Thousands Driven to Obamacare Couldn't Pay and Lost Coverage
By: Sara Hansard (BloombergLaw)
Even the Affordable Care Act is unaffordable. Insurance remains a barrier for obtaining medical care.
S E E D E D C O N T E N T
A significant portion of people who signed up for Obamacare during the pandemic—usually because of job loss—aren’t getting health coverage because they couldn’t pay their initial premiums.
Almost one-third of some 20,000 Maryland enrollees from March through August didn’t activate their plans. In Washington, one-fifth of a 27,000-enrollee sample are still without coverage due to lack of payment, a sign that Obamacare subsidies may not be enough to help uninsured people get coverage in a public health emergency.
Twelve states that operate their own Affordable Care Act exchanges have opened special enrollment periods outside the normal year-end window in response to Covid-19. In other states, uninsured people who lost their jobs are eligible for Obamacare now, but others must wait until November.
People are enticed to sign up, but many are having trouble paying the first premium to start the coverage, Trinity College economics professor Gerardo Ruiz Sanchez found in a recent paper. Once people make the first payment, they are entitled to a 90-day grace period if they don’t make subsequent payments before being cut off.
The findings indicate many people can’t afford ACA coverage even though subsidies are provided for those with incomes between 100% and 400% of the poverty level.
“It’s a great idea to open these special enrollment periods for uninsured people,” Ruiz Sanchez said in an interview. But there are “meaningful differences across demographic groups in the probability of paying the first premium.”
In Washington, 20.4% of people who enrolled using the state’s Healthplanfinder between March 10 and July 1 didn’t pay the initial premium, which is necessary for the coverage to take effect, the paper said.
That percentage is far higher than the national average for regular enrollment, which runs from Nov. 1 to Dec. 15. Just 6% of people didn’t pay premiums during the normal 2020 open enrollment period in all the states, according to data from the Centers for Medicare & Medicaid Services.
Extra Help?
People who lost coverage are less likely to pay their initial premium than people using special enrollment for other reasons, such as the birth of a child, the paper found. Lower income people also are less likely to pay the initial premium.
“This provides some empirical evidence that there might be scope for considering a little bit of extra help for them,” Ruiz Sanchez said. “If we’re discussing stimulus checks, if we’re discussing eviction bans, why are we not discussing a little bit of help for people to keep their insurance.”
“The customers who are losing any minimum essential coverage are grappling with how to pay,” Michael Marchand, chief marketing officer for the Washington Health Benefit Exchange, said in an interview.
“If you were to lose coverage today and be able to go onto the exchange and purchase coverage for the remainder of the year, but it was a choice between that and having the necessary internet connections so your kids can go to school at home, what are you going to pick?” Marchand said.
Washington health officials are studying an additional subsidy program that would address “some of the issues around affordability,” Marchand said. California is the only state that has increased Obamacare premium subsidies, expanding them to cover people with up to 600% of the poverty level.
Thousands Don’t Pay
The Maryland Health Benefit Exchange also experienced low payments for people signing up during the special enrollment period it started March 16, Executive Director Michele Eberle said in an interview.
As of Aug. 31, 21,316 people enrolled in Obamacare plans, but only 14,604 people paid initial premiums, a 69% effectuation rate, Eberle said. During the regular 2020 open enrollment period, 77% of enrollees paid initial premiums, she said.
“It all comes down to dollars,” she said. After enrolling in an ACA plan, “they may have realized, ‘I’m not going to have enough money coming in to cover this.’”
Maryland instituted an insurance pool in 2018 to help plans cover catastrophic claims, which helped reduce premiums. They are down 11.9% in the 2021 individual market, the third year of rate decreases, Eberle said.
“That’s how we get more people insured,” she said. “Each year that we’ve dropped the rates, we see more people that don’t qualify for financial assistance enroll.”
Lower Than Expected
The District of Columbia saw a decline in the share of people who paid for coverage after signing up during its special enrollment, Mila Kofman, executive director of the DC Health Benefit Exchange Authority, said in an interview. The district’s special enrollment has been open since the spring.
The district’s effectuation rate for its special enrollment period was 77% in 2020, compared to an 84% rate for regular open enrollment, Kofman said. This year’s figure was “lower than we assumed it would be,” she said.
Special enrollment plan selections have been up as much as 70% compared to 2019, Kofman said. “Based on that, I assumed that the effectuation rates would also be higher because people are taking time to shop around, select a plan, and enroll.”
“The biggest reason is affordability” she said.
Some people are getting job-based coverage in the district’s Small Business Health Options Program, which also opened a special enrollment period. Sign-ups in that program are at 80,650 this month, up from 79,013 in September 2019.
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Obamacare just kicked the can down the road. People are still being prevented from obtaining medical care because of insurance.
trumpski promised better health care for less money 4 years ago. where is it?
have you forgotten john mcstain so soon?
we haven't.
Democrats promised better health care for less money when they wrote the law. What happened?
Why should I ask Republicans why promises made by Democrats didn't materialize?
IMO we already know how Republicans would answer. I'm sure a reporter, somewhere, has published that article.
the insurance companies are the reason the cost of healthcare is so high. any healthcare plan that includes a private sector middle man insurance company to profit off the people is pure crap.
get rid of insurance companies = dramatically lower healthcare costs.
yes, I support single payer which can be funded by the feds taxing income and sending that money to the states to handle their healthcare costs.
funding healthcare much like we do the dept of education is totally constitutional. the feds trying to force us to fund future profits for private companies was plain stupid from the word go.
Insurance companies are only spending other people's money.
and they do a fantastic job of it... while getting paid and costing providers big dollars in the process which is then added to our medical bills.
my family doctor has two people full time, their only job is to "try and get the insurance companies to pay for everything. while hospitals have armies of people devoted to that same task. the cost of those people is added to the price of everything in the bill.
The ACA mandated the maximum profit that insurance companies can make. For E&I the max is 15%, for Medicare/Medicaid the max is 1.5%. Prior to the ACA it was normal for E&I to see 30% to 35% profits. Now any profit above the mandated limits must, by law, be returned to the providers.
Yet even removing insurance companies from the mix is not a valid solution. The insurance companies are the ones who negotiate contracts with health care providers in order to save money. If you remove the insurance company from that role, do you really think that government can do a better job? The government solution has for years been the Medicare solution, to set the reimbursement rates. Many healthcare providers limit the numbers of Medicare/Medicaid patients they work with because the rates are too low to cover costs. We have seen this during this pandemic where hospitals have had to lay off nurses and doctors because they had empty floors due to all non-emergency care was put on hold. Rural hospitals are in a very precarious spot because of this.
The only way to control the cost of healthcare is to control the cost. You cannot do that only from one side. If you look at other development nations that have a national healthcare system they do it with a mix of government owned vs private hospitals and clinics. Doctors and nurses who work at the government owned facilities are government employees. If you want to get to a national healthcare system in this country then government must start to own hospitals, and have doctors and nurses as employees. You have to control the cost side as well, just controlling the reimbursement side will not work. There are too many doctors and nurses who have already stated they will retire if forced to go to 100% Medicare reimbursement rates, and there are many rural hospitals that cannot afford to cut their revenue to those levels and still keep their doors open.
The limit on profit is also a guaranteed profit. Insurance companies are guaranteed a profit by law. Insurance companies can incorporate that guaranteed profit into premium prices by law.
Profit as percentages can cause a problem. As an exercise, let's assume an insurance company has set a target of 5 pct profit which is well below the limit. To make more profit the incentive is to increase consumption. A 5 pct profit on $1 million consumption would be $50k, on $10 million consumption would be $500k, and on $100 million consumption would be $5 million. The insurance company is still only making 5 pct profit but increasing consumption increases the dollar amount of profit. The incentive for insurance companies is to pay higher prices for medical care because that provides a larger dollar amount of profit without increasing the percentage of profit.
The incentive is to increase medical cost inflation because that increases profits without increasing the percentage of profit. It works the same way for all the middleman services in the healthcare system. A doctor (not all doctors BTW) can make more money by owning an interest in a contract service, such as an MRI, and then prescribing increased use of that service. The service may make a 1 pct profit but increasing use of the service increases the dollar amount of profit.
IMO the biggest problem in healthcare that we need to tackle is the increasing dependence on contract middleman services. The incentive for these middleman services is to increase consumption and bolster medical cost inflation to make more money without increasing percentage of profit.
I'm not about to say the current system is perfect. But just like the Democrats can rightly slam Trump and the Republicans for never presenting their new health care plan, the last thing I want to see is a shift to socialized medicine without seeing the plan for the entire system. Just changing a reimbursement rate won't fix the issues. And the billing has to be handled somehow, if not an insurance company as the middleman then the government has to create a department to manage it. There are too many parts to the healthcare system and to properly handle it you have to manage costs as well.
And before you say the government can handle billing, need I point out how badly the government screwed up higher education? For my entire life, I have not seen a government run program that rightly controlled costs. Their scheme has always been to throw money at the issue and try to handle reimbursements, but ignore the cost side of things. Possibly because throwing money at something allowed the Congressional representatives for that area to go home and brag about how they brought back extra money to their districts..
The current system has been socialized for middleman services. That's the problem. Read any economic textbook description of the effects of middleman services on economic efficiency and productivity. Increasing the number of middlemen ain't capitalism; that's socialism.
Newt Gingrich socialized the United States by allowing financial middlemen to control everything. Newt Gingrich was responsible for the repeal of Glass-Steagall to legalize a shady deal by Citibank. Gingrich's Republican Revolution fucked us all. Socialism is looting the productive economy using middlemen.
Neo-liberal, free trade, supply-side Republicans have already made the United States socialist. The financial sector in the United States functions the same way as the Chinese Communist Party.
I think we agree. The insurance companies take some of the money out of the system to meet their expenses and make a profit. Nothing wrong with that but it does take part of the monies. I think the differences between what we are saying is you are pointing out that the insurance companies don't add value where I point out that providing a replacement system is much harder than just eliminating the middleman. Health insurance companies really got their start after WWII where the returning solders came home, businesses were doing ok but as there was still a huge bill to pay for the war they couldn't just increase worker pay so they started to provide benefits such has health insurance in place of more money. And to control their costs they turned to insurance companies to manage the billing process. It allowed for smaller business to benefit from the advantages in negotiations that a larger insurance company representing many small companies could bring, as each small business didn't have the weight to bear when negotiating with medical providers. As these health insurance companies were already providing claims processing, it was a natural fit for Medicare / Medicaid / CHIP when those programs came along. Thus it turned into a trillion + dollar industry in 2020.
Even under the ACA, the costs continue to grow to where people can no longer afford coverage, much less those large deductibles. A change is needed. But we cannot afford to follow the advice of Nancy Pelosi from 2010 where we have to pass the bill before we can know what's in it. Democrats hammer Trump, rightly so, for promising a shiny new healthcare plan without him actually presenting a plan. Any change, including to a single payor system, needs to be fully examined before it can be accepted. And all I'm saying is that in order to even attempt to make it work they have to work it from both sides, costs AND reimbursement rates. If all they do is set up to pay the Medicare reimbursement rates for everything then a single payer system will fail.
forgetting the cost of the people required to deal with the insurance agencies being added to our medical bills....
that maximum profit you speak of is "guaranteed.
leaving only one question, how do I get the govt to guarantee my profits? ( rhetorical )
Even if you can afford the premiums, I doubt that very many working class families can afford the deductibles.