By DOUG WILSON
Herald-Whig Senior Writer
Frank Kisner of the Illinois Department of Insurance didn't see any hands go up when he asked a Quincy audience how many of them have read the Patient Protection and Affordable Care Act -- also known as Obamacare.
Kisner, the department's deputy director of consumer education, said the law that takes effect over the next two years is like a partial blueprint that lays out a home's foundation and points out where walls and doors are, without filling in all the other details.
"It looks good on paper, but since it's something new, we've got to work out how it all goes together," Kisner told the Quincy Area Chamber of Commerce Brownbag Luncheon group Thursday.
Illinois is in the process of setting up an insurance exchange that will assure that health care insurance policies meet minimum federal guidelines. The state is doing the work in partnership with the federal government and has received about $39 million in federal funds. A payment of an additional $50 million should come between February and April.
Some other states have opted to set up insurance exchanges on their own. Still others have asked the federal government to set one up.
A study indicates that Illinois customers will save $25.5 million over a two-year period under the partnership setup, Kisner said.
Starting in 2014, insurers will no longer be able to exclude people with pre-existing conditions from getting coverage. Premiums will vary only on the basis of age, tobacco use, family size and geography.
Kisner explained that geography is a factor because the cost of health care, the cost of living and average incomes all vary from place to place.
Some provisions of the Affordable Care Act already are in effect. Parents can continue to keep adult children on their insurance plans until the children reach age 26. Children who are military veterans may be covered until age 30.
"They do not need to live at home, and they could be married, although you can't cover their spouse," Kisner said.
Starting last year, insurers had to meet certain medical loss ratios or provide rebates to policy holders. Insurance companies must spend 80 to 85 percent -- depending on whether it is an individual, small or large group policy -- of the premiums they receive on health care services. If the insurers fall short of those spending levels, they must rebate money to the person who is insured.
Insurance companies also must justify rate hikes that exceed 10 percent in a year.
The Affordable Care Act's individual mandate will require that most all Americans have health insurance starting in 2014 or face fines. Kisner said an urban legend holds that the penalties will be only $85.
"The penalties will be between 1 percent and 3 percent of a person's annual income," Kisner said.
By that measure, a $20,000 a year wage-earner owing 1 percent would be fined $200. Someone making $150,000 and owing 3 percent would owe $4,500.
State exchanges are scheduled to hold open enrollment periods for individuals and small businesses by next fall.