With some exceptions, the federal Patient Protection and Affordable Care Act (PPACA) enacted in 2010 requires everyone to get health insurance or pay a fine.  The individual mandate contained in the act takes effect in 2014 and levies fines for failure to document coverage at the greater of $95 or 1 percent of annual income capped at $285 (triple the flat rate) for that year.  After that, the penalty will grow until it reaches a ceiling in 2016 of the greater of $695 or 2.5 percent of annual income capped at $2,085.The IRS will be the compliance authority, and the agency is empowered only to seize tax refunds as payment toward unpaid penalties.

To make getting insurance easier for low-income, residents under 65, Medi-Cal coverage will be expanded to include individuals (except for legal immigrants residing in the U.S. for less than five years) earning up to 133 percent of the federal poverty line (FPL) or $14,850 annually.  In addition, partial subsidies for the cost of insurance will be offered on a sliding scale to individuals not qualified for Medi-Cal and earning up to 400 percent of FPL or $44,680 annually.  (The FPL at 133 percent for a family of four in 2010 was $29,327 and $88,200 at 400 percent.)

Here is where Covered California, our state exchange, enters the picture.  Few believe that these low-income individuals will buy health insurance at the premium prices currently on the market.  And the tax penalties called for by the PPACA to motivate them to do so are a joke when you consider how premium payments would deplete their discretionary income.  So, the agency is considering a plan to offer health insurance coverage to these individuals at prices that will be covered by the subsidies they receive.  Arguably, the excuse not to buy is removed … great incentive.  Right?

So, what does this mean for consumers?  Uninsured individuals with annual incomes between 139 percent and 200 percent of the FPL, or between $14,850 to $22,340, and the aforementioned legal immigrants with annual incomes below 134 percent of FPL, will be offered discounted-premium health insurance coverage that subsidies will cover through local Medi-Cal managed care plans.  Approximately 914,000 (26 percent) of California’s over 3.5 million  uninsured residents under 65 that are eligible to participate in our state exchange will also be eligible to participate in the plan being considered by Covered California.  More if the Covered California board broadens the scope of the plan.

What does this mean for the Medi-Cal managed care plans that will coordinate and pay for the care this population needs?  Well, most are concerned about how “churning” between private and Medi-Cal coverage will impact patient care management.  You see, income fluctuations move many of these individuals on and off the Medi-Cal rolls, so having them enrolled in the Medi-Cal managed care plan they will default to when their income takes a downturn is good planning.  Also, many of these individuals are the adult parents of children on Medi-Cal, so a “family plan” managed by a single health plan kind of makes sense, doesn’t it?
And what does this mean for the doctors and hospitals who will treat them?  Well, that’s an appropriate subject for another blog entry, but write back and tell me what you think.