Resident, business owner: Having personal insurance meant keeping my business open

The rocky road to implementation of the Affordable Care Act, commonly known as Obamacare, took another turn last week with the extension of the March 31 enrollment deadline for those who have had trouble signing up.

But even as most media coverage of the ACA has focused on technical glitches, delays and the politics of the law, it is undeniable that it has had — and will continue to have — huge ramifications for most Americans, both in how it is implemented and financed.

Jon Abram, 57, like many independent small businessmen and women, started feeling the pressures of health care insurance premiums in recent years. A third-generation hairstylist and barber at Jon’s Hair Loft on Claverie Way in Benicia, Abram went into the barber business in 1977 and until recently had insurance through Kaiser that he said was very good.

But over the years Abram’s premiums had increased, and finally they had become unaffordable. He said he reached a breaking point when he had to assume a $5,200 co-pay and $95 deductibles on office visits to afford his plan.

Abram became interested in obtaining more affordable insurance when the ACA passed a little more than four years ago. And when it became clear he needed hernia surgery, he had all the more reason to see what the new law could do for him.

Unfortunately, when the health exchanges opened in October 2013, like many Americans Abram was unable to sign up because of computer glitches. So he waited.

After a couple tries, when he finally was able to access California’s exchange, Covered California (www.coveredca.com), this is what he found.

The website offers five plans: Platinum, Gold, Silver, Bronze and Catastrophic, depending on the services covered.

There are also three types of plans: copayment, deductible and NAS deductible, where covered services other than preventive care are subject to the deductible, and once the deductible is reached the coverage kicks in.

Abram selected the Silver Plan and the copay option. At the time his choice of insurers was Blue Cross, Aetna, Kaiser or Health Net. Because he had been covered by them previously and had an established record there, he chose Kaiser. How much did he have to pay? His premium was just $87.22 a month.

It took about two weeks for a congratulatory message to arrive that informed Abram he had been accepted by Covered California. Unsure if the new insurance would work, he gave it a month to “settle in” before primary care physician in January and scheduling his long-delayed hernia surgery.
Abram had the surgery in February and awaited the bill. He was surprised to learn that his co-pay was only $1,100 on a $16,000 bill.

Abram said he wonders where the rest of the money came from, but appreciates the fact that he was able to afford the much-needed surgery without going bankrupt.

According to published reports in the Washington Post and Politico as well as the White House website, there are four ways the Obama administration plans to pay for the Affordable Care Act: reduction of fraud, waste and abuse in existing Medicare and Medicaid (Medi-Cal) programs, cuts in existing medical programs like Medicaid and Medicare, at least 18 new taxes, and a dramatic increase in the “risk pool.”

The new taxes include a tax on persons who are uninsured either through their employer, the Native-American health care system, Medicaid, Medicare, retirement plans or other similar plans. That is why the often-postponed enrollment deadlines for the individual mandate are so important — people who don’t enroll must pay a tax, and that tax helps support the system in liieu of the money that person would otherwise spend on insurance.

There are also penalties assessed on employers, taxes on so-called “Cadillac” plans that offer a high level of benefits, and fees on certain manufacturers and insurers — pundits like Sarah Kliff of the Washington Post like to point to the 10-percent tax on indoor tanning salons as an example of the types of taxes buried in the 2,600-plus-page law.

Basically, the reason for the delay in implementing the individual mandate for uninsured individuals is that a certain number of people — usually cited as around 8 million — must be in the risk pool for the ACA to operate economically. The idea is that the premiums pay for the payout for treatment from the pool. According to government sources, there are currently around 6 million enrolled.

According to industry and other published sources, the key to providing affordable insurance is to enroll into the risk pool as many of the “young invincibles” as possible. These are persons between the ages of 18 and 34 who generally don’t require a lot of medical care. According to the Houston Chronicle, a little more than 20 percent of residents who enrolled through Covered California are in this group.

Within the “young invincible” group, men are the bigger bargain for health insurance companies because they often go decades before seeking any kind of medical care.

Yet the same thing that makes them not seek care — the “invincibility” of the young — causes them to take chances. The military takes advantage of this psychological state of invincibility when it sends men into combat. Unfortunately, it is behavior that also leads to a high rate of fatal trauma, HIV and successful suicide attempts.

Nevertheless, on the whole young men utilize medical care at a significantly lower rate than those older than 40. Thus the mandatory requirement for insurance and the need to extend the deadlines for enrollment to increase the size of the insurance pool.

The Affordable Care Act allowed Jon Abram to receive medical care at a reasonable rate that he would otherwise not have been able to afford.

But, he said, it also may have allowed his business to remain viable.

“One of the biggest challenges for a small business person is insurance of all types,” Abram said, “especially health insurance.” The small business person lacks the number of employees to leverage low premiums and high benefits from insurance companies, he said, and very often industry insurance pools don’t provide the kind of savings they are intended to.

So Covered California was something more than a way to insure his own health, Abram said. It also was a chance to stay open for business.