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Small business owners learned how they, along with health care providers, employees and individuals, would be affected by Maryland Health Care Reform changes during a panel presentation Wednesday evening.

Calvert Memorial Hospital president and CEO Jim Xinis began the presentation, hosted by the Calvert County Chamber of Commerce at the College of Southern Maryland Prince Frederick campus, with discussion of how health care reform under the federal Affordable Care Act is going to affect consumers and the “provider community” once it becomes effective Jan. 1, 2014.

Xinis said as a health care provider, although Calvert Memorial Hospital has “issues with the reform bill, overall in the grand scheme of things we support health care reform.”

From a consumer standpoint, the reform bill is beneficial because it expands coverage to dependents and children up to the age of 26; requires insurers to cover children with pre-existing conditions; prohibits pre-existing conditions in adults; requires insurers to spend 85 percent of the premiums on medical claims and quality improvements; provides drug discounts to seniors; ends lifetime limits; prohibits insurers from charging women more than men; and limits higher premiums based on age, Xinis said.

The foundation for the health care reform, Xinis said, is getting access to care to more people, which means “dramatically lowering the number of people who have no health care coverage” on a national basis. Xinis said CMH writes off roughly $8 million in “bad debts and charity” each year, and having more people covered by insurance would greatly reduce that number.

One of the “biggest challenge[s]” Xinis said he sees with the reform is that there are not enough providers in the Southern Maryland region to take care of all of the people who will be newly covered by insurance. Xinis said a recent study showed Maryland has 16 percent fewer physicians available for clinical practice than the national average, and Southern Maryland has the largest shortage of physicians in the area.

“When you expand benefits … that, in theory, would mean people have access to health benefits that have not had access before,” Xinis said. “One of the things we’re concerned about here in Calvert County … is do we have enough providers to take care of everyone?”

An “unintended consequence” of the reform for consumers, Xinis said, is increased insurance rates by 25 to 60 percent. He said the increase is due to the elimination of pre-existing conditions, mandated benefits, more people who are less healthy accessing the system and getting insurance coverage and new taxes and fees charged to insurers that will most likely be passed onto consumers.

Kevin Yang, chief information officer for the Maryland Health Benefit Exchange, said the exchange was created by “an act of legislature” with a purpose of implementing portions of the Affordable Care Act and setting up regional exchanges. He said state-based exchanges will be set up in regions throughout the state as marketplaces to help determine the eligibility of individuals and employers — whether they qualify for Medicaid, advance premium credits or small business subsidies — and will allow individuals, employees and employers to select and set up health plans.

“It’s not an issuer of a health insurance plan,” Yang said. “We’re a marketplace, a conduit.”

Currently, Calvert Healthcare Solutions provides insurance to more than 1,800 people in the county who did not have access to health insurance, Xinis said, but the health care reform could put the center out of business. Xinis said the center has applied to serve as the “navigator role” for the Southern Maryland region’s exchange to prevent the center from closing. The designation for the exchange will be announced at a later date, and Xinis said he hopes the center will be the organization chosen to be the exchange.

The Small Business Health Options Program, or SHOP, is a program within the exchange to allow small businesses and its employees access to affordable coverage, Yang said. Benefits of using the program are that employers can offer employer or employee plan choices; can continue to use brokers; can use online tools to pick their plans and set up costs; and can qualify for tax credits.

Insurance plans will be offered at “different medal levels,” Yang said. Insurers were asked to categorize their plans by bronze, silver, gold and platinum designations, he said, and each plan is “based on the actuarial value.” He said the silver plan is a 70 actuarial value, meaning that “on average, that plan should pay 70 percent of your medical costs and the consumer would pay 30 percent” through their deductible. The gold plan pays for 80 percent on average and the platinum plan pays for 90 percent on average, he said.

For small businesses, the exchange sets up the employer choice or employee choice models. The employer choice model is “similar to today,” Yang said, which allows the employer to pick a single carrier and have all employees select either a bronze, silver, gold or platinum level of coverage from that carrier.

The employee choice option, Yang said, allows employers to select what level of coverage to offer to employees and allows the employee to choose which provider they want that level of coverage from.

Jon. S. Frank, president of Jon S. Frank & Associates Inc., an employee benefits brokerage that advises small and medium size businesses on employee benefits with a primary focus on health plan management, said qualified plans in the levels will be available without medical underwriting during the open enrollment period, which in its first year this year will run from October to March. Many small businesses, Frank said, will not be impacted by the reform until its anniversary date after the reform’s implementation date of Jan. 1, 2014.

Frank said Maryland Health Care Exchange is an entirely online system, and access to the SHOP exchange for small businesses would begin online. He said tax credits are only available to small businesses purchasing insurance through the SHOP exchange as an added benefit of using the program.

Although enrollment will be conducted by “certified navigators” at the exchange, small businesses can still use brokers, as they “have not been eliminated from the process,” Frank said.

The “small group market,” Frank said, is defined in Maryland as having 50 or more full-time employees. Under the reform, small businesses that have 50 or more full-time employees must offer health care coverage to them.

For a business with more than 50 full-time eligible employees, “employer responsibility” will be triggered under “pay or play,” meaning it is the employer’s responsibility to offer health insurance benefits or pay a penalty, Frank said. Health care coverage must be offered to “actual full-time employees who are either salary or working more than 30 hours a week after a waiting period of not-to-exceed 90 days,” he said.

Plans must also meet the minimum essential coverage, or the bronze level, and must be affordable as measured against an employee’s W2 earnings, Frank said. If an employer does not meet these requirements, penalties starting at $2,000 per eligible employee will be enforced, he said. If employers opt out of offering benefits to eligible employees, Frank said, they will end up paying roughly the same amount in penalties as they would pay to offer health care benefits.

The exchange’s navigators also will work with individuals without insurance options, Frank said.

If someone purchases insurance through the exchange as an individual, subsidies are provided from 133 percent to 400 percent of the federal poverty level. As an example, Frank said if a “party of one” is making 200 percent of the federal poverty level, their income will be about $22,000, which will determine what subsidy that person gets.

“A subsidy is not a freebie,” Frank said. “It’s an advance tax credit.”

kfitzpatrick@somdnews.com