Accountable Care Act has reduced the number of uninsured, but has failed to deliver lower costs for most Americans or employers
More big increases are coming to Obamacare premiums during 2017. This is an important development and, depending on how the new Congress decides to address problems with the Affordable Care Act (ACA), the consequences can be either positive or negative for clinical laboratories and anatomic pathology groups.
Large increases in healthcare premiums can have a trickle-down effect on clinical laboratories and pathology groups since health insurers tend to reduce reimbursements to providers when they are in a financial squeeze. And while the November election puts the future of the ACA in doubt, a recently released Kaiser Family Foundation (KFF) study adds further evidence that Obamacare (colloquial for the ACA) has fallen short of its goal of reining in healthcare costs while simultaneously expanding healthcare coverage to millions of Americans.
The KFF study shows premiums in the ACA’s Health Insurance Marketplace will continue to increase in many regions in 2017. Researchers blame the higher price in part to the phasing out of the ACA’s reinsurance program and the unexpected losses many participating insurers have experienced.
Big Premium Increases in Arizona, Alabama
Using the second-lowest priced silver plans as a benchmark, KFF reports that the regions with the largest premium increases will be:
• Phoenix, Arizona (up 145% from $207 to $507 per month for a 40-year old non-smoker making $30,000 per year);
• Birmingham, Alabama (up 71% from $288 to $492); and
• Oklahoma City, Oklahoma (up 67% from $295 to $493).
Meanwhile, 2017 rates will fall slightly in:
• Indianapolis, Indiana (down -4% from $298 to $286);
• Cleveland (down -2% from $234 to $229);
• Boston (down -1% from $250 to $247); and
• Providence, Rhode Island (down -1% from $263 to $261).
Consumer insurance site HealthPocket also analyzed the 2017 ACA health plan data with an eye toward the market conditions facing consumers who receive neither premium tax credits nor subsidies for healthcare out-of-pocket costs.
“With respect to 2017, it is immediately evident that the market conditions facing the unsubsidized are getting considerably worse,” HealthPocket stated in an InfoStat article on the company’s website. “The percentage increase for each category of Obamacare nationwide is in the double-digits.”
“Deductibles among bronze and silver plans, the plans most likely to be purchased by people without subsidies, are still considerably beyond what the average family has saved for medical bills,” the article concluded.
Elderly Americans Hardest Hit by ACA Premium Increases
HealthPocket also noted that older Americans are being hit the hardest. A 60-year-old making $48,000 annually, which would be above the $47,520 cut-off for individual premium subsidy eligibility in 2017, will spend 22% ($872.01) of their income to afford their age group’s average silver plan premium, while a 30-year-old would spend only 9% ($364.91).
Nevertheless, the majority (85%) of consumers who buy insurance plans in health exchanges qualify for federal tax credits that lower their monthly premiums. Most of these consumers will not experience big premium increases next year. For example, though premiums for the silver plan in the Phoenix area are expected to rise 145%, consumers receiving a subsidy will have that increase offset by a $300 per month tax credit, the KFF study shows.
Robert Moffit, PhD, a Senior Fellow at The Heritage Foundation Center for Health Policy Studies, argues that healthcare reform has not resulted in “big cost reductions for individuals, families, and businesses.”
In an article he penned for The Daily Signal, Moffit noted that the Centers for Medicare and Medicaid Services (CMS) estimates that total per-capital health insurance spending will rise from $7,786 in 2016 to $11,681 in 2024, while the Congressional Budget Office (CBO) predicts that job-based premiums will increase by almost 60% between now and 2025.
On the other hand, the ACA has succeeded in one of its goals: that of reducing the ranks of the uninsured. A Gallup Poll found that the uninsured rate fell to 11% in the first quarter of 2016, down 6.1% since the individual mandate requiring Americans to purchase health insurance or be penalized took effect in the fourth quarter of 2013.
Health Plans Withdraw from Insurance Marketplace
As a result of financial losses, which they blamed on higher-than expected claims and slow growth, many insurers are withdrawing from the health exchanges or “individual insurance” markets in some states. Others are struggling to remain. The KFF report notes that only 57% of exchange enrollees will have a choice of three or more insurers in 2017, down from 85% of enrollees in 2016.
Representatives at UCare, an independent, nonprofit health plan in Minnesota, told the Star Tribune that their company considered exiting Minnesota’s individual insurance market rather than request a 66% premium increase. (See Star Tribune, “Minnesota Health Insurers Propose Big Premium Hikes for Individual Plans,” September 2, 2016.)
“The first [option] was to exit the market,” said Ghita Worcester, Senior Vice President Public Affairs and Marketing at UCare. “Our second option was to consider 2017 a ‘bridge’ year in which we would continue to provide coverage … while working with industry leaders to identify and implement ‘fixes’ to help stabilize this market for the future. We chose the second option.”
Employer Insurance Costs Also Increased under Obamacare
The ACA also has not reduced healthcare costs for employers and the more than 40% of Americans who are insured through their workplace. An article in Time reported on previous Kaiser data, which showed that in 2008 the average employer-sponsored family plan cost a total of $12,680, with employees footing $3,354 of the bill. By 2016, however, the cost of the average employer family plan reached $18,142, with workers picking up $5,277 of the cost. (See Time, “Here’s What’s Happened to Health Care Costs in America in the Obama Years,” October 4, 2016.)
More than Half of Workers on High-Deductible Health Plans
In addition, more people than ever are enrolled in high-deductible health plans. For the first time, KFF’s 2016 Employer Health Benefits Survey showed half (51%) of all covered workers and 65% of workers in small firms face deductibles of at least $1,000.
“We’re seeing premiums rising at historically slow rates, which helps workers and employers alike, but it’s made possible in part by the more rapid rise in the deductibles workers must pay,” KFF President and CEO Drew Altman, PhD, said in a KFF news release.
As a result, the ACA is likely to continue to be viewed as both a success and a failure.
“Today, Americans face higher health insurance premiums, vastly higher deductibles in health plans, and higher prescription drug costs than we ever have,” journalist Brad Tuttle wrote in the Times article. “But because millions more Americans have health coverage, and because things might have been even more costly had the Affordable Care Act never gone into effect, we may be better off, collectively.”
That statement probably overlooks one consequence of the ACA that makes many hospitals, physicians, and clinical laboratories unhappy. In order to have lower premiums for their health insurance exchange products, many health insurers developed narrow networks that excluded providers considered to be higher-priced. As this occurred, payers—including medical laboratories and pathology groups—lost access to the patients enrolled in the ACA exchange plans.
—Andrea Downing Peck