August 27, 2019
The ACA and Retirement: Is there a Link?
When older workers are able to get health insurance from a source outside of their jobs – Medicare, a spouse’s job, or an employer’s retiree health coverage – they become much more likely to decide it is time to retire.
So it’s reasonable to ask whether the Affordable Care Act, which provided millions of people with health insurance for the first time, has also helped to nudge more older workers into early retirement.
The answer, surprisingly, is no, according to a recent study for the University of Michigan Retirement and Disability Research Center. This finding is important, because baby boomers who are poorly prepared financially to retire should be working longer – not retiring sooner – to improve their retirement outlook.
The researchers, who are at the University of Michigan and Vanderbilt University, estimated that the uninsured rate of 50- to 64-year-olds dropped substantially after the ACA went into effect in 2014 – from 16 percent in 2013 to 12 percent in 2016. But when they tracked these older workers for several years, they found no evidence that they started retiring at a faster pace after the ACA established the state insurance exchanges and gave tax subsidies to people who purchased coverage on the exchanges.
The study also looked at whether retirement activity increased in response to a separate provision of the ACA: the expansion of the Medicaid health insurance program for low-income Americans. The expansion, which was voluntary for each state, was achieved by increasing the income ceiling for eligibility. The federal government gave a financial incentive to states that broadened eligibility for Medicaid coverage, and about two-thirds of the states have expanded to date.
In comparing states that expanded their Medicaid programs to states that had not, the researchers again found virtually no change in low-income workers’ retirement trends.
There is widespread agreement that turning 65 and becoming eligible for Medicare motivates people to retire. So why is the ACA different?
One possible explanation is that the “political uncertainty” surrounding the ACA and Medicaid expansion “discourage[s] older workers from counting on them when making career decisions,” the researchers said. …Learn More
August 22, 2019
Health Plan Confusion and Bad Decisions
A popular idea for reducing healthcare costs is to arm consumers with detailed information about the prices of drugs and medical procedures so they can make smarter decisions.
But the academic community is reaching the opposite conclusion: people don’t understand the information they already have and are making bad decisions based on these misconceptions. The latest example is a survey of Wisconsin state workers who sometimes defer care because they are under the mistaken impression that they can’t afford it.
“Workers do not understand how health plans work, the role of deductibles, co-insurance and co-pays … and what goes into out-of-pocket costs,” concludes a report by the University of Wisconsin public affairs school, which surveyed 2,200 government workers.
Before getting into the specific findings, it’s important to note that Wisconsin’s employees are in an enviable position. They choose from just four health insurance options approved and overseen by the state. The broader implications of the report are more distressing, if one considers that millions of Americans buying insurance through the Affordable Care Act exchanges, Medicare Advantage plans, or Medicare Part D drug plans must sort through oodles of plan options with different copayments, deductibles, physician and hospital networks, or drug coverages.
The confusing patchwork of Part D plans hurts retirees’ pocketbooks, according to research in Health Affairs, which found that only one out of 20 retirees selects the cheapest drug plan to meet their medication needs. A different study found that health insurance buyers purchase overly expensive plans when they have to choose from a complex menu of options.
The Wisconsin report said state workers there are also overwhelmed: …
December 6, 2018
ACA Premiums Drop in Many States
Premiums for the benchmark silver health insurance plans under the Affordable Care Act will go down 1 percent to 2 percent, on average, in 2019.
This sounds like good news to people scurrying to enroll by the Dec. 15 deadline. But a more accurate characterization is that this slight decline is a break from what had generally been a relentless pace of premium hikes in 2016 through 2018.
Cynthia Cox, director of health reform and private insurance for the Henry J. Kaiser Family Foundation, said insurance companies in many states had previously “raised premiums more than they had to” amid the uncertainty in the program’s early years. These hikes boosted their profits, but they’ve “put the brakes on premium increases,” which they are required to justify to state regulators.
On close inspection, however, the picture is far more complex. Each state regulates its insurers, and individual state markets have gone in many different directions in the five years since the Affordable Care Act (ACA) went into effect, a Kaiser study shows. The unique developments in each state market reflect a combination of state and federal regulatory changes, insurers’ constant repricing to market conditions, and insurers’ entrances into, and exits from, the state insurance exchanges.
Here are a few examples, based on insurance companies’ rate filings with state regulators:
- Tennessee residents will see the biggest decline in 2019 premiums, a drop of 26 percent for the benchmark silver plan, which is the second lowest-cost silver plan. Tennessee insurers initially had set some of the lowest premiums in the country. In a 2018 adjustment, Cox said they overcorrected them to the point that the policies became “particularly overpriced.” Next year, insurers will drop the premiums as they continue their efforts to find the proper pricing for the state’s insurance market. Somewhat similar stories have played out in New Mexico, New Hampshire, and Pennsylvania.
- North Dakota premiums are going in the opposite situation. Two years ago, Cox said, insurers there were “losing money quickly,” so they raised their 2018 rates by 8 percent. This increase apparently wasn’t enough, and the benchmark silver premium will rise by another 21 percent next year.
- Alaska’s premiums got so high that the state stepped in. In 2017, the federal Centers for Medicare & Medicaid Services granted Alaska’s request for a waiver that allowed it to reinsure its health insurance companies to reduce their risk in hopes they would drop their prices. The reform worked. Between 2017 and 2019, Alaska’s benchmark premium has fallen 25 percent.
- New Jersey’s benchmark price will drop nearly 15 percent as a result of a new state law. Last summer, the state instituted a mandate requiring uninsured residents to purchase coverage to replace the federal mandate, which was eliminated. …