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ACA Insurance in the Time of COVID-19

The urgency of the pandemic ushered in important changes to the Affordable Care Act (ACA), including a steep reduction in premiums for health insurance policies purchased on the state and federal exchanges through the end of 2022. Now Congress is debating reforms such as making the larger premium subsidies permanent and broadening the reach of the federal-state Medicaid program beyond the expansion introduced in the 2010 ACA.

We spoke with Tyson Lester, an independent insurance agent in southern California, about what the changes so far have meant for consumers. Tyson is licensed to sell policies in California, Florida, and Texas.

Tyson LesterTyson Lester

Has the Affordable Care Act promoted disease prevention and care during the pandemic?

Some of the best feedback we got from our clients was about using the telehealth and remote options in their policies. It’s been an option for quite some time, but it was utilized more frequently during COVID-19. People were able to access primary care physicians, receive consultation and be diagnosed with COVID over the phone. It was amazing. It helped them because: 1) they were able to just make a phone call; 2) they were able to receive good consultation; and 3) if testing was necessary, they were able to go to a testing facility.

In response to COVID, did you see a rush into ACA policies last year?

ACA enrollment increased last year, but consumers’ response to the pandemic was mixed. In 2020, 12 states and Washington D.C. temporarily reopened their health insurance exchanges but people didn’t have the additional premium assistance to make it more affordable. In the remaining states, working people who lacked employer health insurance didn’t have the ACA as another option for coverage when the pandemic hit.

As for the workers who did have employer health insurance last year but then lost their jobs, they had to make a tough decision between whether they wanted to elect their employer’s COBRA, which is expensive, go uninsured, or go on the insurance exchange. But many people weren’t fully aware of the ACA’s longstanding option: when someone loses group health insurance from their employer, they can buy what’s known as a special enrollment ACA plan. In Texas, for example, part of the reason for last year’s increase in the uninsured population, in the midst of COVID-19, was that people who lost their jobs – and their employer coverage – weren’t even aware the ACA exchanges were available to them. We actually put a flyer together for this specific topic last year, because it was so important.

In March, the American Rescue Plan significantly increased the ACA premium subsidies through December 2022. What has been the effect?

For anybody who was previously enrolled, the American Rescue Plan significantly reduced premiums in California, Texas, and Florida and potentially their total out-of-pocket costs. As a result of the larger subsidies, I saw an influx of new customers throughout this year on California’s exchange, which – unlike most other states – opened a special enrollment for all of 2021. Earlier this year, the federal exchange opened, which caused an influx of customers too. This is where Texas, Florida and many other states sell their ACA policies. All states on the federal exchange shut down again in August but will reopen for 2022 in November. …
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Part D: More Retirees Face High Drug Costs

Pharmacist selling prescriptions Several million retirees have spent so much on their prescriptions in recent years that they crossed over into the “catastrophic” phase of their Medicare drug plans.

Once catastrophic coverage kicks in, Part D drug plans require retirees to pay only 5 percent of their medication costs out of their own pockets. But there’s a catch: there is no cap on total annual spending, which can quickly rise to thousands of dollars if they need chemotherapy or a brand-name designer drug for a rare medical condition.

Juliette Cubanski, deputy director of the Kaiser Family Foundation’s Medicare policy program, said that could change, because proposals to place a cap on total out-of-pocket spending in Part D plans have a bipartisan tailwind behind them. Democrats in the House recently reintroduced a bill that would limit spending to $2,000. Last year, the Republican-controlled Senate Finance Committee approved a $3,100 cap, which is currently part of a Republican prescription drug bill.

Now, President Biden says he wants to limit retirees’ spending in their Part D plans. However, the bills circulating on Capitol Hill could also become tangled up in a more complex debate about a related issue: the best way to control drug prices.

A flat dollar cap – if it passes – would be simpler than the current system for determining out-of-pocket drug costs, though it would mainly help people with extraordinarily high spending. Cubanski said most people on Medicare spend less than $2,000 out-of-pocket annually.

But in a given year, she said, “that could be anybody.” And as baby boomers stampede into retirement, more people will be pushed into catastrophic coverage at a time of continually rising drug prices. …Learn More

Healthcare Deductibles: the Burden Grows

At $140 billion, the nation’s unpaid medical bills are the single largest form of past due debt. One thing driving this is no doubt rising deductibles for health insurance.

Health Insurance CartoonA third of insured Americans said in a survey that it is difficult to pay the deductibles in their employer health insurance plans and in the policies sold on the Affordable Care Act (ACA) marketplaces.

Among employer-sponsored insurance plans, policies with high deductibles are becoming more pervasive, even in large corporations. Employers are choosing high-deductible plans in part to keep their workers’ monthly premiums at a reasonable level – a tradeoff that is inherent in health insurance.

But the sky-high cost of medical care can quickly run-up out-of-pocket spending in years when someone in the family becomes very ill or needs surgery. Average deductibles exceed $3,000 for a single worker’s policy in half of the U.S. companies with less than 200 workers. The family plan deductibles exceed $6,000 in more than 40 percent of small companies.

ACA plan deductibles are rising in almost every state and have surpassed $4,000 per year, on average, in 11 states from Arizona and Michigan to Oregon. A variety of plans are available on the exchanges, including plans with lower deductibles for people willing to pay higher premiums. But ACA premiums have also been rising, though the federal government has temporarily increased the premium subsidies as part of COVID-19 relief.

New research appearing in the July issue of the Journal of the American Medical Association (JAMA) estimates that medical bills made up more than half of all the consumer debt in collections last year. And the data are through June 2020 and don’t even reflect the full cost of caring for COVID patients. …Learn More

2.2 million Workers Left Out of Medicaid

The Affordable Care Act gives a carrot to states that expand Medicaid from a health insurance program mainly for poor people to one that also includes low-income workers.

Under the 2010 law, the federal government initially paid the full cost of adding more people to the Medicaid rolls, and a large majority of states have signed up. The federal funding for new expansions dropped a bit in 2020 to 90 percent and will remain there.

Yet 11 states are holdouts and haven’t expanded their programs, leaving nearly 2.2 million workers and family caregivers in what the Center for Budget and Policy Priorities calls the Medicaid coverage gap.

Medicaid Map

The workers falling in the gap, who would qualify for coverage if their states expanded Medicaid, do not have health insurance at their places of employment and can’t afford to buy subsidized insurance through the Affordable Care Act.

The bulk of the uncovered workers are in the South, with half in Texas and Florida. Missouri had been a holdout. But last week, the Missouri Supreme Court ordered the legislature to comply with a voter ballot initiative and fund expansion of the state’s Medicaid. Expansion was also controversial in Oklahoma, but it went into effect on July 1 after voters there approved the measure.

An analysis by the Center sketched a picture of who is in the gap, based on 2019 Medicaid data, the most recent available. People of color comprised about 40 percent of the working-age population but made up 60 percent of the people in the gap in the non-expansion states, the Center estimates.

Nationwide, one in four who lack access to Medicaid are lower-paid essential workers on the front lines during the pandemic. …Learn More

ACA Proves Itself but Race Disparity Persists

The U.S. Supreme Court’s decision in June to reject another challenge to the Affordable Care Act was widely seen as the final word: the law is here to stay.

But it was COVID-19 that underscored how important it is.

Racial disparities in uninsured populations

The federal government said nearly 10 million people signed up for Medicaid health coverage during the pandemic year that ended in January 2021. A decade after passage of the Affordable Care Act (ACA), which expanded Medicaid to include more low-income Americans by increasing the income limit for eligibility, the new sign-ups pushed total Medicaid enrollment to a record high of 80 million.

The recent increase was largely due to the spike in sign-ups among the unemployed or workers who saw their hours reduced and lost some of their wages. The relief packages passed by Congress in March 2020 and this year encouraged Medicaid enrollment by giving states additional funding to pay medical costs and sign up more people.

Beyond Medicaid, sales of regular health insurance policies sold on the state insurance exchanges also rose last year, as COVID-19 raced through the population. A 5 percent increase in enrollment in the policies, which are often subsidized, pushed total enrollment to 12 million.

Earlier this year, the American Rescue Plan continued to shore up health coverage by reducing insurance premiums for people who buy the policies. Unfortunately, these and earlier federal supports were temporary measures put in place for the pandemic, and some progress will be reversed when the supports expire at the end of this year or next year.

Despite the recent coverage gains, it has been a bumpy ride. Prior to COVID-19, sales of ACA policies had been slowing after years of marked progress in reducing the U.S. uninsured rate. And in the states that have not expanded Medicaid to reach more residents, the uninsured rates are nearly double the rates in the expansion states – 15.5 percent vs 8.3 percent. …Learn More

Medicare

Enrollment Trends in Medicare Options

Most retirees manage to get by on less than they earned as workers. Yet they devote a much larger percentage of their income to medical care than working people.

To limit their annual spending on care, retirees usually buy some type of insurance policy to help pay the bills Medicare does not cover. But a big shift is under way: the Medigap and employer plans that once dominated are now in decline. Only about a third of retirees have one of these two supplementary arrangements, down from two-thirds in 2002.

Retirees are instead swarming into Medicare Advantage plans  – HMOs run by insurance companies – which doubled enrollment in the past decade to become the most popular form of coverage. A small minority of retirees go without any policy at all, so the only premium they pay is for Medicare Part B’s physician coverage. (The Part A hospital coverage has no premium.) At the same time, the vast majority of retirees today enjoy prescription drug coverage, either through a stand-alone Part D plan or as part of an employer or Advantage plan.

Helen Levy at the University of Michigan digs into what the market changes mean for retirees’ bottom line in recent research funded by the U.S. Social Security Administration.

With fewer employers offering retiree health insurance, new Medicare beneficiaries focus on the tradeoffs between Medigap and Advantage policies. A big reason the Advantage plans have taken off is lower premiums, which are, on average, substantially below the premiums on Medigap plans. Advantage plans’ other appeal is that they frequently cover extra services like dentists and eyeglasses.

Both Advantage and Medigap plans can still leave beneficiaries with high out-of-pocket spending. The federal limit on Advantage plans’ deductibles and copays increased this year to $7,550 per year, though insurers are permitted to reduce this cap. Many Medigap plans do not have out-of-pocket maximums at all. However, these plans tend to give more protection from large medical bills overall.

Just as important to retirees as paying the bills is the risk of being socked with inordinately high spending on hospital and physician care in a bad year. Levy defines this unpredictability as retirees having to shell out more than 10 percent of income out of their pockets, excluding all premiums.

Under this standard, about 23 percent of the retirees in the study with Advantage plans spent more than 10 percent of their income for care – versus 17 percent of Medigap buyers.  About 28 percent of those without any coverage outside of Medicare exceeded the 10-percent threshold. …Learn More

Employers Want Help with Health Costs

The cost of employer health insurance has skyrocketed, and workers are picking up some of that growing tab. Amid employees’ grumbling, employers are loath to push more of the cost onto their workers.

That’s why the consensus view among major employers, expressed in a recent survey, sounded like a cry for help. Calling rising insurance costs “unsustainable,” the vast majority said they need help from the government either to provide alternative forms of coverage or control health care and prescription costs.

Employers “have reached their limit,” said Elizabeth Mitchell, chief executive of the Purchaser Business Group on Health, an employer advocacy organization that collaborated with the Kaiser Family Foundation on the survey.

Employers, she said, “are tired of pouring tons of money into a broken health care market that delivers uneven quality at bloated costs.”

And these are the major corporations and non-profits with more than 5,000 employees. They have some leverage to negotiate with insurers and more financial wherewithal to pay for the plans. Smaller employers – if they provide health insurance at all – pay roughly the same premiums as large employers, and their workers shoulder a larger share of the cost for family plans.

Last year, employers with more than 50 workers paid $21,342 in premiums to cover employees with family plans – that’s still 50 percent more than a decade ago, despite a recent slowdown in health care inflation, according to Kaiser.

When employers’ insurance costs rise so quickly, that squeezes out money they might use for wages and other benefits. Workers are also paying more, though each employer decides how much of the added costs to pass on to workers.

In 2020, employees paid nearly $5,600 – more than a quarter – of employers’ total costs for family plans. To curb their health insurance expenses, employers increasingly are offering high-deductible plans, and the deductibles workers pay for these plans are also rising.

The major employers said in the survey that they’re open to a range of federal policies that would either cut health care costs or get the government more involved in providing health care. …Learn More