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Assuming, however, that Obama prevails and the high court rulesonly on the individual mandate, then the Vermont exchange isvirtually certain to open for business on Jan. 1, 2014, about 18months from now. So, what will it look like, how will it affectsmall business in the state, and how will it affect the uninsured? It should be noted at the outset that much of the public discussionof the exchange in blogs and the web and in newspapers and radioand television — has been dominated by people who are highlycritical of the single-payer idea in Vermont, as well as many ofthe details of the exchange. Some of this sentiment is ideological if the government is doing it, it must be bad or based onself interest: It will disrupt the way they now do business andcost them money. (We ll assess the validity of the oppositionlater in the series.) A wholesale restructuring of the health care industry in the UnitedStates under the Affordable Care Act will be extremely complicatedand there is no way yet to parse what it might look like, but fromthe Vermont perspective the exchange portion of the program lookslike a terrific deal for both workers and individuals. That sbecause there are federal subsidies to support both coverage forthe currently uninsured and for small businesses who now providehealth coverage for their workers and those who don t. The first formal analysis on this question was the so-called Hsiaoreport, which kicked off the Shumlin initiative last year, andwhich estimated that these subsidies could run from $200 million to$400 million per year. Those figures constitute a goodly chunk ofthe whole hospital bill for the state, now running to about $2billion. None of this is Shumlin s idea; it is entirely anoutgrowth of the first step toward Obamacare and it is a huge slugof money to grease the skids toward the much more complex steps tofollow in 2016. It works like this: As of 2014, all health insurance forindividuals and companies with 50 or fewer employees will be soldthrough the exchange. All the insurance sold there must have afully elaborated set of benefits in terms of what is covered, aswell as conditions that prevent insurance companies from rejectingpeople on the basis of factors such as pre-existing conditions. Obamacare establishes four levels of permitted richness of planthat can be offered. They are denoted by metal levels: Theplatinum level calls for the employer to pay 90 percent of theclaims submitted on behalf of the people covered in the pool; thesepayments would be paid according to the policy purchased by thecompany. The remaining 10 percent would be paid by some combinationof the company and the employees, through mechanisms such as copaysand deductibles. The gold level percentage figures are 80-20,silver 70-30 and bronze 60-40. The federal subsidy limits the individual s burden on a slidingscale up to income levels of $92,200 for a family of four. Theindividual consumers of health care will pay for their share in theform of copays and deductibles and a share of the total premium forthe coverage. The Department of Financial Regulation has estimated the impact onthe following model participants in the program: A couple with no children now buy insurance that costs $13,200 peryear. Their family income is $52,000 per year. If they buyinsurance through the exchange in 2014, they would receive afederal tax subsidy that would drop the cost for the same coverageto $4,994, a savings of 63 percent. A single, self-employed electrician, annual income $40,000 peryear. He buys insurance with the same coverage as example one. Hisannual cost now is $7,200. Cost from the exchange would be $3,804. A family of four, mother, father and two kids, with an annualincome of $32,000. They now buy an insurance policy with a $10,000deductible at an annual cost of $8,400. If they buy insurance inthe exchange, their costs drop to $960, a savings of 89 percent.Moreover, if they were spending the whole $10,000 on medical care,they would save $7,500 because their deductible in the exchangewould be much lower. For most individuals and employees of small businesses in Vermont,the combination of the exchange structure and the federal subsidiesare a financial boon. They either provide insurance coverage to thebulk of those that have none now, or they hold out the prospect forimproving the coverage of those who have very high deductibles orpay very high premiums. There are some caveats. One is illustrated by the final individualexample provided by the Department of Financial Regulation: thefamily of four with an annual income of $450,000 per year who buyhealth coverage in the private market, and in the future will haveto buy it inside the exchange. They will get no financial boostbecause their income exceeds the federal $92,200 limit. A second caveat concerns those individuals who have no health careinsurance now and don t want to pay anything in the future forhealth insurance, whether they can afford it or not. Thoseindividuals will have to purchase care in the exchange in 2014because of the personal mandate in the federal law. That wouldchange obviously if the Supreme Court kills the mandate. Thepurpose of the individual mandate is to make sure that everyonepays what he or she can afford for health care coverage, since atsome point everyone is certain to be treated if they get sick orinjured. If the mandate survives, it will be enforced by the federalgovernment through the income tax system. When the individual fileshis tax return, he will have to report whether he has healthcoverage. If he or she doesn t, they will have to pay a penaltyaccording to the following formula: a minimum of $695 a year or 2.5percent of family income, up to a maximum of $2,085. The penaltywould be phased in between 2014 and 2016, and there would beexceptions, including financial hardship, people whose incomeis so low they don t have to file a tax return, and those for whomthe lowest cost plan would consume more than 8 percent of theirincome. In short, most small business employees and individuals who buyinsurance would have health coverage, and for a significant portionof the Vermont population, the federal tax subsidies would make itless expensive than it has been in the past. Small businesses and the mandate What about the employers, the small businesses, the backbone of theVermont economy? What is the effect on them? Could they afford it?Would it drive them out of business? These are critical questions. The Department of Financial Regulation estimates that there are16,500 such firms in Vermont and about 7,500 now provide some kindof health insurance. What is the effect on them? And what about thecompanies that don t provide health insurance? These questions lie at the heart of the anti-reform effort inVermont since its inception in early 2011. We ll return to thisissue in much more detail in No. 3 of the series, and while theremay be some employers who may pay more than they do now, the vastmajority should get a significant reduction. Under federal law, no employer with 50 or fewer workers has toprovide health insurance and that does not change when the fullimpact of Obamacare kicks in in 2016. Employees will have to obtaincoverage as individuals, but at no cost to small businesses. How about those companies that do provide insurance? There has beenmuch talk about how some companies could face increases of up to 18percent per year. That would be catastrophic. We ll return to thisissue in more detail later, but the fact is that no small employerhas to pay an increase of 18 percent because he or she isn trequired to pay for health insurance. This provision is theultimate safety valve for the small business community. The Department of Financial Regulation laid out this scenario whenthe agency issued its examples earlier this year. XYZ company withan owner, Mr. Jones, and seven employees, pays a total premium of$153,600 per year in the current insurance market. Each person,including the owner, has a $2,500 deductible. The employees in thecompany, including the owner, pays 20 percent of the cost of thepremium, or a total of $30,720. We are high quality suppliers, our products such as China Cold Rolled Steel Coil , China Tin Plate Coil for oversee buyer. To know more, please visits Tin Plate Coil.
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