During the recent oral argument in King v. Burwell — the Supreme Court case deciding if providing subsidies to buy health insurance in the 36 states utilizing federal health care exchanges is allowed under the Affordable Care Act (ACA) — Justice Kennedy suggested that disallowing subsidies might be unconstitutionally coercive because “states are being told either create your own exchange, or we’ll send your insurance market into a death spiral.” Are “death spirals” real, or just a way to frighten the public?
The death spiral will purportedly happen like this: disallowing federal exchange subsidies will make insurance less affordable for the 87% of federal exchange enrollees currently receiving subsidies. These people will no longer be required to buy insurance since the ACA’s individual mandate only applies to individuals who have access to affordable insurance. Since the ACA imposes community rating, requiring roughly the same premium for all individuals in a given plan with only small adjustments for their risk characteristics, and guaranteed issue of insurance regardless of the enrollee’s health, the old and unhealthy will continue to buy coverage but the young and healthy will forego coverage. The resulting higher risk pool of enrollees will increase the average cost of individuals remaining in the non-group insurance market, both on and off the exchanges, resulting in increased premiums that will drive out more low cost, healthy patients eventually destroying the market.
Two economic simulations predict that “adverse selection,” where healthier people leave the insurance market and sicker people stay in causing premiums to rise, will occur if the King plaintiffs prevail. The Urban Institute predicted discontinuing federal exchange subsidies would result in premium increases of 35% and enrollment declines of 69% in the individual health insurance market. The Rand Corporation made similar predictions.
But it is hard to reconcile these forecasts with studies of earlier state insurance market “reforms” that created market conditions similar to those that would result if federal exchange subsidies are disallowed. These studies suggest adverse selection would be minimal and would not lead to a “death spiral,” that is, it would not lead to a self-reinforcing cycle of adverse selection in which each time premiums rise, more people exit, leading to a sicker, more expensive risk pool and market collapse.
On Monday, the Supreme Court denied certiorari in Coons v. Lew, a constitutional challenge to provisions in the Affordable Care Act (ACA) creating the Independent Payment Advisory Board (IPAB), an independent federal agency charged with responsibility for controlling the growth of health-care costs by constraining the growth of Medicare.
IPAB is controversial, and potentially unconstitutional (as even fervent ACA advocates admit). Nonetheless, the denial of certiorari was to be expected. IPAB is not yet operational, so (as the U.S. Court of Appeals for the Ninth Circuit concluded) a challenge of this sort isn’t ripe. If and when the IPAB is up and running — and begins making changes to Medicare that affect providers or beneficiaries — there will be ample time to consider the constitutionality of Congress’s creation.
Alternatively, Congress could repeal or reform IPAB itself, as some have suggested. Given that the text of the ACA expressly limits Congress’s ability to amend these portions of the law, such legislative action could itself prompt litigation and perhaps even High Court review.
The Court’s denial of certiorari in the Coons case does not mean the justices won’t revisit the ACA next term. Another cert petition is pending in Mayhew v. Burwell, Maine’s challenge to the constitutionality of the ACA’s maintenance of eligibility requirements for Medicaid. According to Maine (and supporting amici), the federal government’s threat to withhold all Medicaid funding should Maine restrict Medicaid eligibility below pre-existing levels is unconstitutionally coercive and violates the Medicaid holding of NFIB v. Sebelius.
If, as oral argument in King v. Burwell suggested, some of the justices are interested in revisiting federalism concerns about the ACA, Mayhew is a potential vehicle. Indeed, although the U.S. Court of Appeals for the First Circuit found Maine’s arguments unconvincing, Maine’s position would get a boost should the the federal government prevail in King on federalism grounds.
Obamacare reached age 5 on Monday [1]. As I’ve pointed out earlier, this anemic child is not exactly a picture of health, falling behind the lofty expectations set for it on many dimensions. But the one bright spot for its proud parents relates to how much the law has reduced the number of uninsured. The president’s Council of Economic Advisors ecstatically announced last December: “the drop in the nation’s uninsured rate so far this year is the largest over any period since the early 1970s.” A little perspective is in order.
First, taking the CEA’s figures at face value (which my chart below does), this decline amounts to a 2.8 percentage point net reduction in the rate of being uninsured, that is, above and beyond the decline that would have occurred anyway according to CBO [2]. It may well be the biggest one-year decline since the 1970′s, but CBO’s expectation at the time the law was passed was that uninsured risk would drop by 6 percentage points in 2014 alone. Even as late as May 2013, CBO was expecting the net decline to be 3.5%. In short, in its first year, Obamacare scored 46% if we use CBO’s original projection as the scoring standard and 79% if we used the May 2013 projection. Clearly we would like this child to perform better than that in future years. But that would require the number of newly covered Americans to increase an additional 79% this year compared to last year.
Reality check: that is certainly not going to happen. Charles Gaba at ACASignups estimates that estimated paid sign-ups on the Exchanges are only 10.5 million so far, compared to 7.06 million last April [the original post stated 10 million, see Update #1 for explanation]. That’s only a 49% increase, suggesting Obamacare will fall even further behind CBO expectations for 2015 [the original post stated 42%, see Update #1 for explanation]. Medicaid won’t fill the gap, since Medicaid evidently is growing by about 300,000 persons per month. Even if we assume all of these are uninsured, that would reduce the uninsured rate by only 0.1% monthly, or 1.2% over 2015 as a whole. That provides only about half of what’s needed to keep pace with CBO projections, leaving the Exchanges to fill the gap. But as we’ve seen, the Exchanges are lagging behind.
The landmark 2006 Massachusetts health-care law that inspired the federal overhaul didn’t lead to a reduction in unnecessary and costly hospitalizations, and it didn’t make the health-care system more fair for minority groups, according to a new study that may hold warnings for the Affordable Care Act.
Massachusetts’ uninsured rate was cut by half to 6 percent in the years immediately following the health-care law signed by then-Gov. Mitt Romney. Blacks and Hispanics, who have a harder time accessing necessary medical care, experienced the largest gains in insurance coverage under the Massachusetts law, though they still were more likely to be uninsured than whites.
The new study, published in the BMJ policy journal, examined the rates of hospitalizations for 12 medical conditions that health-care researchers say wouldn’t normally require hospitalization if a patient has good access to primary care. These include hospitalizations for minor conditions like a urinary tract infection, or chronic conditions that would require repeat primary care visits over the course of a year.
“It’s thought to be a good measure and one of the few objective ways of looking at access [to health-care provider] in the community,” said Danny McCormick of Harvard Medical School, the study’s lead author.
About 14 million Americans have gained health coverage since Obamacare’s insurance expansion began in 2014 — but those new enrollees haven’t swamped the nation’s doctors’ offices, new research shows.
When the health-care law started, there was concern that an influx of new patients could overwhelm doctors. It’s already hard enough to get an appointment with a primary care provider — wouldn’t millions of newly insured Americans just exacerbate the problem?
New data from 16,000 providers across the country, pulled by the medical records firm AthenaHealth, shows that requests for new appointments just barely edged upward in 2014. The proportion of new patient visits to primary care doctors increased from 22.6 percent in 2013 to 22.9 percent in 2014.
The New York legislature voted down Gov. Andrew Cuomo’s proposal to tax health insurance policies to fund the state’s Obamacare exchange, calling the fees system used by the Obama administration and other states counterintuitive.
The shrinking number of state-run Obamacare exchanges are facing a new problem this year — how to fund their ongoing operations now that start-up grants from the federal government are running out.
In New York, like many other states, Cuomo proposed a tax on health insurance premiums to fund the state-run exchange’s operations. That tactic comes with its own concerns: some states, such as Hawaii, have smaller-than-expected enrollment and the per-policy fees aren’t bringing in enough money.
Rhode Island is considering adopting a tax itself, but due to small enrollment in the tiny state, fees per Obamacare enrollee would likely climb higher than $30 every month, according to Modern Healthcare. Even California, which boasted the highest enrollment of any state in 2014 (but has recently been dethroned by Florida), has had to raise its monthly premium tax.
But according to the New York Post, members of New York’s state legislature refused the extra tax on premiums because the plan would drive up the cost of health insurance for Obamacare customers, defeating the purpose of the exchange and its often-subsidized coverage.
Coping with ever-increasing medical bills is frustrating — and getting more so..
A recent survey by private health insurance exchange EHealth highlights the pressure Americans are feeling. It found that more than 6 in 10 people say they’re more worried about the financial effect of expensive medical emergencies and paying for healthcare than about funding retirement or covering their kids’ education.
People who get health insurance through work and on their own have seen their costs rise dramatically over the last decade.
According to the Commonwealth Fund, a New York think tank, annual increases in work-based health plan premiums rose three times faster than wages from 2003 to 2013. Out-of-pocket costs have also been climbing.
“More people have deductibles than ever before,” says Sara Collins, a Commonwealth Fund vice president. From 2003 to 2013, the size of deductibles has grown nearly 150%.
Whether a person is coping with a severe illness or trying to deal with everyday medical costs, the challenges are many.
Can government get people to buy a product that millions think isn’t worth the price?
That’s the question that health care analysts are asking as they pore over the results of the Obamacare open season that concluded on February 15.
On the surface, the data released earlier this month by the Department of Health and Human Services are encouraging. Nearly 11.7 million people selected a plan this year, compared with just more than 8 million during the 2014 open season.
There are some cautionary signs. Despite the influx of new subscribers, the age profile continues to skew older. Nearly half are 45 or older and 26 percent are over 55. Interest among the young remains largely unchanged over last year.
So is interest among middle income people who lack coverage. Enrollment has been dominated by those with the lowest incomes. HHS reports that 83 percent of people who have selected plans have incomes between 100 percent ($11,770) and 250 percent ($29,425) of the federal poverty level (FPL). Medicaid, meanwhile, has grown by nearly 20 percent since Obamacare was launched, swelling its ranks to 70 million. Roughly 22 percent of the U.S. population is now on Medicaid, despite the refusal of 22 states to expand their programs.
(Reuters) – Arizona Republican Governor Doug Ducey signed a law on Monday that requires doctors to tell women that drug-induced abortions can be reversed and that blocks the purchase of insurance on the Obamacare health exchange that includes abortion coverage.
The requirement that patients be told that the effects of abortion pills may be undone by using high doses of a hormone was the most hotly contested provision during legislative debate.
Supporters said there was ample evidence the reversal was possible if acted upon quickly, although they provided no peer-reviewed studies in support of their position.
Two reports released in the past week demonstrate a potential bifurcation in state insurance exchanges: The insurance marketplaces appear to be attracting a disproportionate share of low-income individuals who qualify for generous federal subsidies, while middle- and higher-income filers have generally eschewed the exchanges.
On Wednesday, the consulting firm Avalere Health released an analysis of exchange enrollment. As of the end of the 2015 open-enrollment season, Avalere found the exchanges had enrolled 76% of eligible individuals with incomes between 100% and 150% of the federal poverty level—between $24,250 and $36,375 for a family of four. But for all income categories above 150% of poverty, exchanges have enrolled fewer than half of eligible individuals—and those percentages decline further as income rises. For instance, only 16% of individuals with incomes between three and four times poverty have enrolled in exchanges, and among those with incomes above four times poverty—who aren’t eligible for insurance subsidies—only 2% signed up.
The Avalere results closely mirror other data analyzed by the Government Accountability Office in a study released last Monday. GAO noted that three prior surveys covering 2014 enrollment—from Gallup, the Commonwealth Fund, and the Urban Institute—found statistically insignificant differences in the uninsured rate among those with incomes above four times poverty, a group that doesn’t qualify for the new insurance subsidies.