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Issues in Health Reform

Author: rriporte

How competitive are health insurance markets

A recent study of the insurance markets in six states (Alaska, Florida, Kansas, North Carolina, Ohio and Texas)  released by the Brookings Institution suggested the following common themes:

  • “Despite education and outreach efforts by insurance agents, navigators and health policy experts, many consumers lack a good understanding of health insurance and how plan provider networks and premiums are related to out-of-pocket costs such as deductibles, co-payments and co-insurance.
  • The size of the population in a state’s insurance market is an important determinant of insurer participation.
  • The ability of insurers to negotiate favorable contracts with health care providers is key to their success and interest in participating in an insurance market.
  • Enrollment in marketplace plans is generally driven by low premiums, which has implications for consumers who purchase lower-cost plans that may not meet their health care or financial needs.”

For a good summary press release from Kansas see: Kansas Health Institute

Health insurance enrollment 2016, numbers and issues

Though somewhat specific to Kansas, this press release written by a KSRE colleague Katie Allen detailing an interview with me might be informative and useful in other contexts.

Released: Feb. 24, 2016

Health insurance enrollment numbers higher overall in Kansas

More consumers are enrolled in the Health Insurance Marketplace for 2016 compared to previous years.

 MANHATTAN, Kan. – According to the Health Insurance Marketplace, more than 12.7 million Americans signed up for a health insurance plan for 2016 during the marketplace’s open enrollment period that ended Jan. 31. This number includes more than 4 million new enrollees.

More than 100,500 Kansans were among those who enrolled in the marketplace, up from about 96,000 enrolled at this time last year.

Roberta Riportella, Kansas Health Foundation professor of community health at Kansas State University, said as the year goes on, the enrollment numbers are expected decrease slightly, because enrollees must pay the monthly premiums and some must also submit additional paperwork to be considered insurance policy holders.

“We expect to lose some, but these initial numbers for people who went to the marketplace are encouraging,” said Riportella, a health insurance specialist for K-State Research and Extension. “At least 80 percent of those people qualified for assistance in paying for their premiums, which makes the plans much more affordable.”

Since 2014, nearly all Americans are required to have health insurance. The Affordable Care Act, which made having health insurance mandatory, outlines a few exemptions (https://www.healthcare.gov/exemptions/). These could include certain hardships, financial status, life events and membership to some groups.

Enrollment numbers in the marketplace have continued to generally go up nationwide and in Kansas, Riportella said, for a variety of reasons.

“There is a greater awareness that there is an insurance marketplace where I can go ‘shopping’ for insurance that my neighbors and family members are using. It didn’t blow up. It didn’t go away. It wasn’t repealed, and it seems to be a fairly stable way for me to get insurance for myself and my family members,” she said. “Another reality is the fines for not being insured that people experienced for the first time when they filed their 2014 tax returns.”

In the current income tax season, taxpayers now have to show proof of health insurance enrollment – for at least nine months of the year in 2015 – on their tax documentation. For those without the required amount of coverage in tax year 2015, the penalty is 2 percent of household income, or $325 per adult and $162.50 per child under 18 up to a maximum fine of $975 – whichever is the greater amount. For those without coverage in 2016, the penalty will be the higher amount between 2.5 percent of household income, or $695 per adult and $347.50 per child to a maximum fee of $2,085. The fines will continue to increase, Riportella said, which discourages people from remaining uninsured.

Options outside the marketplace

Consumers who did not enroll in the marketplace before the Jan. 31 deadline may have other options to meet the nine-month requirement for health insurance coverage in 2016. Options available now typically have certain requirements for consumers to meet to enroll in coverage, but Riportella said some people still might have more than one option.

  • The marketplace (https://www.healthcare.gov/) is still available for those who experience a qualifying life event (http://www.hr.mnscu.edu/insurance/documents/Qualifying_Life_Even.pdf) this year. Qualifying events include losing job-based or other insurance, moving out of state, or changing family composition such as getting married or divorced, losing a spouse, or adding a child. Enrollees with a qualifying life event have 60 days after the event to sign up for insurance through the marketplace. This is considered a special enrollment period.
  • Job-based health insurance is an option if the employer provides coverage.
  • KanCare (http://www.kancare.ks.gov/), Kansas’ Medicaid program, is available to low-income U.S. citizens and lawfully present immigrants who are over 65, under 18, or disabled. Children and pregnant women might be eligible for KanCare if their household incomes are less than 245 percent of the federal poverty level.
  • For adults age 65 and older, Medicare (https://www.medicare.gov/) remains the health insurance option. Certain younger people with disabilities and people with end-stage renal disease and amyotrophic lateral sclerosis, commonly called ALS or Lou Gehrig’s disease, will continue to get their health insurance through this federal program.
  • Other public programs include TRICARE, Veterans Affairs (VA) or the Indian Health Service (IHS) for eligible enrollees.
  • Enrolling in private health insurance is another option available at any time, though many private plans mirror the same open enrollment period offered by the marketplace.

Because having health insurance is required for nine months of the year, consumers could still be within the legal requirements if their plans begin by April 1, Riportella said.

In addition to avoiding a tax penalty, having health insurance encourages appropriate and timely use of medical care while it protects against extraordinary financial risk, she said.

Medical expenses are a leading cause of personal bankruptcy, she said, so having health insurance protects families against that risk. Plus, families are better able to plan for medical expenses, and can budget for the premiums and out-of-pocket expenses of their plans.

More information

To learn more about how to enroll in the marketplace or KanCare, call the marketplace, available 24/7, at 800-318-2596. People who think they meet special enrollment criteria should contact the marketplace. The Kansas Health Institute also has numerous resources on its website (http://www.khi.org/).

Read more about issues in health reform on Riportella’s blog (http://blogs.k-state.edu/issuesinhealthreform/).

Sidebar: Addressing the health insurance gap in Kansas

The Affordable Care Act made it possible for consumers to purchase health insurance without being denied due to one or more pre-existing conditions, said Roberta Riportella, Kansas Health Foundation professor of community health at Kansas State University and K-State Research and Extension.

Also, in many cases, people are eligible to receive financial assistance in paying for premiums through advance premium tax credits, which lower consumers’ monthly insurance bills, and out-of-pocket health care costs through cost-sharing reduction plans, which lower items such as emergency room fees and prescription costs, Riportella said.

Financial assistance in the form of premium tax credits makes the policies in the marketplace more affordable for those who fall between 100 and 400 percent of the federal poverty level, or FPL (https://aspe.hhs.gov/poverty-guidelines). Eligibility for cost-sharing subsidies on Silver plans, or middle-tier plans, bought on the marketplace is available to those whose annual income lies between 100 and 250 percent of the FPL.

Another health insurance option for low-income individuals and families is Medicaid, called KanCare (http://www.kancare.ks.gov/) in Kansas, but eligibility is limited. Currently in Kansas, KanCare is available to low-income U.S. citizens and lawfully present immigrants who are over 65, under 18, or disabled. Children and pregnant women might be eligible for KanCare if their household incomes are less than 245 percent of the federal poverty level.

In 32 states, Medicaid expanded to include individuals under 138 percent of the FPL, so more people could be insured in that program, Riportella said, but in the 18 states that have not expanded, including Kansas, there is a lack of affordable options for health insurance. These people fall into a “gap,” as they cannot afford insurance on their own, are not eligible for assistance in paying for marketplace plans and are not eligible for Medicaid (KanCare) enrollment.

“We are enrolling lots of people who are eligible (for health insurance) in the marketplace, but we have about 100,000 low-income people in our state who would otherwise be eligible for Medicaid,” Riportella said. “Almost half of those, 49,000, are under 100 percent of the federal poverty level and aren’t eligible for financial assistance to pay for premiums and out-of-pocket costs if they were to purchase a plan in the marketplace. These folks are in what we call the ‘gap.’”

“This is because the law strongly encouraged states to expand their Medicaid programs to cover those with incomes less than the federal poverty level,” she continued. “So unless we expand Medicaid to include these folks, or have some type of program to insure or deliver care to those in the ‘gap,’ Kansas will be stuck where we are right now at about 14 percent of our population being uninsured.”

The gap affects not only individuals and their families, but also affects the communities in which they live, Riportella said. People without insurance seek care under more dire circumstances, and uninsured consumers who seek late care for perhaps greater health care needs raises the cost of care for all.

The uninsured gap is not shared equally by race in Kansas either, according to the Kansas Health Institute, which recently reported that Kansas has the most racial disparity in those not covered by health insurance of all states. In 2014, 17.4 percent of black Kansans were uninsured compared to 7.6 percent of white Kansans. Nationwide, 13.6 percent of black Americans were uninsured in 2014, significantly lower than the rate in Kansas (http://www.khi.org/news/article/despite-obamacare-insurance-disparities-persist-in-kansas).

For more information about eligibility to receive assistance through premium tax credits or out-of-pocket cost-sharing reduction plans, visit HealthCare.gov (https://www.healthcare.gov/lower-costs/qualifying-for-lower-costs/).

————–

K-State Research and Extension is a short name for the Kansas State University Agricultural Experiment Station and Cooperative Extension Service, a program designed to generate and distribute useful knowledge for the well-being of Kansans. Supported by county, state, federal and private funds, the program has county Extension offices, experiment fields, area Extension offices and regional research centers statewide. Its headquarters is on the K-State campus, Manhattan.

Story by:
Katie Allen
katielynn@ksu.edu
785-532-1162
K-State Research and Extension

For more information:
Roberta Riportella – rriporte@ksu.edu or 785-532-1942
 

 

 

Persisting disparities in who is insured

While overall the US is experience decreasing rates of people uninsured, these gains are not shared among the races equally.  Racial disparities that are related to more people of color working in part time and/or lower paying jobs, and in general, increase the rates of poverty among blacks and other nonwhites, are also having an impact on who gets health insurance.

Most of those part time and lower paying jobs do not come with health insurance.  Fortunately, there are now options in the state and federally run Marketplaces where many can purchase health insurance without worrying about pre-existing conditions excluding them.  Also, in many cases, people are eligible to receive substantial financial assistance in paying for premiums (Advance Premium Tax Credits) and the cost-sharing portions of insurance (Cost Sharing Subsidies).

However, in order to qualify for that financial assistance the family income must be above the federal poverty line ($11,880 for an individual; $24,300 for a family of 4).  In the 18 states where Medicaid has expanded to include individuals under 138% of that level, there are options for those who are ineligible to receive financial assistance.  Those individuals are insured through their states’ Medicaid systems.

In the 32 states that have not expanded however, there are no affordable options for insurance.   This is where we observe being poor and without a job that offers health insurance to impact racial minorities the hardest.   (The one exception is Wisconsin that has its own Medicaid coverage outside of the federal Expansion.)  And, as all uninsured people, those without coverage do often use health care, but they access care at inappropriate times (less preventive, more acute and severe care needs), and in inappropriate places (emergency rooms for routine care).  Finding a way to insure this population or provide them with more consistent health care would improve their health outcomes and community outcomes that thrive with a healthy workforce.

This issue is covered in detail in a news article and in a Kansas Health Institute issue brief.

Variation in 2015 Marketplace Plan Selection Rates by Income

Open enrollment in the federal and state Health Insurance Marketplaces is over for the 2016 insurance year but we’re still learning from prior years’ experiences.  The focus of the following issue brief written by RWJ and the Urban Institute  http://www.rwjf.org/content/dam/farm/reports/issue_briefs/2015/rwjf424382 presents March 2015 data (end of Open Enrollment 2) showing:

  • how many estimated people who were eligible for Marketplace coverage actually signed up, and of those,
  • how many were eligible and applied for assistance in paying for premiums, and
  • how many of those in total “effectuated” coverage, that is paid premiums and filled out all necessary paperwork to start the policy coverage.

The data are presented by state, with some data on how people of different income levels behaved in these markets.

The general picture shows that there are many people in all states who are likely missing out on using the Marketplaces for affordable health insurance coverage.  The selection rates…number of people eligible for financial assistance paying for Marketplace plan divided by the total number of people estimated eligible…are still lower than might be expected.  There is also large variation between states as to how many are enrolled, and whether or not it was a state-based exchange, or a state with a Medicaid Expansion, were not necessarily the defining factors.

Some key findings:

  • 24.1 million people were eligible for Marketplace tax credits
  • 10 million, 41%, selected plans but only 8.6 million “effectuated” their coverage for a more accurate enrollment rate of estimated eligibles of 35%.
  • the 13 state based marketplace states had more variation between each other in effectuated plan rates (5-50%) than those in the 37 states using healthcare.gov (18-57%).
    • Florida’s high effectuation rate (57%), the highest of all states, skews the non Medicaid expansion states’ rates when combined.
    • Rates in Minnesota and DC were impacted by special programs they have that cover individuals under 200%FPL.  Over 200%FPL, Minnesota and DC look much as the other states.
  • the higher the income, the less use of the Marketplace. This was true for all states. That is, even with tax credits, out of pocket premium costs for those with higher incomes get increasingly more expensive and appear to be discouraging Marketplace enrollment.  (Some of the drop off may be due to under estimated alternative insurance options like employer based insurance.)

Report conclusions:

  • The relatively low effectuation rate could be improved by additional outreach efforts, especially in states with very low rates.
  • Premium tax credits, cost sharing reductions, and premium criteria are the same across all states so Marketplace enrollment data provide insights into people’s willingness to pay for insurance given some level of financial assistance.
  • The limits of a willingness to pay more of the premium costs could hold back significant decreases in the number of people uninsured.  While the fines for remaining uninsured may weigh into families’ decisions as those fines become increasingly expensive, it may be that without a policy change to improve affordability overall insurance costs may remain a barrier to fuller insurance levels.

 

 

What Does Open Enrollment 2016 look like? Part 2

There are other factors beside premium changes at work this year impacting available consumer choices. A major one is the changing composition of insurance companies still offering products in the Marketplaces. Nationally, many of the nonprofit cooperative insurers that had more than 500,000 customers between them have closed this year. Some states are losing other large insurers. And just before Thanksgiving, one of the largest insurers in the country, UnitedHealthcare, started rumbling about its lower than expected earnings that many see as a harbinger for UHC pulling out of the Marketplaces fully for 2017 (see NY Times, Wall Street Journal accounts). This would have major ramifications for insurance options available to many Americans.

Is this the fault of the ACA? The reasons behind this are complicated. Some might say that attempting to insure the previously uninsurable, the sickest, through a model that doesn’t allow the business shouldering that risk to recoup fully their expenses was unsustainable to start with. Remember, the reason for the individual mandate is so that healthy folks, and young folks (usually the most healthy) would be part of the risk pool, generating revenue and balancing out the expenses of the sickest. However, until the individual mandate penalties hurt enough to push more healthy folks to purchase health insurance, and all of the consumers who have less adequate plans join the Marketplaces fully (when the grandfathered provisions of their health plans run out), there may not be enough healthy people in the plans to make this work. (The young have done a good job of getting enrolled but many of these are under 26 and on their parents’ employers’ plans, not adding to the Marketplace policy pools.)

In a new and uncertain market, the ACA did create a “risk corridor” program to cushion insurers from extraordinary costs. All insurers who offer QHP (qualified health plans) in the Marketplaces pay for this “risk corridor insurance,” and the government pays out their claims. (Good detail on how risk corridors work can be found in this Health Affairs blog). However, the program that was to be self-sustaining off of those premiums is not. There are more claims that there is money for pay out so insurers are getting proportionally less than they would have expected. The tenuousness in the risk corridor program may be pushing certain insurers to leave the Marketplaces. That was the case that Coventry made when it pulled out of Kansas. The withdrawals from the Marketplaces is understandable as these are, for the most part, for-profit companies and it may not make sense to require them to be in the business of losing money.

A differently funded risk corridor system, perhaps one that put more federal dollars in the pot to support insurers, could likely overcome this particular shortfall. It would keep more insurers in the pool, continue to foster competition among insurers for “covered lives” to choose their plans, and give consumers more choice. However, in this political climate it is more than unlikely than any fixes will be forthcoming. It appears easier to use this as yet another excuse as to why the ACA is a failure.

What Does Open Enrollment 2016 look like? Part 1

The latest numbers say that more than 1 million consumers have already selected plans through healthcare.gov. More than 2 million have submitted applications. Still, shopping for health insurance is not for the light of heart. It is serious business. To make an informed and reasonable choice requires an understanding of how health insurance works and what different policies cover, matched to an individual’s projected health care expenses for the coming year. At its base, it is a contract and only what is in the contract is covered.

Americans who are either without health insurance or had purchased a plan through one of the Exchanges are in the middle of another open enrollment period. It’s the third time for many through this process. This open enrollment period began November 15 and runs through January 31, 2016. For a plan to be effective on January 1, 2016 however, that plan must be purchased by December 15.

Because of significant changes in premium and out of pocket costs most are suggesting that people shop around rather than simply renew a policy they’ve already had. Benefits covered and the network of health care providers covered in different plans are also subject to change from year to year. This too suggests a careful review of plan details.

As insurers vie for more customers, and more healthy customers, this volatility of prices and benefits is likely going to be part of the fabric of this new insurance market. The good news is that less expensive plans can be found. A new Kaiser Family Foundation (KFF) analysis found that in 73% of counties, healthcare.gov enrollees could lower their silver level premiums by shopping around

For a more personal side to this with real life stories, see the NY Times article on the “…New Seasonal Stress.”

The differences of opinion over Medicaid Expansion in Kansas

The reality of a southeastern Kansas hospital closure has pushed to the forefront the role that a Medicaid Expansion would or would not have played in keeping the doors to that hospital open.  A recent news release by the Kansas Health Institute summarizes well the differences of opinion over expanding Medicaid in Kansas, and whether doing so may have avoided the closing of the hospital.

Let’s first remember that Medicaid has been a state/federal partnership since 1966 that allows states to pay for medical services for low-income individuals and families using a mix of federal and state dollars.  In order to participate and receive federal dollars, the feds set certain minimum core standards that states must meet in their own programs.  (For more information on Medicaid see this website. For information on the core requirements see KFF issues brief, and particularly Appendix A.) Any divergence from those standards has to be approved by the feds through a waiver process.  Kansas has a waiver to allow for private managed care organizations to provide Medicaid services (using those federal dollars).  That program is called KanCare.  Those eligible for KanCare in Kansas include those who meet income requirements in the following categories:

  • Children up to age 19, including those who are in foster care or who get adoption support payments
  • Pregnant Women
  • Persons who are blind or disabled by Social Security rules
  • Persons age 65 or older
  • Persons receiving inpatient treatment for tuberculosis
  • Low income families with children
  • Persons screened and diagnosed with breast or cervical cancer through the Early Detection Works program

(The FPL income level varies by program but it’s worth noting that the federal standard minimum income level for parents to qualify is 28% FPL. The Kansas Medicaid program qualifies these parents close to that minimum, at just under 33% of FPL, $7870 for a four person household). Kansas does not include childless adults in its Medicaid program unless they are over 65 and meet income criteria for that category.)

The Affordable Care Act allowed for states to expand eligibility for states’ Medicaid programs to include all (children and adults regardless of whether or not they are parents) who have incomes under 138% of the federal poverty level ($16,243, single person household; $33,465, 4 person household, 2015).  The intent of the ACA was to encourage states to adopt this arrangement.  The Supreme Court ruling in June 2012 determined that the encouragement mechanism (expand or withdraw from all Medicaid federal supports) was too forceful and therefore allowed states to choose if they want to participate or not in the expansion.

Kansas is one of 19 states that have yet to expand Medicaid. There is no end date as to when states can expand.  Alaska and Utah are in the process of expanding and the other 28 states and the District of Columbia have already expanded; Wisconsin has a unique arrangement to cover all adults under 100% FPL not funded through these Medicaid Expansion federal dollars. For a discussion of why states (and Kansas in particular) are not expanding see this blog.

Regarding how hospital closures play into a Medicaid Expansion: Kansas Governor Brownback and the Lt Governor Colye have been arguing that expanding Medicaid would not fix the economic situation of failing hospitals.  They assert that the financial hardship for hospitals is caused by decreasing Medicare payments to hospitals as part of ACA. However, as importantly, they raise a moral issue about who is deserving of receiving state-supported care as an argument against an expansion.

“Those who say Medicaid  Expansion would save the Independence Hospital are lying.  It wouldn’t.  Instead, this Obamacare ruse funnels money to big city hospitals, creates a new entitlement class, and fails to rightly prioritize service for disabled citizens.  Governor Brownback will maintain his commitment to provide care to vulnerable Kansans before able bodied adults. (for full statement see Governor’s office statement on hospital closure and Medicaid Expansion.)

A point by point response from the Kansas Hospital Association can be found here. The response clarifies the reasons for Kansas hospital financial hardship, notes how these are more complicated than Medicare payment structure changes, and uses evidence on the impact on hospitals from other states that have expanded their Medicaid programs to suggest that Medicaid paying patients do help a hospital’s fiscal bottom line.

At its simplest, hospitals depend on a cash flow from paying patients. Medicare, Medicaid and private insurers are all part of the mix. Patients who are uninsured are still hospitalized, often times for illnesses that would have been better treated in community settings before they got severe enough to warrant hospitalizations. Those uncompensated hospitalizations impact smaller hospitals more since there is a higher rate of uninsurance in rural and smaller communities. That means those smaller hospitals are more reliant on public payers such as Medicare and Medicaid. The argument is that with more patients eligible to have their hospitalizations paid for by Medicaid there would be an additional payer in the mix and more income flowing to meet the hospitals’ expenses. And on a related and very important matter, Medicaid paying for community care for these uninsured community residents would help to decrease unnecessary hospitalizations at the outset.

Who would be eligible for Medicaid in Kansas? A report released in 2014 from the Kansas Center for Economic growth contradicts the notion that those who would be Medicaid eligible in the expansion are able-bodied adults who should be working.  In fact, most of those who would be newly eligible for an expanded Medicaid program have at least one family member who is working.  However, their jobs are often part time, and pay less than 100% of the FPL, the criteria for being eligible for premium tax credits in the Health Insurance Marketplace to help pay for insurance.  That is, these folks are too poor to qualify for assistance in paying for premiums.  This may seem odd but the ACA had a plan for those folks.  It’s called the Medicaid Expansion.  The ACA intended for those too poor to qualify for premiums assistance to be insured through state Medicaid programs.

The report goes on to detail the types of occupations, and the wages in those occupations, where working class people are most likely to be uninsured and eligible for Medicaid if the state chose to expand within new federal guidelines.  The report makes additional economic arguments for the wisdom of the expansion.  “Medicaid expansion would go a long way toward increasing economic security for uninsured workers.  It also would be an asset for small businesses—which will benefit from healthier and more productive employees—and the economy as a whole—which will benefit from the flow of federal dollars into the state.” The Kansas Center for Economic Growth report makes the case the expanding Medicaid would be good for Kansas local economies, especially rural communities, and the state as a whole.

Previous blogs on Medicaid that might also be of interest are on: March 13, 2015; April 23, 2014, July 13, 2013; May 23, 2013; May 8, 2013

 

How is the ACA faring according to enrollment criteria or what do the enrollment numbers mean?

If one uses as a standard the Forbes article analyzing recently released Census Bureau data ACA is performing at 71% of expected enrollment and is therefore a failure. True that the Census data used in that article in all new reports are likely more accurate than earlier reports based on smaller samples that had shown more hopeful progress. Still, I find it odd, to say the least, to call a drop in the rates of uninsured of about 8% overall to be a failure. The ASPE DHHS national data report now shows 17.6 million uninsured gaining health insurance coverage through the Health Insurance Marketplaces, Medicaid, and also including individual private market coverage.

The ASPE report also notes that the decreases in the uninsured has differentially affected racial and ethnic groups. The largest decline was among African Americans where the uninsurance rate was halved from 22.4% to 12.1%, 2.6 million people gaining insurance.  Hispanics had farther to go. They started at 41.8% uninsured and are now at 30.3%. That is still a high rate of uninsured that is complicated by matters of documentation but a significant drop nonetheless and affecting 4 million real lives. Whites had, and continue to have, the lowest rates of uninsurance among those three groups. They started at 14.3% and have declined to 8.3%, impacting 7.4 million lives.

Those are significant numbers of Americans now being insured and having much more balanced access to health insurance. No one can be denied a policy because they are sick. No one’s policy can be cancelled because they are sick. There are no longer annual nor lifetime maximums on the amount paid out for covered services. In a nutshell, not only are all of the new folks insured and protected, but most who are insured through employer plans also now share those same protections (there are exceptions for self-funded plans and for the small percentage still grandfathered in under old regulations). Further, this ability to access insurance through a place other than a place of employment has opened up opportunities for those who want to leave their current places of employment. In the past many were stuck in jobs solely for the purpose of keeping health insurance because they would have been denied coverage elsewhere because of pre-existing conditions.

So why is there less enrollment than anticipated? There are two barriers to fuller enrollment that the Forbes article does not acknowledge. The first barrier more critical to less than anticipated enrollment is the reality that 19 states have still not expanded Medicaid, the public insurance program through which it was anticipated many of the newly insured were to become insured. The ASPE Data Point Report shows that expansion states have dropped to lower rates of uninsurance (from 18.2% to 10.1%) compared to non-expansion states (from 23.4% to 16.1%), though it is telling that the non-expansion states had farther to go, indicating perhaps a less friendly environment for employment based opportunities for insurance and a host of other contextual issues that drive health disparities in those states at the start.

The second reason is that most of the states that are relying on the federal government to run their insurance exchanges had less enthusiasm for the law and perhaps created less supportive environments to ensure that all eligible individuals knew of their new insurance options. One cannot blatantly ignore the political realities that have created fear around the law and discouraged eligible families to consider their options. It is therefore understandable that initial anticipated goals have not yet been reached and it remains an uphill battle in many states to get to expected enrollment numbers.

Agreed that it would have been best not to have overestimated the potential of the ACA to decrease the number of uninsured, especially in such a hostile political environment. Still, you can decide if a drop from over 20% to under 13% uninsured makes the ACA a success or a failure. And then we can determine what needs to be done to make sure that more Americans can gain insurance.

The Cadillac Tax in the news: Update

UPDATE Sept 3, 2015

A new analysis by the Kaiser Family Foundation adds some detail to how employers may be affected.  A couple of points to emphasize:

  • This is a tax on employers, not employees.  Yes, there will likely be trickle down to employees in terms of higher deductibles and other cost sharing mechanisms but individuals will not see their income taxed for this.
  • Health savings and flexible spending accounts’ employer contributions are included in the maximum that an employer can spend each month before the tax kicks in.  That is, it is not just the amount paid for the insurance plan that will be used in the calculation.
  • The tax to employers is calculated per employee since the amount paid toward health care varies by employee choices.

Given the growth in health care costs the Kaiser report predicts up to 42% of all employers being affected by 2028, having at least one plan hitting the threshold after which the tax kicks in.  The threshold is $10,500 in 2018.  It will be $13,500 paid toward an individual plan by 2028.

Remember, this is an attempt to have consumers have more “skin in the game” as they make choices about their health care use.  It also is about minimizing the tax free benefit that advantages employees who get compensation as a tax exempt health benefit rather than as taxable wages.  The negotiation for this type of compensation, carried out by many unions, is the reason for union resistance to the tax.  There is little expectation that employers will give wage compensation to make up the difference if they are encouraged by this tax to scale back on benefits.

Finally, this part of the Affordable Care Act is not set to go into effect until 2018.  Expect more political discussion and debate.

July 26 posting

There has been talk about repealing the ACA’s “Cadillac Tax,” by candidate Hillary Clinton most recently. A brief by David Wessel for the Brookings Institute is an excellent and detailed discussion about what the tax is and why repealing it would interfere with the attempts to control health care costs built into the ACA.

Even more briefly:

  • The Cadillac tax is set to go into effect January 2018.
  • It does this by saying that employers who offer and pay for expensive policies (premiums costs of over $27,500 for a family, $10,200 for individual) will be taxed/fined.
  • It was intended to generate revenue and curb incentives for employers to offer very generous (and potentially inefficient plans) that have protected consumers from having more skin in the game (higher copays and deductibles). Basically, the argument is that without more costs felt directly by consumers, poor choices are made to overuse (see note below).
  • Republicans have never liked it. It contradicts their understanding of free markets, and freedom of employers. And it is part of Obamacare.
  • Democrats haven’t talked much about it until now though unions have never liked it since they have negotiated for those better health insurance benefits in lieu of wages.
  • Some say encouraging employers to renegotiate wages based on slightly less insurance benefits would be economically sound (at least it requires that those wages are taxed which gives money to support public work).

On a side note,I find lacking the argument that issue about consumers needing more skin in the game, needing to feel the expenses more directly in their pocketbooks that has fueled the whole movement to health savings accounts and stronger consumer decisions:

  • Yes, the consumer/patient makes the first decision to see a health care provider but
  • After that first decision most of the costs are generated by medical professionals telling the patient what the diagnosis is, what kinds of treatments are best, how many times she should return for visits, etc. That is, most medical costs are generated by the medical system decisions NOT consumers.