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Issues in Health Reform

Month: September 2015

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

Posted on by rriporte

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

Posted on by rriporte

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.