ACA Impact on Coverage and Access

 VII. Key Issues: Regulation & Reform >> C. Health Reform >> Affordable Care Act (ACA) >> ACA Impact Analysis >> ACA Impact on Coverage and Access (last updated 10.29.18)

Impact on Uninsured

Impact on Private Health Insurance Coverage

Theory

• Large Employer Incentives to Maximize the Employee-Paid Premium. Firms do not have an incentive to offer coverage to any worker for whom such an offer would make their total compensation costs exceed their value to the firm (termed their marginal revenue product).  But for the same reason, firms have an incentive to avoid paying a penalty of $2,000 per worker–roughly $1 an hour. Firms can minimize the chances of workers accepting offered coverage by maximizing the premium amount the employee must pay, so long as this does not exceed 9.5% of the worker’s wage. This affordability threshold is based on the cost of single coverage (e.g., $5,000). For a $10 per hour worker earning $20,000 annually, such coverage would be considered “affordable” so long as the employee share of premiums did not exceed $1,900, leaving an employer share of $3,100. But on a $16,000 family policy, this allows the employer to pay only $3,100–leaving $12,900 for the employee to pay. Few employees would elect to use more than 60% of their cash wage just to purchase family health coverage. So long is the coverage offered is adequate and affordable, an employee who refuses offered coverage is ineligible for subsidized Exchange coverage. Thus, the employer can escape both paying for health benefits or a penalty for such workers.

Projected Estimates of Net Impact on Coverage

• Pizer, S.D., Frakt, A., and Iezzoni, L. The Effect of Health Reform on Public and Private Insurance in the Long Run, 3.9.11. “As the high-premium excise tax affects increasing numbers of workers between 2018 and 2030, we predict that some will shift from private to public coverage, amplifying the effect of Medicaid expansion. The proportion of workers and their families covered by public insurance will grow from 6% in 2006 to about 14% in 2030 while about 5% will obtain subsidized coverage through exchanges. The fraction covered by private insurance will grow initially in response to the mandate and then decline in response to the tax.”
• Congressional Budget Office. Estimates of the Effects of the Affordable Care Act on the Number of People Obtaining Employment-Based Health Insurance (March 2012).
• Congressional Budget Office. Estimates for the Insurance Coverage Provisions of the Affordable Care Act Updated for the Recent Supreme Court Decision (July 2012). Reflects the impact of the Supreme Court decision to make the Medicaid expansion optional for states.
• Battacharya, J. Employers and the Economics of Health Care Reform, 10.25.13. ƒ”In 2014, 37 million employees would benefit financially from their employers dropping their plans.ƒ”
• Abraham, J. M. Employer Provision of Health Insurance Under the Patient Protection and  Affordable Care Act, 10.25.13.
• American Action Forum. Premium Increases for “Young Invincibles” Under the ACA and the Impending Premium Spiral. October 2, 2013. This study compared premiums for the lowest cost plan available in the non-group market in January 2013 to the lowest cost bronze plan available on the exchange on October 1, 2013. The analysis showed that on average, a healthy 30-year-old male nonsmoker will see his lowest cost insurance option increase 260 percent. Premiums for such individuals will increase in all fifty states and the District of Columbia – from a low of 9 percent in Massachusetts to a high of 600 percent in Vermont. The Obama Administration estimates they need the participation of nearly 2.7 million 18-35 year olds in order for state-level health insurance exchanges set up by the Affordable Care Act (ACA) to work as intended. In the majority of instances, the cost of bronze level insurance will far exceed the costs of the penalties, except for those with incomes 133% of the federal poverty level. Because premiums for such individuals may be 10 times as large as the individual mandate penalty, this study suggests there is a large risk of triggering an adverse selection premium spiral.
• Center for Health and Economy. Health and Economy Baseline Estimates, July 14, 2014.
  • “By 2016, the number of insured, non-elderly Americans is projected to increase to 247 million — 89 percent of the total non-elderly population — as a result of the expansion of Medicaid, the continuing implementation of the subsidized Marketplace, and an increasingly costly tax penalty for remaining uninsured.
  • The population of non-elderly Medicaid beneficiaries is estimated to be 42 million in 2014 and 47 million by 2016. These estimates are subject to the uncertainty of each state’s decision regarding Medicaid expansion.
  • The individual market is estimated to expand from 35 million covered lives in 2014 to 50 million by 2016, driven largely by the rollout of the Marketplace.
  • A slight increase in the number of uninsured occurs after 2016. This increase is due to the phase out of the risk protections for insurance companies and the discontinuation of non-qualified health plans currently available in the market. These changes lead to a slight increase in uninsured in 2017, and year-on-year premium increases that lead to higher uninsured numbers later in the analysis period.”
• An Early Look At Changes In Employer-Sponsored Insurance Under The Affordable Care Act. “(I)t is arguably still too early to see the full effects of the ACA on employer-sponsored insurance. Employers may have been slow to understand and react to the new incentives in the first year of implementation of the ACA’s major coverage expansions because of uncertainty over the health insurance Marketplaces (which discourages firms from offering coverage) and the employer mandate (which encourages large firms to offer coverage). Nonetheless, results from this study, microsimulation predictions, and findings from employer responses under reform in Massachusetts suggest that workers will continue to obtain health insurance through employers.” (Health Affairs, 12.16.14)
• Health Market Impact of Employer Migration to the Individual Market. “Hixme’s model facilitates the transition of employer group coverage to other actuarially equivalent coverage by bundling individual market products with other wrap-around coverages by means of proprietary algorithms. The transition of individuals from group coverage to individual coverage results in a larger, younger, more sustainable individual market population. Furthermore, this population improvement to a broader age/income spectrum attracts insurers that have been discouraged by the past and current volatility. These findings and observations are described in more detail in this report.” (Axene Health Partners, 5.8,17)

Measured Impact on Coverage

Gains in Coverage

• An end to annual and lifetime limits: Before the Affordable Care Act, 105 million Americans with employer or individual market coverage had a lifetime limit on their insurance policy.
• Free preventive care: Under the Affordable Care Act, health plans must cover preventive services — like flu shots, cancer screenings, contraception, and mammograms – at no extra cost to consumers, benefiting about 137 million Americans.

Adverse Impacts on Coverage

• Obamacare Enrollment Data: Employer Based Coverage Declines. “New data show that the number of people who have private health insurance increased by just over 520,000 in the six months between October 1, 2013, and March 31, 2014. That was because almost all the gains in individual coverage through the Obamacare exchanges were offset by reduced enrollment in employer-sponsored group coverage… While enrollment in fully insured employer group coverage modestly increased—by just over 175,000 individuals—in Q4 2013, it dropped by nearly 4.2 million individuals in Q1 2014. The result was a net enrollment decrease of 4 million individuals for the combined six-month period.” (Heritage Foundation, 7.28.14)
• CBO Misses Its Obamacare Projection By 24 Million People. “Based on the CBO’s own numbers, it seems possible that Obamacare has actually reduced the number of people with private health insurance. In 2013, the CBO projected that, without Obamacare, 186 million people would be covered by private health insurance in 2016—160 million on employer-based plans, 26 million on individually purchased plans. The CBO now says that, with Obamacare, 177 million people will be covered by private health insurance in 2016—155 million on employer-based plans, 12 million on plans bought through Obamacare’s government-run exchanges, and 9 million on other individually purchased plans (plus a rounding error of 1 million). In other words, it would appear that a net 9 million people have lost their private health plans, thanks to Obamacare—with a net 5 million people having lost employer-based plans and a net 4 million people having lost individually purchased plans. None of this is to say that fewer people have ‘coverage’ under Obamacare—it’s just not private coverage. In 2013, the CBO projected that 34 million people would be on Medicaid or CHIP (the Children’s Health Insurance Program) in 2016. The CBO now says that 68 million people will be on Medicaid or CHIP in 2016—double its earlier estimate. It turns out that Obamacare is pretty much a giant Medicaid expansion.”  (Weekly Standard, 3.28.16)
• The End of Speculating about the End of Employer-Sponsored Coverage. “It was easy, five years ago, to explain why big companies would dump their workers onto the public marketplaces… But we have scant evidence of that storyline becoming reality. Employer-sponsored coverage has held pretty steady. And while there are individual stories about certain companies ending health insurance coverage, most studies fail to show any larger trend in the economy. There are just as many people getting coverage at work as when Obamacare took effect. Prior to Obamacare, there was no mandate that companies offer health insurance. But employers did so anyway to stay competitive and woo employers, particularly in tight labor markets. The public market hasn’t changed this calculus. The botched Healthcare.gov launch in 2014 left some employers skittish, not wanting to shift their workers into a situation where shopping for coverage would be difficult or impossible. The type of insurance offered on the marketplaces has, as discussed earlier, been relatively skimpy compared with what companies typically give workers.” (Vox, 8.24.16)
• Uninsured Rate Soars for the Moderately Broke: CDC. “The U.S. Center for Disease Control and Prevention has come out with new tables that break out the uninsured rate numbers by age and income group. One table shows what happened to adults ages 18 to 64. For all adults in that age group, the total uninsured rate fell to 12.1% during the first three months of 2017, from 12.4% in the first quarter of 2016… The CDC analysts did not talk about whether changes in the ACA exchange market explained the increase in the uninsured rate for people with income from 138% to 400% of the federal poverty level. The CDC tables do show that the percentage of people with income from 250% to 400% of the federal poverty level who had private coverage fell to 77.8% in early 2017, from 79% a year earlier.” (Think Advisor, 8.30.17)

Number Switching Coverage Involuntarily

Impact on Workers’ Family Members

• Survey: Employers Shifting Health Care Costs of Family Members to Employees. “More than half (56%) of employers have increased employee contributions to health care coverage for spouses, with another 25% planning to do so by 2018, according to results of a recent survey. In addition, the 2015 Willis Towers Watson/National Business Group on Health (NBGH) Best Practices in Health Care Employer Survey reports that use of spousal surcharges when other employer-provided coverage is available is expected to more than double by 2018, from 27% to 56%. The survey also found that a small number (3%) of employers don’t offer or have eliminated subsidies altogether for spousal coverage, with another 10% planning to by 2018…Survey results show total health care costs (employer and employee) reached $12,041 per employee per year in 2015 and are expected to rise nearly 5% in 2016.” (HR Dive, 3.14.16)
• Employers Redefining Employee Costs for Spousal Health Care Coverage. “While not as prevalent, a similar trend has emerged in health care coverage for employees’ children. Just under half (46%) of employers have increased employee contributions for children’s health care benefits more than for employee-only coverage, with another 15% planning to by 2018.” (Willis Towers Watson/National Business Group on Health (NBGH), 3.9.16)
• UPS Won’t Insure Spouses Of Some Employees. “Partly blaming the health law, United Parcel Service is set to remove thousands of spouses from its medical plan because they are eligible for coverage elsewhere…Rising medical costs, ‘combined with the costs associated with the Affordable Care Act, have made it increasingly difficult to continue providing the same level of health care benefits to our employees at an affordable cost,’ UPS said in a memo to employees… The health law requires large employers to cover employees and dependent children but not spouses or domestic partners.” (Kaiser Health News, 8.21.13)
• Some Find Their Children Are Being Forced into Medicaid Plans. “Families shopping for health insurance through the new federal marketplace are running into trouble getting everyone covered when children are eligible for Medicaid but their parents are not. Children who qualify for Medicaid, the safety-net program for the poor and disabled, can’t be included on subsidized family plans purchased through the federal marketplace… ‘Based on your income, they’ll separate your kids from your primary policy and they shift them off to Medicaid or Healthy Kids and there’s no way you can bring them back,’ said Clouden.” (Associated Press, 1.26.14)

Impact on Private Insurance Coverage Quality

Is Obamacare Harming Quality? “Obamacare’s preexisting conditions provisions literally penalize insurers that offer quality health insurance to the sick. That is not the purpose of those provisions, of course. Their purpose is to make health insurance available to the sick. They do so, in part, by requiring insurers to charge sick enrollees no more than healthy enrollees of the same age (and to do something similar when setting premiums across age groups). The result is that these provisions increase premiums for younger and healthier enrollees, and reduce premiums for older and sicker enrollees. It is there the problem arises… The Henry J. Kaiser Family Foundation explains that Obamacare’s preexisting conditions provisions create perverse incentives for insurers ‘to avoid enrolling people who are in worse health’ by designing insurance policies to be ‘unattractive to people with expensive health conditions.’ Indeed, those provisions create relentless incentives for all insurers to make their coverage for high-cost conditions worse than their competitors’.” Cannon, M.F. (Health Affairs, 1.4.18)

Other Market Disruptions

• Purchase No Longer Year Round. Bloomberg Businessweek reports (4.4.14): “With limited exceptions, insurers are refusing to sell to individuals after the enrollment period for HealthCare.gov and the state marketplaces. They will lock out the young and healthy as well as the sick or injured. Those who want to switch plans also are affected. The next wide-open chance to enroll comes in November for coverage in 2015.”  The law does not prohibit year-round sales, but the guaranteed issue and modified community rating rules make insurers reluctant to sell outside open enrollment periods as this might invite adverse selection.
  • Brief Extension of Open Enrollment Period. The federal Exchanges have essentially given an extension for online enrollment through April 15. But some state-run Exchanges, such as Oregon’s, for example, have extended this deadline until April 30.
  • Open Enrollment Period Exceptions. The only people guaranteed to be able to buy outside open enrollment windows are people who experience certain qualifying life events, such as losing a job that provided insurance, moving to a new state, getting married, having a baby or losing coverage under a parent’s health plan.
  • Availability of Short-Term Coverage. “Some do still offer temporary plans, lasting from a month to a year. But those plans don’t cover pre-existing conditions and don’t get buyers off the hook for the law’s tax penalty.”

• Some Still Lack Coverage Under Health Law: Backlogs, Technical Glitches Stall Insurance Policies. “Months after the sign-up deadline, thousands of Americans who purchased health insurance through the Affordable Care Act still don’t have coverage due to problems in enrollment systems. In states including California, Nevada and Massachusetts, which are running their own online insurance exchanges, some consumers picked a private health plan and paid their premiums only to learn recently that they aren’t insured. Others received a policy but then got married, had a baby or another “life event” that required their coverage to be updated, yet have been waiting months for the change to take effect. As a result, some of these people say they have put off medical treatments or paid out of pocket for health expenses. Some insurers say they will be reimbursed.” (Wall Street Journal, 7.7.14)
• “Skinny” and High-Deductible Plans Being Offered in 2015. “Nearly one company in six in a new survey from a major employer group will offer ‘skinny’ plans in 2015, while 32 percent are offering a high-deductible plan. Employers can shield themselves from health law penalties by offering insurance that meets tests for affordability and value — regardless of whether anybody signs up. At the same time, workers can avoid the ACA’s individual penalty by enrolling in a company skinny plan, which qualifies as ‘minimal essential coverage’ for individuals under the health law by the mere fact that it’s employer-sponsored…The survey also showed a continued move by large companies toward high-deductible, ‘consumer-directed’ health plans and to providing tools for workers to shop around for care. Consumer-directed plans, often paired with a tax-favored health savings account, feature deductibles of thousands of dollars.” (Kaiser Health News, 8.13.14)
• Five Open Enrollment Tips To Cope With Obamacare, Employer Cost-Shifting. “As the Affordable Care Act and moves by employers and private insurers emphasize lower cost medical care and increased quality, consumers need to closely examine their open enrollment information this fall for myriad changes: Unitized Pricing/Charging Per Child, Narrow Networks, the Consumer Directed Health Plan (CDHP), the Private Exchange and the Specialty Pharmacy.” (Forbes, 9.1.14)
• The ACA’s Pediatric Essential Health Benefit Has Resulted In A State-By-State Patchwork Of Coverage With Exclusions. The approach used to establish the Affordable Care Act’s pediatric essential health benefit has resulted in a state-by-state patchwork of coverage with inconsistent exclusions, particularly with regard to services for children with mental or developmental disabilities. (Health Affairs, December, 2014)
• Impact of Cadillac Tax on Employer Sponsored Insurance. See Excise Tax on Comprehensive Health Insurance Plans (Cadillac Tax).

Impact on Medicare Part A and Part B Coverage

• Physician Participation Declining. According to Wall Street Journal (7.29.13), CMS has reported that almost 10,000 doctors opted out of Medicare in 2012 alone — a figure that is triple the number that opted out in 2009.

Impact on Medicare Advantage (Part C) Coverage

Projected Number Losing Part C Coverage

• CMS Projection. The ACA cuts payments to Medicare Advantage (MA) plans. In an analysis shortly after enactment (4.22.10), the Medicare actuary concluded: “We estimate that in 2017, when the MA provisions will be fully phased in, enrollment in MA plans will be lower by about 50 percent (from its projected level of 14.8 million under the prior law to 7.4 million under the new law” (p.. 11). MA members losing their Part C coverage essentially will be forced back into the Medicare fee-for-service system that many experts have described as wasteful and inefficient.

Empirical Evidence

• Jacobson, Gretchen, Tricia Neuman and Anthony Damico. What’s In and What’s Out? Medicare Advantage Market Entries and Exits for 2015. Oct 23, 2014. This Data Note examines the availability of plans nationwide and by state in 2015, and changes in plan availability since 2011. It documents the number and share of Medicare Advantage enrollees affected by plan withdrawals each year, the characteristics of plans that will be entering the market and characteristics of those exiting the market in 2015, and also assesses the potential implications of these changes for Medicare Advantage enrollees.
  • Total Enrollment Trends. “Since 2010, enrollment has far exceeded expectations, increasing by nearly 5 million beneficiaries, continuing a steady upward climb that started a decade ago…”
  • Total Plan Choices. “Between 2010 and 2014, the total number of plans has declined modestly, but beneficiaries in 2014 still had the option to choose among 18 Medicare Advantage plans, on average.”
• News and Observer (Raleigh, 11.19.14). “North Carolina senior citizens who choose private Medicare policies are seeing an unusual level of turmoil this year, with more than 57,000 notified their plans won’t be offered in 2015 and others seeing rates more than triple… upheaval involves a program that lets people 65 and older choose private policies instead of federal health coverage. About 475,000 in North Carolina have those [Medicare Advantage] policies. No other state had so many people lose their current Medicare Advantage plans, according to a national tally by the Kaiser Family Foundation..New York was second with just over 55,000 enrolled in canceled plans.”… “Blue Cross spokespersons Ryan Vulcan and Lew Borman attribute the cancellations and rate hikes to changes in federal reimbursement and rising health care costs.”
• Disproportionate Impact on Low Income Beneficiaries. According to a Health Affairs Health Policy Brief: “Medicare Advantage supporters also emphasize the importance of the plans to low-income beneficiaries. These enrollees often can’t afford private ‘Medigap’ plans that supplement Medicare by covering additional benefits and offering cost-sharing protection. They note that disruptions to the Medicare Advantage program disproportionately affect minority beneficiaries, since Hispanic and African American beneficiaries make up a larger share of Medicare Advantage enrollees.

Impact on Medicare Prescription Drug (Part D) Coverage

• Egan, Emily and Sang Kim. Percentage of Medicare Beneficiaries at Risk of Losing Part D Plan. American Action Forum (February 18, 2014). The administration’s proposed Medicare Part D rule, released in January 2014 will have a far-reaching and harmful impact on beneficiaries enrolled in the popular prescription drug program. The most damaging to plan enrollees is CMS effectively doing away with preferred networks in Part D, which negotiate prices that are key to keeping monthly premiums and drug prices low. This decision could force as many as 14 million enrollees out of their current plans, and into a new, higher cost plans. The report includes a map and table showing, respectively, the percent and total number of Medicare beneficiaries in each state that are at risk of losing their drug coverage in 2015, if the rule is allowed to go into effect.
• Holtz-Eakin, Douglas and Angela Boothe. CMS Rulemaking and Medicare Part D: Stifling Innovation, Limiting Access, and Decreasing Quality. American Action Forum (February 6, 2014). New proposed regulations, entitled Medicare Program: Contract Year 2015 Policy and Technical Changes to Medicare Advantage and Medicare Part D, alter the current structure of the program and thus jeopardize its success and quality. The proposed rule could result in increased premium and copayment costs, decreased continuity of care for beneficiaries as well as fewer participating pharmacies. The report cites two principal adverse impacts on access:
  • Any willing provider. The proposed “any willing provider” provision means plans would be required to accept any provider into their network that is willing to meet the terms and conditions of the plan’s contract. The addition of the any willing provider requirement could cause over fourteen million seniors to lose their current plan within a preferred provider network, disrupting the continuity, quality of coverage, and increasing costs through the removal of discounted membership rates. Preferred provider networks have proven to be a mechanism through which Part D has been able to achieve great cost savings. As reported in a study by Milliman, the continuation of preferred provider networks would save the federal government an estimated $9.3 billion over the next ten years.
  • Crowd out of employer insurance. The regulation creates incentives for employers to get rid of their employer sponsored retiree pharmaceutical benefit, in exchange for sending their retirees to the Medicare Part D program for coverage, increasing costs for the program.

Impact on Access to Care