The Center's work on 'Health Policy' Issues

The Center works to ensure that federal and state health insurance programs provide coverage that meets the health care needs of low-income children and families, as well as seniors and people with disabilities. The Center also works to remove barriers preventing eligible families from gaining access to health coverage.


Today’s Conflicting Court Decisions Won’t Affect Federal Marketplace Subsidies

July 22, 2014 at 3:35 pm

Two federal appellate courts issued rulings today that relate to the health reform law.  In a unanimous decision, a panel of the U.S. Circuit Court of Appeals for the Fourth Circuit upheld a lower court decision finding that individuals are eligible for premium subsidies to purchase health insurance through the federal marketplace, just as they can in state-based marketplaces.

In a 2-1 decision that has received considerably more media attention, the D.C. Circuit Court of Appeals overturned a lower court ruling and ruled that premium subsidies can be used to purchase coverage only through state-run marketplaces, and not through the federal marketplace.

What do these decisions really mean?

  • Premium subsidies for the millions of federal marketplace enrollees will continue to be available, as the Administration confirmed today.
  • The Administration will appeal the D.C. Circuit court decision to the entire D.C. Circuit, where it will likely be reversed, as Washington and Lee University School of Law professor Timothy Jost explained earlier this month.
  • That’s because, as we first noted two years ago, the merits of the legal theory challenging subsidies for federal marketplace enrollees are extraordinarily weak, relying on a distorted, incorrect reading of the Affordable Care Act and ignoring legislative intent and history.

Medicaid Expansion Decisions Leading States Down Divergent Paths

July 16, 2014 at 2:24 pm

As a growing number of reports increasingly make clear, a state’s decision whether to expand Medicaid as part of health reform has real-life effects on its residents and its businesses.  In the 26 states and the District of Columbia that have expanded Medicaid (see map), the positive benefits are already playing out.  Here’s some of the latest information:

  • Hospitals are providing less uncompensated care.  In Arizona, hospitals reported that the Medicaid expansion is the chief reason for a 30 percent decline in the amount of uncompensated care they have provided so far this year, compared with a year ago.  The Colorado Hospital Association found a similar decline in charity care through April when it surveyed hospitals in 15 states that have expanded Medicaid and 15 that have not.
  • Medicaid expansion is driving large gains in health coverage.  A survey conducted by the Urban Institute finds that while the uninsurance rate is dropping across the country, states that have expanded Medicaid have seen a drop in the percentage of non-elderly adults who are uninsured by more than one-third — a 37.7 decline — while the uninsured rate fell by only 9 percent among states that haven’t expanded.  A survey from the Commonwealth Fund found a similar trend.

States can opt in to the Medicaid expansion at any time, allowing them to extend coverage to millions with the federal government picking up all of the cost of the expansion through 2016 (and nearly all of the cost in the years after), as we have written.  New Hampshire recently started accepting applications for its expansion, with coverage first available on August 15.

But states that refuse to expand leave a coverage gap, where people below the federal poverty line have income too high for Medicaid under prior eligibility rules but too low to qualify for federal subsidies to purchase coverage through the marketplaces.  This means we’re likely to see more stories as in Tennessee where, due to the coverage gap, a couple separated so the wife’s income would be low enough to maintain her Medicaid coverage.

MedPAC: Medicare Advantage Overpayments Not the Right Way to Aid Low-Income Beneficiaries

July 8, 2014 at 1:41 pm

Overpaying the insurance companies that serve some Medicare beneficiaries through the Medicare Advantage (MA) program is not a targeted, effective way to help low-income beneficiaries with their out-of-pocket costs, the Medicare Payment Advisory Commission’s (MedPAC) latest report to Congress explains.

Insurers have long defended the overpayments as helping low-income beneficiaries and have claimed that repealing or scaling back health reform’s MA savings is necessary to protect such beneficiaries from benefit cuts.  But as we’ve explained, recent research shows that before health reform, insurers didn’t pass on most of the overpayments to enrollees in the form of better benefits.  And MedPAC’s report reiterates its longstanding position that higher MA “payments are not a direct or efficient way to target assistance to low-income beneficiaries.”

That’s because, as MedPAC puts it, “higher MA payments and extra benefits financed by those payments do not go only to low-income beneficiaries.  Rather, all enrollees in a given MA plan receive the same extra benefits, low-income or not.”  Insurers’ own data show that 59 percent of MA enrollees had incomes over $20,000 in 2011.

The Government Accountability Office similarly concluded in 2008 that “if the policy objective is to subsidize health care costs of low-income Medicare beneficiaries, it may be more efficient to directly target subsidies to a defined low-income population than to subsidize premiums and cost-sharing for all [Medicare Advantage] beneficiaries, including those who are well off.”

A direct and efficient way to help Medicare beneficiaries with limited incomes, according to MedPAC, is to expand the Medicare Savings Programs, through which Medicaid helps low-income beneficiaries cover their premiums and/or cost-sharing charges.

RSC Health Plan: More Uninsured and Underinsured, Fewer Consumer Protections

July 2, 2014 at 11:58 am

With House supporters planning a new push for the Republican Study Committee (RSC) health plan (H.R. 3121), aided by RSC chairman Steve Scalise (R-LA)’s election as House majority whip, it’s worth looking at the plan’s likely impact.  Unfortunately, it would substantially expand the ranks of the uninsured and end various important consumer protections.

Impact on the Number of Uninsured

The RSC plan would repeal health reform, including its Medicaid expansion, under which the federal government will pick up nearly the full cost of covering individuals up to 138 percent of the poverty line.  The 13 million people whom the Congressional Budget Office (CBO) now estimates will gain Medicaid coverage in states that adopt the expansion would lose out.

It also would eliminate the new marketplaces through which millions of people are buying private coverage, as well as the premium tax credits and cost-sharing reductions that make marketplace coverage much more affordable for low- and moderate-income people.  The loss of these subsidies would cause millions of new marketplace enrollees to lose their health coverage.

The RSC plan would also end the tax exclusion for employer-based coverage, replacing it with a standard income and payroll tax deduction of $7,500 for individuals (and $20,000 for families) who buy coverage on their own or through their employer.  As CBO, the Joint Committee on Taxation, and others have previously estimated, this type of proposal would likely cause many people to lose their job-based coverage by encouraging employers to drop it on the assumption that their workers could use the deduction to purchase health insurance in the individual market.  (Unlike current law, the plan would not require larger employers to either offer affordable, comprehensive coverage or pay a penalty.)  But many workers in poorer health who lost employer-based insurance likely would be unable to find coverage in the individual market.

Moreover, the tax deduction would do very little to help most uninsured people gain coverage.  Most uninsured people either don’t earn enough to owe income tax or are in the 10 or 15 percent tax bracket, so they would receive an income tax benefit of no more than 15 cents for every $1 they can deduct, along with a payroll tax benefit of 7.65 cents per dollar earned.

People who lose their jobs and have no earned income would receive no benefit, while a single poor adult earning $10,000 would receive no income tax benefit and a payroll tax benefit of about $574 a year, far below the cost of insurance.  And, assuming the plan’s deduction was in place in tax year 2014, a single 64-year-old with income equal to twice the poverty line — $23,340 — would likely receive a total tax benefit of no more than about $1,530.  That’s only about one-quarter of the tax credit that health reform provides, because health reform’s tax credit is refundable, more generous at lower incomes, and adjusted for age (as older people face higher premiums).  Moreover, unlike under health reform, the RSC plan gives people with modest income no help with their deductibles and other cost-sharing charges.

The deduction would primarily benefit people in the top income tax brackets, who least need help in affording insurance and are the most likely already to have coverage.  (Also, it’s unclear whether the payroll tax deduction would effectively result in lower Social Security benefits for individuals taking it, as well as lower contributions to the Social Security and Medicare trust funds that would hasten their insolvency.)

Impact on Consumer Protections 

Health reform prohibits insurers in the individual market from refusing to cover people with pre-existing medical conditions.  In contrast, the RSC plan would allow insurers to deny coverage in such cases, except for people who have had continuous coverage (through an employer or in the individual market) for at least 18 months.  That’s only a modest improvement over the deeply flawed situation before health reform.

Thus, someone without job-based coverage who was denied coverage in the individual market because of cancer or diabetes would likely remain uninsured.

Moreover, people with pre-existing conditions who have had continuous coverage could qualify for individual-market coverage only through a high-risk pool.  Such coverage likely wouldn’t be affordable.  The high-risk pools could charge premiums twice as high as the standard premium, and standard premiums could vary based on age, with no upper limit.

More broadly, relying on high-risk pools to provide coverage would be “extremely expensive and likely unsustainable,” as the Commonwealth Fund has explained.  That’s because they pool sick individuals not with healthy individuals — as regular insurance pools do to keep premiums stable and affordable — but with even sicker individuals who cost even more to insure.

Indeed, experience with state high-risk pools shows that unless government financial support for them rises significantly over time, the pools eventually have to sharply restrict enrollment, set premiums further above what many families can afford, and/or scale back coverage by reducing benefits or increasing deductibles and other cost-sharing, in order to keep costs from spiraling out of control.  Yet the RSC plan provides no actual federal high-risk-pool funding.  (It authorizes Congress to appropriate money for this purpose, but Congress may never do so, given the caps on funding for appropriated programs and the automatic “sequestration” cuts.)

Finally, the RSC plan would eliminate all of health reform’s consumer protections and market reforms.  It would allow insurers to once again:

  • set annual and lifetime dollar limits on the coverage they provide;
  • require cost-sharing charges for preventive care;
  • have no annual limit on out-of-pocket costs;
  • limit the children whom parents can include on their plans to those 21 and younger, rather than those up to age 26;
  • charge people higher premiums in the individual and small-group markets based on their health status;
  • charge older people premiums that are more than three times what they charge younger people in the individual and small-group markets (the limit under health reform is 3 to 1); and
  • charge women higher premiums than men in the individual and small-group markets.  

In another reversal, the RSC plan would allow insurers to leave big coverage gaps in the individual and small-group markets by omitting critical benefits such as prescription drug coverage or maternity care, as they could do before health reform.  And by allowing out-of-state insurers to sell insurance within a state without complying with the state’s consumer protections, the plan also would undermine the insurance market reforms and protections that a number of states had put in place before health reform.

The bottom line?  The RSC’s proposal would be a very large step backward that would drive millions of Americans, especially people of limited means, into the ranks of the uninsured and the underinsured.

Lower Recidivism: Yet Another Good Reason for States to Expand Medicaid

June 25, 2014 at 2:54 pm

Some opponents of health reform’s Medicaid expansion have cited an estimate that 35 percent of adults newly eligible for Medicaid have been involved in the criminal justice system in the past year.  This figure is highly inflated.

In reality, only about 17 percent of newly eligible adults who enroll in Medicaid will have been in jail or prison.  But even though they will make up about one-sixth rather than one-third of new Medicaid enrollees, their number is significant — and connecting these low-income adults to the health care system can help them avoid returning to jail or prison, as we explain in a new paper.

On any given day, about 750,000 people are in jail; about 75 percent of them for nonviolent offenses.  As many as 90 percent of people in jail are uninsured.  This figure isn’t surprising; until health reform’s coverage expansions took effect this year, there was no pathway to health coverage for poor and low-income adults who weren’t parents living with their minor children, pregnant women, seniors, or people with disabilities.  Not many people with prison or jail stays fall into these categories.

Health reform opened up Medicaid eligibility for all adults with incomes below 138 percent of the poverty line.  So far, 26 states and the District of Columbia have decided to expand coverage.  In addition, adults who aren’t eligible for Medicaid or employer coverage and have incomes between 100 and 400 percent of the poverty line can qualify for premium tax credits to help them afford private coverage through the new health insurance marketplaces.  Roughly half of people leaving jail can qualify for coverage through Medicaid or the marketplaces.  (This figure takes into account that about half of the states have adopted the Medicaid expansion and half have not.)

A number of states and counties are working to connect people released from jail to health coverage for the first time, with a particular focus on people with mental illness and substance-use disorders, given the prevalence of these conditions in this population and the role of these conditions in increasing criminal activity.

States considering whether to expand Medicaid should consider the growing evidence that connecting the jail-involved population to treatment for mental illness and substance abuse can lower the rate at which they return to jail or prison.

For example, a study of a Michigan program to help recently released prisoners obtain community-based health care and social services found that it cut recidivism by more than half, from 46 percent to 21.8 percent.  Similarly, a study that the Justice Department funded in Florida and Washington found that “in both states, 16 percent fewer jail detainees with serious mental illnesses who had Medicaid benefits at the time of their release returned to jail the following year, compared to similar detainees who did not have Medicaid.”

Click here to read the full paper.