Deductibles and other forms of cost-sharing have been creeping up in the United States since the late 1990s. A typical employer health plan now asks an individual to pay more than $1,000 out of pocket before coverage kicks in for most services. The most popular plans on the Affordable Care Act exchanges require customers to pay several times as much. Even Medicare charges deductibles.
People tend to hate these features, but they were not devised to be cruel. Rather, they were fashioned with economic theory in mind. Deductibles and co-payments are intended to make patients behave more like consumers in other parts of the economy.
New research suggests that high deductibles in particular may not work as intended. A team of researchers at the University of California, Berkeley, and Harvard recently published a working paper on what happened when a large (unnamed) employer switched from a more generous health plan to one with a high deductible.
Spending fell by about 12%, a remarkable decline. But the way workers achieved those savings gave the researchers pause. There was no evidence that workers were comparing prices or making wise choices on where to cut, even after two years in the new plan. They visited the same doctors and hospitals they always had.
About 12.7 million people enrolled in ObamaCare plans this year, which is almost 9 million fewer than had once been expected and 1.4 million fewer than the upper boundary of its revised enrollment forecast.
Nevertheless, Health and Human Services secretary Sylvia Burwell declared the year “a success” and claimed that enrollment “exceeded our expectations.” In reality, ObamaCare enrollment has hit a wall.
At 12.7 million, total enrollment at the federal and state-run ObamaCare exchanges has ended up in the middle of range of the administration’s sharply lowered enrollment forecast, which they said could be anywhere from 11 million to 14.1 million for 2016. The Congressional Budget Office had previously expected enrollment to hit 21 million this year.
With the results now in from the Affordable Care Act’s third open enrollment period, it’s getting increasingly difficult to sugarcoat the extremely low numbers of enrollees relative to original projections. The 12.7 million people who signed up for an exchange plan amounts to just half as many enrollees as was projected by government and private sector research organizations when the ACA passed.
The Rand Corporation predicted 27 million, the Centers for Medicare and Medicaid Servicespredicted 24.8 million, the Urban Institute predicted 23.1 million, and the Congressional Budget Office predicted 21 million.
Since the Affordable Care Act became law, Democrats have lost majority control of the House and Senate, while opposition to the law has been constant and implacable. Despite its unpopularity, Congressmen Sander Levin and Henry Waxman, former chairs of the two House committees that had primary jurisdiction over health care reform when the law was passed, see the ACA as an important step to moving the U.S. closer to attaining universal health care. They believe Sen. Bernie Sanders’s proposal to throw away the ACA to pursue a single-payer system is counterproductive and dangerous. Levin and Waxman support Hillary Clinton as the presidential candidate who will keep the ACA moving forward.
Last month, majorities in Congress voted to repeal the Affordable Care Act. Not surprisingly, President Obama vetoed the repeal bill, and the Republican Congress was unable to override the president’s veto.
As former leaders in Congress, we have a message for both sides in this debate: It’s time to give the states a chance.
This doesn’t mean that conservatives and Republicans have to give up the fight to reduce the regulations and taxes in the law. It also doesn’t mean that progressives and Democrats have to stop defending protections for the underinsured and uninsured.
Instead, it’s time to look to a provision of the Affordable Care Act — Section 1332 — that can achieve what both sides earnestly wish for: providing more Americans with access to more affordable, flexible, patient-centered health care.
As more requirements of the health care law take effect, income tax filing season becomes more complex for small businesses.
Companies required to offer health insurance have new forms to complete providing details of their coverage. Owners whose payrolls have hovered around the threshold where insurance is mandatory need to be sure their coverage — if they offered it last year — was sufficient to avoid penalties.
Even the most tax-savvy owners may find that do-it-yourself doesn’t work when it comes to fulfilling the law’s requirements. Many don’t know about the intricacies of the new health care regulations associated with the law that affect employers, says Lydia Glatz, an accountant with the firm MBAF in Fort Lauderdale, Florida.
“Most small businesses and mom-and-pop operations,” Glatz says. “They’re more involved in running their day-to-day business.”
N.C. Insurance Commissioner Wayne Goodwin this week became the latest public official to warn of the harms wreaked by the Affordable Care Act, saying the federal insurance law has destabilized the state’s insurance market and now threatens to leave some residents without options for health insurance.
Goodwin expressed his concerns in a letter sent Tuesday to Sylvia Burwell, secretary of the U.S. Department of Health and Human Services, as a follow-up to a personal conversation he had with the Obama administration official in November. Goodwin, a Democrat up for re-election this year, warned that the ACA is driving up insurance costs, reducing consumer options and generating unsustainable financial losses for the insurers, with the potential risk that insurers will withdraw from the state altogether.
Stung by losses under the federal health law, major insurers are seeking to sharply limit how policies are sold to individuals in ways that consumer advocates say seem to discriminate against the sickest and could hold down future enrollment.
In recent days Anthem, Aetna and Cigna, all among the top five health insurers, told brokers they will stop paying them sales commissions to sign up most customers who qualify for new coverage outside the normal enrollment period, according to the companies and broker documents.
President Barack Obama will propose reducing the bite of the unpopular “Cadillac tax” on high-cost health insurance plans in the budget he releases next week, in a bid to preserve a key element of the Affordable Care Act.
Jason Furman, the White House Council of Economic Advisers chairman, wrote in the New England Journal of Medicine that the president’s plan would reflect regional differences in the cost of health care, reducing the tax’s bite where care is particularly expensive.
“This policy prevents the tax from creating unintended burdens for firms located in areas where health care is particularly expensive, while ensuring that the policy remains targeted at overly generous plans over the long term,” Furman wrote in the Journal article.
There is little congressional appetite to revisit ObamaCare’s Cadillac tax in an election year, but that’s not stopping the coalition opposing it from campaigning about it.
Fight the 40, the coalition that includes unions and Fortune 500 companies as members, is still pushing for a full repeal of the 40 percent excise tax on employer-sponsored health benefits above a certain threshold. The tax was originally scheduled to go into effect in 2018 but was pushed back two more years in December.
“We will continue our work to highlight how the tax creates age, gender, and geographic disparities and how it impacts vulnerable demographics,” the group said in a memo shared first with Morning Consult.