Kansas State University


Issues in Health Reform

Category: Tax Credits

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 it mean when politicians say health care is a right?

Of late President Obama and others have been touting the recent Supreme Court (SCOTUS) decision in King v Burwell that upholds tax subsidies for every state as proving health care is a right. Hmmm. That’s still a stretch. Let’s look at who is likely to either have health care paid for with the assistance of insurance, or have health care directly provided to them and who is still left out.

We have the public plans that do make health care a right for those who fit the eligibility criteria. There is:

  • Medicare for those over 65, the disabled, and selected other special disease interest groups (End Stage Renal Disease, Lou Gehrig’s disease).
  • Medicaid for those poor enough who are over 65, or under 19 (those who are in the state Children’s Health Insurance Programs (CHIP)), and now adults under 138% FPL ($27597 for family of four) in the 31 states that have expanded their Medicaid programs (as of July 2015)
  • The Veteran’s Administration system that provides care directly to veterans.
  • The Tricare system for active military that also provides care directly; and
  • The Indian Health Service for members of tribal nations that also provides care directly. Members also have access to all of the insurance options available for others (Medicare, Medicaid, CHIP, employer sponsored insurance, marketplace plans and plans in the private market)

We have a complicated private insurance system that now does offer health care as a right to all who qualify or can afford it. The “right” parts are the consumer protections where no one can be turned down because of a pre-existing condition, have a policy cancelled or maxed out, and because certain large employers are mandated to provide insurance. People covered under this “right” are:

  • Those who work for employers with over 100 employees, since January 2015 mandate
  • Those who work for employers with over 50 employees, mandate begins (if still in effect) January 2016
  • Those not covered through work who can afford private insurance without assistance if they are over 400% FPL ($97000, family of four), or between 100-400% if they can afford insurance with subsidies

That leaves out the 126000 in Kansas (Families USA data) who are like the 6.4 million others in states that also have chosen to not yet participate in the ACA supported Medicaid Expansion. Those folks fall between a state’s standing maximum eligibility to qualify for Medicaid (33% in Kansas for parents, 0% for childless adults) and 138% FPL. These folks are too poor to qualify for financial assistance paying for a marketplace insurance plan and too “rich” to qualify for Medicaid in states with very stringent criteria for eligibility.

Therefore, while it is true that things would have been even more difficult for the 80-90% of people in the marketplaces who depend on those tax subsidies to afford those insurance plans had the Supreme Court ruled otherwise in King v Burwell, to say that the SCOTUS decision means that health care is a right is more than a stretch of the implications of that ruling.

The SCOTUS has ruled on tax subsidies: What does this mean and can we now move on to fixing things?

On June 25, 2015 the Supreme Court of the United States ruled to uphold the health law tax subsidies. (Here is full ruling) One might easily say all is as it was before the ruling. That is, in the new marketplaces of insurance that began in January 2014 because of the Affordable Care Act, things would continue as they were. Anyone who was eligible to receive a tax subsidy and had been receiving those subsidies for assistance in paying for insurance purchases through those marketplaces would continue to do so. The threat had been to consumers in the almost 3 dozen states (34) where the federal government was facilitating their marketplaces. The ruling for those subsidies to continue for all allows implementation in a “more certain and predictable environment for the health care industry, states, and consumers.” (WSJ)

Over 11 million previously uninsured Americans are now insured (Kaiser Family Foundation). Approximately 80% of those enrolled in marketplace plans (some previously insureds included) are receiving financial assistance (Kaiser Family Foundation in JAMA). Tax credits to help pay premiums for those plans are available to those with income less than 400% federal poverty level (FPL) ($97,000 family of 4). Those with incomes less than 250% FPL ($60,625 family of 4) qualify for additional assistance in paying out of pocket expenses. That financial assistance to an estimated 6.4 million was what was in jeopardy.

If you are looking for a good resource showing a state-by state effect with a map to accompany it (showing numbers of potential lives that were affected and the amount of dollars at stake), see this Kaiser Family Foundation brief.

Others have well described the intricacies of the ruling discussing such issues as why the 6 justices who ruled in favor of the administration thought it was important to see the law in its full context. There were 3 fairly strongly worded descents and there are many who continue to see this ruling as a political decision. Conservative media were outraged though I was surprised to see even Fox News op ed piece by a physician/health care executive focusing on trying to improve health by giving access to care.

Here are some words representing opposing and supportive views,

  • Brookings Brief that explains well the ruling and talks about upcoming challenges.
  •  Washington Post article was accepting of the ruling and includes a video on what you need to know about it.
  • In this National Journal piece the focus was on the argument of one of the most vocal dissenters, Justice Scalia.
  • CBS summed up the Republican point of view in this article.
  • Media Matters for America focused on balancing the conservative media reactions.

What I would like to point out is:

  1.  I’ve been surprised that I’ve not seen talk about what state marketplaces really are. In fact, whether facilitated by the feds or or in partnership with the feds, operated solely by a state all marketplaces are state based. They include insurers who offer policies specific to that state’s population and only a particular states’ residents can buy those policies. The insurers had to get approval from the states’ insurance commissioners offices to offer insurance products in those states. Yes, in the federally facilitated exchanges the feds had to do a lot of the work, especially the website aspects, but all state insurance offices were fully engaged in the discussions with the insurers.
  2. That we have spent a lot of time and energy worrying over the potential implication of a ruling that would have been detrimental to residents of those living in federally facilitated exchanges/marketplaces states. Given the particular wording in the decision, that is up to the SCOTUS to sort this out, this aspect can’t go back to Congress, though other parts could and I suspect might. As this aspect of the national conversation is put to rest, others may arise.
  3. Even those who believed the contested language referring to state Exchanges was precise–written with the intent to push states toward setting up their own exchanges else their residents would be ineligible for those tax subsidies (a major stick approach)– understood that major turmoil would ensue if 6+ million or so newly insured were suddenly in jeopardy of having that insurance become unaffordable again.

There are many who now say that with this latest legal challenge behind us, the focus can be on improving the law, and these suggested improvements are from both supporters and non.

  •  For a perspective on not “surrendering” but block granting ACA instead see US News and Forbes
  • See the Wall Street Journal for a perspective on how the ruling raises the bar for Obamacare opponents, basically requiring political movement to improve on the perceived failings of the law.
  • See the National Center for Policy Analysis for more specific changes the author believes would improve the insurance aspects of the law
  • For a list of possible improvements, including improving the value of the care we receive (see Health Affairs)
  • For an understanding of ongoing challenges such as the costs of the subsidies (and the price of health care in general), see The Hill.

And there are still some who prefer a single payer for all system, an expansion of Medicare. Some of us recall that the reason we got the ACA from a Democratic President is that Obama believed an expansion of the private insurance industry would garner bipartisan support. We’ve seen all too clearly through the years with a law that passed with not one Republican legislator supporting, through dozens of repeal attempts, that that bipartisanship did not materialize. Check out this Huffington Post site for a collection of essays on the perspective of Medicare for All.


Countdown to Supreme Court Decision about ACA Tax Subsidies

By the end of June 2015 the Supreme Court of the United States will hand down their decision in King v Burwell that will impact around 8 million Americans who are currently receiving tax subsidies to help pay insurance premiums for policies they have bought in their state marketplaces.  Either those 8 million will sleep easily knowing that all is as it was and they will continue to get help paying for their subsidies OR they may be quite a bit more agitated with lots of unknowns.

The issue is whether or not the language of the Affordable Care Act (aka Obamacare) that permits subsidies for residents only in those in states running their own Exchanges/marketplaces is the way the law must be interpreted and enacted OR if the intent was indeed broader.

In a large sense all of the Exchanges/marketplaces are “state” Exchanges since the insurance policies approved for sale in those are set up for each state specifically.  The sticking point is that some states (34 of them) had the federal government facilitate the operation of their marketplaces.  Those are called “federally-facilitated” exchanges/marketplaces and are considered, by the challengers, to be non-state marketplaces.

The challenge about the wording has been an attempt to gut one of the main provisions of the law that makes insurance policies offered in those Exchanges/marketplaces more affordable.  In some cases, it is very much more affordable with individuals near 138% federal poverty line ($16,242 for one in 2015) paying ~$20/month for a policy.

Depending on whom you ask the law’s reference to state Exchanges 1) was sloppy wording, but seen in context of the whole law, could not have intended to cut off from subsidies residents of states not operating their own Exchanges OR 2) the intent was not to give subsidies to states not operating their own Exchanges, perhaps as an incentive to get the states to operate their own Exchanges.  The SC Justices are either going to assume the language was sloppy within the full context of the law thereby allowing the subsidies to exist in all states OR they will be true to the language of the law and say: if Congress intended subsidies to be for residents of all states then Congress has to fix the wording.  There exists concern that Congress is not in any position to agree upon new wording.  Certainly, there are many legislators who would welcome the damage a ruling in favor of the plaintiffs would do to the ACA.  However, since those directly impacted negatively would be residents of many states, and these are their legislators, some are looking to temporary fixes including:

  • extending the tax subsidies through the end of the year so there would be less disruption (this would leave no good alternative for affordable policies going forward), and
  • Governors are considering taking on the responsibility of running their own Exchanges (but this is a huge undertaking, as evidenced by the fact that some states tried and decided to let the federal government takeover: e.g. Maryland)

I spoke to this issue on Nov 19, 2014 and in depth in a July 22, 2014 post when the issue about ACA tax subsidies was just heating up with circuit and district court rulings.  The specifics remain relevant.

How do American’s feel and what do they understand about this judicial case?  “A brand spanking new Kaiser Family Foundation poll finds a broad majority of Americans wants Congress to pass a law to make subsidies available in all states if the Supreme Court guts them…about 6 in 10 (63 percent) say Congress should pass a law so that people in all states can be eligible for financial help from the government while about a quarter (26 percent) say Congress should not act on the issue.” (Washington Post, Sargent, June 16, 2015).


Who gets tax subsidies to pay for health insurance anyway?

As the Supreme Court is set next week to hear King v Burwell, the case against tax subsidies’ eligibility for non state Exchange state purchasers of health insurance, earlier post, this essay points out how most of us receive subsidies to pay for health insurance..whether it’s the Medicare population who paid into the system no where near what they are taking out, or those of us whose employers get our insurance premiums as a business write-off, and we get the benefit as pre-tax income.  As Rampell points out, these facts are important to understand in the face of the resistance many have to the tax subsidies received by most of the folks who purchase insurance through the Marketplace Exchanges.  The tax subsidies for those who work but don’t have employer sponsored insurance levels the playing field.   http://www.washingtonpost.com/opinions/if-you-want-to-know-who-gets-health-care-handouts-look-in-the-mirror/2015/02/26/53e2de84-bdf9-11e4-bdfa-b8e8f594e6ee_story.html?wpisrc=nl_opinions&wpmm=1

If Open Enrollment in the Marketplace is through Feb 15, why is Dec 15, 2014 so important?

It is true that consumers have until Feb 15, 2015 if they intend to find and enroll in an insurance plan through the Kansas Health Insurance Marketplace. However, for benefits to begin Jan 1, 2015, you must sign up by Monday Dec. 15. Otherwise, benefits won’t begin until Feb 1, or March 1.

So the time is now to enroll. Go to healthcare.gov or all 1-800-318-2596 24/7 to start your application or renewal today.  You can find more information at:  https://www.healthcare.gov/keep-or-change-plan/

If you signed up last year, you will be automatically re-enrolled in the plan you had UNLESS it is no longer available OR you actively choose a new plan.  Since plans change it is wise to review your coverage and the network of health care providers to see if you still have the plan you want.  If you had assistance paying for premiums make sure that that assistance will continue in 2015.  If you allowed the Marketplace to access your tax records, you should still be eligible.  If you did not, you will have to resubmit income information.

Remember almost all are required to be insured and report it on with their tax returns. For the year 2014, your status will be reported on the return you file before April 2015. Your insurance status for this coming year will be reported April 2016.



Will health insurance cost me more this year?


Health insurance premium costs in the US have been rising every year since number crunchers have been watching this.  In the past some of those numbers have been very high, double digits for years.  The Affordable Care Act (ACA) is working to keep the rate of those increases down to a minimum, below where they have been in previous years.

However, for Kansas there is a report showing that we are not doing as well as other states. Perhaps not surprisingly given the political nature of evaluating the success of the ACA, there is disagreement by analysts over the accuracy and the relevance of those numbers.

The national report singling out premium increases in Kansas as being higher than all but Alaska came from PricewaterhouseCoopers (PwC) (http://www.pwc.com/us/en/health-industries/health-research-institute/aca-state-exchanges.jhtml).  That report projected Kansas’ health insurance premiums overall up more than 15 percent this year compared to about a 5 percent average increase nationwide. As reported in the NY Times, these reports, however, are misleading on several levels. http://www.nytimes.com/2014/11/19/upshot/how-much-did-health-insurance-rates-go-up-its-complicated.html?_r=1&abt=0002&abg=1

For one, if you are concerned with what consumers are really paying, these national analyses muddy the waters by including premiums for all plans offered in each state as opposed to only using data for those plans people are actually enrolling in. In reality most consumers purchased one of the lower cost bronze or silver plans.

To correct this bias, they commissioned an analysis looking at the costs of those bronze and silver plans for all federally facilitated marketplace states, including the one in Kansas.  For Kansas, the cost increase for an average lowest bronze plan for a 50 year old non smoker was 8 percent, compared to 3 percent increase nationally, but the average lowest silver plan for the same person went down 6 percent in Kansas compared to a 4 percent increase nationally. http://avalere.com/expertise/life-sciences/insights/avalere-analysis-2015-exchange-premium-file

A more detailed analysis of the Kansas marketplace is provided by the Kansas Health Institute (KHI) (http://www.khi.org/news/2014/nov/15/kansas-marketplace-opens-year-two/).  Their report said that the average premium for all plans offered in the marketplace increased just 0.1 percent from 2014 to 2015, while acknowledging that individual Kansans could see a wide range of price changes for specific level plans. As an example, premiums for some silver plans are anywhere from 11.6 percent more to 13 percent less in 2015 compared to 2014.

When considering what these premium increases really mean for consumers we also have to remember that last year the Kansas marketplace was ranked as having the 5th lowest premium costs of all states. Even an 8 percent increase of a smaller starting amount will likely yield an affordable premium compared to others.  So, coupled with the lower starting point, these reports provide evidence that Kansas premium increases are at minimum comparable to other states, in some cases better, and that the actual premium costs still provide value at a good cost to Kansas consumers.  It is surprising and encouraging that even as Kansas has a small number of insurance companies offering plans in the marketplace, those insurers seem to be offering affordable products to Kansans.  We might expect with less competition prices could be higher.

As time goes on we would expect insurers to adjust their premiums based on the collected health care expense experiences of all insureds in those plans.  According to the Henry J. Kaiser Family Foundation (http://kff.org/health-reform/state-indicator/marketplace-enrollment-as-a-share-of-the-potential-marketplace-population/#table), this past year only 19 percent of Kansans expected to be eligible for enrollment in the Kansas marketplace actually signed up.  This was less than the 28 percent national average. Still Kansas had a good number of the valued younger (under 35) adults enroll, 38 percent, helping to ensure a workable mix for insurance rates overall.  All states are expected to see growth in their enrolled populations for 2015.

Tax Subsidies

This year it is likely to be the change in the tax subsidies rather than premium increases that have the potential to make health insurance more expensive. Over 80 percent of families nationwide and in Kansas are using these subsidies to help pay for insurance. This financial assistance to pay for premiums is based on the premium of the second lowest cost silver plan offered.  So, if there are plans that have lower premiums in that tier compared to last year…and there are…then the subsidy will be based on the cost of those new plans resulting in a smaller subsidy. Re-enrolling in the same silver plan may cost more even if the premium hasn’t changed because the subsidy one gets to pay for that premium is now based on a different plan. This difference is one of the important reasons why people need to consider plans carefully this year.  It could be that an individual finds the higher price she has to pay worth it but one needs to be aware and make this decision with full knowledge.  The reason there are less expensive plans in the same tier is that some of the plans offered for the first time this year have larger restrictions on network providers than those plans offered last year.  Restricted networks vs paying a higher portion of the premium is the choice many Kansas families may have to make.


The cost-sharing arrangements constitute a major part of the cost of health insurance.  These are payments you make outside of the monthly premium.  They include deductibles and actual copayments or coinsurance.  They are cost-sharing mechanisms when you actually use care and receive a bill.  Even those payments schedules may change within the insurance policies being offered so this is another feature people have to pay attention to when choosing a plan for this coming calendar year.  The bottom line is to be careful to see if you may be paying more for the types of health care services you may usually receive.


When one considers the overall costs of insurance she should also consider the cost of not being insured.  Besides the real risk of financial consequences if one has an unexpected major illness (one hospitalization can wipe out personal finances for those uninsured), there is also the tax penalty.  Kansans who fall under 138 percent of the federal poverty level (FPL) won’t incur a tax penalty for being uninsured.  With a few other exceptions everyone else who’s uninsured will face a penalty much higher for 2015 than in 2014. People who obtain health insurance through their employers, Medicare, TRICARE, Veteran’s Affairs, or KanCare, Kansas’ Medicaid program, are considered insured and will not face penalties.  Tax penalties will continue to go up every year. For 2014, you will face a tax penalty when you file in April 2015 of $95 per person or 1 percent of annual household income above the tax-filing threshold (about $10,000 for an individual), whichever is greater. You will face a penalty every year that you continue to be uninsured, and that penalty will increase every year.  If you choose not to enroll in 2015, you will face a tax penalty when you file in April 2016 of $325 per person or $975 a family or 2 percent of annual household income above the tax-filing threshold (about $10,000 for an individual), whichever is greater.

How to get insured

Open enrollment in the marketplace began Nov. 15 and goes through Dec. 15 to be covered beginning Jan. 1. People have until Feb. 15 to sign up for health insurance next year, though, for coverage to begin March 1. Whether or not a person buys in the Health Insurance Marketplace, as long as the coverage by some qualifying insurance plan starts by April 1, that person is meeting the federal mandate and will not be subject to penalties.

If obtaining insurance through the marketplace, log on to www.healthcare.gov. To learn more about how to enroll in the marketplace or KanCare, Kansas’ Medicaid program, call the marketplace, available 24/7, at 800-318-2596.

What now that SCOTUS will hear the case against the ACA tax subsidies?

I spoke to this issue in depth in a July 22 post when the issue about ACA tax subsidies was just heating up with circuit and district court rulings.  The Supreme Court has agreed to hear the case.  That earlier posting is still accurate.  https://blogs.ksre.ksu.edu/issuesinhealthreform/aca-tax-credits-may-be-taken-away-by-courts/

The fact that the SCOTUS has chosen to take this up, and some say a bit out of expected cycle, has raised concern among the supporters of ACA, and of the tax subsidies in particular.  The ACA covers many things beyond assuring affordable health insurance for many (the otherwise eligible Medicaid population in many states including Kansas got left out by a June 2012 SCOTUS decision that said the feds could not coerce states into expanding Medicaid by threatening to pull all Medicaid funds if that state did not participate).  It has funds for health care workforce development and community health projects, and ways to improve the efficiency of Medicare and delivery of care in general.  However, expanding the number of insured is clearly a main centerpiece of the legislation and a contrary ruling many say would effectively dismantle that aspect of the ACA.  The SCOTUS  will decide if the consumers in the 27 states with federally facilitated exchanges (marketplaces) can still receive those tax subsidies.  Without them we would assume that insurance policies would once again be unaffordable for most as 80% of those enrolled in health insurance plans through those marketplaces nationwide are now receiving subsidies.



ACA Tax Credits may be taken away by courts

We will all be hearing lots on the news in the next days and weeks about some conflicting rulings regarding one important aspect of the Affordable Care Act…the premium tax credits and tax subsidies that help low income families afford their new health insurance policies.  It is expected that the Supreme Court will be the ultimate arbiter of this, especially since there are conflicting lower court rulings.  The NY Times piece covers the issue well.

In a nutshell….

1.  some states have federally facilitated Exchanges/Marketplaces (including Kansas), and others went ahead and fully designed their own Exchanges.
2.  The plaintiffs have argued (now successfully in at least one ruling) that the original law was written to allow tax credits to consumers purchasing insurance policies through state Exchanges, not through federally facilitated state Exchanges.
3.  The nuance being argued is whether or not Exchanges that were set up by the feds BUT IN STATES and with insurance policies sold in those states are the same as state Exchanges.  One court says yes, another says no.  Most pundits say the law was ambigious on this regard so it is up to the administrative body, in this case, the IRS, to interpret  and put into operation the law.  Others had said in the past that the writers were really trying to push the states to setting up their own Exchanges and hence, denying consumers the tax credit in those states that relied on the feds to set up the Exchange, ergo a presumed incentive to go with the state Exchange.  When fewer than half of the states felt ready to design their own Exchanges (and some chose not to for seemingly political reasons), then the administration asked that this aspect be interpreted more fully to include all Exchanges.  This will certainly be an interesting court battle to watch…but one with severe consequences for many Kansans and other Americans.

IF the Supreme Court holds that consumers are eligible for tax credits and subsidy cost sharing only Exchanges set up by the states this will negate tax credits for those in 36 states, including Kansas.

57,000 Kansans signed up for policies in the Kansas Marketplace.  National figures show over 80% of those consumers have been eligible for tax credits.  Some are only paying $20/month for policies that would otherwise cost approximately between $200-$600 month.  One can quickly see how the current rulings negating the ability of the IRS to implement tax credits would result in having those lower income families once again unable to afford insurance.

Note:  people may qualify for subsidies if they have incomes of up to $45,960 for individuals and up to $94,200 for a family of four.  The Congressional Budget Office estimates that subsidies this year will average $4,400 for each person who receives a subsidy.