ACA/Obamacare: Why Were Coverage Gains So Tepid? Why Do So Many Remain Uninsured?

"Friends and foes of the Affordable Care Act (ACA) alike tend to target the relative effectiveness of the (soon-to-be-repealed) individual mandate as the key factor behind relatively higher levels of insurance coverage since the law was enacted in 2010. 

ACA supporters might wish that the mandate was much stronger, but they still claim that its repeal will trigger rising premiums and leave millions more Americans uninsured in the years ahead.

Many ACA foes often can’t decide whether repealing the mandate remains the key to unraveling Obamacare or if it simply should be eliminated as a matter of principle, regardless of the cost and coverage consequences.

Spoiler alert: They were both wrong about the past. They are likely to remain mistaken about the future.

In reality, overall coverage gains under the ACA hit a modest, but relatively stable, plateau well before last month’s tax-cutting budget reconciliation law decided to eliminate further penalties under the individual mandate as of 2019. Those initial reductions in the number of uninsured Americans were due primarily to expanded eligibility for Medicaid and, secondarily, to generous subsidies for lower-income enrollees in state-based health insurance exchanges. 

The less-explored question involves why Obamacare’s overall combination of taxpayer subsidies, expanded insurance programs, health benefits requirements, AND coverage mandates had so much less of an effect than the law’s architects envisioned.

It turns out that many of the nominally uninsured still have other alternatives to health care than just through heavily-subsidized Medicaid and exchange-based insurance. You might call such uncompensated care either an option for “implicit insurance” or a hidden tax on acquiring more formal coverage.

Health policy researchers Amy Finkelstein, Neale Mahonem and Matthew Nolowidigdo unravel the puzzle in a recent National Bureau of Economic Research paper. They explain why there is less “demand” than expected for the increased “supply” of subsidized coverage for lower income individuals and more limited take up of subsidized coverage than once predicted.

The bottom line is that the nominally uninsured (before and after Obamacare’s implementation) pay only a small share (one-fifth to one-third) of their medical expenses. Hence, they value formal health insurance at substantially less than its full cost to insurers providing such coverage. 

Among the sources of other financing for care provided to the uninsured are federal and state subsidies for uncompensated care, such as Disproportionate Share Hospital (DSH) payments (reduced more gradually and later than originally envisioned under the ACA), as well as part-year insurance coverage, direct care programs, and private donations.

The federal Emergency Medical Treatment and Active Labor Act (EMTALA) also requires hospitals to provide “emergency care” to screen and stabilize uninsured patients on credit. Nonprofit hospitals claim provision of charity care as one of the primary ways to fulfill their community benefit requirements for tax-exempt status. Retroactive look-back coverage under Medicaid also has provided a further modest financial cushion for some providers treating the nominally low-income uninsured.

Keep in mind, too, that the accounting lines between charity care and bad debt are far from clear cut, and they can be adjusted somewhat to match the financial reporting needs of nonprofit versus for-profit providers. Recovery rates for uncompensated care provided to low-income uninsured individuals with few assets are limited (roughly 10-20 percent at best) and further shielded by personal bankruptcy protections.

So, while financial and medical life for lower-income uninsured individuals is far from  comfortable or stable, Finkelstein, Mahonem, and Nolowidigdo find that these various backup “options” do reduce the willingness of low-income individuals to pay for the full --and in many cases even the generously subsidized, out-of-pocket -- premium costs of insurance coverage. For example, other research by Finkelstein estimates that adults living below the Federal Poverty Level would be willing to pay only 20 to 50 cents per each dollar of Medicare insurance coverage spent on their “behalf,” and they would rather give up Medicaid than pay the insurance costs of providing it." - The Real Hidden Tax on Increased Insurance Coverage, economics21.org, 01/25/2018

Link to the entire essay appears below:

https://economics21.org/html/real-hidden-tax-increased-insurance-coverage-2816.html

ACA: The Informed and Web Savvy Consumer Purchases Health Insurance?

The Affordable Care Act was supposedly aimed at insuring the previously uninsured. Unfortunately a woefully low percentage of previous uninsured are attracted to ACA whereas the vast majority of applicants are the previously insured merely looking for a tax credit to lower rates [subsidy]. (1)

Moreover, regarding the uninsured or the previous insured seeking subsidy, an implicit assumption by the central planners of ACA is that potential health insurance consumers are web savvy and informed consumers of health insurance. Maybe not so much regarding the uninsured which is the supposed target market of ACA.

Lower middle income and lower income people, making up a large segment of the previously uninsured, are not exactly the segment of the population with computers, computer skills and web savvy. Hence the central plan designers of the ACA have designed a delivery system known as the market place exchange web site that does not match the target market’s access point and skill set.

The same population that makes up the uninsured market, if they manage to find a computer, acquire computer skills and navigate the web site, are further assumed to be informed consumers by the central planners. Would an uninsured person or an insured person be more informed regarding health insurance? Would a person consistently uninsured in the realm of health insurance over long periods, in the main, be familiar and informed regarding health insurance?

One ends with a mismatched delivery system regarding its target market with the target market being additionally populated with uninformed market participants. Central planning at its zenith!

What are the results? Abysmal. However, highlighting two of the uninformed results may be of interest:

(a) when comparing seemingly like-kind insurance plans on the ACA web site the consumer defaults to lower price. Unfortunately the lower price many times means the consumer has purchased the ultra-narrow or narrow provider network. Hence when the time comes to use the insurance the consumer finds few takers. One might call this procedure being “informed” the hard way, (2)

(b) the supposed informed consumer will realize, without any doubt, that once his or her policy is issued they will need to request a HIPPA Release Authorization Form from their insurer, sign such form, and return it post-haste. Huh? Without the form only the named insured can access insurance information, claims paid or pending information, etc. A single person without a HIPPA Release Authorization Form filed will find no outside person can help. If a spouse is involved, sorry no information unless the form is on hand. Yes, one spouse is considered the named insured and the other spouse can only gain access if the named insured submits the HIPPA Release Authorization Form. Of course the model informed consumer of the central planner surely knows this information without a second thought. (3) (4) (5)

The plans differ; the planners are all alike... - Frédéric Bastiat


　

Notes:

(1) Aetna could be forced out of Obamacare: CEO, CNBC, 01/22/2014

http://www.cnbc.com/id/101354183



　

　
(2) Marketplace Plans’ Networks Are Very Small, Study Finds. Kaiser Health News, 12/12/2013


http://capsules.kaiserhealthnews.org/index.php/2013/12/marketplace-plans-networks-are-very-small-study-finds/?referrer=search


(3) Authorization Use and Disclosure FAQs

http://www.hhs.gov/hipaafaq/use/index.html



　
(4) HIPAA Release Form

http://www.healthcare-information-guide.com/HIPAA.html



　
(5) HIPPA Release Authorization Form

http://www.healthcare-information-guide.com/support-files/hipaa-release-form.pdf

Aetna CEO: ACA Is Not Attracting Previously Uninsured

‘Aetna CEO Mark Bertolini told CNBC on Wednesday that Obamacare has failed to attract the uninsured, and he offered a scenario in which the insurance company could be forced to pull out of program.

The company will be submitting Obamacare rates for 2015 on May 15.

"Are they going to be double-digit [increases] or are we going to get beat up because they're double-digit or are we just going to have to pull out of the program?" Bertolini asked in a "Squawk Box" interview from the World Economic Forum in Davos, Switzerland. "Those questions can't be answered until we see the population we have today. And we really don't have a good view on that."

He said that so far, Obamacare has just shifted people who were insured in the individual market to the public exchanges where they could get a better deal on a subsidy for coverage. "We see only 11 percent of the population is actually people that were firmly uninsured that are now insured. So [it] didn't really eat into the uninsured population." ‘ - Aetna could be forced out of Obamacare: CEO, CNBC, 01/22/2014

Link to the entire article appears below:

http://www.cnbc.com/id/101354183