The impact of ObamaCare on doctors and patients, companies inside and outside the health sector, and American workers and taxpayers

Since the Affordable Care Act health insurance marketplaces opened in 2014, there have been a number of changes in insurance participation as companies entered and exited states and also changed their footprint within states. Our earlier analyses of insurer participation and some notable company exits can be found here.  Note that we consider affiliated insurers serving the same areas as one insurer.

In 2014, there were an average of 5.0 insurers participating in each state’s ACA marketplace, ranging from 1 company in New Hampshire and West Virginia to 16 companies in New York. 2015 saw a net increase in insurer participation, with an average of 6.0 insurers per state, ranging from 1 in West Virginia to 16 in New York. In 2016, insurer participation changed in a number of states due to a combination of some new entrants and the failure of a number of CO-OP plans. In 2016, the average number of companies per state was 5.6, ranging from 1 in Wyoming to 16 in Texas and Wisconsin.

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Obamacare customers who do not receive government help to pay for health insurance are expected to look for ways to reduce their costs during this open enrollment season by going uninsured, buying less extensive coverage or altering their incomes.

Industry and nonprofit insiders say people who are looking for ways to reduce their spending on monthly premiums tend to seek alternatives to Obamacare plans, such as through a religious health-sharing ministry, short-term health insurance, or indemnity plan. Others may choose to go uninsured or reduce their incomes so they can receive federal assistance.

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In an odd twist, low-income people in about half of U.S. counties will now be able to get a taxpayer-subsidized ACA policy for free. The Kaiser Family Foundation found that in 1,540 counties a hypothetical 40-year-old making $25,000 a year can get a basic “bronze” plan under the ACA next year for zero monthly premium. This could become a springboard for marketing pitches by insurers as they try to sign up more consumers.

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Here’s a strange paradox: Health-care costs have increased by an unsustainable rate of about 8.5% each year over the past decade, according to PwC’s Health Research Institute. Already, the average employer-based family health insurance plans costs more than $18,000 annually.

But Medicare spending has been relatively stable. Over the past three years, the program’s payouts to hospitals have increased by only 1% to 3% a year, roughly even with inflation. The prices paid for some core services, such as ambulance transportation, have actually gone down.

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The Affordable Care Act seems here to stay, including its incentives for health-care industry consolidation. Big Government drives bigger business. The latest evidence is CVS Health Corp.’s mooted $66 billion bid for insurer Aetna Inc., as companies look for ways to make money beyond being regulated utilities.

It took longer than expected, but the Trump administration finally moved earlier this month to provide broad exemptions to the Obama administration’s notorious HHS contraceptive mandate. The mandate requires employers sponsoring health-insurance plans to cover contraceptives, including some products that induce abortions, for all workers enrolled in their plans. The Trump administration issued two interim final regulations providing ready pathways for employers with religious or moral objections to get out from under the requirement.

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This week, the Tax Court gave Benjamin and Delores Gibson the bad news that they would have to pay back a premium credit of $4,628.80 that went to Benjamin Jr. The Gibsons filed their 2014 return claiming Junior as a dependent even though he had not been living with them for much of the year. There is an interesting practice question here. Dependency is a matter of fact, not an election, but when it comes to older kids not living at home, it can be treated as, in effect, an election. Preparers need to be alert to the health care credit implications of claiming a dependent and weigh that against other benefits.

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Middle-class Americans, who have been hardest hit by Obamacare, are desperate for Congress to do something — anything — to lower costs.

Today, health insurance can cost more than a mortgage. The average family of four will face a staggering $22,622 in health insurance and related medical costs this year ($14,300 for premiums with an $8,322 deductible). The average annual cost of a mortgage (principal and interest) is about $18,000 for a $309,000 house.
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Conspicuously absent from most commentary arguing that Kansas should expand Medicaid under the Affordable Care Act is any discussion about the program actually improving the health of recipients. Instead, we are left with terribly materialistic arguments about forgone federal money. Why is it that on the biggest policy questions facing Kansas, such as Medicaid or education, we hear lots about money spent and little about health outcomes or student achievement?
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Lower than expected enrollment, rising premiums, and declining issuer participation have led to an increased focus by state and federal policymakers on stabilizing the individual health insurance market. Legislative proposals aimed at addressing these concerns are currently being discussed. Assuming the package of proposals were approved by Congress and issuers were permitted and willing to refile rates for the 2018 plan year, a combination of these policies may lead to the reduction of individual market premiums—as compared to current law–by 13% to 17% for 2018, driven primarily by the reinsurance program as well as the continued Health Insurance Tax moratorium.

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