Californians Brace For Increased Healthcare Premiums If Federal Subsidies Expire

Californians brace for increased healthcare premiums if federal subsidies  expire - Los Angeles TimesSource: Los Angeles Times, by Melody Gutierrez and Anabel Sosa

For the last two years, Syd Winlock has had a major burden lifted from his surgically repaired shoulder.

Federal subsidies passed as part of a temporary pandemic relief package have drastically cut how much he pays in healthcare premiums, allowing the Sacramento-area small-business owner to purchase an insurance plan during the last two years that provided better coverage for his shoulder and knee replacements.

Those federal subsidies, however, will expire at the end of this year if Congress does not extend the program. His “very manageable” price — about $700 a month for him and his wife — will increase to $2,300, Winlock said.

“Even if we went to a lesser-type policy, it would still be about $1,800 a month,” Winlock, 63, said. “I mean, that’s more than my mortgage.”

Roughly 150,000 lower- and middle-income Californians would be similarly priced out of coverage by the rising premiums if the federal subsidies are not extended, a Covered California analysis recently estimated.

The federal subsidies were passed in early 2021 as part of the Biden administration’s American Rescue Plan Act, which temporarily provided help to Americans to recover from the economic and health effects of the COVID-19 pandemic.

Under the act, health insurance premiums were capped at 8.5% of a household’s income. That significantly dropped monthly payments and led to more consumers signing up through Covered California, the insurance marketplace created by the 2010 Affordable Care Act for working-age people who aren’t covered by a health plan at their job.

Enrollment in the state’s exchange has hit a record-high 1.8 million, of which Covered California reported that 92% received some form of subsidy.

“These enhanced subsidies have fundamentally delivered affordability and delivered on the promise of the Affordable Care Act in the way that it was intended,” said Jessica Altman, executive director of Covered California.

“There were a lot of people who said things like, ‘Oh, my gosh, you know, for the first time I can afford my health insurance and my child care….’ This is particularly important given the inflationary environment we are in now.”

More than 1 million lower-income earners — individuals making between $17,775 and $32,200 and families of four with income between $36,570 and $66,250 — would see their premiums more than double if Congress doesn’t extend the program, according to the Covered California analysis. Monthly premiums for middle-income earners would increase, on average, by $272 per member next year.

John Baackes, the chief executive of L.A. Care, a health insurance plan serving Los Angeles County’s poorest and most vulnerable residents, said that although the enhanced subsidies don’t expire until the end of the year, the window for Congress to act is growing smaller because of its monthlong August recess. At that point, legislation typically slows down in an election year.

Baackes said health plans will need time to send renewal notices to consumers of anticipated rates for the 2023 coverage year, which are mailed in October.

“So we’re very concerned about it,” Baackes said. “The American Rescue Plan provided increased subsidies that are really a wonderful thing. And many of our members benefited from it.”

With open enrollment beginning one week before the Nov. 8 midterm elections, Democrats on Capitol Hill are increasingly eager to prevent consumers from receiving notices about huge increases in insurance premiums before voters go to the polls. But the debate about whether to extend the subsidies or — as some have pushed — make them permanent has been hamstrung by wrangling over the price tag and the effect on skyrocketing inflation.

Keeping the subsidies an additional three years would cost $74 billion, while the price tag for making them permanent is $220 billion over the first 10 years, according to the Congressional Budget Office.

Gov. Gavin Newsom and state lawmakers proposed spending $304 million in separate state healthcare subsidies to lessen the burden if the federal program is not extended. That money, which is included in a state budget that is expected to be finalized this month, would offset premium increases for more than 700,000 residents.

However, those state-funded subsidies will cover only a fraction of the federal premium discount currently available under the American Rescue Plan, which provided $1.7 billion to California in each of the last two years to help with healthcare costs.

“Nearly half of the folks in Covered California are paying less than $10 a month,” said Anthony Wright, the executive director of Health Access California, a consumer group that is pushing Congress to make the increased federal subsidies permanent. “We live in a high-cost-of-living state, so people will have to make decisions about how much healthcare they can afford.”

That worries Tuan Nguyen, a caregiver in the Silicon Valley city of Milpitas. Having been diagnosed six years ago with a rare and painful disorder called glossopharyngeal neuropathy, Nguyen said he has to buy more costly insurance coverage that allows him to see particular specialists.

“I need the healthcare plan,” said Nguyen, 44. “I need to see my doctor. I need my treatment. These are things that are a necessary part of my life, and they’re all very expensive and getting much harder to afford.”

Reducing the number of uninsured residents in the state has been a top priority for Newsom and legislative leaders, who in 2019 approved legislation creating a fee for anyone who does not have insurance. The individual mandate was intended to induce younger and healthier individuals to buy coverage through Covered California to widen the pool and lower rates overall as Democratic leaders move California closer to universal coverage.

As part of that effort, California has incrementally expanded eligibility for Medi-Cal, the state’s healthcare program for the poor, to certain age groups of low-income people regardless of immigration status. California’s pending budget would offer Medi-Cal to the final remaining age group in 2024, opening the healthcare program to residents 26 to 49 years old regardless of immigration status. Newsom said the move will make California “the first state in the country to achieve universal access to health coverage.”

Miranda Dietz, a research and policy associate at UC Berkeley Labor Center, said the significant increase in the number of Californians with health insurance over the last two years would be in jeopardy without the federal subsidies. Dietz co-wrote a study in partnership with the UCLA Center for Health Policy Research that projects that as many as 1 million people will forgo insurance in California next year if federal subsidies expire.

“It makes it so it’s very disheartening to take away these extra subsidies that have been really crucial in improving affordability for folks,” Dietz said. “It’s a real blow towards that goal of universal coverage and more affordable coverage.”

The added cost of premiums “will be a real struggle for folks who are deciding between rent and groceries,” Dietz said.

For Winlock, the small-business owner, the added cost if federal subsidies are not extended would be temporary. Next year, Winlock and his wife turn 65 and will qualify for Medicare. In the meantime, he would probably look for the cheapest plan possible and hope for the best.

“We probably would look at some alternative ways to get healthcare,” Winlock said. “We certainly wouldn’t be able to afford mainstream healthcare. It is just out of our budget.”

Californians with Individual Health Coverage Spent Significantly Less on Healthcare

California residents who bought insurance through the individual market spent significantly less on health care in 2014 than they did the year before. The year, 2014 marks the first year of the Affordable Care Act (ACA). The report by the California HealthCare Foundation reveals that median out-of-pocket spending for families with individual coverage dropped from $7,345 in 2013 to $4,893 in 2014. Thirty-five percent of Californians with individual coverage said that health care costs ate up more than 10% of their household income compared to 43% in 2013. The reduced spending is likely due to premium tax credits and cost-sharing subsidies available for the first time in 2014 through Covered California. Spending declines were more pronounced in California than in the rest of the country. In fact, it’s likely California’s spending declines helped pull down the national averages.

Hundreds of Thousands of Californians Face Increased Tax Penalty

Covered California is reminding consumers that time is running out to avoid the tax penalty for those who do not have health insurance in 2016. A recent report from the Henry J. Kaiser Family Foundation (http://kff.org/health-reform/issue-brief/the-cost-of-the-individual-mandate-penalty-for-the-remaining-uninsured) estimates that the average household penalty in 2016 will be $969, which is a 47% increase from 2015. The report also estimates that those subject to the penalty include 75% of people who are eligible for premium subsidies. The fine is calculated two different ways; uninsured consumers will pay whichever amount is higher. The first calculation is 2.5% of household income, with a maximum of the total yearly premium for the national average Bronze health insurance plan premium. The second calculation is $695 per adult plus $347.50 per child under the age of 18, with a maximum of $2,085.

The following table shows the potential range of penalties for not having insurance in 2016.

Estimated Annual Penalties for Not Having Health Insurance in 2016
Household Size Minimum Maximum*
1 (single filer) $695 ($58 per month) $2,484 ($207 per month)
2 (single filer with one dependent under 18) $1,043 ($87 per month) $4,968 ($414 per month)
3 (married filing jointly with
one dependent under 18)
$1,738 ($145 per month) $7,452 ($621 per month)
4 (married filing jointly with two dependents under 18) $2,085 ($174 per month) $9,936 ($764 per month)

Nearly nine out of 10 Covered California enrollees get some financial assistance. Covered California says that 670,000 enrollees paid $100 a month or less for their coverage in 2015 and 350,000 enrollees paid $50 or less per month. Open enrollment runs through Jan. 31. Anyone signing up between Jan. 16 and Jan. 31 will have their health care coverage start on March 1.

Californians Are Encouraged To Explore Mental Health Coverage

The California Assn. of Marriage and Family Therapists (CAMFT) urges Californians to investigate mental health coverage during open enrollment. Under California law, psychotherapy may be much more affordable than most people assume. The Affordable Care Act and the Mental Health Parity and Addiction Equity Act require insurers to provide behavioral health coverage to treat mental health disorders or substance abuse  that is comparable to coverage for treatment of physical health with no annual limits. Despite robust access to affordable mental health care, many policyholders are not utilizing it to their full benefit. Often, the obstacle is a lack of information about the available options. The website, CounselingCalifornia.com, allows consumers to search for local therapists who accept clients with managed care plans.

Online Tool Allows Californians to Compare Health Care Costs

California Healthcare Compare is a new web-based tool that allows Californians to access and compare healthcare prices and quality ratings online. Commissioner Jones directed the California Department of Insurance to get federal Affordable Care Act grant funds to enhance transparency in healthcare pricing. Commissioner Jones then partnered with the University of California San Francisco (UCSF) and Consumer Reports to createHealthcareCompare.insurance.ca.gov.

A first of its kind in California, California Healthcare Compare allows consumers to compare hospital and medical group quality in the areas of maternity care, hip and knee replacement, back pain, colon cancer screening, and diabetes. The site also reveals estimated regional costs for more than 100 different medical procedures or conditions ranging from appendicitis to prostate cancer, illustrating dramatic price differences depending on where you seek care. To enhance consumers’ knowledge of the healthcare system, Consumer Reports provides expert tips and advice on how to navigate the healthcare system.

R. Adams Dudley, MD, Director of UCSF’s Center for Healthcare Value said, “This website would not be possible in most states because the information simply isn’t available. Because of the advocacy of California consumer and business groups and the vision of California’s insurers and providers, we have much more information about quality of care than most states. Therefore, we can tell a pregnant woman not only about the C-section rate at a hospital and whether she’ll be allowed to try for a vaginal delivery if she’s had a C-section before, but also what percentage of women at that hospital learn to breast feed before going home and how often complications happen.”

Californians with the Top Chronic Conditions: 11 Million and Counting

Chronic conditions are the leading cause of death and disability in the United States, and are the biggest contributor to health care costs. But there is wide variation in their incidence. Major differences depend on age, income, race and ethnicity, and insurance status, according to a report by the California HealthCare Foundation. The report finds that many Californians with chronic conditions are delaying needed care because of cost. The following are key findings:

  • About 40% of adults have at least one of the five chronic conditions studied.
  • High blood pressure is the most common chronic condition, affecting about one in four, or 7.6 million, adults in California.
  • The prevalence of chronic conditions falls as income rises. Fourteen percent of adults living under 138% of the federal poverty level have two or more chronic conditions compared to 8% of adults in the range of 400% or more of the federal poverty level.
  • 34% of Californians with psychological distress delayed getting needed medical care, and 27% delayed filling prescriptions. Cost or lack of insurance was frequently cited as the reason for these delays.
  • 70% of Californians who are 65 or older have at least one chronic condition, compared to 26% of those  18 to 39.

Californians With Mental Health Issues Face Discrimination

Californians With Mental Health Issues Face Discrimination
Many California residents with mental health issues report discrimination in personal relationships and in the workplace, according to a RAND Corp. study. Just 41% of those surveyed say that people are caring and sympathetic to those with mental illnesses while 81% say that people with mental illness face prejudice and discrimination. More than two-thirds of said they definitely or probably would hide a mental health problem from co-workers or classmates, and more than one-third said they would hide their condition from family or friends.

Nearly 90% who had a mental health problem faced discrimination. Most often, they faced discrimination in intimate personal relationships, but they also reported high levels of discrimination at school, in the workplace, and from health care providers and law enforcement officials. However, Californians who are facing psychological distress are showing signs of resiliency. More than 80% of those surveyed have a plan for staying or becoming well and say they can meet their personal goals. In addition, about 70% of those surveyed said that they are satisfied with life. The large majority of respondents say that recovery from mental illness is possible and say they would seek treatment for a mental health problem if needed.

Proposition 63, which imposed a special state tax on people with incomes over $1 million, funds the California Mental Health Services Authority (CalMHSA). Wayne Clark, executive director of CalMHSA said, “This new report…highlights the need to confront stigma, and the opportunity to promote mental health in our state with the statewide stigma reduction efforts offered by CalMHSA.” The survey found that the mental health education campaign mounted by CalMHSA is reaching people facing psychological distress. About one-third of the people surveyed had been reached during the previous 12 months by the early intervention efforts, such as viewing the campaign’s documentary on ending stigma about mental illness. In addition, other activities that could be related to the CalMHSA efforts reached nearly 90% of the group during the previous 12 months.

More Calif. patients say they receive very good or excellent care

Fifty-three percent of low-income California residents responding to a survey said they receive excellent or very good health care. The figure is 5 percentage points higher than in 2011 and might reflect a culture shift as health clinics have focused more on patient satisfaction under the Affordable Care Act. Kaiser Health News (2/11)

Californians Received an Average of $5,200 Per Household Through Covered California

About 800,000 California households got federal subsidies to make health care more affordable in 2014. The average amount received was more than $5,200 per household per year, or about $436 per month, according to Covered California executive director peter V. Lee. He said, “It’s important for uninsured Californians to know that many people like them received more than $5,200 last year to help them purchase health coverage, and that support is available to many others eligible to sign up before February 15.”

The total amount of premium help  — known as the federal Advanced Premium Tax Credit (APTC) — was $3.2 billion paid to health insurance companies on behalf of those who enrolled in private coverage through Covered California in 2014. The consumers themselves paid $1.1 billion toward those policies in 2014, meaning that for every dollar a subsidized consumer spent on premiums, the federal government paid another $3.

The data released Monday are reflected on new Health Insurance Marketplace Statements being mailed this week by Covered California. Known as Internal Revenue Service (IRS) Form 1095-A, the two-page statement (www.CoveredCA.com/news/pdfs/sample-1095-A.pdf) will show the amount of Advanced Premium Tax Credit each household received on a month-by-month basis in 2014. Similar to other tax documents, like a W-2 or 1099, the 1095-A will be used by consumers when they file their federal tax returns this year to ensure the subsidy they received is appropriate.

Consumers need to use this information when they file their taxes for 2014, Lee said. For many consumers, their tax credit will need to be adjusted, because their income is different than what they estimated it would be for 2014. As a result, consumers will see their tax credit adjusted upward or downward in their tax return based on their actual income as reported to the IRS for 2014.

Under the Affordable Care Act, the amount of tax credit reducing the consumer’s monthly health insurance premium payment is based on an estimate of their income made when they purchase their insurance. Consumers pay their share of the premium to the insurance company, and the federal government pays a portion on their behalf, based on their estimated income in the year ahead. The amount paid by the government is called the Advanced Premium Tax Credit, because it is paid in advance but reconciled as a tax credit at tax time based on the consumer’s official income as reported to the IRS. Consumers can elect to wait to get the entire tax credit at the end of the year, but almost all consumers took their premium tax credit in advance.

Many tax preparers and commercial tax software products are ready to accept information from Form 1095-A. Consumers may be able to get free software or in-person help filing their taxes and can learn more at www.irs.gov/freefile or www.irs.gov/VITA.

The period to sign up for coverage for 2015 continues for the next three weeks until February 15.  In addition to premium help, many consumers also benefited from cost-sharing reductions that lowered their out-of-pocket costs when they visited the doctor, Lee said.

In 2014, more than 60% of consumers who received subsidized coverage through Covered California qualified for cost-sharing reductions, which reduced their out-of-pocket health care expenses. Lee said that in 2014, the value of the out-of-pocket discounts per household amounted to about $1,200 per year.

Covered California Enrollment Has a Strong Start

Covered California announced that 69,245 consumers submitted applications for health coverage, including Medi-Cal, during the first four days of the 2015 open-enrollment period. Executive director Peter V. Lee said, “We had a strong start when we opened Saturday for Covered California, and we are continuing to see tremendous interest from people seeking security for themselves and their families in Covered California plans and Medi-Cal coverage.”

As of Tuesday, November 18, about 35,877 consumers were determined to be eligible for coverage through Covered California, and 11,357 picked a plan. In comparison, in October 2013, it took 15 days to reach 10,972 plan selections. About 33,368 applicants were deemed to be likely eligible for Medi-Cal from November 15 to November 18. So far in 2014, Medi-Cal has enrolled more than 2.2 million Californians.

The second open enrollment of the Affordable Care Act began on Saturday, November 15, and continues through Feb. 15, 2015. Californians used the enhanced website at www.CoveredCA.com to apply for coverage using a single, streamlined application.

The website is working well for the vast majority of consumers. In four days, there were 314,100 unique visitors to CoveredCA.com. The upgraded enrollment portal allows for greater user capacity and faster page loads so that consumers do not have to return later to complete an application.  More than 12,000 certified insurance agents, 10,000 county eligibility workers and more than 6,000 certified enrollment counselors are partnered with Covered California, ready to help enroll consumers.

Covered California anticipates a total enrollment of 1.7 million Californians (excluding Medi-Cal enrollees) by the end of the second open-enrollment period: 1.5 million in subsidized coverage and 230,000 in unsubsidized coverage. This forecast represents an increase of about 500,000 in total enrollment.

Last Updated 06/29/2022

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