The Center's work on 'Health Reform' Issues

Critics’ Portrayal of Health Reform Doesn’t Match Reality

March 5, 2015 at 5:16 pm

As we explained yesterday, many of the benefits that three key House Republican committee chairs claim their health plan will offer are things that health reform already provides — and, in most cases, much more so than their plan likely would. Here’s another problem with their Wall Street Journal op-ed: its portrayal of health reform simply isn’t true. It portrays people “stuck” in health insurance they can’t afford, and paying for benefits they don’t want, just to avoid the penalty for not having coverage. The reality is quite different.

Many people buying their own insurance have more freedom of choice than before health reform. Before health reform, people without job-based coverage had few good options. Many couldn’t buy insurance on their own or faced exorbitant premiums because of pre-existing health conditions or other factors. And enrollees who wanted to switch plans often faced a battery of questions from the insurance company and higher premiums.

Now, people have numerous plan options to choose from and can switch each year to suit their needs, just like people with job-based coverage. Moreover, people who’ve enrolled through the marketplaces give their coverage high marks: seven in ten people surveyed last fall rated their coverage and the quality of their health care as excellent or good.

Coverage is more affordable for most Americans, not less. More than 80 percent of the people enrolling through the marketplaces are eligible for premium subsidies, which reduce premiums in the federal marketplaces by an average of 72 percent. Before health reform, premiums were out of reach for people with modest incomes. Now that insurers have to grant coverage to everyone and charge the same premiums regardless of past medical problems, a market that was closed to many with modest incomes is finally a viable source of health insurance. Recent data show other pocketbook improvements: fewer people skipped needed medical care or had problems paying medical bills as health reform took effect.

Before health reform, many plans lacked benefits that people wanted. Before health reform, many plans in the individual market lacked coverage of maternity care, substance abuse and mental health treatment, and prescription drugs. Health reform requires insurers to include those benefits. It also requires coverage of certain preventive care at no cost, bars annual and lifetime limits on benefits, and caps the amount people pay on deductibles and other cost-sharing charges each year.

It isn’t all about the individual mandate. To be sure, the penalty for not having insurance is a critical part of health reform since it encourages more healthy people to buy coverage. But the mandate isn’t the only reason people would purchase marketplace coverage, as the op-ed claims. The penalty hasn’t even fully phased in, yet numerous surveys show significant — even historic — gains in coverage (see here and here) through the marketplaces, as well as through health reform’s Medicaid expansion.

Those gains reflect the fact that people who are uninsured generally want coverage but either can’t afford it or don’t have coverage through a job. Now, however, health reform offers people a choice of marketplace plans with meaningful benefits and substantial help purchasing them.

House Republican Op-Ed Admits Benefits of Affordable Care Act

March 4, 2015 at 2:10 pm

What’s striking about the vague health plan that three key House Republicans — Education and Workforce Committee Chairman John Kline, Ways and Means Committee Chairman Paul Ryan, and Energy and Commerce Committee Chairman Fred Upton — outlined yesterday isn’t just the lack of critical details, but their language in describing it.  They imply that their plan will offer certain features that the Affordable Care Act (ACA) doesn’t when, in fact, the ACA already provides these benefits — and, in most cases, much more so than their plan likely would.  This suggests they recognize that many ACA elements are actually quite popular, including:

  • Allowing people to choose from a range of plans that fit their needs and budgets and having insurers compete for their business. The ACA’s federal- and state-based marketplaces do just that.  They allow individuals and families to choose from an array of plans with differing levels of coverage, with multiple insurers participating in virtually every state.  Marketplace subsidy amounts are based on premiums for a benchmark plan, encouraging insurers to compete based on price as well as other factors.
  • Helping people who have to buy coverage on their own to afford it. Under health reform, people with incomes between 100 and 400 percent of the poverty line who lack access to other health coverage can get tax credits to help pay the premiums for marketplace coverage.  People with incomes below 250 percent of poverty also receive help with deductibles and other cost-sharing.  It’s far from clear that Chairmen Kline, Ryan, and Upton would offer comparable subsidies that limit premiums to specified percentages of income for people below 400 percent of poverty, as the ACA does.  And their op-ed is silent on whether they will offer any help with deductibles and cost-sharing.
  • Providing tax credits that are advanceable, refundable, and adjusted for age. That’s exactly how the marketplace tax credits work today.  They go directly to the insurer on behalf of an eligible individual (though people can elect to get the credit instead when they file their taxes).  They are refundable; that is, their value isn’t limited by what people owe in federal income tax.  And they’re adjusted to account for differences in premiums based on age.  Under the ACA, insurers can charge older people no more than three times what they charge younger people; the premium credits ensure that, whatever your age, if you are below 400 percent of poverty, your share of the premium charges cannot exceed specified modest percentages of income.  We are very skeptical that Chairmen Kline, Ryan, and Upton will offer anything comparable.
  • Providing safeguards for consumers. Chairmen Kline, Ryan, and Upton say they would let adult children to stay on their parents’ plan up to age 26 and would prohibit insurers from imposing lifetime limits on coverage.  They also would “protect people with existing conditions” but don’t specify how.  The ACA, however, requires much more in consumer protections and market reforms.  For example, it prohibits insurers in the individual market from denying coverage to people with pre-existing conditions, charging people in poorer health higher premiums than healthy people, charging women more than men, or setting lifetime or annual dollar limits on coverage.  As noted, insurers can’t charge older people more than three times what they charge younger people, and they must set an annual limit on total out-of-pocket costs for covered services.  In addition, they can’t charge cost-sharing for preventive care and can’t have big gaps in their coverage, such as not covering prescription drugs or maternity care (as often occurred in the pre-health-reform individual market).  In contrast, the Kline-Ryan-Upton plan apparently has no standards for benefits and cost-sharing charges, and their op-ed says nothing about limiting insurers’ ability to set annual dollar limits on coverage or charge higher premiums to women and older people.

The Kline-Ryan-Upton plan would likely make coverage less affordable for millions of Americans, particularly those who are older and in poorer-than-average health, thereby increasing the ranks of the uninsured and underinsured.  It wouldn’t come close to achieving the benefits that the ACA provides today.

Ruling Against Health Reform Subsidies Would Be Wrong — and Harmful

March 4, 2015 at 5:00 am

As the Supreme Court hears oral arguments in King v. Burwell this morning, it’s critical that the Court recognize that the Affordable Care Act (ACA) provides premium tax credits for consumers in all states, as we’ve explained.  Invalidating the credits for people in states that didn’t create their own exchanges would be wrong from a legal perspective and would harm millions of Americans.

The ACA clearly states that if a state elects not to establish its own exchange, “the Secretary [of Health and Human Services] shall . . . establish and operate such Exchange within the State.”  In other words, the federal government stands in the shoes of states that elect not to operate their own exchanges by establishing and operating the exchanges on their behalf.

As Chief Justice John Roberts has said, the exchanges are “an element of a comprehensive national plan to provide universal health insurance coverage” (emphasis added).  Leaving millions of people in 34 states unable to afford coverage is not a national plan — yet that’s exactly what would happen if residents of states with federally operated exchanges weren’t eligible for help buying coverage in the exchange.

If the Supreme Court invalidates premium credits in the federal exchange, the number of uninsured Americans would jump by roughly 8 million, as many people would find coverage unaffordable without subsidies, according to studies from the RAND Corporation and the Urban Institute.

Millions more would face dramatic premium increases because younger and healthier people would be especially likely to go without coverage, leaving those who continue to buy coverage older and less healthy, on average — and thus costlier to cover.  RAND estimates that premiums would jump by 47 percent; the Urban Institute estimates a 35 percent increase.

A diverse group of Americans would be hurt.  Most tellingly, 81 percent are full- or part-time workers who don’t get coverage at work.

While some health reform critics claim they have alternative reform plans in case the Supreme Court rules against the premium credits, their claims are hard to take seriously.  The recent “plan” from three Senate Republican leaders — Health, Education, Labor and Pensions Committee Chairman Lamar Alexander; Republican Policy Committee Chairman John Barrasso; and Finance Committee Chairman Orrin Hatch — is extremely vague and would likely undo consumer protections and market reforms that help millions of Americans get affordable coverage, as we’ve noted.

Similarly, the recent proposals from three House Republican leaders — Education and the Workforce Committee Chairman John Kline; Ways and Means Committee Chairman Paul Ryan; and Energy and Commerce Committee Chairman Fred Upton — lack essential details and would likely make marketplace coverage unaffordable for millions of Americans, especially people who are older or have pre-existing conditions, forcing many back to the ranks of the uninsured and underinsured.

Millions of Americans have benefited from the coverage they’ve received under the ACA. It’s imperative that the Supreme Court make the right decision on the merits and not turn back the clock on health reform.

Another Day, Another Republican Health Non-Plan

March 3, 2015 at 1:59 pm

Three leading House Republicans — Education and Workforce Committee Chairman John Kline, Ways and Means Committee Chairman Paul Ryan, and Energy and Commerce Committee Chairman Fred Upton — say they have a plan in case the Supreme Court rules that health reform subsidies are no longer available to people buying federal marketplace coverage.  Like the recent proposal from three Senate Republicans, this latest “plan” is very vague, but what we know about it strongly suggests that it would make coverage much less affordable, particularly for people who are older or in poorer health.

The three House chairmen say they would allow states to waive various health reform requirements.  They don’t specify which ones, but their proposal likely would allow insurers to return to the pre-health-reform market by:

  • offering plans with large gaps in coverage, such as no prescription drug or maternity coverage;
  • charging older people much higher premiums than younger people;
  • charging deductibles and other cost-sharing without limits; and/or
  • imposing annual dollar limits on benefits.

States also could drop health reform’s individual mandate, which helps keep premiums stable and affordable in the individual market by encouraging a balanced mix of people (younger and healthier people as well as older and sicker ones) to enroll in health coverage.

The chairmen also would allow insurers to sell coverage across state lines, which would likely mean that insurance companies wouldn’t have to comply with consumer protections in most states — only whatever weaker protections exist in the state where the insurer has chosen to be licensed.  Such plans would mainly attract healthy people with low health care costs since they least need strong consumer protections.  That’s exactly why the Congressional Budget Office (CBO) previously found that such an approach would drive up premiums for people with higher-than-average health care costs, forcing some to go without coverage.

Similarly, the chairmen say that small businesses could pool together to purchase coverage.  That’s probably a nod to proposals establishing “Association Health Plans” (AHPs).  Like plans offered across state lines, AHPs are generally exempt from a state’s consumer protections, so they mainly attract businesses whose employees are younger and healthier.  Because employers with older workers and less-healthy people would remain in the regular non-AHP market, they would end up paying much higher premiums, as CBO also has explained.

Finally, the chairmen say they’d provide a new tax credit to buy health insurance.  But they don’t explain how it would compare to the credit provided in the marketplace today, such as by revealing the size of the credit or who would get it.  Nor do they say whether their plan includes financial assistance to help people with deductibles and cost-sharing charges, as health reform does.  They say the tax credit amount would be adjusted for a person’s age, but they don’t say whether the adjustment would fully account for the much higher premiums that older people would have to pay under the plan.

In short, under the Kline-Ryan-Upton plan, many people, especially those aged 50-64 and those in poorer-than-average health, would likely pay much more than under current law, and any subsidies would likely prove highly inadequate over time.  This, in turn, would reverse health reform’s dramatic progress in reducing the ranks of the uninsured and underinsured by (1) forcing millions of people to go without coverage and (2) forcing many others to get by with skimpy coverage or face deductibles and co-pays they can’t afford and, hence, go without needed care.

Republican Senators’ “Plan” for Health Subsidies Lacks Substance

March 2, 2015 at 4:44 pm

Republican Senators Lamar Alexander, Orrin Hatch, and John Barrasso claim in a Washington Post op-ed today that they have a plan if the Supreme Court decides that health reform subsidies are no longer available to people buying coverage through federal marketplaces.  Their “plan,” however, is extremely vague — perhaps intentionally so, because the details would likely show that it would make coverage less affordable for marketplace enrollees, particularly those who are older or in poorer health, and threaten the stability of the overall individual health insurance market.

The senators write that the plan would “provide financial assistance to help Americans keep the coverage they picked for a transitional period,” but they don’t furnish the most basic information about this assistance.  Would people receive the same amount of help they do now, both for premiums and for deductibles and cost-sharing?  How long would this transitional assistance be available?  What, if any, financial assistance would be available when it expires — and if it were available, who would be eligible and for how much?  The senators don’t say.

The senators also write that their plan would give states “the freedom and flexibility to create better, more competitive health insurance markets offering more options and different choices,” whether or not they have a federal marketplace.  They don’t explain what this means either, but most likely it means permitting states to significantly weaken or drop health reform’s consumer protections and market reforms, as well as eliminate the individual mandate that people have coverage or pay a penalty.

Health reform established these protections for a good reason.  Before health reform, insurers in the individual market could charge people with pre-existing health conditions exorbitant premiums or deny them coverage outright.  They also could charge older people much higher premiums than younger people, pricing many out of coverage.  And many individual-market plans had large gaps in coverage, such as no prescription drug coverage, or charged deductibles and other cost-sharing that people could not afford.

Health reform ended or limited those practices — requiring insurers to take all comers, barring them from charging sicker people more, limiting how much they can charge older people, requiring certain benefits to be covered, and establishing an annual limit on out-of-pocket costs.  But to ensure that older and sicker people don’t disproportionately enroll, which would cause premiums to skyrocket, health reform also includes an individual mandate.  That creates a balanced mix of people enrolled in health coverage — young and old, healthy and sick — which helps keep premiums more stable and affordable.

Permitting states to roll back these protections and eliminate the individual mandate would almost certainly make health coverage much less affordable for marketplace enrollees, particularly for people aged 50-64 and those with pre-existing health conditions.  Even if some subsidies were available after the transition period, they would likely prove highly inadequate over time as plan premiums rose.  That, in turn, would drive many people out of marketplace coverage and back to the ranks of the uninsured and underinsured.