The Affordable Care Act, part 1

His research at Duke involved cardiovascular disease prevention. Dr. Lillis is a full time internal medicine physician practicing primary care in Fredericksburg, Virginia. He is also a monthly columnist for the Free Lance-Star newspaper and a member of the Board of Directors of Doctors for America as well as Director of the blog Progress Notes. In June of 2012 he was invited to the White House to participate in its Physician Conversation on Care Coordination which brought together some 200 medical leaders from large and small healthcare practices, specialty societies and other medical organizations. It was here that he, along with fellow Doctors for America physicians shared the results of their membership survey with the White House. Dr. Lillis and his family live in Fredericksburg. Chris, before we embark on the specifics, talk a little about recent activities with Doctors for America and how your organization has been working to inform the public about present and pending changes to the healthcare system of coverage.

Christopher Lillis: Right now Doctors for America is conducting a new campaign called The Coverage is Good Medicine campaign. Our goals are to educate physicians, medical students, residents so that they understand how to best advise their patients who might be seeking new health insurance coverage. So we’ve made available a number of educational materials that people can download quite easily at our website as well as conducting national conference calls that physicians can join and even earn continuing medical education credits to understand how best to help their patients who might need health insurance coverage.

Jan Paynter: Now let’s turn to topic of the Affordable Care Act Healthcare Marketplace and of course politics. Our governor…new governor, Terry McAuliffe, has made clear that one of his signature policy goals will be expanding Medicaid under the Affordable Care Act giving approximately 400,000 Virginians coverage that fall into the category of lower income. Now he hopes to funnel some five million a day into our economy and according to a recent Washington Post article this issue, rather than social issues, is sure to dominate the Virginia Legislature moving toward the Virginia elections. My question, Chris, is, is $500 million a day a realistic number in your view?

Christopher Lillis: Yes. So the number that has been quoted by the Commonwealth Institute as well as the Coalition for Healthcare for All Virginians is five million dollars per day we’re losing by not choosing to expand Medicaid. These are dollars that were made available to the State of Virginia in the Affordable Care Act so that we can help low income Virginians expand their health coverage options. Now the intention of the Affordable Care Act was to cover 400,000 low income Virginians but there’s a lower number that fall into the so-called coverage gap. It takes a little bit of kind of dizzying numbers to talk about. So the Affordable Care Act was supposed to extend Medicaid to everyone making 138 percent of the federal poverty limit or below. However, individuals that make up to 100 percent of the federal poverty limit can participate in the private health insurance exchanges. So there’s a difference in numbers. So if we expanded Medicaid, 400,000 would qualify and when we choose not to expand Medicaid, 200,000 Virginians are left with no options.

Jan Paynter: Oh, I see. Chris, I thought that it might be interesting to look a little bit at the history of attempts to reform healthcare. Sarah Cliff of the Health Reform Watch compared the rocky rollout of Obamacare to the 1966 Tough Sell during the Johnson administration prior to Medicare being signed into law and the news accounts were really strikingly similar in nature and kind to what’s going on today. Discuss a little bit if you would, Chris, what are, in your view, some of the similarities and dissimilarities in terms of public and professional response to this issue.

Christopher Lillis: It’s actually really fun to do this research. If you go online, you can find an audio clip…an audio clip of then actor Ronald Reagan who was hired by the American Medical Association in the early 1960s to do something called a Coffee Cup Campaign. At that time, Ronald Reagan was talking about how instituting Medicare in this country would be a march towards Socialism, a march towards Communism and a government takeover of all health care and that it would ruin the quality of American medical care. And when you listen to the arguments that were put forth against the Affordable Care Act in 2010 and even now, most of those same sorts of fears were present and most of those same sorts of pieces of rhetoric were employed to try to persuade the American public that this is not good for them. Now, the other times that…the other major time that healthcare reform was attempted was back in the 1990s when the Clinton administration was in place and the same sorts of words were chosen. This is Socialism, this is Communism, this is a march towards a government takeover of healthcare. And so I think when there’s ever been an attempt to expand medical coverage to individuals, there’s been a fear that’s been whipped up that’s really unfounded because right now 48 million Americans enjoy the coverage that Medicare provides them and it’s one of the most popular government programs there is and it’s funded by the taxes that we pay. And so this is a remarkably analogous situation as to how difficult it was to pass Medicare and how difficult it was to pass the Affordable Care Act.

Jan Paynter: Yeah, it was interesting. In reading about this I was also fascinated that JFK attempted to expand benefits to the elderly population and was likewise unsuccessful so as we discussed before the program, clearly objects in the rearview mirror are closer than they appear. What are some of the latest healthcare signup numbers that you’ve found?

Christopher Lillis: So right now between the state-based exchanges and the federal exchange, that’s the infamous healthcare.gov, roughly two and a half million people have signed up for private health insurance and roughly half of those come from the federal exchange and half come from the states. There’s been a remarkably disparate experience across the country. So some states like California and New York just chose to set up their own exchange and in the peak in December they were signing up as many as 30,000 people a day for new insurance. Those were the high functioning exchanges, the websites that were working quite well. And we all know about healthcare.gov in October and November it was a very rough rollout. The website was not functioning well both on the front end and the back end and there were very few signups. But December came along and some of the fixes to the website were finally in place and we saw a million people sign up just in the month of December for the federal exchange. So we first start out with that number, 2.5 million who now have private health insurance that they’ve paid for either through state-based or federal exchanges. The other number that’s important is about four and a half million people have newly gained coverage through Medicaid. That’s in some of the 25 states that have chosen to accept the Affordable Care Act dollars to expand their state-based Medicaid program. Unfortunately Virginia is not one of those states that has chosen to expand but again, states like Maryland, New York, California, have had remarkable success signing up their citizens for Medicaid and now they have the ability to see a primary care doctor.

Jan Paynter: In your January 10th Progress Notes, which I always find extremely helpful, you have a piece called “Fun with Numbers”. If you wish, share it with us, some of the findings that most jumped out at you.

Christopher Lillis: Sure. Well, I mean, those numbers stood out to me very loud and clear, that six million people just in the last couple of weeks now have new insurance whether through the federal exchange, state exchange or Medicaid. We forget that a couple of years ago three million young Americans gained access to health insurance by being able to stay on their parent’s plan. Many people don’t realize that a billion dollars have been refunded to consumers when health insurance companies overcharge for their products and some people don’t realize that nine billion dollars in savings have been realized by seniors through the Medicare Part D program thanks to changes in the Affordable Care Act. And then the number zero is a pretty important number when we think about January 1st, 2014. Zero people can be discriminated against for having a pre-existing condition. Zero people can be denied coverage because they’ve reached an annual or lifetime cap. Those have been banned. And so we see that there have been some consumer protections that make the number zero pretty prominent now but mostly it’s amazing to see that close to 10 million people have new insurance thanks to the Affordable Care Act at this moment.

Jan Paynter: Oh, I think one of the most exciting thing has been doing away with discrimination for people with pre-existings. Chris, what kinds of questions might we be asking ourselves as we prepare to enroll in the Healthcare Marketplace?

Christopher Lillis: I think first and foremost you have to try to assess what your current health status is and how often you need healthcare services. There are many different types of insurance one can purchase. Some that are very generous in their coverage, some that are less generous in their coverage but as a result have lower premiums. So someone who’s young and healthy, I think someone who’s under 30 we can talk about, might have very few health needs. They’re healthy, they don’t really need to see the doctor that often, and under 30 years old, you’re allowed under the Affordable Care Act to purchase catastrophic coverage. Now these plans will provide two preventive care visits per year that are free from out of pocket but they’re not going to cover things like prescription drug costs and they’re not going to cover things like emergency room visits. They will kick in when you have a catastrophic illness like a car accident or God forbid a cancer diagnosis. But these will have extremely low premiums so someone who’s young and beginning their career, this might be attractive to them so long as they’re healthy. Now above the age of 30 and before Medicare age, individuals have a myriad of choices. They can purchase bronze plans, silver plans, gold plans, platinum plans and what those refer to is the actuarial value of the health insurance. That’s a pretty tough concept to understand but at the low end, at the bronze plans, the plan will roughly cover 60 percent of all of your healthcare costs and at the high end, the platinum plan, your health plan will cover roughly 90 percent of your healthcare costs. So the platinum plans will be quite pricey in terms of their premiums but you will have very few out of pocket costs from then on. And so if you are someone who is ill, have a chronic condition, might have…might be facing a very high future health care cost, spending a little more in premiums would save you those later out of pocket dollars. But if you’re someone who’s healthy and someone who rarely uses the healthcare system, then those bronze plans or the silver plans can be more attractive. It’s important to know that if your income is below 400 percent of the federal poverty limit, and for a family of four that’s about $92,000, there are tax subsidies available to help defray the cost of your insurance and that’s all those plans that I just discussed, the bronze, silver, gold and platinum.

Jan Paynter: How will Obamacare affect the cost of Medicare drug coverage?

Christopher Lillis: So, it’s going to affect the consumer more than it affects the system. So, Congress has never granted Medicare the authority to negotiate drug prices with manufacturers and so for the longest time pharmaceutical companies have been just allowed to set the prices they wish to set. However, the Affordable Care Act for consumers is closing the so-called donut hole in the next several years so already seniors have saved about a billion dollars on their drugs costs. Excuse me, about nine billion dollars on their drug costs because once they reach that donut hole, the point in time where their Medicare Part D is no longer in effect, when they’re responsible for 100 percent of their drug costs, those prescription drugs are discounted by 50 percent and that donut hole will keep getting smaller and smaller until 2020 when the donut hole will be completely eliminated.

Jan Paynter: Ah, that’s very exciting for people. Doctor, in your judgment, what are some of the most frequently acceptedness concerning healthcare?

Christopher Lillis: The question I get most often in my practice from my patients is something to akin to, is it true that if I get diagnosed with cancer at 75 years old, Medicare won’t pay for my treatments because I’m too old? So this goes back to the 2010 politi-fact lie of the year which was that the Affordable Care Act contains so-called death panels. There is no age when your Medicare benefits stop essentially from…you can get treated for cancer when you’re 100 years old or treated for cancer when you’re 65 years old. There’s no death panels in the Affordable Care Act.

Jan Paynter: And I know that one of the things people were curious about, legal immigrants and agricultural workers are all eligible for reductions in costs assuming that they fall into that category, obviously for immigrants they have to be legal, but otherwise all the same regulations I’m assuming would obtain for those categories.

Christopher Lillis: Sure. Yeah, for legal immigrants, they’re going to be treated like any other American citizen. For those who are not here legally, for those who don’t have proper immigration status, then they are not able to access these benefits. They’re not able to access tax subsidies. They can still purchase insurance if they choose to but they won’t have help paying for it through the tax credits that are available under the Affordable Care Act for American citizens.

Jan Paynter: Now if I have job-based coverage, can I switch to the marketplace?

Christopher Lillis: That’s a good question. The answer is absolutely yes, you can. But if you have an employer who provides you with insurance or can provide you with insurance, you cannot get the tax subsidies. So that’s an important distinction. So, you are free to purchase whatever health insurance you’d like. However, the reason most will choose the exchanges is because of the tax subsidies to help defray the cost and you lose that tax subsidy if you can gain health insurance elsewhere. So the only exception are individuals who have health insurance through their employer that is deemed unaffordable. So if more than…if you have to spend more than nine and a half percent of your annual gross income on your healthcare costs and your health insurance provided through your employer is not covering those costs, then you can be eligible for the tax subsidy. It starts to get a little complicated and this is where it’s always important to know you can reach out to navigators, folks who have been awarded grants by Health and Human Services to sit down with you, understand your own personal financial situation, what your insurance options are and give you some good advice about what direction to pursue.

Jan Paynter: Yeah, I found the Henry J. Kaiser Foundation, which I know you refer to a lot in your organization, as one of the most helpful places to go. You can hit a question, punch on it, get a very cogent and clear and informative answer and we talked a little bit about this before the program, at least for my money, that organization does a better job to me than healthcare.gov unfortunately but…

Christopher Lillis: And Consumer Reports just built a new tool to help walk you through what is your best health insurance option.

Jan Paynter: They’re excellent, too.

Christopher Lillis: Yeah, I think it’s one of those things where you can find a lot of nonpartisan advice out there.

Jan Paynter: AARP is very good. What is meant by the term, Chris, of open enrollment and what is the current timeframe for it?

Christopher Lillis: So open enrollment refers to the period of time when you can purchase a new health insurance policy. So we’re right now in the first open enrollment period of the Affordable Care Act. That started on October 1st, 2013, and ends March 31st, 2014. That’s when you can simply log onto the site or call a broker or work through a navigator and purchase a new policy. Once we reach March 31st, 2014, you will not be able to purchase insurance again until the next open enrollment period which will be October of 2014. Exceptions include if there’s a major life change, if you lost your job or if you got divorced or if you even moved from one state to another because insurance policies don’t cross state lines. But if you are not having a major life change, you need to sign up by March 31st or wait ‘til October, 2014.

Jan Paynter: What are considered essential health benefits under the marketplace plans, Chris?

Christopher Lillis: So essential health benefits include preventive services like a wellness visit to your primary care doctor; preventive care tests that are certified by the U.S. Preventive Task Force Service, things like mammograms, pap smears, vaccines, colonoscopies. Those need to be afforded to you without new out of pocket cost, so no inducing the deductible or co-pays. Other essential health benefits include maternity care, emergency room visits, prescription drug costs and one that’s a little more controversial is pediatric dental care. I think some folks get a little riled if they don’t have children any longer that they have to purchase a plan that has that essential health benefit but that’s truly the way insurance works.

Jan Paynter: Well and people have said the same thing about being beyond or not needing maternity benefits. We have all kinds of things that we purchase that have bundled within it things that we do not use but for the sake of the public good they are included. So, can I be charged more for my…because of my age?

Christopher Lillis: Yes. So, there are so-called age bands that are legal and the age bands dictate that someone who’s 30 years old gets what would be considered a rate of let’s call it one dollar and someone who’s 64 years old, for the same policy, could only be charge three dollars. So there’s a range that happens and every year you get older, you will be charged a little bit more but the age bands dictate that there can be no wider difference than three times what the youngest and healthiest would pay.

Jan Paynter: With respect to the individual mandate, what is the penalty if we’re not covered by 2014, this year?

Christopher Lillis: Well, this first year it’s actually not that onerous so most will face a penalty of $95. But those penalties can go up to $695 in coming years. For some who are very well off, they can suffer a penalty of up to one percent of their income but that’s something that a lot of health economists don’t feel is stiff enough to induce people to purchase health insurance.

Jan Paynter: Oh, that’s very interesting. What is meant by a grandfathered plan and should a person keep it or switch to Obamacare?

Christopher Lillis: Well, the truth is nowadays there are very few plans that qualify as grandfather plans. A grandfather plan is a health insurance policy that you would have purchased prior to March 2010. If that plan has never changed, then you are entitled to keep that plan and it does not have to comply with the minimum health benefit standards of the Affordable Care Act. Now, most of us, when we purchase an individual plan find that the policy changes from year to year. That’s just the norm and so this was unfortunately what garnered the politi-fact lie of the year moniker when President Obama promised the American people that if they liked their plan they would be able to keep it. In actuality, because of the way that health insurance companies write their policies and they change from year to year, none of them really had the…retained the status of a grandfather plan.

Jan Paynter: Where can I go to get help if I can’t afford deductibles and co-pays?

Christopher Lillis: Well, so this is an interesting feature of the Affordable Care Act. So, if you cannot afford your deductibles and co-pays, it probably means your income is at such a level that the tax subsidies will be very high and you might even qualify for something little people know about called the Enhanced Silver Plan. So if you have a…if you make below 200 percent of the federal poverty limit and you purchase an Enhanced Silver Plan, it dramatically lowers your co-pays and deductibles even beyond what the silver plan would.

Jan Paynter: I see.

Christopher Lillis: And so again, this is a very graduated system. The higher your income the less help you’ll get. The lower the income the more help you’ll get. But if you have trouble paying for co-pays and deductibles even beyond the tax subsidies and the possibility of purchasing an Enhanced Silver Plan, I think it’s largely up to you. I don’t know that there’s another resource to help you afford your co-pays and deductibles once they’ve been lowered to that degree.

Jan Paynter: Well, we’re going to have to break and conclude part one but I want to stress to people what we’ve discussed which is that it’s very important that people be mindful of the application periods for open enrollment so they make sure they can take advantage of this. Chris, thank you very much for doing this today.

Christopher Lillis: It’s been my pleasure.

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