By Kelley Weiss, CHCF Center for Health Reporting

Tax credits for small businesses offering health insurance have been available since the health law was passed in 2010. (Photo/Getty Images)

With less than a year to go before the full rollout of Obamacare, many business owners are still scratching their heads over what it will mean for them.

In fact, most still wrongly believe they’ll have to offer health insurance to their employees, according to a recent eHealth survey. While businesses with 50 or more full time employees will have to pay a $2,000 penalty per worker if they do not offer health insurance, there is no penalty for smaller businesses.

Another commonly misunderstood part of the health care law is the role of the tax code. John Gonzales [also with the Center for Health Reporting] has more details about how paying your taxes and Obamacare works. It’s the bedrock of enforcing the law and subsidizing premiums for people to buy insurance.

At an event about taxes and Obamacare, UCLA health care economist Dylan Roby gave a somewhat grim picture. He says widespread ignorance and varying degrees of hostility towards the health care law persist among business owners.

“Many of these employers, especially on the smaller level, are not that great about maintaining a relationship with the government,” Roby says.

Take, for example, the small business tax credits that have been available since 2010, when Obamacare passed. The U.S. Government Accountability Office last year estimated that less than 5 percent of eligible businesses have claimed the credit. This isn’t a big surprise to Larry Levitt of the Kaiser Family Foundation.

“It’s about as exciting as picking health insurance and doing your taxes and that’s what we’re combining here,” Levitt says.

These business owners are potentially leaving money on the table. If you’re a small business owner who has been offering health insurance at any point since 2010, you may qualify for a tax credit. You can file a revised tax return to collect it.

Another break for businesses trying to purchase health insurance for their workers could come from the new “marketplace” called Covered California.

This state-run exchange is supposed to even the playing field for small businesses that can pay almost 20 percent more than larger ones for health insurance. Currently a little under half of California’s small businesses offer health insurance to their employees.

On the flip side, those $2,000-per-employee penalties for large businesses that don’t offer health insurance start next year. But this will affect less than 5 percent of businesses. That’s because in California, and nationally, most businesses are considered small, meaning they have fewer than 50 employees.

Allan Zaremberg, head of the California Chamber of Commerce, says it’s a daunting task for businesses to keep the carrot and stick aspects of Obamacare straight.

“There is a heck of a lot of confusion about tax credits and costs and do I put him in the exchange or take the penalties,” Zaremberg says.

Allan says he’s not convinced the stick approach will work with businesses. He says they’ll be weighing if taking a couple thousand-dollar penalty per employee for not offering coverage would actually be cheaper.

“I’m not always sure that you can scare them with a monetary penalty. And certainly for a small employer there is none,” Zaremberg says.

Now the push is on to educate businesses about the potential benefits of Obamacare. USA Today and Kaiser Health News report that California has budgeted about $250 million to help consumers, including small businesses. But few experts are saying it’ll be easy.

The health care overhaul is “a big complicated piece of business,” President Obama told reporters during Tuesday’s news conference. (Alex Wong/Getty Images)

If you’re one of the millions of people confused about Obamacare, the president took a few minutes on Tuesday to reiterate his main messages about the federal health law.

“For the 85 to 90 percent of Americans who already have health insurance, they’re already experiencing most of the benefits of the Affordable Care Act even if they don’t know it,” the president said.

He called insurance “stronger, better, more secure,” for people than before the law’s passage. ”Full stop. That’s it. Now they don’t have to worry about anything else.”

President Obama specifically mentioned three benefits of the ACA already in place:

• Children can stay on their parents’ plan until age 26
• Your insurance company cannot drop you if you get sick
• You get free preventive care with no co-pay and no deductible (including many cancer screening tests)

The law also has banned lifetime caps on coverage. For people who have employer-based insurance or Medicare, most of the changes required by the law are already in place.

For people who do not have insurance — or who buy insurance for themselves or their families — “implementation issues” remain, the president said.

“… What we’re doing is we’re setting up a pool so that they can all pool together and get a better deal from insurance companies,” the president said. “And those who can’t afford it, we’re going to provide them with some subsidies. That’s it. I mean, that’s what’s left to implement because the other stuff’s been implemented, and it’s working fine.”

But the challenge in setting up that system is “still a big complicated piece of business,” he acknowledged.

A big complicated piece of business indeed.

It’s been three years since California became the first state in the country to pass legislation to set up a marketplace, now called Covered California. Covered California has been moving full steam ahead, but  the clock is ticking down rapidly to Oct.1 when the online marketplace must open for people to begin shopping for insurance. Coverage will start on Jan. 1, 2014.

“Glitches and bumps” ahead

The president was clear there’s still a long ahead. “And the last point I’ll make,” he said, “even if we do everything perfectly, there’ll still be, you know, glitches and bumps, and there’ll be stories that can be written that says, oh, look, this thing’s, you know, not working the way it’s supposed to, and this happened and that happened. And that’s pretty much true of every government program that’s ever been set up.”

The president’s remarks came on the same day that a new poll showed some troubling gaps in the public’s understanding of the law.

More than 40 percent of Americans are unaware that the ACA is still the “law of the land,” according to the poll conducted by the non-partisan Kaiser Family Foundation. And just under half of Americans say they so not understand how the law will affect themselves or their families.

Dr. Kathleen Clanon talks to patient Andrew Solis about keeping his HIV under control. Clanon worries her patients will have disruptions in their care if they don’t navigate the changes coming under federal health reform. (Mina Kim/KQED)

A major goal of the federal health care law is that millions of people who currently do not have health insurance will have improved access to care. But the massive overhaul is also expected to be widely disruptive, and doctors worry that many people with chronic illness could suffer during the changeover, as KQED’s Mina Kim details today on The California Report.

Kim tells the story of 33-year-old Andrew Solis who stopped taking HIV medications more than a year ago after becoming addicted to methamphetamine while in a “rocky relationship.” He resumed treatment at the Oakland Highland Hospital HIV clinic last October after ending the relationship.

Solis has been able to get back in to treatment fairly easily, Kiim reports. But changes coming under the Affordable Care Act could complicate care for clinic patients, says Kathleen Clanon, chief medical officer at Highland Hospital.

From Kim’s report:

“They are all poor basically. It’s been 15 years or so since HIV was really a disease in the U.S. of middle-class men. It’s been a disease of poverty in the U.S., really, for about 15 years now.”

Right now, low-income patients without insurance get their health care paid for by the federal Ryan White program which only covers HIV related care. In order for them to get the full benefits of the Affordable Care Act, they’ll need to move to a more traditional insurance-based care. For starters, they’ll have to first choose an insurance carrier and a primary care doctor and Clanon says, that won’t always be easy.

“Most of the information that goes to people about their choices and how they’re becoming insured is going to come by snail mail, and people who are low-income frequently don’t have stable addresses, and the majority of my patients don’t have regular access to the internet.”

If her patients don’t fill out the paperwork, they will be automatically assigned to a primary doctor — one that Clanon says is unlikely to have a specialty in HIV care. Or worse, she fears her patients won’t tell their new doctor that they’re infected, because of stigma surrounding people with the virus.

“I have a patient that I saw about a month ago, he needed to move in with his mom. However she was so afraid of him that she was making him eat in his room off paper plates that she would then throw away. So stigma will make it difficult for people to fix any weirdness that happens in terms of where they get assigned.”

And people with HIV, Clanon says, don’t have time to be away from treatment.

“Within a week, ten days, two weeks, if you stop taking your HIV medication, the virus comes back. And treatment interruptions are dangerous for people with HIV, they’re dangerous for their health, and they’re dangerous for our whole community because during that time that person is infectious to others.”

Still, the Affordable Care Act earmarks money to deal with all that paperwork. Covered California, the state’s new health insurance marketplace will soon announce grants totaling $49 million for education and outreach. Much of the money is expected to be awarded to community groups which have extensive networks in ethnic and low-income populations — the very people who might have the most trouble navigating the new system.

The primary goal of that outreach is simply to get people enrolled in a health insurance plan. But Dana Howard, a spokesman with Covered California says these “assisters” will also be charged with helping people directly. “Assisters are there to say, ‘Let’s figure out who you’re seeing. Let’s find a plan that has your network in there and find the one that has the best price,’” Howard described.

Anthony Wright of Health Access, a statewide consumer advocacy group, was a bit more circumspect, saying, “that is the hope” when asked if assisters would help make sure people made it into a plan that includes their current doctor.

In the meantime, Dr. Clanon is moving ahead on her own, Kim reports. Two staff members at Highland’s HIV clinic are becoming experts in the Affordable Care Act. They’re also working with insurance plans to make sure that one of their HIV/AIDS doctors can be listed as a primary care provider.

Again, from Kim’s report:

Clanon says her clinic is ahead of the game, but she worries about clinics in rural areas or clinics with fewer resources. To help them along, Clanon’s been traveling up and down the state talking with other HIV providers about ways to prepare for health reform.

This post has been updated to include a quote and information from Dana Howard of Covered California. It also corrects the amount of money to be granted for education and outreach.

California’s insurance marketplace, Covered California, will open in October, 2013. People will be able to buy insurance, which will take effect January 1, 2014.

Calling today a “game changer for California and a game changer for the nation,” Peter Lee, executive director of Covered California, the state’s marketplace for health insurance, announced benefit plans that will be featured in the exchange.

He also unveiled its updated website (in English and Spanish) where consumers can access what is sure to be a very popular premium calculator. People with incomes up to 400 percent of poverty are eligible for subsidies from the federal government to help purchase insurance. The calculator gives an estimate of what you will pay after the subsidy.

An estimated 2.6 million Californians are expected to qualify for the subsidy. People who receive Medi-Cal or employer-based health insurance are not eligible and will continue to receive health insurance through their current plans.

As called for in the Affordable Care Act, there will be four tiers of coverage: platinum, gold, silver and bronze. The platinum plan will cover 90 percent of health care costs and have the highest premium. The gold plan will cover 80 percent; the silver 70 percent.

The bronze plan will have the lowest premium and cover 60 percent of costs, “meaning a consumer would pay 40 percent out of pocket,” said Ken Wood, senior advisor for Covered California. “That’s really a catastrophic plan that’s designed to protect someone from financial collapse if they had a severe illness. … So we are defining benefits across a wide range of richness and design and thus affordability.”

In other words, pay a higher premium and more of your health care costs will be covered.

California goes beyond federal requirements by detailing what deductibles and co-pays consumers may be charged. Platinum and gold plans will have no deductible, and a doctor’s office visit will be $25 (platinum) or $45 (gold). From there, silver plans will have $2,000 deductibles, a $45 doctor’s office visit co-pay and an additional $500 deductible for medications. (See chart at end of post for more detail on deductibles and co-pays.)

While Wednesday’s announcement detailed many aspects of costs, the premium prices are still estimated and will not be finalized until June.

These standardized deductibles and co-pays are rules which apply to plans sold in the exchange. While health insurers may still offer plans of other designs outside the exchange, consumers who qualify for the subsidy must purchase their plan on the exchange.

“The HR department for the rest of us”
Calling these announcements a “bold, big step forward,” Anthony Wright, executive director of the advocacy group Health Access said, “Consumers will get good and simple information about what the plan covers, and what it doesn’t. It will remove the guesswork so many consumers go through trying to figure out the differences between plans. … For individuals and families who don’t work for large employers with significant purchasing power, Covered California will serve as the HR department for the rest of us.”

Consumers can calculate their subsidies, but they should be sure to read the disclaimers — especially noting that the subsidy is based on the “silver” tier of coverage.

Patrick Johnston, president of the California Association of Health Plans sounded a cautionary note, saying that the standardization of plans may reduce confusion, but might also increase premiums, then pointed to some of the requirements of the Affordable Care Act not addressed in Wednesday’s news.

“New taxes, limits on geography-based pricing and age rating restrictions are all part of the Affordable Care Act that will drive up the cost of coverage for millions of consumers and employers,” Johnston said. “We will see in the coming months whether the standardized benefit designs adversely impact premiums or not.”

The benefit plans also feature out-of-pocket maximums: $6,400 for individuals and $12,800 for a family. In other words, if you get very sick or injured, that is the maximum amount you will have to pay outside of your premium.

“That’s a lot of money, let’s face it,” said Ken Wood. “But when people can have hospital bills at $500,000 or $1,000,000, can find they’re in a bankruptcy situation because of that type of tragedy, having their exposure limited to $12,000 is a bit is a breakthrough.”

(Chart: Covered California)

Editor’s Note: This post has been updated to reflect that the CaliforniaCovered website includes a calculator for insurance costs, not the subsidy from the federal government.

Taylor Gaydon (R) — a 15-year-old with Type 1 diabetes — prepares to zipline with friends at a weekend diabetes camp in Livermore. (Photo: Elaine Korry)

You’re likely familiar with rehabilitation — physical therapy after an injury would fall into this category. But parents with chronically ill children are all too familiar with a different type of service — habilitation service — as Elaine Korry detailed Monday morning for The California Report.  From her story:

“Habilitative services are really just making sure that a child can thrive in the world that they’re living in, so, for example, hearing aids are a habilitative service,” says Kelly Hardy, director of health policy at Children Now, a statewide advocacy group.  …

Dr. Thomas Long, a health financing expert with the American Academy of Pediatrics, says it helps young patients, like deaf kids, attain health in the first place.

“Habilitation implies skills that have not yet been developed,” Long says.  ”For example, speech therapy.  It’s terribly important for children to learn to speak well.”    

Habilitation is also important for kids with a chronic disease, such as asthma or diabetes.

California’s implementation of the Affordable Care Act is in full swing. It takes effect next Jan. 1. The federal health bill left it to states to determine their own benchmark health insurance plan that would be offered in the health benefit exchange — as long as that plan offered benefits across the 10 categoriesrequired by the ACA.

One hitch is that the federal government did not define exactly what was meant by “habilitative services,” so California legislators stepped in when they passed AB 1453 last fall. That bill defined the benchmark plan in California, and legislators defined ‘habilitative services’ this way:

Did you catch that? The passage lists not only what is included and but also what’s not included. In Korry’s piece, she interviewed the family of a teenage girl who has Type 1 diabetes. The entire family has learned a lot about managing the disease in a diabetes camp, a retreat sponsored by the Diabetic Youth Foundation. From Korry’s report:

It’s a place where kids with a life-threatening disease, like 15-year-old Taylor Gaydon, can have fun while learning to manage their disease. 

“I usually check my sugar 8 to 10 times a day,” Gaydon says, “and I don’t think I’d be as good taking care of my diabetes without camp. It really helped. …

Fun activities such as zipline plunges and scavenger hunts are just a small part of the weekend’s events. Program director Janet Kramchuster says most of the time is devoted to education.

“We talk about carbohydrate counting, we talk about insulin adjustments,” Kramchuster says. “We talk about how the family is functioning as a unit. We really delve into intensive education that cannot be covered in a 15-minute doctor’s appointment.”

The Diabetic Youth Foundation subsidizes most of the cost of running this camp.  Families pay the remainder, usually out of pocket.  Those with chronically ill children often face expenses for vital services their insurers don’t cover.  But children’s advocates say that under the Affordable Care Act, support services must be covered by insurance, if they fall into habilitative services category.

So, is a diabetes camp a habilitative service? Maybe, maybe not. It depends how individual health plans are written. Charles Bacchi with the California Association of Health Plans says the challenge will be in finding a balance. The more generous a benefit package, the higher the premiums. From Korry’s report:

“We’ve got to look at things that are medical,” Bacchi says, “provided by licensed providers — and not try and shift social and educational costs into the health care premium dollar, because that will inordinately increase premiums and make health care unaffordable for millions of Californians.”

That’s one argument. On the other side, advocates for kids with chronic illnesses say a broad array of service, including social supports and education, arm patients with vital knowledge.  Again, Diabetic Youth Foundation’s Janet Kramchuster.

“That knowledge prevents the ER visits, and it helps reduce complications down the road,” says the Diabetic Youth Foundation’s Kramchuster. “Talk about a savings for insurance companies.”

Support for Elaine Korry’s reporting comes from Lucile Packard Foundation for Children’s Health Journalism Fund at USC Annenberg School for Communication and Journalism.

In Thursday’s State of the State speech, Gov. Brown called for a special legislative session to address the Affordable Care Act. (Justin Sullivan/Getty Images)

In his State of the State speech Thursday morning, Gov. Brown spent about 60 seconds addressing health and human services — and all those seconds were devoted to the rollout of the Affordable Care Act.

Early in his speech, Brown reiterated his theme of fiscal discipline and seemed to urge caution in implementing the Affordable Care Act, stating, “The ultimate costs of expanding our health care system under the Affordable Care Act are unknown. Ignoring such known unknowns would be folly.”

Later in the speech came the bulk of his comments about the ACA. Here’s the transcript:

“California was the first in the nation to pass laws to implement President Obama’s historic Affordable Care Act. Our health benefit exchange, called Covered California, will begin next year providing insurance to nearly one million Californians. Over the rest of this decade, California will steadily reduce the number of the uninsured. Today I’m calling for a special session to deal with those issues that must be decided quickly if California is to get the Affordable Care Act started by next January.

“The broader expansion of Medi-Cal that the Act calls for is incredibly complex. It will take more time. Working out the right relationship with the counties will test our ingenuity and will not be achieved overnight. Given the costs involved, great prudence should guide every step of the way.”

Let’s take these two items one at a time, starting with the health benefit exchange. Brown is calling for a special legislative session so that new laws necessary to implement the exchange can take effect more quickly. That speed is necessary since the exchange must open for people to enroll on October 1. Health insurance purchased in the exchange will start on January 1, 2014.

Regarding Medi-Cal, the governor’s comment of “working out the right relationship with the counties” is an allusion to money, a topic he addressed when he released his budget earlier this month.

Right now, California counties receive billions in state dollars to care for the uninsured. Under the Affordable Care Act, most of the uninsured will have access to coverage. That access will largely be paid for in federal dollars. Gov. Brown believes that since the counties will benefit from this new federal money, they should pick up the tab for other things the state has traditionally funded. Childcare subsidies is one idea that has been tossed out. Determining the “right relationship with the counties” could shape up to be one of the political battles to watch in the coming months.

The “unknown” of the ultimate cost is, in part, because no one can be sure exactly how many people will sign up for coverage. In addition, the mass marketing that is expected to happen this summer to encourage people to enroll is expected to bring in many people currently eligible for Medi-Cal but not currently enrolled. The state will be on the hook for half the costs of these people — not the 100 percent federal dollars for the newly eligible.

Listen to Jerry Brown’s comments on health care reform:

In addition, the implementation of the ACA is expected to bring many people already eligible for Medi-Cal into the fold. The state will pay a greater share of the costs for those people.

Altogether, analysts project that from 2014 to 2016, California will incur additional annual costs between $188 million and $471 million. But at the same time, billions of dollars will flow into the state, paying the overwhelming majority of total costs for the newly enrolled and those already eligible.

“This is a really great opportunity for California to enroll and offer coverage to over a million people at a very low cost to the state,” said Laurel Lucia, lead author of the study and a policy analyst at the UC Berkeley Center for Labor Research and Education.

And those billions of dollars will lead to additional jobs in California, she says. “Those federal dollars will create jobs in the health care system and those health care workers will spend money in the community.”

From the report:

• The Medi-Cal Expansion and enrollment growth among those already eligible is predicted to bring between $2.1 and $3.5 billion in new federal Medi-Cal dollars to California in 2014, growing to between $3.4 and $4.5 billion in 2019.
• Overall, the federal government will pay for at least 85 percent of the total new Medi-Cal spending between 2014 and 2019, including:
1. 100 percent of the health care spending for the newly eligible for the first three years (and no less than 90 percent in 2017 and after);
2. 50 percent for those already eligible for Medi-Cal but not enrolled; and
3. 88 percent for children already eligible for Healthy Families but not enrolled in 2015 through 2019, and 65 percent in 2014.

In a statement, Anthony Wright, executive director of Health Access, an advocacy group said the study makes clear that Medi-Cal expansion would be a “boon, not a burden,” to California. “The state should take quick action to be ready for health reform in early 2013,” he said. “We must work to maximize the benefit for Californians, and bring in as much federal dollars into our health system and economy.”

While the federal overhaul of health care initially required a massive expansion of Medicaid, last June’s Supreme Court ruling on the Affordable Care Act made the Medicaid expansion optional, state by state.

While California has moved forward with county-wide “Bridge to Reform” programs, the state legislature has yet to formally approve the statewide Medi-Cal expansion. Gov. Brown is expected to call a special legislative session soon to address the Affordable Care Act.