Hawaii to start seeing effects of health act
BY Greg Wiles
Advertiser Staff Writer
Some of the first changes under the health care reform act will begin in the next few weeks, with senior citizens, older college students and the uninsured gaining benefits. For people who use indoor tanning booths, the news isn't as good.
Local health care experts say some of the first effects of health care reform will start in June, though the sweeping changes expected under the Patient Protection and Affordable Care Act won't occur for several years.
"There are numerous changes that impact health insurers, businesses and individuals and that is why a number of them are going to be phased in over the course of four or five years," said Hawai'i Insurance Commissioner J.P. Schmidt. "The bill was more than 2,000 pages long."
The controversial act was signed into law on March 23 after a bruising debate on Capitol Hill, with advocates saying the reform bill will result in expanded coverage and numerous improvements to the nation's health care system.
Critics have complained the bill marks greater federal government intrusion into health care and may result in higher costs. Those concerns, however, did not stop the bill from becoming law and now some of the first notable changes for the consumers are about to take effect.
Some of these have generated controversy, such as young adults up to age 26 being able to stay on their parents' health plans as part of the act's overall goal of having everyone insured. The Hawaii Medical Service Association, the state's largest health insurer, is among insurers nationally that have agreed to implement this provision more than three months early.
On June 1 it will open its rolls to the young adults, allowing people who would ordinarily lose their health coverage because of age, school graduation or school status change to keep health care insurance through their parents' policies. They won't be eligible for the coverage if they have insurance from an employer group.
That potentially could affect health care coverage for thousands of people, said Fred Fortin, HMSA senior vice president. That's only one of a mind-numbing number of changes within the bill.
"We just felt this was the right thing to do," Fortin said.
Also in June, there will be relief for 34,300 Medicare beneficiaries who fall into the so-called doughnut hole or gap in Medicare Part D coverage. These people will automatically receive a one-time payment of $250, with the first group of rebate checks being mailed on June 15, according to AARP.
MORE CHANGES LATER
Other changes that take effect on June 23, or 90 days after the signing of the reform bill, include:
• Subsidized coverage through a high-risk insurance pool for people with existing medical conditions who haven't had insurance coverage for the past six months. The state declined to establish this pool by itself and will instead rely on the U.S. Department of Health and Human Services to set it up.
Bruce Botorff, AARP Hawaii associate state director, said he's heard of this problem from people who have an existing illness, are unemployed and haven't been able to get health coverage.
"That's one of the issues I've heard several times," Botorff said.
Schmidt said there are relatively few people in Hawai'i who would get coverage through such a pool.
He said that's because the state has one of the lowest uninsured rates in the nation because of the Hawai'i Prepaid Healthcare Act and because of a recent law that allows self-employed people, even if they have pre-existing conditions, to be treated similarly to others in getting insurance.
According to DHHS, 8 percent of Hawai'i residents have diabetes , and 29 percent have high blood pressure, two conditions that are used as reasons to deny health coverage.
• Another program will be established by the end of June that will help reimburse employer plans for costs of early retirees over the age of 55 who are not eligible for Medicare. The reinsurance would kick in for retiree claims totaling between $15,000 and $75,000.
The DHHS estimates there are 21,800 Hawai'i residents who have early retiree coverage through their former employers, and that the program would provide premium relief to the retirees.
• Beginning July 1, a "tanning tax" of 10 percent will be imposed on people receiving indoor tanning services.
• The Internal Revenue Service already has begun mailing notifications to 18,500 small businesses and nonprofits in the state to tell them about tax credits amounting to as much as 35 percent of the premium costs paid for workers.
The tax credit would help make offering health insurance more affordable for those businesses. To qualify, the companies must have fewer than 25 full-time employees that make average annual wages of less than $50,000.
There also are a host of other, larger programs that take effect six months after the bill's signing. Some of these go to the bill's intent of promoting more health coverage. While Hawai'i has one of the lowest uninsured rates — less than 10 percent of the population — it's estimated that 123,000 people go without health insurance.
These changes include coverage of preventive health services, coverage of emergency services without prior authorization and allowing OB/GYNs or pediatricians to be designated as primary care providers.
The most significant of the changes later this year may be those that deal with what DHHS says are consumer protections in health insurance. Insurers won't be able to cap how much they'll pay out on the coverage they provide.
"Removal of lifetime and annual benefit limits will certainly be significant for those struggling with serious illnesses," Schmidt said.
Insurers are also prevented from rescinding someone's coverage except in the cases where there's been fraud or intentional misrepresentation. Nationally there have been complaints of insurers taking away coverage from people with certain conditions or people who may be prone to certain illnesses.
The changes coming this year aren't favorable for everyone. Art Ushijima, president and chief executive officer of Queen's Health Systems, said there were cuts in Medicare payments to providers in April and more are scheduled in the fall.
"We're trying to assess that impact right now on our budgeting," said Ushijima, who acknowledged the bill has been good for patients. "From a consumer standpoint, those things that have been effected are good."
Still, Ushijima and others locally are trying to figure out further effects of the bill, including how things will change when the biggest of the modifications, the start of health care exchanges where people can buy coverage, are put into effect in 2014.
Ushijima said there might be some positive impact of an incentive program rewarding quality care, but that rules have yet to be written for many of the programs that will be phased in as part of the act in coming years.
"We're all sort of working through this," Ushijima said.
At HMSA, a dozen of the insurer's leaders have been meeting regularly to plan for upcoming changes because of the act. That's in addition to steps HMSA is taking on its own to stem rising health care costs and improve the quality of care.
"Basically we're trying to make it work for Hawai'i," Fortin said. He noted though: "This is a very big thing. There are numerous moving parts."
There remains the possibility that Hawai'i's Prepaid Healthcare Act will come to an end because of a provision saying it will sunset when universal coverage is available. That's potentially one of the biggest issues for the state, but experts said there may not be enough information to determine the effect for some time to come.
Even at that, a declaration of the sunsetting of the Prepaid Healthcare Act — a landmark piece of legislation that mandates employers provide health insurance to employees working more than 20 hours a week regularly — may be decided in courts, said University of Hawai'i Economics professor Jerry Russo.
"I think that's going to have to require a judicial ruling," Russo said.
The state Department of Human Services also is studying the reform act, including a future requirement that expands Medicaid coverage.
DHS spokeswoman Toni Schwartz said the increased coverage will mean the state will be paying out more in 2014 and will need to add workers to process the increased paperwork.
"Overall, it's just going to cost the state more money," Schwartz said.
The reform act also may translate into higher health premiums in the short run, Schmidt said.
"We are quite concerned about a number of the new requirements and the impact they'll have on premiums," he said. "I think many commentators have agreed the health care reform act will increase premiums at least over the short term."