The second enrollment period for the Affordable Care Act’s insurance exchanges is scheduled to begin on November 15 and will last three months. For this period, the administration is targeting between 9 and 9.9 million enrollees, below the Congressional Budget Office’s projection of 13 million. With the disaster that was last year’s initial sign-up period, and the potential the new Republican-dominated Congress has to change the health care reform law, this is an important moment in Obamacare’s history. For the administration, the task is enrolling a sizable number of the 32 million Americans who remain uninsured after choosing not to purchase insurance last year. However, that description is an oversimplification of the potential the next few months have to change the trajectory of the Affordable Care Act.
Here is an analysis of how Obamacare could be altered next year; premium costs, provider networks, penalties, the expansion of Medicaid, the constitutionality of insurance subsidies, and the future of the reform itself were impacted by events of the past year.
Higher costs?
Whatever claims the Obama administration has made, the primary goal of the health care reform was ensure greater access to health insurance. “The ACA starts from a place of wanting to make sure that all individuals can obtain affordable insurance, even if they have a prior medical condition,” noted Aaron Carroll MD, MS, in a blog post for the forum of the Journal of the American Medical Association. And indeed, data collected over the past several months has consistently shown that significantly more Americans are insured now than before the Obamacare insurance policies went into effect in January of this year. To keep this downward trend in motion insurance policies must remain affordable. But to keep insurance affordable while also increasing accessibility and improving health outcomes is near impossible.
Together, access, care quality, and costs are known as the iron triangle of health care, a relationship defined by the geometry of that shape. Just as a triangle’s legs can be lengthen if another side is shortened, one or “perhaps even” two of those components of health care can be improved, but those improvements have to come at the expense of a third, as Carroll noted. Therefore, to ensure a health care system can achieve better outcomes, costs will increase or some change in access will be required. In the case of the Affordable Care Act, given the main goal of the reform was greater accessibility, health insurance costs had to bare part of that new burden.
How did premiums increase in 2014?
In the first year after the individual mandate was implemented, premiums increased, in comparison to previous rates, depending on several key factors: the age of the individual, preexisting conditions, income, family size, market competition, and state of residence; premiums for younger, healthier, and cheaper-to-ensure will be proportionally higher to balance out the higher costs incurred by older and sicker enrollees in the marketplaces. A recently released study conducted by the non-partisan National Bureau of Economic Research (and published by Brookings Institution), quantified how Obamacare’s new insurance requirements, from mental health care to contraceptives, and its ban on insurers refusing coverage or charging more to customers with preexisting conditions, changed premium prices. In 2014, premiums in the non-group market increased by 24.4% compared to what prices would have been had Obamacare not been implemented. More specifically, premiums rose in all but six states (including Washington D.C.). Of course, premium hikes were commonplace before Obamacare; in the three years before the health care reform law was enacted, premiums increased on average of 10%.
And what about 2015?
Changes to insurance premiums will vary greatly this coming year depending on local markets and plan type. Broadly, several organizations that tract premiums and other health insurance costs have predicted that health insurance rates will be modest. “One of the fears going into the second year is that premiums would skyrocket. That’s largely not the case; for most of the country, for most insurers, premium increases are quite modest,” Larry Levitt of the Kaiser Family Foundation told MSNBC. But Levitt explained a key wrinkle in the trajectory of rate costs. For insurance customers with Obamacare policies to keep health care costs from increasing next year, many will have to switch plans. Of course, approximately 83% of the 7.1 million enrolled in exchange-based plans received subsidies, which were created to insulate consumers from premium price increases. Subsidies are meant to ensure that insurance customers pay no more than 9.5% of their incomes on coverage. And in 2015, individuals earning up to $46,680 annually and households of four earning $95,400 will be eligible for subsidies.“It’s likely to be a confusing situation for consumers,” added Levitt. “The onus will be on consumers themselves to go search out their options—a lot is changing.”
Premiums are “generally” decreasing
A Kaiser Family Foundation analysis of 49 cities found that, on average, the cost of the most popular plans are decreasing. The results indicated that (at least) in large cities the exchanges are working as intended: Health insurers are competing for customers, which is keeping prices low. And both policy experts and the media have been framing this change as surprising. “Usually, health insurance premiums have gone in one direction, and that is up,” Cynthia Cox, the senior Kaiser analyst who co-authored the paper, told The New York Times. But again, premium decreases depend on what plan is purchased; not all plans are good deals. The plans that will be cheapest are those that are new to the market this year. Meanwhile, “most insurers have been changing their insurance plan designs dramatically under the federal law. Narrow networks, higher deductibles, and higher out of pocket costs when you visit a doctor are the new norm,” Josh Archambault, director of health care policy & program manager for the Middle Cities Initiative at the Pioneer Institute, told the Fiscal Times. “In other words for many Americans under Obamacare, they are paying more and getting less.” Levitt also noted that doctor and provider networks will remain narrow to keep costs low.
Pricewaterhouse Coopers’ analysis of data from 43 states and Washington D.C. shows that premiums will rise 5.6%, on average, well below the typical hike. And the average proposed premium was around $381. However, premium changes range from a 22% drop to a jump of 35%.
How will the penalties and the coverage gap change?
For those that chose to remain uninsured once again, the penalty will be higher, rising more than triple to $325 per person in 2015, or 2% of income, depending on whichever is higher.
Meanwhile the coverage gap will remain. Tens of millions will fall through the cracks of the system because of the 2012 challenge to the Affordable Care Act. The expansion of Medicaid was meant to provide health insurance to the working poor, and in states that rejected the expansion, many of those who earn little more than the federal poverty level will likely find it difficult to pay the premiums of policies purchased via the individual exchanges, meaning that millions of adults will have limited, if any, options for health coverage. The do not earn enough to qualify for federal tax subsidies and too much to be eligible for Medicaid, leaving a coverage gap. And it is very unlikely that the states that chose not to expand Medicaid already will widen eligibility given the 2014 midterms did not unseat sitting Republicans or turn any states from red to blue.
Did economist and Obamacare architect Jonathan Gruber just gave the repeal movement new life?
More specifically, Jonathan Gruber is the paid technical adviser to the Department of Health and Human Services and unofficial adviser to congressional Democrats who earned the moniker “Mr. Mandate,” a reference to the individual insurance mandate that is the backbone of the health care reform law. It was Gruber’s decades of research on the complexities of the American health care ecosystem that showed the Obama administration that its envisioned reform could only work if every U.S. resident was required to be insured. And his work served to explain the stakes of the 2012 Supreme Court case that could have dismantled Obamacare by deeming the individual mandate unconstitutional. “As soon as I started reading the dispatches my stomach started churning,” he told The New York Times in March 2012, amid Supreme Court arguments. “Losing the mandate means continuing with our unfair individual insurance markets in a world where employer-based insurance is rapidly disappearing.”
But his role in the creation of the Affordable Care Act has brought under fire in the days since investment adviser Rich Weinstein released a video of Gruber revealing the dark underbelly of lawmaking. “This bill was written in a tortured way to make sure the [Congressional Budget Office] did not score the mandate as taxes,” Gruber told an audience at a University of Pennsylvania health care conference last year. “Lack of transparency is a huge political advantage. Call it the stupidity of the American voter, or whatever.” That statement has been decried for the obvious reasons. Pointing out the value lack of transparency for an administration that promised to be the most transparent in history has only is not as shocking as it might once have been. But Republicans have taken his comments as evidence that the White House purposefully misled the American people about the law’s ramifications.
More important to the latest debate surrounding the Affordable Care Act — which draws into question the ability of the federally-facilitated exchanges to distribute insurance subsidies — are Gruber’s comments about the marketplaces. “What’s important to remember politically about this is if you’re a state and you don’t set up an exchange, that means your citizens don’t get their tax credits—but your citizens still pay the taxes that support this bill,” Gruber explained at a 2012 symposium. “So you’re essentially saying [to] your citizens you’re going to pay all the taxes to help all the other states in the country.”
The question is whether this revelation will impact the repeal movement. In an opinion piece published in The Wall Street Journal just after the midterm elections, both soon-to-be Senate Majority Leader Mitch McConnell and Speaker of the House John Boehner, the Ohio Republican who also won re-election, wrote that with the Senate majority won, the part was “renewing our commitment to repeal ObamaCare.” And some Republican lawmakers are a calling for congressional hearings. However, policy experts doubt this latest outrage will be enough to translate into any major changes, citing the negligible impact that the a number of controversies — from last year’s flawed website launch to the fallacies of the “if you like your plan, you can keep it” pledge to the delays of the employer mandate — had on the law.
Democrats have attempted to argue that Gruber was less an Obamacare architect and more a simple economic adviser, one of many. But the fact remains that he was paid close to $400,000 for his services.
As for whether the the federal web portal that connects all federally-facilitated exchanges, Healthcare.gov, which was rolled out last October with numerous flaws that impeded enrollment, Obama has said, “We’re really making sure the website works super well. … We’re double and triple checking it.”
