Five Things to Know about the Possible Renewal of Extra Affordable Care Act Subsidies

Five Things to Know about the Possible Renewal of Extra Affordable Care Act  Subsidies | KFF

Source: Kaiser Family Foundation, by Cynthia Cox, Krutika Amin, and Jared Ortaliza

Congress is considering an extension of extra help for people buying their own health coverage on the Affordable Care Act Marketplaces. These temporary subsidies, passed as part of the American Rescue Plan Act (ARPA), increased the amount of financial help available to those already eligible; the ARPA also newly expanded subsidies to middle-income people, many of whom were previously priced out of coverage.

There are reports Congress is considering a temporary extension of the subsidies for two years. If these subsidies expire, either at the end of this year or after a temporary renewal, premium payments will rise. Here’s what to know:

The Big Picture: How Much Higher Would Premium Payments be Without ARPA?

If Congress extends the temporary subsidies, premium payments in 2023 will hold mostly flat for Marketplace enrollees, since the premium tax credits shelter enrollees from increases in the underlying premium. However, if these extra subsidies expire, out-of-pocket premium payments will rise across the board next year for virtually all 13 million subsidized enrollees. In the 33 states using HealthCare.gov, premium payments in 2022 would have been 53% higher on average if not for the ARPA extra subsidies. The same is true in the states operating their own exchanges.

Exactly how much of a premium increase enrollees would see if these subsidies expire depends on the enrollee’s income, age, and the premiums where they live.

For example, using our subsidy calculator, you can see that with the ARPA a 40-year-old couple making $25,000 per year currently pays $0 for a silver plan premium with significantly lowered out-of-pocket deductible costs. Using a new version of our subsidy calculator that shows what premium payments in each zip code would have been if the ARPA had not passed, you can see that same couple would have paid $76 per month (or $915 over the course of 2022) without the ARPA. If Congress extends the ARPA subsidies, though, this low-income couple would save $915.

Here’s another example using the new calculator: If the ARPA hadn’t passed, a 60-year-old couple with an income of $70,000 would have had to pay $1,859 per month (or $22,307 over the course of 2022) for a full-price silver plan. Now, compare this to our 2022 calculator that shows what they currently pay with the ARPA: The same couple currently pays $496 per month (or $5,950 over the course of the year). Instead of being expected to pay about 32% of their income on insurance, which would likely be unaffordable, the couple is paying 8.5% of their income with the ARPA. So, if Congress extends the ARPA subsidies, this older middle-income couple will save over $16,000.

The Double Whammy: How 2023 Premium Increases and Subsidy Expiration Would Affect Some Enrollees

The renewal of these subsidies would also prevent some enrollees from experiencing two kinds of premium increases at once. If Congress does not extend these subsidies, the subsidy cliff would return, meaning people with incomes over four times poverty (or about $51,520 for a single person) would lose subsidy eligibility altogether. So, without the ARPA subsidies, these enrollees would not only pay the increase due to the loss of subsidies, but also any increase in the underlying premium.

Our early look at 2023 premiums shows premiums rising about 10%, with most rate increases falling between about 5% and 14%. This is more than in past years, in part due to inflation and rebounding utilization. These rates are still proposed and will not be finalized until next month.

The figure below shows a hypothetical subsidy cliff if premiums do indeed rise by 10%. For example, a 60-year-old making just above four times poverty ($51,521) in 2022 pays 8.5% of their income on a silver plan under ARPA, but would have paid 22% of their income in 2022 without the ARPA on average across the U.S. If premiums rise 10%, they would pay 24% of their income in 2023.

In the states where premiums are currently highest, people losing subsidies would see the steepest increases without the ARPA subsidies. For example, a 60-year-old making just above four times poverty ($51,521) in 2022 would pay more than a third of their income on a silver plan without the ARPA in West Virginia and Wyoming; and in New Hampshire, the person would have paid 15% of their income without ARPA.

The Ticking Clock: Why the Timing Matters

Insurers are now in the process of setting 2023 premiums and some are already factoring in an additional premium increase because they expect ARPA subsidies to expire.

The National Association of Insurance Commissioners (NAIC) wrote to Congress asking to extend these subsidies by July to provide greater certainty as insurers set premiums for next year. Premiums for 2023 are locked in by this August, so if Congress does not act before its August recess, whatever assumptions insurers make about the future of ARPA subsidies will be factored in to their 2023 premiums.

States and the federal government, which operates HealthCare.gov, will need to reprogram their enrollment websites and train consumer support staff on policy changes months ahead of open enrollment this fall. If Congress ultimately extends the enhanced ACA subsidies but does not give state and federal exchange administrators enough lead time to make changes to enrollment websites, people shopping for coverage may get incorrect information or may temporarily lose access to subsidies, causing some to drop coverage.

The End of the Public Health Emergency: How Enhanced Marketplace Subsidies Could Mitigate Coverage Loss

The end of the public health emergency and, with it, the requirement for continuous enrollment in Medicaid is expected to lead to significant coverage losses. So far, the number of uninsured people has not grown during the pandemic and resulting economic crisis. However, ironically, we could see a jump in the uninsured rate as the public health emergency ends if people disenrolled from Medicaid do not find alternative coverage.

Enhanced Marketplace subsidies could act as a bridge between Medicaid and the ACA Marketplaces when the public health emergency ends. If enhanced Marketplace subsidies are still in place when the Medicaid maintenance of eligibility (MOE) ends, many people disenrolled from Medicaid could find similarly low-cost coverage on the ACA Marketplaces. If they are eligible for Marketplace subsidies, people losing Medicaid coverage may find Marketplace plans that, like Medicaid, have zero (or near-zero) monthly premium requirement, assuming the enhanced assistance is extended.

The Costs: What This Means for the Federal Budget

The Congressional Budget Office (CBO) expects the enhanced subsidies to cost about $248 billion over the course of ten years if extended permanently. A large part of the estimated cost is due to the CBO’s expectation that 4.8 million more people would enroll in the ACA Marketplaces than would if the enhanced subsidies are not extended. The actual cost will depend on how many people enroll and how much premiums rise over the coming years. Congress could lower the total cost by extending subsidies temporarily, for example by two or three years, but the annual cost would likely stay about the same.

Conclusion

Health sector inflation, rising utilization, and other factors may cause 2023 premiums to rise by more than in past years. However, as we’ve written before, Congress’s action or inaction on ARPA subsidies will have an even greater influence over how much subsidized ACA Marketplace enrollees pay out-of-pocket for their premiums than will market-driven factors that affect the underlying premium.

Whether subsidies expire at the end of this year or in two or three years, their expiration would result in the steepest increase in out-of-pocket premium payments most enrollees in this market have seen.

L.A. County Coronavirus Weekly Death Rate 70% Higher Than In Bay Area: Why So Much Worse?

L.A. County coronavirus weekly death rate 70% higher than in Bay Area: Why so  much worse? - Los Angeles TimesSource: Los Angeles Times, by Rong-Gong Lin II & Luke Money

With Los Angeles County set to decide in the coming days whether to impose a new mask mandate, one factor of note is a rise in coronavirus deaths.

L.A. County’s weekly COVID-19 death rate is significantly higher than that of the San Francisco Bay Area. On a per-capita basis, L.A. County was recording 96 deaths a week for every 10 million residents, while the Bay Area was recording 56 deaths a week for every 10 million residents.

In other words, L.A. County’s latest weekly COVID-19 death rate is more than 70% higher than the rate in the Bay Area.

The two regions’ death rates had been closer to each other through parts of June. But something changed in July, and there was a dramatic rise in L.A. County’s death rate not matched by that in the Bay Area.

There are various reasons that could explain why L.A. County has a higher death rate. The nation’s most populous county, L.A. County is structurally at higher risk from COVID-19 waves due to a higher rate of poverty and overcrowded housing. Additionally, vaccination and booster rates are generally higher in the Bay Area, and anecdotally, some have observed that voluntary masking seems more common in the Bay Area than in L.A. County.

Since the start of the pandemic, L.A. County has been among the hardest-hit counties in California. Of the state’s 15 most populous counties, L.A. County has one of the worst cumulative COVID-19 death rates — about 3,200 dead for every million residents. (San Bernardino County has an even worse rate, of about 3,700 dead for every million residents.)

By contrast, the Bay Area’s cumulative death rate is far lower than that of L.A. County. The Bay Area’s cumulative death rate is roughly 1,200 dead for every million residents.

L.A. County could impose a new universal indoor mask mandate for public settings as soon as Friday, although Public Health Director Barbara Ferrer has raised the possibility of postponing such a decision should pandemic conditions significantly improve in the coming days. The Bay Area is not currently publicly considering a mask mandate.

When Ferrer was asked at a news briefing last week why her agency’s approach to a possible mask mandate differed from that of other counties in the state, she pointed to factors that have left L.A. County particularly vulnerable, including its size and population of 10 million, 2 million of whom remain unvaccinated.

The county is also home to many older residents generally at higher risk of severe health outcomes from COVID-19, as well as nursing homes and industrial work settings where transmission can be particularly problematic.

Data also continue to show that COVID-19 is taking a disproportionate toll on Black and Latino residents as well as people living in poorer areas of L.A. County.

“Getting transmission levels down low benefits everybody, but it particularly reduces risks for those most vulnerable,” Ferrer said.

In L.A. County, hospitalization rates have grown much faster in recent weeks for older residents.

“When people pass along misinformation that the current COVID surge is not affecting or hurting anyone, these are the people they are dismissing: our elders,” Ferrer said.

Weekly coronavirus cases are showing early signs of a decrease in Los Angeles County, but it’s too soon to say whether it’s a blip or the beginning of a sustained trend.

As of Monday afternoon, L.A. County was averaging about 6,100 coronavirus cases a day over the previous week, down 11% from the prior week’s average of nearly 6,900 cases a day. On a per-capita basis, the latest rate is 425 cases a week for every 100,000 residents. A case rate of 100 or more is considered high.

This is the largest week-over-week decline in cases in a month. But the future remains uncertain. A similar decline in mid-June ended up being temporary, only to be followed by more weeks of even steeper increases in cases.

The coming days will probably be critical in determining whether L.A. County implements a mask mandate starting Friday.

Ferrer said last week that if a steep decline in cases emerges this week, her agency is likely to pause the implementation of a universal mask order for indoor public settings.

Officials also are closely watching to see whether the rate of new weekly coronavirus-positive hospital admissions improves.

A key metric that would determine whether L.A. County remains headed toward a mask mandate is whether there are 10 or more new weekly coronavirus-positive hospital admissions for every 100,000 residents. L.A. County on Thursday reported the rate was 11.4.

Citing new data available through Saturday, the U.S. Centers for Disease Control and Prevention said that rate had fallen to exactly 10.

Throughout this late spring and summer pandemic wave, most public health officials in Bay Area counties have not publicly suggested the need for a renewed local mask mandate. The lone exception, Alameda County, rescinded its own mask mandate three weeks after implementing it on June 3. Because the other highly populated Bay Area counties did not join with Alameda County’s decision, its mask mandate attracted significantly less attention in the Bay Area.

Since the beginning of May, L.A. County’s COVID-19 death rate over a 12-week period has grown to far exceed that of the Bay Area.

From May 1 through Friday, L.A. County has recorded 664 COVID-19 deaths, and the Bay Area, 389 deaths. On a per capita basis, that means — over this 12-week period — L.A. County has recorded 658 deaths for every 10 million residents, while the Bay Area has reported 464 deaths for every 10 million residents.

In other words, if L.A. County had the Bay Area’s death rate, L.A. County would have recorded nearly 30% fewer deaths — about 200 fewer fatalities — over the last 12 weeks.

And if the Bay Area had L.A. County’s death rate, the Bay Area would’ve had more than 40% more deaths — about an additional 160 fatalities — over the same time period.

The calculations for the Bay Area include nine counties adjacent to the San Francisco Bay and also Santa Cruz and Monterey counties, which matches the state Department of Public Health’s definition for the region.

Expiration Of Healthcare Subsidies Will Have Domino Effect, Leading To Higher Prices And Increased Medical Debt

The Burden of Medical Debt – Section 3: Consequences of Medical Bill  Problems – 8806 | KFFSource: Healthcare Dive, by Heather Korbulic

The COVID-19 pandemic forced the United States to cope with a health insurance crisis it didn’t anticipate. Congress and the Biden administration responded by enacting policies to expand access to subsidized private health plans sold through Affordable Care Act exchanges.

The results were nothing short of spectacular: Fewer than 10% of Americans are uninsured, compared to nearly 22% in 2010. In addition, a record 14.5 million consumers are enrolled in a state health insurance exchange plan.

However, unless Congress takes action, the subsidies will expire at the end of the year, and millions of Americans will experience dramatic price increases, become uninsured and likely accrue medical debt.

The American Rescue Plan (ARP) enabled consumers to enjoy lower premiums and access to premium tax credits regardless of income. This made health insurance more affordable for individuals and families, which led to a record 21% increase in public health exchange enrollment compared to prior coverage years.

State-based exchanges enrolled an additional 600,000 individuals, according to the National Academy for State Health Policy, which also reported the average premium savings ranged from 7% to 47% across the state exchanges. Further, 20% or more of enrollees are paying less than $25 per month for coverage in at least eight states. It is a significant achievement to make health insurance affordable for those who once considered coverage financially out of reach.

Returning consumers can even save, on average, 40% off of their monthly premiums because of enhanced tax credits in the ARP, according to the CMS. These changes are possible because the federal government reduced the salary ceiling for tax credits, recognizing a universe of low and middle-income people who earned too much to qualify for Medicaid but found the prices of most insurance plans out of reach.

In some cases, the credits saved individuals thousands a year. The cost, for instance, of a “silver” health plan is currently $390 a month with subsidies for individuals earning $55,000 annually, down from $560 a month.

Unfortunately, those cost savings may end, leaving individuals with the hard decision of either paying for coverage or paying for basic necessities. More often than not, the latter wins out. Securing insurance through an employer isn’t always a better (or even viable) option, since premiums in employer-sponsored plans increased 3.6% in 2021 and 3.9% in 2020, according to the Urban Institute.

Are Healthy Employees Unfairly Burdened?

The Affordable Care Act requires healthy employees to pay the same insurance premiums as their unhealthy coworkers, even though they account for a significantly lower proportion of their employer’s health care spending. Many see this imbalance as a ripoff, according to a video report by SelfHelpWorks.com. The following is a summary of the video report and comments by Lou Ryan, founder and CEO of behavior change firm SelfHelpWorks:

Health insurance costs have skyrocketed in recent years, reaching an average of $6,251 for single coverage in 2015 according to a Kaiser Family Foundation/HRET employer survey. Many employees feel the high insurance rates are a ripoff. The biggest cost driver is chronic disease, which accounts for 86% of the nation’s health care costs according to the CDC. As chronic disease creeps up in an organization its health care costs are driven upwards, resulting in higher premiums and fewer benefits for everyone.

Ironically, most chronic disease can be prevented or reduced by simply making healthier lifestyle choices. Yet the Affordable Care Act essentially requires employees of the same age and gender to pay the same rates regardless of health status. This penalizes employees who work at staying healthy, causing them to view their health insurance as a ripoff. Employers have implemented corporate wellness programs. But results are generally poor when it comes to creating sustained behavior change among those who need it most. While these people want to break free of unhealthy habits like junk food, tobacco or excess alcohol, the vast majority simply find it impossible to do so for any length of time. The problem is that the issue is not being tackled correctly, Behavior begins in the mind, not the body. To view the 3-minute video report, visit selfhelpworks.com and scroll to the bottom.

Proposed Obamacare Rates 12% higher for 2016

HealthPocket analyzed rate filings for 3,771 plans in 45 states and found proposed Affordable Care Act premiums average a 12% rate increase for 2016. Premiums were compared for 40-year-old non-smokers in the largest city in each state. The Silver plan was the most popular exchange plan during the 2015 open enrollment period, accounting for 67% of marketplace plan selections. The 2016 rate proposals for silver plans averaged 14% higher than premiums in 2015. At a 16% increase, gold plans had the highest rate increases proposed for 2016. Entry-level bronze plans had 2016 rate proposals that averaged 9% higher than 2015 while platinum plans, the top-tier of the Affordable Care Act plans, averaged only a 6% increase in rates for 2016.

HealthPocket also found that rate increases varied significantly depending on the type of health plan. For example, among bronze plans examined, rate proposals for HMO and EPO plans were 20% higher than 2015 while PPOs were only 4% higher.

The 2016 rates represent the first time Affordable Care Act insurers have had a full year of medical claims data (including the post-deductible period) to determine rates for the new enrollee pools enabled by the law. Before the enactment, in most states applicants with expensive pre-existing conditions risked being rejected for privately purchased health insurance. Given the exclusion of this population in the pre-reform market, historical data on enrollee pools had limited value for setting Affordable Care Act rates.

Consumers will not necessarily pay the health insurance premiums proposed within the rate filings. The proposed rates must be reviewed and approved by the insurance regulators to each state in which the rates were filed. That process may result in lowering of some of the proposed rates . Moreover, some consumers will experience lower premium increases due to subsidies. Those who are unsubsidized and pay full price for health insurance, will endure the full cost of whatever rate increases are approved.

Consumers in Grandfathered Plans Can Face Higher Costs for Preventive Benefits

Reprinted from the Kaiser Health News (www.khn.org).

by Michelle Andrews June 9, 2015

Judy Naillon called her insurer several months ago to find out why she was being charged $35 every month for birth control pills. Her friends said they were getting their pills for free under the federal health law. Why wasn’t she getting the same deal?

The insurance rep explained that was because the plan Naillon and her husband had through his job was grandfathered under the health law. That meant the plan didn’t have to cover preventive services, including contraceptives, with no charge to consumers as Obamacare requires of other plans.

Naillon, 33, would have to continue to pay a share of the cost of her pills, and the plan wouldn’t pay if she wanted to switch to an intrauterine device. There also was no coverage for an annual physical.

“I’m just really frustrated,” says the Wichita, Kan., piano and violin teacher. When her husband took a new marketing job last fall, I thought that surely all these insurers must now be covering these benefits.

About a quarter of insured workers remain covered by grandfathered plans, according to the Kaiser Family Foundation. (KHN is an editorially independent program of the foundation.) These plans were in existence when the health law was enacted in March 2010 and haven’t changed their benefits or consumer costs significantly since then.

In addition to not being required to cover preventive benefits without charge, grandfathered plans are exempt from some other health law requirements. They don’t have to guarantee members’ rights to appeal a decision by their health plan, for example, and may charge consumers higher copays or coinsurance for out-of-network emergency services. They also don’t have to comply with the law’s limits on annual out-of-pocket spending ($6,600 for someone in an individual plan and $13,200 for families), so consumers in these plans may be on the hook financially for more of their medical care.

When the health law passed, President Barack Obama sought to reassure anxious consumers by promising that if you like your health care plan, you can keep it. Since then, the number of grandfathered plans has steadily declined. In 2011, 72% of companies that offered health insurance had at least one grandfathered plan; by 2014 that number had declined to 37%, according to KFF’S annual employer health benefits survey. The decline isn’t surprising, say benefits experts.

Large employers make changes every year to improve care and reduce costs, says Steve Wojcik, vice president of public policy at the National Business Group on Health, an advocacy group representing large employers’ interests.

“Some big self-funded companies may keep generous grandfathered plans as a recruiting and retention tool, says Joe Kra, a partner and actuary at human resources consultant Mercer. Smaller employers are more likely than large ones to be grandfathered at this point,” Wojcik says. Small firms typically buy a plan from an insurer that pays their claims, unlike larger companies that often design their own plans and pay their employees’ claims directly.

Some health policy experts have two words for the demise of grandfathered plans: Good riddance. Lacking many consumer protections and generally subject to weaker regulation, they aren’t necessarily good options for people who have health problems.

“But they can be a good deal for younger and healthier people. Grandfathered plans are more likely to hang onto people who are low risk,” says Sarah Lueck, a senior policy analyst at the Center on Budget and Policy Priorities. However, on the individual market, if healthy people stay in grandfathered plans, it tends to leave sicker people in the comprehensive plans that comply with the health law.

From an employee’s perspective, what grandfathered plans may lack in consumer protections they may make up for in reduced cost sharing, Kra says.
In order to retain their grandfathered status, for example, plans are limited in how much they can increase copayments and deductibles, among other things. That means if someone had a $20 copayment in 2010, the copayment could be no more than $26 next year, Kra says. Likewise, a $500 deductible could be no more than $652.

“If an employee is in a grandfathered plan, they’re one of the fortunate minorities,” Kra says. Naillon probably wouldn’t agree with that statement. “Even though my doctor would like to do a physical and run labs, I can’t afford to have those services,” she says.

Obamacare Premiums Higher in Counties Without a Preferred Provider

A study by HeathPocket reveals that consumers benefit when PPO plans are available to them, even if they choose not to buy PPO plans since the other available plans will have lower premiums. The average Obamacare premium for a 40-year-old was $327.28 in counties with no PPOs and $325.43 in counties with PPOs. Obamacare health plans must meet the standards mandated in the Affordable Care Act, but plans choose whether to cover out-of-network providers and require referrals for specialist visits, according to the study.

HMO, EPO, and POS plans were 5% higher in counties with no PPO plans than in counties with PPO plans. Premiums for POS plans were 6% higher in counties with no PPO plans than in counties with PPO plans while HMO premiums were only 2% higher. EPO plans had the greatest premium cost difference, with average premiums of $335.55 in counties where PPO plans were available and $387.21 in counties where PPO plans were unavailable, an increase of more than 15%.

HealthPocket also found premium differences among counties with only one available plan type and counties with multiple available plan types. Plans in counties with only one available plan type had an average premium of $350.61, 8% higher than the average premium of $324.06 for plans in counties with multiple available plan types. Among the four plan types, PPO and POS plans may appeal most to consumers who want to continue seeing their doctors if other plans don’t cover their doctor’s in-network. However, cheaper HMO plans could be preferable for consumers that don’t mind staying in-network and getting referrals from their primary care doctor

It May Be Harder to Get Your Meds in the Exchange Plans

On the exchange plans, branded mental health and oncology medications are extremely likely to be subject to step therapy or prior authorization. In fact, more than 70% of covered drugs require utilization management in exchange plans. HIV/AIDS drugs have the lowest incidence of utilization management, with more than half of exchange plans providing open access to these medications, according to a report by Avalere Health. Caroline Pearson vice president at Avalere says that consumers shopping on the exchange need to look beyond premiums. Patients may be better off with a plan that provides open access to drugs they use regularly. They will need to work closely with their physicians to fulfill utilization management requirements where they exist, she added.

Health plans rely on utilization management to encourage patients to choose lower cost drugs and use the drugs that are most appropriate to their medical condition. However, these tools may block access to needed medications, particularly for vulnerable populations like severely mentally ill patients. Utilization management for mental health drugs is more than four times more common for exchanges compared to employer coverage. Matt Eyles, executive vice president at Avalere said, “The utilization management tools we profiled are not as widely used in commercial insurance settings, so they need to be closely monitored for their effects on consumers and on the clinicians responsible for their administration.” For more information, visit http://avalerehealth.net/expertise/life-sciences/insights/more-controls-on-drug-access-in-exchanges.

Higher BMI raises hospitalization risk in study

Data on nearly 250,000 Australian participants showed that every additional BMI point was tied to up to a 4% higher risk of being hospitalized for a variety of conditions within a two-year period. The study was published in the International Journal of Obesity. Reuters (10/21)

Last Updated 08/10/2022

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