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.

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.”

Can California Keep Offering Cheap Health Care? Here’s What State Network’s New CEO Says

Can California keep offering cheap health care? Here's what state network's  new CEO says | Nation | fltimes.com

Source: The Sacramento Bee, by Cathie Anderson

Jessica Altman took over in March as chief executive officer of Covered California, and even as she was settling into a new home in Sacramento she also was making the rounds with congressional leaders to drive home just how much Californians want access to health insurance.

The greatest barrier to getting it is all too often the cost, Altman said in her first interview with The Sacramento Bee, and nothing underscored that more than the record enrollment Covered California saw last year when new federal assistance in the American Rescue Plan slashed premiums for California enrollees by an average of 20%.

Enrollment in plans offered on California’s state-based marketplace surged to 1.8 million, according to Covered California records, an increase of more than 150,000 people.

Altman said she has to keep sharing the story that the financial help put in place under the American Rescue Plan is having an astounding impact for all Americans who rely on state and federal marketplaces to provide them with a lifeline when they or their family members are unexpectedly struck by illness and to get the preventative care that is so crucial to staying in good health. The federal subsidies were approved for only 2022 policies.

“Health care is core,” she said, “and being healthy is core to our ability to live happy and healthy lives and pursue the things that we want to pursue. It is also, within our society, a great equalizer if it’s used effectively and equitably in supporting people across our nation and in California.”

In other words, Altman said, Covered California’s work is not done when a consumer pays a premium.

“Our role as a marketplace does not end simply when people get covered,” she said. “It goes to what happens next. Is that health insurance providing the access that people need. Do they have the providers that they need? Are the providers providing high quality care that is actually delivering them better health outcomes? So this next phase of responsibility (is) not just access to coverage but access to quality, equitable care.”

A native Californian, Altman was the insurance commissioner for the state of Pennsylvania before she took the top job at Covered California. Altman takes the reins from Peter V. Lee, the founding leader of the marketplace since 2012.

She offered a glimpse into her key priorities during a question-and-answer session with The Bee. We asked what her three key priorities were as she started her tenure.

The top priority is always going to be consumer-centric? How can Covered California, better serve customers that we have today, better reach the customers that we can have tomorrow, and better serve them in navigating our health care system, that can be all too complex.

One example: How can we better assist Californians as they transition between types of coverage — whether that’s from Medi-Cal to private insurers, from COBRA to a Covered California insurer, or between plans within Covered California or other types of transitions.

What are the outreach tools and the infrastructure that we have to identify these people at the time when they need us and to help them through those processes?

GO DEEPER WITH DIVERSITY, EQUITY AND INCLUSION

Equity is built into our mission. It is something Covered California has always done. Are the providers providing high quality care that is actually delivering better health outcomes for all enrollees?

This next phase of responsibility is not just about access to coverage but access to quality, equitable care.

There are many things that we are doing through the equity lens, for example, our outreach to community-based organizations, our efforts to be embedded in different communities across California to provide customer service, our push to be known and understood across languages and across cultures, and our work to make sure that the providers that are in the network of the health plans that we contract with are diverse are culturally competent and are meeting the health care needs of all of our population.

‘OUR JOB DOESN’T STOP WITH COVERAGE’

Our job doesn’t stop with coverage. It goes to quality.

Over the next coming years, we will be monitoring our health plans’ performance for six key measures of quality. We will have our health plans putting financial accountability on the table (paying penalties) if they do not meet the goals of those quality measures.

We are talking about things like: How many children that they cover are getting immunizations? How many adults are getting colorectal screenings that save lives at the appropriate age? How are they doing in monitoring blood sugar levels and hypertension among their population and improving it? These are the things that we know are the drivers of morbidity and mortality.

We will, by the way, be collecting and reviewing those measures not just holistically but also stratified by demographic factors like race and ethnicity to really make sure we are understanding any disparities.

Our equity work and our quality work are both the same and much more than one another. So what I mean by that is, health care quality is equity. Delivering on health care quality will help us deliver equitable outcomes.

WHAT MAKES YOU WANT TO DO THIS WORK?

I come from a family who has worked in health care and is steeped in health care. My father’s father was a primary care physician who I remember well, doing house calls even into his 80s with his black leather doctor’s bag and his stethoscope. My mother’s father was an obstetrician-gynecologist who provided women’s health services in a very different era.

And both my parents have worked in health care and had long careers in health care.

The issues hit close to home for me both because of watching my family members and loved ones give their lives and commitment to improving the health care of others and also (because) I have seen too many people I love experiencing health challenges. I have always been driven to public service, I have never worked anywhere other than in public service.

Healthcare Spending Could Drop $11.4B Next Year If ACA Premium Subsidies Expire, Research Finds

Health care spending would drop $11.4B without premium credit expansion |  BenefitsPRO

Source: Healthcare Dive, by Rebecca Pifer

Dive Brief:

  • * Healthcare spending could drop by more than $11.4 billion next year if enhanced premium tax credits enacted in the American Rescue Plan expire, new research finds.
  • * Hospital spending would decline by $3.8 billion, while spending on physician practice services would drop by $1.3 billion, according to a report from the Robert Wood Johnson Foundation and the Urban Institute published Wednesday. Prescription drug spending would decline by $3.4 billion and spending on other services outside of hospital and doctors’ offices would fall by $2.8 billion.
  • * Plummeting health services spending would happen due to lost credits potentially leaving more than 3 million people currently on Affordable Care Act plans without insurance, and therefore less likely to spend on care, researchers said.

Dive Insight:

The $1.9 trillion ARP legislation passed in March 2021 increased subsidies for coverage in the ACA marketplaces and expanded the number of people they’re available to. The more generous financial aid increased coverage affordability and enrollment, which reached a record high for 2022.

Those enhancements will expire in 2023 unless Congress extends them. The subsequent price hikes would hit about 13 million people across the U.S. and could lead to millions losing coverage, according to estimates.

The new research from the Urban Institute and the RWJF puts a price tag on the loss of provider revenue stemming from that drop in coverage.

Using an Urban Institute simulation model, researchers estimated healthcare services spending for the non-elderly, including uncompensated care provided to uninsured patients with and without the enhanced financial aid. The model excludes health insurance premium loads or administrative cost, as that spending doesn’t go to providers.

The research found that total spending on health services would reach almost $2.097 trillion next year if the enhanced ARP premium tax credits are extended and drop to roughly $2.086 trillion without them.

“The reason why we’re seeing this large decline in health spending is because uninsured people use less medical care,” Urban Institute senior fellow Matthew Buettgens said in a statement on the report.

Florida, Georgia, North Carolina, South Carolina and Texas — states that would see the greatest coverage losses if the subsidies expire — would have the biggest drop in spending, ranging from 1.3% to 1.9%.

California, Massachusetts, New York and Vermont would see virtually no change in spending, as they have state programs providing enhanced premium tax credits or cost sharing reductions before the ARP was passed that will remain in place.

The political fallout from failing to renew the subsidies would likely be severe, as news of spiking insurance premiums would hit voters right before the midterms.

President Joe Biden has pushed Congress to make the subsidies permanent. Though the effort has stalled in Congress, vulnerable Democrats in swing states are now pushing for leadership to fast-track legislation extending the subsidies, according to Politico.

For ACA Enrollees, How Much Premiums Rise Next Year is Mostly up to Congress

For ACA Enrollees, How Much Premiums Rise Next Year is Mostly up to Congress  | KFF

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

Health insurers are now submitting to state regulators proposed 2023 premiums for plans offered on the Affordable Care Act (ACA) Marketplaces. Changes in these unsubsidized premiums attract a lot of attention, but what really matters most to the people buying coverage is how much they pay out of their own pockets. And the amount ACA Marketplace enrollees pay is largely determined by the size of their premium tax credit. Generally speaking, when unsubsidized premiums rise, so do the premium tax credits, meaning out-of-pocket premium payments hold mostly steady for people getting financial assistance.

For just over a year, ACA Marketplace enrollees have benefited from enhanced tax credits under the American Rescue Plan Act (ARPA), which Congress passed as temporary pandemic relief. The enhanced assistance lowers out-of-pocket premiums substantially, and millions of enrollees saw their premium payments cut in half by these extra subsidies. ACA Marketplace signups reached a record high of 14.5 million people in 2022, including nearly 13 million people who received tax credits to lower their premiums.

Soon, the vast majority of these nearly 13 million people will see their premium payments rise if the ARPA subsidies expire, as they are set to at the end of this year.

The ARPA subsidies were enacted temporarily for 2021 and 2022 as pandemic relief, but congressional Democrats are considering extending or making the expanded subsidies permanent as a way of building on the ACA, as President Biden had proposed during his 2020 campaign. If Congress does not extend the subsidies, out-of-pocket premium payments will return to their pre-ARPA levels, which would be seen as a significant premium increase to millions of 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. In New York, for example, premiums for tax credit-eligible consumers would be 58% higher if not for the ARPA. Such an increase in out-of-pocket premium payments would be the largest ever seen by the millions receiving a subsidy. Exactly how much of a premium increase enrollees would see depends on their income, age, the premiums where they live, and how the premiums charged by insurers change for next year.

For states, the timing of Congressional action on ARPA subsidies matters both for rate review and state enrollment systems. State-based exchanges – as well as the federal government, which operates HealthCare.gov – will need to reprogram their enrollment websites and train consumer support staff on policy changes ahead of open enrollment in November. States will start making these changes as soon as this month. Additionally, as insurers submit premiums for review, state insurance commissioners and other regulators must assess the reasonableness of 2023 rates, and some of that determination will depend on the future of ARPA subsidies. The non-partisan National Association of Insurance Commissioners (NAIC) wrote to Congress asking for clarity on the future of ARPA subsidies by July.

For insurers, the timing matters because 2023 premiums get locked in later this summer. Last summer, when insurers were setting their 2022 premiums, some said the ARPA had a slight downward effect on their premiums, based on the risk profile of enrollees. Insurers are now in the process of setting 2023 premiums and some might factor in an upward effect on premiums if they expect ARPA subsidies to expire. 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 locked in to their 2023 premiums. Additionally, although this is not necessarily at the same scale of the uncertainty seen in 2017 surrounding the ACA repeal and replace debates (when many insurers explicitly said that uncertainty was driving their premiums up), it is possible that some insurers will price 2023 plans a bit higher than they otherwise would, simply because of uncertainty around the future of the ARPA’s enhanced subsidies. The NAIC letter to Congress warned that “uncertainty may lead to higher than necessary premiums.”

For enrollees, the timing matters both for knowing how much they will pay and for maintaining continuous coverageNearly all of the 13 million subsidized enrollees will see their out-of-pocket premium payments rise if the ARPA subsidies expire. But if the subsidies are renewed by Congress, but not until the end of the year right before subsidies are set to expire, there could still be a disruption if states and the federal government do not have enough lead time to update their enrollment websites to reflect the enhanced subsidies. In this scenario, the millions of enrollees who currently have access to $0 premium Marketplace plans might have to pay a premium in January – putting them at risk of losing coverage due to non-payment. Similarly, middle-income enrollees might temporarily lose access to advanced payments of the tax credit in the month of January, making it unaffordable for them to maintain coverage.

Congress’s action or inaction on ARPA subsidies will have a much greater influence over how much subsidized ACA Marketplace enrollees pay for their premiums than will market-driven factors that affect the unsubsidized premium. Even if unsubsidized premiums hold steady going into 2023, the expiration of ARPA subsidies would result in the steepest increase in out-of-pocket premium payments that most enrollees in this market have seen. This would essentially be a return to pre-pandemic normal, but the millions of new enrollees and others who have received temporary premium relief may not see it that way.

State-Based ACA Exchanges Make Backup Plans In Case Congress Fails To Act On Enhanced ACA Subsidies

Urban Institute study finds 3M close lose coverage if boosted ACA subsidies  expire

Source: Fierce Healthcare, by Robert King

The Biden administration and states across the country celebrated record-breaking enrollment gains for the Affordable Care Act (ACA) this year.

 

But state-run exchanges are eyeing backup plans for outreach and marketing in case Congress doesn’t extend beyond this year a major driver for those enrollment gains: enhanced income-based subsidies. Some officials have warned that people could drop off coverage—and consumers may shift to less-generous plans—if Congress doesn’t act in time.

“If we are still in this stage of uncertainty, we will have to anticipate either outcome and ramp up planning efforts … with both scenarios in mind,” said Zachary Sherman, executive director of the exchange called Pennie, in an interview with Fierce Healthcare.

 
 

Sherman said Pennsylvania’s exchange signed up more than 110,000 new customers compared to the last open enrollment, and 35,000 of those customers are getting subsidies that they typically would not be eligible for.

The American Rescue Plan’s (ARP’s) enhanced subsidies ensured that anyone making more than 400% above the federal poverty level wouldn’t pay more than 8.5% of their income on healthcare. Previously, that was the cutoff for eligibility for income-based subsidies. The enhancements also ensured that some consumers qualified for zero premiums or $10 a month premiums.

According to a recent Assistant Secretary for Planning and Evaluation report, an estimated 3.4 million Americans currently insured in the individual market would lose coverage and become uninsured if the ARP’s premium tax credit provisions are not extended beyond 2022. Kaiser Family Foundation determined premiums would more than double for many.

 

Pennie isn’t the only exchange that saw massive gains thanks to the subsidies.

Washington’s exchange saw nearly 60,000 residents sign up for coverage for 2022, and 73% of all customers were eligible for subsidies, up from 61% in 2021, the exchange told Fierce Healthcare.

It added that over 100,000 of the exchange customers (42% of total enrollment) pay $100 or less a month, compared to 29% before the ARP was signed into law.

Customers signing up on state-run exchanges saw average premium savings of 7% to 47% for 2022, according to a report from the National Association for State Health Policy. The report added that at least eight exchanges had 20% or more of their customers paying less than $25 a month for coverage.

 

Overall, there were 14.5 million people who signed up for coverage for 2022 when considering both the state-run exchanges and the federally run HealthCare.gov, a record number.

Now, though, states are grappling with how many people could lose coverage if the extra subsidies go away.

Plans likely will start finalizing rates this summer and open enrollment will start in the fall, creating even greater pressure on Congress to act.

Minnesota’s exchange, MNSure, told Fierce Healthcare it expects 70,000 enrollees will lose some benefits and 10,000 would lose all of it.

“Most of them will still get some subsidy. All of them will see a reduced subsidy,” said Libby Caulum, senior director of public affairs for MNSure.

Sherman said 90% of customers get financial assistance and will also see some adjustment, requiring key outreach if the subsidies don’t get extended.

“We will have to do a considerable amount of planning and communication to those populations to help them understand what that means,” he said.

This includes helping consumers understand the automatic renewal process and how to make plan adjustments.

Sherman said that customers took the opportunity to buy more expensive plans than they otherwise would. A consumer that normally would buy a bronze or silver tier plan would instead buy a gold plan.

“If the subsidies go away and the purchasing power of the subsidies is less going into 2023, we will want to make sure people understand that,” he said.

Some of the people who were earning too much to qualify for subsidies before could drop out.

“We will do a lot of education around the value and importance of staying covered about the options available to consumers,” Sherman said. “Maybe you are not in a gold plan but there are other options for you and the implications of buying a less expensive plan.”

Caulum added that predicting consumer behavior could be tricky, and it is difficult to pin down how many enrollees could drop off.

“Once people get coverage it could be sticky for them. They realize the benefit and they don’t want to drop It,” she said.

It isn’t just consumers, however, that could be forced to rethink their available benefits.

Massachusetts Health Connector Authority, for example, applied state funds otherwise allocated for premium assistance to help “reduce cost-sharing for critical services including primary care, mental health visits and prescription drugs,” said Executive Director Louis Gutierrez in a release from the National Association for State Health Policy.

Calling on Congress

The Biden administration, meanwhile, has been relatively mum on its plans on what happens if the enhanced subsidies aren’t extended.

Administration officials said they believe Congress will extend the subsidies. However, Centers for Medicare & Medicaid Services Administrator Chiquita Brooks-LaSure recently told reporters the agency can move quickly to implement rules and change outreach efforts in case Congress doesn’t act.

It remains unclear whether lawmakers will extend the subsidies. The $1.75 trillion Build Back Better Act, which extended the subsidies through 2025, was nixed in the Senate after objections from Sen. Joe Manchin, D-West Virginia. But Biden had said late last year the goal is to pass the social spending package in chunks.

However, so far none of those chunks have made significant progress through Congress, despite widespread support from Democrats.

Covered California Rates Jump 13% in 2017

Covered California Rising costs

Covered California’s premiums jumped 13.2% for 2017, up from about a 4% increase in each of the past two years. However, most consumers will see a much smaller increase or pay less next year if they switch to another plan. California executive director Peter Lee said, “Shopping will be more important this year…Almost 80% of our consumers will be able to pay less than they are paying now, or see their rates go up by no more than 5% if they shop and buy the lowest-cost plan at their same benefit level.”

While premiums will rise, the subsidies will rise as well. About 90% of Covered California enrollees get help to pay for their premiums. The average subsidy covers roughly 77% of the consumer’s monthly premium. “Even though the average rate increase is larger this year than the Past two years, the three-year average increase is 7% – substantially better than rate trends before the Affordable Care Act was enacted,” Lee said.

Covered CaliforniaPremium increases 2014-2015 2015-2016 2016-2017 3-year average
Average weighted increase 4.2% 4% 13.2% 7%
Lowest price Bronze plan 4.4% 3.3% 3.9% 3.9%
Lowest priced Silver plan 4.8% 1.5% 8.1% 4.8%
Second lowest priced Silver plan 2.6% 1.8% 8.1% 4.1%
If a consumer switches to the lowest priced plan in the same tier -4.5% -1.2%

 

Lee said the average rate increase reflects the following factors:

  • A one-year adjustment due to the end of the reinsurance funding mechanism in the Affordable Care Act. The provision was designed to moderate rate increases during the first three years when exchanges were being established. The American Academy of Actuaries estimates that this will add 4% to 7% to premiums for 2017.
  • Special enrollment by some consumers who sign up only after they become sick or need care, which has had a significant effect on rates for two insurance plans.
  • The rising cost of health care, especially for specialty drugs.
  • Pent-up demand for health care among those who were uninsured before the Affordable Care Act.

Lee said, “Covered California is working to address some of these issues on multiple fronts. The exchange is aggressively marketing to attract healthy consumers year-round, and is working to ensure special enrollment is available only to those who meet qualifying circumstances. It is also sampling the special enrollment population to better understand how to make any further improvements needed.”

Covered California is reducing the number of services that are subject to a consumer’s deductible. Starting in 2017, consumers in Silver 70 plans will save as much as $55 on an urgent care visit and $10 on a primary care visit. Consumers in Silver, Gold, and Platinum plans will pay a flat copay for emergency room visits without having to satisfy a deductible, which could save them thousands of dollars.

These improvements build on features already in place that ensure most outpatient services in Silver, Gold and Platinum plans are not subject to a deductible, including primary care visits, specialist visits, lab tests, X-rays and imaging. Some Enhanced Silver plans have little or no deductible and very low copays, such as $3 for an office visit. Consumers in Covered California’s most affordable Bronze plans can see their doctor or a specialist three times before the visits are subject to the deductible.

The contract with health insurers for 2017 ensures that consumers select or are provisionally assigned a primary care physician. Below are the companies selected for the 2017 exchange:

  • Anthem Blue Cross of California
  • Molina Healthcare
  • Blue Shield of California
  • Oscar Health Plan of California
  • Chinese Community Health Plan
  • Sharp Health Plan
  • Health Net
  • Valley Health Plan
  • Kaiser Permanente
  • Western Health Advantage
  • A. Care Health Plan

The following carriers are increasing their coverage areas in 2017:

  • Oscar will be entering the market in San Francisco, Santa Clara, and San Mateo counties.
  • Molina will expand into Orange County.
  • Kaiser will be available in Santa Cruz County.

With the expansion of carriers, 93% of consumers will be able to choose from three or more carriers, and all will have at least two to select from. In addition, more than 93% of hospitals in California will be available through at least one Covered California health insurance company in 2017, and 74% will be available in three or more plans. Rate details by pricing regions can be found in Covered California’s Health Insurance Companies and Plan Rates for 2017, posted online at: http://coveredca.com/news/pdfs/CoveredCA-2017-rate-booklet.pdf.

Millenials Underestimate the Cost of Care

Millennials (ages 18 to 36) are more likely than are non-millennials to underestimate the cost of an injury or illness, including medical, household, and out-of-pocket costs (66% versus 45%), according to a survey by Aflac. Sixty-five percent say they could afford less than $1,000 for an unexpected out-of-pocket expense. Millenials are more inclined to try unconventional ways to pay for out-of-pocket health care expenses, such as borrowing from friends or family and crowd sourcing. The online study surveyed 1,500 benefit decision-makers and 5,000 employees at small, medium, and large companies

Health Insurers Increase Debt in Wake of the ACA

Since 2011, U.S. health insurers have nearly doubled their borrowing levels due to the Affordable Care Act (ACA), according to a report by A.M. Best. With traditional health insurance products, insurers receive full premium payment every month before paying any claims. But that’s not the case with exchange products. In the first few years of the exchanges, insurers relied heavily on risk-adjustment, reinsurance, and risk corridors. The timing of paying direct premium subsidies fluctuated significantly. So health insurers had to pay the claims because their liquidity was under pressure. They turned to borrowing to alleviate this pressure. A.M. Best has not seen any significant rating pressures due to borrowing. However, heavy reliance on borrowed funds could put pressure on ratings if it reduces financial flexibility or slows the growth of capital and surplus. However, financial institutions see the use of borrowed funds as favorable since many top borrowing insurers are very big, highly capitalized, and highly rated, according to the report. 

What to Do If You Lose Your Tax Subsidies from the Health Insurance Marketplace

CMS announced a special enrollment for those who lost their tax subsidies. Jim Jalil CEO ofHealthCareForYouNow.com said, “We have seen a large of number of individual losing there tax credit despite sending the required documents needed for their subsidies. We first noticed around May this year when our members completed their taxes for 2014. Most who have changed their income or adjusted the subsidies notice that the subsidies were removed despite sending all the required documentation.”

Jalil offers the following advice: In order to regain the lost tax credit you will need your 2015 application ID number from the Marketplace as well as your updated projected income for 2015 to reissue a tax credit for the remainder of the 2015 calendar year. You’re likely entitled to a grace period. Most people who purchased insurance plans on state and federal marketplaces qualified for tax credits, making their insurance more affordable. If you got a premium tax credit to reduce your monthly premiums, you’re in luck: The Affordable Care Act instituted a 90-day grace period for these subsidized plans.

For the first 30 days after your missed payment, your insurance company must pay your claims. For days 31 to 90 of the grace period, they don’t have to pay the claims but will hold them rather than flat-out denying them. During the entire 90-day grace period, you can get caught up and have your insurance pick back up once you are current on your premiums. Any claims held during this time will be processed once you’re caught up. If you’re unable to get caught up during this time, your policy will be canceled and any claims submitted after the initial 30 days will be your responsibility entirely.

Last Updated 06/29/2022

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