With just over a month to go before the first wave of changes initiated by the Affordable Care Act go into effect in October, there have been many policies put into place in preparation. This past Wednesday, the Obama administration announced that insurers will be required to allow uninsured Americans to pay medical bills with prepaid debit cards, as opposed to requiring bank-account transfers, as is commonplace in current practices. Based on census data, it has been found that one in four low-income people who are eligible for tax subsidies to cover the cost of their insurance didn’t have bank accounts, and this new law is intended to protect those people.
Although insurers will be required to accept payment in the form of prepaid debit cards, they will not be required to accept automatic monthly payments from said cards (or credit cards). This law is being supported heavily by consumer advocates for “unbanked” Americans, and by major credit card companies such as MasterCard and Visa. Those consumer advocates, however, feel that lawmakers have dropped the ball in fully delivering with this new law. “If you require someone to take a monthly step they’re just less likely to do it,” says Brian Haile, Senior Vice President of Health Policy at Jackson Hewitt Tax Service Inc.
The new law will require all Americans to have insurance coverage, otherwise they stand to face tax penalties. Advocates like Haile are concerned that low-income Americans will not make the effort to obtain and maintain their insurance coverage if payment must be done manually every month.
Insurers have a problem with the requirement to accept prepaid debit cards, as they are weary of vendor fees on the cards creating an additional incurred expense on their end. This is an issue that many small business owners face, which is evidently now being felt by insurance companies. As it would be expected, MasterCard and Visa wrote letters to the administration, advocating the requirement of insurers to accept prepaid debit cards.
To say the least, it’ll be interesting to see how the development of the Affordable Care Act plays out, and the policies that go into effect as a result.