created compli-

ance burdens or many employers new reporting require-

ments, notices that all employers have to give to their workers

and new costs through taxes and ees that help pay or dier-

ent parts o the law. Theyre also starting to worry about a biguture penalty or especially generous health plans the so-

called Cadillac tax that could have a ar wider impact than

the laws authors originally thought.


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By the time you actor it all in, business groups say, Obam-

acare will hurt their costs more than it will help.

They are adding to employers costs. So the case cant be

made on money, said Helen Darling, president o the Nation-

al Business Group on Health, which represents large busi-

nesses and public-sector employers.

The Obama administration has won praise rom employer

groups or delaying the requirements or businesses to report

the details o their coverage to the ederal government, as wellas the nes employers with 50 or more ull-time workers will

have to pay i they dont provide health coverage. But theyll

still be an issue or businesses starting in 2015.

Obama administration ocials say theyre doing their best

to get the word out to businesses so they dont run into anynasty surprises. Theres a new health care changes wizard

website to walk all employers through the new requirements.

And the Small Business Administration is holding Obamacare

events with small-business owners across the country, con-

ducting weekly webinars to teach them about upcoming re-quirements, and posting news and guides on its website.

We know olks are busy, an SBA ocial said which is

why the administration is conducting the educational events
http://business.usa.gov/healthcarehttp://www.sba.gov/healthcarehttp://www.sba.gov/healthcarehttp://business.usa.gov/healthcare


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and trying to make the rules easier.

There are loud voices in the business community that depict

Obamacare as the biggest threat employers ace today nota-

bly the U.S. Chamber o Commerce and the NFIB, two o the

most powerul interest groups in Washington.

But there are also employer groups that solidly back the law

like Small Business Majority, an advocacy group thats con-

ducting the webinars with the SBA to tout the laws benets,

like the health exchanges and tax credits or small businesses.The benets ar outweigh the costs, said John Arens-

meyer, the groups ounder and CEO who previously was the

ounder o an international e-commerce company. Theres

been a lot o conusion. Theres been more heat than light

on the subject.And not all o the alleged dangers to businesses hold up to

scrutiny. Is Obamacare a job killer, as many Republicans

charge? Economists say its just not showing that kind o im-

pact at least so ar. And is it going to cause employers every-

where to slash their workers benets? Even UPS, which gotnational attention or cutting its health coverage or spouses

who can get their coverage elsewhere, now says it cant really

blame Obamacare or that one.
http://www.usatoday.com/story/money/business/2013/08/20/ups-spouses-health-insurance/2651713/http://www.usatoday.com/story/money/business/2013/08/20/ups-spouses-health-insurance/2651713/


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I wouldnt characterize it as, We did this because o Obam-

acare, UPS spokeswoman Kara Ross told POLITICO even

though its memo to employees was ull o reerences to the

law.

Other leading business groups say Obamacare is just part o

a bigger picture o rising health care costs that has been going

on or years. Yes, they say, employers are trying to nd ways to

trim their health benets so their spending rises more slow-

ly. But to pin it all on Obamacare, they say, misses the largertrends in businesses health care costs.

Not at all. Everything thats happening now was going to

happen anyway, and its just a matter o how ast and how

much, Darling said.

The small-business exchangesSupporters o the law insist that small-business owners may

just not know enough about the law to realize the good things

they can get out o it. Case in point: the small-business health

exchanges.Theyre called SHOP exchanges, and like the ones or in-

dividuals, theyre supposed to provide a place to compare

health plans and buy them at competitive prices. Theyll also
https://www.healthcare.gov/what-is-the-shop-marketplace/https://www.healthcare.gov/what-is-the-shop-marketplace/


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designed to give small businesses with 50 or ewer workers

an important advantage: the ability to spread their risk o big

medical expenses, since theyll be part o larger groups, and

use their combined purchasing power to get better rates rom

insurers.

And like the health exchanges or individuals, open enroll-

ment or the SHOP exchanges starts on Oct. 1 although

some enrollment is being delayed in the ones run by the eds.

Its giving small businesses the kind o bargaining cloutthat big businesses always had, Arensmeyer said. It creates

one-stop shopping or the small-business owner.

Theres just one problem: For the rst year, employees wont

actually have choices in most o the SHOP exchanges.

In all o the ones run by the eds and remember, these arethe ones that are stretched pretty thin the Obama adminis-

tration delayed the eature where small-business workers will

be able to choose their health plans. So i youre a small-busi-

ness worker and you live in one o those states in 2014, your

employer will just say, Heres your health plan like theydo now.

I you live in one o the states that are running their own

health exchanges, youre more likely to have a choice o health


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plans most o them will have employee choice in 2014. And

you may get that choice in the ederally run exchanges start-

ing in 2015, but only i the Obama administration is able to get

those marketplaces running more smoothly. The Department

o Health and Human Services has a website where you can

look up what kind o exchange your state has.

Theres also another eature o the law that was supposed

to help small businesses: a tax credit to help the smallest

ones buy health insurance. It has been around since 2010 ona smaller scale, but starting in 2014, theyll be able to get a

credit or up to 50 percent o their health care premium costs

i they buy insurance through one o the SHOP exchanges.

Its only or really small businesses, though those that

have ewer than 25 employees (or their equivalents, again),pay less than $50,000 a year in average wages and pay or at

least hal o the premiums themselves. And they only get the

ull credit i they have 10 or ewer ull-time workers and their

average wages are less than $25,000 a year.

Thats why the tax credits havent gotten a lot o use so ar they just havent been very helpul to small businesses, and

many o the businesses at that level dont oer health cover-

age anyway (and they wouldnt be required to under Obam-
https://www.healthcare.gov/what-is-the-marketplace-in-my-state/http://www.irs.gov/uac/Small-Business-Health-Care-Tax-Credit-for-Small-Employershttp://www.gao.gov/assets/600/590832.pdfhttp://www.gao.gov/assets/600/590832.pdfhttp://www.irs.gov/uac/Small-Business-Health-Care-Tax-Credit-for-Small-Employershttps://www.healthcare.gov/what-is-the-marketplace-in-my-state/


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acare). Kuhlman o the NFIB calls it underwhelming.

But even i small-business owners arent sure they would

qualiy or the credit, Arensmeyer says they should at least

talk to their accountant to check it out.

Who has to cover their workersThe issue that most people know about is the employer

mandate a loose term or a set o nes or businesses that

dont cover their workers. Thats a big issue or small busi-nesses that might be right on the edge o 50 workers.

Starting in 2015, any employer with the equivalent o 50 or

more ull-time workers will have to pay a $2,000 annual ne

or each worker not co

Documents

Affordable Care Act (by David Nather @ DavidNather)