Healthcare decision has high stakes for 2 million uninsured Georgians

The Supreme Court hearings this week on the federal law requiring citizens to buy health insurance have widespread implications in Georgia -- where about 2 million residents have no health insurance.

The mandate calls for almost everyone to obtain insurance or face a penalty. But studies of the law's potential impact in Georgia predict that about 800,000 Georgians may remain uninsured even if the law is implemented. 

How many Georgians are ultimately enticed to comply with the mandate and buy insurance -- if the law is upheld -- will rest on two important factors. Will most consumers opt to pay for coverage to avoid getting hit with a penalty? And, will the state-based insurance exchanges, which would open in 2014, offer consumers health plans with affordable prices and quality coverage?

Whether Congress has the right to penalize someone for failing to purchase a product is at the heart of what the Supreme Court must determine. Georgia is among the states arguing that such a mandate is unconstitutional.

"Those opposing the law will claim that if Congress can force people to purchase health insurance, then Congress can force people to eat their broccoli or buy burial insurance," said Bruce Brown, an Atlanta attorney who was a clerk for Warren Burger, a former Chief Justice of the Supreme Court. "Those who support the law argue that many economic laws are in some sense coercive, whether it's preventing manufacturers from hiring child labor or the minimum wage. Most exercises of government authority involve some restrictions of individual freedom."

Who's really affected?

An estimated 53 percent of Georgians under age 65 would get coverage through an employer after implementation of the law -- about the same portion who get coverage at work today, according to research conducted by conducted by William S. Custer, a Georgia State University economist and health care expert. A massive expansion of the Medicaid program, required under the law, would add about 700,000 people to Georgia's health plan for low-income people.

But what about the other 1 in 4 Georgians? The decisions these Georgians make -- if the law is indeed implemented -- are the hardest to project, but perhaps the most important to the Obama Administration's goal of extending coverage to as many Americans as possible.

The Patient Protection and Affordable Care Act, the formal name for federal health care reform, envisions attracting these consumers to new state-based insurance exchanges that are a key element of the law. It's hard to predict how many consumers will find the new marketplaces attractive because so much about how they will work is unknown.

The idea is that the marketplaces would be similar to an online shopping site that would offer consumers a choice of private insurance plans that must meet minimum coverage requirements. Consumers with incomes up to about $76,000 for a family of three would be able to qualify for an income-based subsidy to help pay for coverage, if they shop on the exchange. But experts say the most significant help in paying for coverage -- a subsidy that Custer expects to average about $3,200 a year -- would be reserved for consumers that make up to double the poverty limit -- $38,180 for a family of three.

But those with incomes high enough to pay taxes could face a penalty if they do not buy coverage. The penalties vary by income. But in the first year, the average penalty for people well above the poverty line would be about $250 in 2014, according to Custer's calculations. But that penalty would grow over the years -- reaching an average of about $1,100 for the higher-income consumers by the year 2020. There are no criminal penalties for failing to comply with the mandate. It's difficult to predict how many Georgians will end up shopping on the exchange if the law is upheld. Custer said the estimates range from 500,000 to 1.2 million people.

The exchanges are expected to be most attractive to those low-income buyers who could qualify for the hefty subsidies. The exchanges are also expected to appeal to many of the 670,000 Georgians who buy their own insurance policies and whose coverage tends to be more costly than the premiums paid by large groups.

"The theory behind the exchanges is that people will be able to buy coverage at a less expensive rate than today's system -- on average," Custer said. "There will be advantages for people now in the individual market."

But will it work?

States have the authority to design and run their own marketplaces, with guidelines set by the law. Gov. Nathan Deal has said Georgia would prefer to design its own exchange, rather than having the feds set it up. But Deal and other leaders have opted not to make plans for a Georgia-run exchange until the Supreme Court rules on the whether the law is constitutional, a decision likely to come down by the end of June.

How attractive the exchanges are to consumers -- in terms of price and coverage options -- is also expected to play a big role in whether employers who currently offer coverage end up dropping it and sending their employees to the exchange to find a plan.

"If the exchange is attractive to employees, many small employers may drop coverage," Custer said. "If it's not, they will continue to offer coverage as they always have."

Bob Graboyes, a guru on the health law at the research arm of the NFIB, which represents small businesses, said the organization for years has sought changes in the nation's approach to health care. But the NFIB ended up being among the parties challenging the individual mandate on constitutional grounds. Projecting what would actually happen under the law is almost impossible, Graboyes said, because it's so unprecedented and complex -- with many regulatory details yet to be revealed.  But he said the law is likely to add to the cost of health care and hit employers with new penalties instead of giving them what they wanted -- a system that would make health care affordable.

"They passed a law that made things appreciably worse and not only didn't fix the problems out there, but it invented countless numbers of new problems that our members are scared to death of," Graboyes said.

Kathie McClure, an Atlanta lawyer, just returned from Washington D.C. where she camped out in front of the Supreme Court for four nights – which enabled her to take a coveted seat inside the courtroom to hear the oral arguments.

She is an ardent supporter of the health care law. She said her two grown children – one with diabetes, the other epilepsy – are shunned by insurance companies because of their pre-existing conditions. “They are one job away from bankruptcy due to medical costs,” she said.

The individual mandate, she said, makes sense.

“The insurance mandate is really an individual responsibility requirement,” she said. “Unfortunately we are all going to get sick at some point in our lives. When everyone is covered that means insurance companies can then afford to cover people with pre-existing conditions, which is really one of the largest problems that needs to be solved.”

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