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Tuesday, August 11, 2015

Obamacare: Heaven or Hell for Ohioans?

"Health insurance coverage rates have gone up in every state. Louise Sheiner, senior fellow and policy director of the Hutchins Center on Fiscal and Monetary Policy at the Brookings Institution, noted that's not a surprise. 'When you give people subsidized insurance and make them get it, then you’re going to get more people insured.'”

President Barack Obama signed the Patient Protection and Affordable Care Act (ACA) on March 23, 2010, and open enrollment for all Americans began on October 1, 2013. While the ultimate outcome of the ACA, also known as Obamacare, remains to be seen, the number of people with health insurance increased in every state since the law was enacted.

In 2012, the last year before open enrollment through the ACA began, 45.6 million people nationwide, or 14.8% of Americans did not have health insurance. 24/7 Wall St. estimated that 28.6 million people, or 9.1% of Americans did not have health insurance as of March this year -- a decrease of roughly 17 million people or a drop of 5.7 percentage points.

The 50 states used different methods to implement the ACA. Some developed their own health insurance exchanges, while others let the U.S. government facilitate enrollment. Even within those camps, each state’s health care marketplace often had unique features. One key aspect of the legislation -- the expansion of Medicaid to include those making up to 138% the federal poverty level -- was optional for states. More than half of all states opted to expand Medicaid coverage, including all the states that developed their own exchanges.

Political reasons are perhaps the only explanation for not expanding Medicaid. If states choose to expand the program, the federal government would pay 100% of the costs, and over time this subsidy would decrease to 90%.

Sheiner explained that there is a coverage gap between the health insurance exchanges and Medicaid -- people who are too poor to get subsidies through the exchanges but not poor enough to qualify for Medicaid fall into that gap. Most of the increase in health coverage nationwide was among low-income Americans newly eligible under the expanded Medicaid program. In the 30 states that adopted the expansion, 9.5 million people have qualified for Medicaid since the ACA rollout.

While the option to expand Medicaid is aimed at helping low-income people, states opting out often had lower median household incomes and higher poverty rates. Many people purchase health insurance in order to avoid financial catastrophe, and while low-income individuals are often among those who need health insurance the most, they are also frequently unable to afford it without help. In fact, according to several studies, unpaid medical bills are the leading cause of bankruptcy in the United States.

For Amanda Kowalski, associate professor of economics at Yale University, the hope is that reducing the share of the uninsured population will improve health outcomes and ultimately lower health care costs. Kowalski's research on the ACA’s early adoption argues that this has happened to some extent already. States that developed their own exchanges, for example, were able to sign up more residents, thus increasing coverage and lowering costs as a result.


Of the 50 states, Ohio had the 21st largest fall in the uninsured rate. And, in case you're wondering, neighboring Kentucky made the largest improvement nationwide: Kentucky’s population without health insurance declined by 10.4 percentage points.

An estimated 11.5% of Ohio residents did not have health insurance in 2012. By March this year, the percentage had fallen by 5.4 percentage points, inline with the nationwide drop. Ohio was among 31 other states to expand Medicaid under the ACA. As a result of the expansion, 587,000 individuals received health insurance.

The initial reforms in Ohio include a rate-cap on individual coverage for those with pre-existing health conditions; increasing the dependent age coverage limit to 28 years old; soon mandating small employers permit business workers to purchase health coverage with pre-tax dollars; and extending the state’s mini-COBRA program so small business employees can maintain health benefits for themselves and their family in the event they become unemployed.

Ohio Statistics

> Ppt. change in uninsured rate, 2012-2015: -5.4

> Expanded Medicaid? yes

> Pct. population without health insurance, 2012: 11.5% (19th lowest)

> Pct. population without health insurance, 2015: 6.1% (14th lowest)

Like most other states, Ohio residents must visit to receive health insurance. Despite the lack of a state-specific health insurance exchange, Ohio’s Department of Insurance website provides useful links and information for state residents curious about Obamacare.

(Thomas C. Frohlich, Alexander Kent, Sam Stebbins and Michael B. Sauter. "How Obamacare Got More People Insured, State By State." 24/7 Wall St. August 05, 2015.)

The so-called “rate shock” of individual-market health premiums going much higher -- by as much as 55 to 85 percent -- has been feared. Some increase has occurred.

What exactly is driving the increase?

According to Milliman, one of the nation’s leading actuarial firms, and Manhattan Institute’s Avik Roy, the main drivers are “risk pool composition changes” (such as having a healthy group subsidize a sick group) and the Affordable Care Act’s expansion of insurance benefits (most especially in its mandated reductions in deductibles and co-pay).

Roy explains ...

“This is a significant concept to understand. Some people have the impression that the main reason that rates are going up under Obamacare is because of the law’s requirement that insurers cover people with pre-existing conditions.

“But that accounts for only a fraction -- around a quarter -- of the rate hike. The rest comes from all the other things that Obamacare does, such as forcing people to buy richer insurance benefits; to buy products with all sorts of add-ons they might not need; to pay Obamacare’s premium tax; and to pay a lot more, if they’re young, to subsidize older individuals."

(Becket Adams. "Report Spells Bad News for Obamacare and Premiums in Ohio."
The Blaze. June 11, 2013.)

The Latest

Despite the cries of the Obamacare bashers that insurance companies would leave the exchanges in droves once they discovered how much money they are losing , it turns out that competition and choice are increasing as we head into 2015.

According to the well-respected McKinsey Center for U.S. Health System Reform's annual study, “In the 41 states releasing exchange participation carrier data, the number of health insurers increased by 26 percent between 2014 and 2015. In the 19 states with complete fillings, the number of products grew 66 percent, with most in the silver tier.

"While 65 percent of existing policies will see in increase in premium costs in 2015, the median increase will be just 4 percent."

Who can remember the last time people was an annual increase of less than 5 percent?

What’s more, based on the popularity of the lowest priced policies in a given tier that we saw during the 2014 season, McKinsey expects that a number of people purchasing higher price plans in their preferred tier will move to either the lowest or second lowest plan in the chosen category.  For those people, the study suggests the mean increase will be less than 2 percent.

(Rick Ungar. "Key Study On Obamacare 2015 Premium Rates Is Out And You Won't Believe What's Going To Happen." Forbes. October 31, 2014)

A recent ASPE report contends ...

“Within the silver tier, the full range of proposed price changes runs from –35 percent to +36 percent. In most cases, the highest increases are being imposed on last year’s lowest-price plans—a median increase of 8 percent, or $258 annually for a 40-year-old nonsmoker. In contrast, the highest-price 2014 silver plans that have re-filed rates have a median premium decrease of 4 percent ($195 annually). As a result, premium price dispersion among renewal plans appears to be decreasing."

Cost of premiums for those being subsidized are all over the place with some likely to pay more and others likely to pay considerably less.

Writes Alex Wayne in Bloomberg:

“Obamacare premiums, once predicted to skyrocket in the second year under the government’s marketplace, have risen about 6 percent for 2015, according to an analysis of preliminary state filings. While foes of the Affordable Care Act warned of double-digit rate increases, the costs of premiums seen so far is more modest for the new year. One reason may be that insurers who came in high in 2014 found themselves beaten out for enrollments. At the same time, 77 new insurance plans will be competing for customers in 2015, U.S. officials say.”

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