Obamacare: Uninsured face tough choice

Fresh out of college, Paula Wallace soon encountered a real education in the mixed-up world of poverty, health care and insurance.

Working for a Roanoke nonprofit, Wallace was helping an uninsured, low-income family when it was hit by medical bills as unforeseen as they were huge.

"I don't know what I'm going to do," she recalls one of the parents repeating. "I don't know what I'm going to do. I can't afford to pay this bill."

The predicament, Wallace realized, could easily be her own.

At the age of 22, Wallace has no health insurance and worries whether she can afford it. Now comes additional angst: a federal law, effective next year, that requires her to have health insurance or pay a tax penalty.

"I don't know what to do, really," she says.

What Wallace  - and each of the millions of other uninsured Americans like her - decides to do could well determine the fate of the Patient Protection and Affordable Care Act, an overhaul of the nation's health care system.

The law's so-called individual mandate requires nearly everyone to have insurance, based in part on the premise that young and healthy people must pay into a system that would otherwise be overburdened with the costs of treating the older, sicker population.

Advocates say the law's ultimate goal of cheaper and better health care will be achieved through a multipart plan that includes requiring everyone to have insurance, offering financial help to those who cannot afford it, and tightening the oversight of insurance and medical costs.

But when it comes to enforcing the individual mandate, a key challenge could be winning over the so-called "young invincibles," who seldom see a doctor and may not appreciate the long-term need for insurance.

That's because the penalty for not having health coverage, which will be collected by the Internal Revenue Service as part of the tax filing process, is far less than what most insurance plans would cost.

Supporters and foes alike will be watching closely what happens after Jan. 1, when the major provisions of the law, also known as Obamacare, take effect.

A proposed expansion of Medicaid - still under debate in Virginia - would provide public health insurance to the poorest of the poor. People who are somewhat better off, making up to four times the federal poverty guideline, will qualify for subsidized insurance through private plans to be sold through a government-run system known as the marketplace. Those who earn more money can buy unsubsidized plans through the marketplace.

Enrollment for insurance plans sold on the marketplace begins Oct. 1, setting the stage for the latest salvo in a public debate over Obamacare that continues, more than three years after the law was passed.

David vs. Goliath

So far, efforts to derail the Affordable Care Act have fallen short during a debate in Congress, a legal challenge before the U.S. Supreme Court and the campaign of a Republican presidential candidate who promised to repeal the law if elected.

Now opponents are planning an attack on the government-run marketplace, an online system that will offer subsidized insurance plans in all 50 states through what are being called exchanges.

"We look at the exchanges as the Achilles' heel of Obamacare, and we are targeting them with that understanding," said Twila Brase, a nurse in Minnesota who is behind a national "Refuse to Enroll" campaign.

As the president and co-founder of the Citizens' Council for Health Freedom, Brase is encouraging people not to sign up for insurance through the exchanges.

She argues that the "federal takeover" of health insurance will lead to limited options for exchange consumers and higher premiums for everyone.

For those who might be inclined to follow Brase's advice, there's a financial incentive as well.

The penalty for not having insurance next year will be $95 for an individual and up to $285 for a family, or 1 percent of household income, whichever is greater.

Even though the penalties rise dramatically over the next three years - to $695 per uninsured individual or 2.5 percent of household income in 2016 - the cost of going without insurance will still be well below the price of most premiums.

"When they look at all that, they will realize there is a way out," Brase said. If enough people take that way out, the theory goes, the exchanges will collapse under their own weight.

"We look at the law as being on the books, but that doesn't mean it has to be successful," Brase said.

One person who already has decided not to enroll is Ann Briscoe, who runs a chimney sweep business in Thaxton with her husband, John.

Briscoe has been without insurance for years and does not take kindly to the notion of the government telling her she has to buy it now.

"Nope, not going to," the tea party activist said.

Even though it can be a struggle to pay for insulin and other supplies that Briscoe and her son need to control their diabetes, she's worried that the Affordable Care Act will just drive those costs higher.

If that turns out to be the case, Briscoe finds it even more galling that she will be forced to buy a ticket for the ride to a train wreck.

"It's just wrong for the government to tell you what to buy," she said. "It's like saying you have to buy GM cars. Where does it stop?"

Another national group is also encouraging people not to follow the federal law, engaging in what it calls "a bit of street theater."

FreedomWorks recently launched a "Burn Your Obamacare Card" drive. Undaunted by the fact that no such card exists, the Alexandria-based organization has been printing them up and handing them out for use in demonstrations.

So far, about 20,000 people have pledged online to burn their cards, organizers say.

"The whole point of ‘Burn Your Obamacare Card' is to puncture the idea that people have some sort of patriotic or legal duty to go into the exchanges to get the coverage they need," said Dean Clancy, vice president of public policy for FreedomWorks. "They don't."

The Congressional Budget Office has estimated that 7 million people will be enrolled in private health insurance through the marketplace by 2015.

"Our goal is to keep them from hitting those numbers," Clancy said - admitting at the same time that it's a long shot.

"We will be heavily outspent in this fight," he said, referring to millions in grant funding awarded to "navigators," people and organizations who will help explain the law's benefits to the public.

"We have only our members, our social media networks, a bit of street theater - and the facts," Clancy said.

"We're David, they're Goliath."

Timothy Jost, a Washington and Lee University law professor and expert on the Affordable Care Act who has testified before Congress about the law, said many people urging resistance on ideological grounds actually have their own insurance.

"They're asking other people to take risks that they themselves are not willing to take," Jost said. "It's pretty disgusting, I think."

Growth, but how much?

In Virginia, the basic assumption among insurance companies is that more people will be signing up for coverage.

"But nobody thinks everyone is going to sign up," said Doug Gray, executive director of the Virginia Association of Health Plans.

That's particularly so for the youngest and healthiest, who are the most likely not to have coverage. There are about 235,000 Virginians between the ages of 25 and 34 without coverage now, or almost a quarter of those younger adults, according to the U.S. Census Bureau. In comparison, 17 percent of people age 35 to 44, and 15 percent of 45- to 54-year-olds, are uninsured.

The premiums the younger consumers might pay could go a long way toward holding down other Virginians' health care bills.

But they could face sticker shock.

Scenarios presented by health plans to the State Corporation Commission last month put the price tag for a 29-year-old at about $2,400 to $2,700 a year through the exchange. For some of the healthiest, that could translate to a 50 percent to 90 percent jump in cost compared with what they would pay for coverage now on the private market.

But people earning less than 400 percent of the federal poverty line will be able to get subsidies - a single young person earning about $20,000 a year would likely get an annual subsidy of about $1,000. People who earn less would get a bigger subsidy; people who earn more would get less.

The discounted cost is still a lot more than the tax penalty the person would face for not having insurance.

But for someone who already had coverage, the subsidy would keep the bill roughly where it had been on the open market.

Those without insurance could decide that coverage that looked too costly this year will be more affordable with a subsidy.

A majority of younger adults would be entitled to some kind of subsidy, census figures suggest.

But there's no way that health plan forecasters can predict the result when 235,000 uninsured young Virginians weigh premium costs and subsidies against a fine and the idea that maybe their parents were right about the need for coverage.

Nor can they tell how often those who do buy insurance will go to the doctor or hospital. They're not even asking the questions that way, Gray said.

Instead, they look at who they insure now and what it costs to cover them, Gray said, and build forecasts based on those numbers.

Their filings with the State Corporation Commission show they're assuming some overall growth in the number of people they insure.

Some of those people will be sicker. For firms looking to sell individual coverage in the Roanoke and New River valleys, forecasts for the extra cost of covering those consumers range as high as 48 percent.

Claims from newly insured people getting treatment they had postponed earlier could add up to another 10 percent, the filings show.

From the forecast of overall growth and the estimates of how sick new customers might be, health plans can predict how much they might spend on claims in the future.

From that number, they calculate the total they need to collect in premiums. They have to apportion that total among customers according to Affordable Care Act rules that say that the oldest customers can't pay more than three times what the youngest ones do, and that people in good health pay the same as people who are ailing.

But the calculations - which now say people in their 20s might expect to pay about $200 a month for a plan, while a 60-year-old might look at about $500 - aren't based on a minimum number of young people signing up.

If, a year after the individual mandate takes effect, a health plan's financial results show that it took a disproportionate load of customers with costly health care needs - perhaps because it didn't sign up enough young, healthy customers - it could get reimbursed from a pool funded by all the plans.

If all the plans end up being wrong about how much they collect in premiums and what they spend on claims, the overall level of premiums would have to change - higher, if they weren't collecting enough, lower if their profits exceed a range that state and federal law says is reasonable.

"The thing that a lot of people forget is that this is a change that will take multiple years to sort out," Gray says.

Making the numbers work

For Paula Wallace, the general idea of having health insurance makes perfect sense. Her concern is more with the dollars and cents.

After graduating from Virginia Commonwealth University last winter, she found her dream job with a Roanoke nonprofit agency, doing social services work in the city where she grew up.

But she has student loans to pay, is starting a life on her own and has a $23,000 annual income to make it all happen.

Wallace could get coverage through work, but she keeps putting off setting up an appointment to talk about it. She doesn't know how much it might cost.

While the Affordable Care Act allows individuals up to age 26 to remain on their parents' plans, that option became too expensive several years ago for Wallace's mother. A more affordable plan might become available through the online marketplace.

Looking at her budget, Wallace figures she could carve out about $100 a month for health insurance.

If coverage through her job costs more than $180 a month, she could shop for a subsidized plan on the marketplace. The law says consumers who would have to pay more than 9.5 percent of their household income to buy employer-provided insurance are eligible for a subsidy as long as they also meet the poverty line requirements.

However, it would be a stretch to find coverage on the marketplace for $100 a month, even with the subsidy - leaving at least the temptation of opting out and paying about $130 next year in a tax penalty.

Still, she's reluctant to go that route, having seen firsthand on the job how financial ruin can be just a serious accident or illness away.

Wallace's views are reflected in a recent poll by the Kaiser Family Foundation, which found that more than 70 percent of young adults said it was important for them to have health insurance. Four of 10 said high costs were the reason they do without.

Five jobs, no insurance

It's not just 20-somethings with incomes in the 20-something range who are facing difficult choices, as Michael Wessel's situation illustrates.

Until recently, Wessel was working five part-time jobs in Roanoke, all of which offered either insurance he could not afford or no benefits at all.

"I've been really worried about what's coming up," said the 45-year-old Wessel, who in the past year has worked as the owner of Wessel Photography, adjunct professor of photography at Virginia Western Community College, drawing instructor at ITT Technical Institute, teacher of a digital camera class for the Roanoke Department of Parks and Recreation, and a driver for BeavEx courier service. (His most unusual delivery was a human lung that needed fast transport from the hospital to the airport for a transplant.)

All of those jobs added up to an annual income of between $35,000 and $40,000 a year. That's too much for a decent subsidy, but not enough to easily cover most insurance plans, considering Wessel's circumstances.

He pays about $700 a month on student loans and credit card debt he amassed while earning a master of fine arts degree from the Savannah College of Art and Design in 2007, just as the national economy was crashing.

This month, Wessel moved out of town to take a new job, working 30 hours a week as the curator of a photo gallery at South Carolina State University.

But the position offers no health insurance, leaving him in the same bind as before.

"I'm going to have to purchase insurance that I can't afford," Wessel said.

Getting the message out

For all the unknowns about the Affordable Care Act, this much seems clear: Lots of people still don't know much about it.

According to a Kaiser Family Foundation poll conducted earlier this year, two-thirds of the uninsured and a majority of Americans said they had too little information to know how the law will affect them, three years after its passage.

Because young people are considered such an important demographic group, special efforts are being made to reach them.

Young Invincibles, a national nonprofit group that represents 18- to 34-year-olds, recently teamed up with the U.S. Department of Health and Human Services to hold a contest for the best video promoting Obamacare.

Other initiatives include Web chats and a mobile app explaining the law. Yet many young people remain in the dark.

That much became apparent recently to Randy Zimmerman, a principal in the Salem insurance firm of Craighead-Zimmerman & Associates.

"I was in a room the other day with four or five young people," Zimmerman recalled, "and I asked: ‘How many of you know you're covered by Obamacare?' and everyone just looked around and said: ‘What?' "

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