The Center's work on 'Insurance Coverage' Issues

Health Reform’s Success Grows; House Budget Chair Promises Repeal

March 17, 2015 at 12:48 pm

A day after the Administration announced that 16.4 million uninsured people have gained coverage under health reform, lowering the uninsured rate from 20.3 percent all the way to 13.2 percent, the House Republican Budget Chairman unveiled a budget that would reverse this remarkable progress by repealing health reform, including its Medicaid expansion.

In the run-up to Supreme Court arguments in King v. Burwell, in which plaintiffs seek to invalidate subsidies for health coverage for people in 34 states using the federal marketplace, House and Senate Republicans said they had plans to maintain coverage for the 8 million people at risk of losing it should the plaintiffs prevail.  Yet House Budget Committee Chairman Tom Price’s budget plan would repeal health reform entirely.

Among other things, that means repealing the requirement that insurers allow young adults to stay on their parents’ health plans until they turn 26.  That provision alone is responsible for 2.3 million of the 16.4 million coverage gain.

The Price plan’s vague statements about “starting over” on health reform and “expanding choices and flexibility” are empty promises for people who can’t afford health coverage without expanded Medicaid and subsidies. The Chairman’s budget eliminates the funding for their coverage, which would drive them back into the ranks of the uninsured.

Medicaid Expansion States Are Saving Money

March 16, 2015 at 1:48 pm

Health reform’s Medicaid expansion has produced significant state budget savings, two new reports covering five states show. Savings are expected to continue — and grow — in coming years. These reports provide strong evidence that claims that the expansion will harm state budgets are misplaced.

Expanding Medicaid saved Arkansas and Kentucky nearly $31 million and $26 million, respectively, in just the first six months of 2014, according to a report prepared for the Robert Wood Johnson Foundation. They expect to save $89 million and $84 million this fiscal year, which ends June 30. What’s more, the report found that these states will continue to accumulate savings that will cover all costs related to the expansion through the end of the decade, even as the federal share of those costs phases down from 100 percent to 90 percent by 2020.

Arkansas and Kentucky have achieved these savings in areas available to all states. For example, as more people have gained health insurance, fewer have needed state-funded mental health and behavioral health programs that serve the uninsured. And both states have moved people who previously received care under specialized Medicaid categories for disabled adults and women with breast and cervical cancer into the expansion’s new eligibility group, for which the federal government is paying the entire cost.

Connecticut, New Mexico, and Washington State are also enjoying budget savings from their Medicaid expansions, a separate report from the Kaiser Family Foundation found.

In addition, Arkansas, Kentucky, New Mexico, and Washington State are collecting more revenue from taxes on the providers and managed care plans that serve the newly insured, the reports show.

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.

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.