A homegrown Central Texas health insurance option could provide coverage as soon as January to people who can’t afford it now but have incomes too high to qualify for the federal-state Medicaid program for the poor and disabled.
The Central Health board gave approval Wednesday night for its nonprofit Sendero Health Plans to apply with the federal government to offer the coverage under the Obama health care law, which calls for the establishment of health insurance exchanges to help people buy coverage in the 50 states. People who refuse to buy coverage will have to pay a penalty.
The health insurance exchanges will start enrolling people in October.
Surveys show that the health exchanges are not well known or understood among the public. They are being promoted as one-stop, online marketplaces that will provide an affordable way for consumers and small businesses to buy health care coverage. Some states are setting up the marketplaces — expected to encourage competition among insurers — while the federal government will run them in Texas and other states that have declined to do so.
Eligible consumers will receive tax credits to help them pay the premiums. For that subsidy, their incomes must fall below 400 percent of the federal poverty level but above 138 percent, the cut-off for Medicaid coverage eligibility. This year’s federal poverty level for a family of four is $23,500, which means four-person households with incomes from $32,400 to $94,000 would be eligible for premium help.
The subsidy is expected to average $5 for every $1 the patient pays in premiums, said Dave Lamkin, Sendero’s president and CEO.
The premium cost for a single person who earns $18,000 a year, or 156 percent of the federal poverty level, “should not be higher than $64 a month,” regardless of the person’s age, Lamkin wrote in an email. “Sendero is not yet at the point in time that we can finalize what our specific premium structure will look like,” he added.
Right now, most uninsured, low-income people can’t afford to pay for their hospitalizations and most other care. Central Health, through Travis County taxpayers, helps pay for that care, while hospitals write off the cost as charity or bad debt. The exchanges provide a way to pay for that, said Patricia Young Brown, president and CEO of Central Health.
“This offers a person or family the dignity to walk into a health care provider and not have that bad debt” dangling over their heads, she told the board. “It’s a very inventive way of helping our uninsured population.”
Sendero is proposing that its plan cover residents of Burnet, Bastrop, Travis, Fayette, Hays, Williamson, Lee and Caldwell counties, the same region Sendero covers with its Medicaid HMO. While large insurers, including Blue Cross Blue Shield, also are expected to set up exchanges in the region, Sendero could be the only one based in Austin, Lamkin said.
Central Health estimates that the region has 401,000 uninsured residents. Assuming the state continues to oppose expanding Medicaid — another part of health care law — an estimated 100,000 people could gain access to coverage through the exchanges in Central Texas, Lamkin said.
In Texas, subsidies will begin for people at 100 percent of the federal poverty line, if there is no form of Medicaid expansion, Lamkin said. Also, people earning above 400 percent of the poverty line can buy insurance from an exchange, but they would not be eligible for a subsidy.
“It’s a win for the patient, it’s a win for the providers in the community and it’s a win for Central Health and the taxpayers,” Young Brown said in an interview.
The Central Health board Wednesday night authorized Sendero to spend $500,000 of its budget to develop its proposal.
One of the biggest challenges will be educating the public about it, Lamkin said.
“We ran a series of focus groups consisting of people who would qualify for an exchange, and most of them knew very little about the exchanges,” he said. “And very few of them knew there would be a penalty” if they did not buy coverage.
Sendero’s application to provide the coverage is due at the end of this month. If the U.S. Centers for Medicare and Medicaid says the application needs to be changed to receive approval, Sendero can choose to proceed or withdraw.