“Mr. Frodo Look: It’s an Oliphant” – Part 1

Oliphants

“The number of Americans without health insurance climbed to 27.5 million in 2018, according to Federal Data that shows the first year to year increase in a decade (and since the advent of the ACA).”[1]

Seema Verma, administrator for th CMS  blamed the long predicted and finally occuring increase in uninsured Americans in a decade on the Affordable Care Act; specifically on higher premiums under the law that have priced people without subsidies out of the market. “The very structure of the law which imposed billions of dollars in new, costly regulations also led to higher and higher insurance premiums,” Ms. Verma said. She said higher-income people are now losing coverage because they can’t afford the premiums and don’t quality for a subsidy. [2]

Let us wind back the clock and look at what actually happened.

On the ACA’s state-based healthcare marketplaces, subsidies to buy insurance were available to people who have household incomes of up to 400 percent of the federal poverty level.[3]  There are two kinds of subsidies: one for premiums, the other for healthcare expenses.[4]

President Trump claimed that because Congress had failed to repeal the Affordable Care Act, he was going to “piece by piece” give America the health care it deserves. Therefore, he issued an executive order that stopped ACA payments to insurers (subsidies for healthcare expenses), in an effort to stop “bailing out [insurance companies] who have made a fortune” under the ACA.[5]

Oliphant2

Before the executive order to remove the subsidies for healthcare expenses went into effect:

  1. The CBO estimated in June 2017 that “The number of people with health insurance would decrease by 4 million in 2019 and 13 million in 2027;”[6] and
  2. Might also “spell the end of the Individual Healthcare Marketplace, which relies heavily on subsidies”[7]

Or would it? According to the Henry Kaiser Family Foundation, premiums would be affected in 2018, but the ACA Marketplace would survive. “These results are generally consistent with a KFF estimate released in April 2018 projecting that silver marketplace premiums would have to increase by 19 percent on average to compensate for the loss of Cost Sharing Subsidy (CSR) payments, with the amount varying substantially by state.”[8]

So, what was the impact? First, here is a reminder about where the removal of the subsidies would impact the pocketbook.

Healthcare 101 chart

Halting some ACA cost-sharing

There are consequences with keeping the premium tax credit while insurer cost sharing subsidies are discontinued:

  • without subsidies, healthcare would cost the same for everybody;
  • premium tax credits are not stopped;
  • ACA Mandated Cost Sharing Reductions: as previously discussed, the Trump Administration halted these in 2017;
  • insurers raised prices;
  • taxpayer pays for the increased premium tax credit;
  • increased premium for those who do not qualify for subsidies;
  • paradoxical lower total costs for people who get premium tax credits.

pay more chart

Therefore, as Ms. Verma said: higher-income people on the ACA exchanges are in fact paying more. But, are they now losing coverage because they can’t afford the premiums and don’t qualify for a subsidy?  In either case, the wound was self-inflicted (by an Oliphant). However, that is not the real reason for the recent increase in the number of uninsured.

Stay tuned for the next blog post as we fact check just where the increase in the uninsured actually occurred.

FOOTNOTES:

[1] Armour, Stephanie, “Trump Administration Blames Increase in Uninsured Americans on Obamacare,” WSJ, 14 Sep 2019, www.wsj.com/articles/trump-administration-blames-increase-in-uninsured-americans-on-obamacare-11568396294

[2] Ibid

[3] Garfield, Rachel, et al. “The Coverage Gap: Uninsured Poor Adults in States That Do Not Expand Medicaid.” The Henry J. Kaiser Family Foundation, The Henry J. Kaiser Family Foundation, 13 June 2018, www.kff.org/uninsured/issue-brief/the-coverage-gap-uninsured-poor-adults-in-states-that-do-not-expand-medicaid/.

[4] “Explaining Healthcare Reform: Questions About Health Insurance Subsidies,” Henry J. Kaiser Family Foundation, Health Reform, 20 November 2018, www.kff.org/health-reform/issue-brief/explaining-health-care-reform-questions-about-health/

[5] Chang, Alvin, “Who Trump actually hurts by stopping payments to insurance companies, explained with a cartoon,” Vox 20 Oct 2017, https://www.vox.com/health-care/2017/10/20/16507786/trump-obamacare-executive-order-csr-cartoon

[6] “Repealing the Individual Health Insurance Mandate: An Updated Estimate.” Congressional Budget Office, Nov. 2017, www.cbo.gov/system/files/115th-congress-2017-2018/reports/53300-individualmandate.pdf

[7] Armour, Stephanie. “Pressure Grows to Fund Children’s Health Program.” The Wall Street Journal, Dow Jones & Company, 29 Aug. 2017, www.wsj.com/articles/pressure-grows-to-fund-childrens-health-program-1504034320.

[8] Kamal, Rabah, et al. “How the Loss of Cost-Sharing Subsidy Payments Is Affecting 2018 Premiums.” The Henry J. Kaiser Family Foundation, The Henry J. Kaiser Family Foundation, 15 Nov. 2017, www.kff.org/health-reform/issue-brief/how-the-loss-of-cost-sharing-subsidy-payments-is-affecting-2018-premiums/.

By | 2019-11-05T12:36:43+00:00 January 28th, 2020|Categories: Healthcare|0 Comments

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