Pathologists and clinical laboratory managers need to understand the reasons why different consumers have entirely different financial experiences with the health insurance obtained under the ACA
One of the interesting consequences of the Affordable Care Act is that there are different classes of consumers who have completely different experiences with the health insurance coverage obtained through the ACA’s health insurance exchanges. It is important for pathologists as well as clinical laboratory managers to understand this fascinating outcome from the Affordable Care Act.
On one end of the spectrum are consumers who—because their income is at or just above the poverty line—get ACA health insurance coverage with full or nearly all of the premium subsidized be the federal government. They are the happiest with the law. That is, until they need to pay deductibles of as much as $5,000 per year for individuals and $10,000 per year for a family.
At the other end of the spectrum are the consumers with incomes at or above the 400% of the poverty level. Because these individuals get little or no federal premium subsidy, they are stuck paying the full price of their health insurance coverage. It is this group that is most unhappy with the ACA. And, not only are they paying hefty monthly premiums for coverage, they are also stuck with the $5,000 and $10,000 annual deductible requirements.
Unfortunately, the nation’s media do not explain this little-known difference in why some consumers sing the praises of the ACA and others vociferously condemn the law as unworkable, overly-expensive, and even go so far as to characterize the ACA as a “disaster” to the finances of themselves and their families.
Deductibles Grow as Coverage Shrinks for Many Americans
According to data from Kaiser Family Foundation, premiums for the second-lowest Silver Plan on the Healthcare.gov Marketplace rose by an average of 23.4% in the US for 2017. While much of this cost is absorbed for those receiving ACA subsidies, those making more than 400% of the Federal Poverty Level (FPL)—or $48,420 per year in 2016—are left finding ways to pay for rising premiums or risk a fine at tax time.
A recent article in The Seattle Times highlighted the plight of Brenda Davis, a self-employed 60-year-old woman facing reduced options, doubled premiums, and annual deductibles. In her case, she’d need to pay nearly $20,000 during a calendar year before seeing any benefit from her mandated coverage.
An article in U.S. News and World Report shows similar stories across the country—from a young, single male in Arizona to a family of four in Ohio. Making matters worse, many of these people also find that while their insurance coverage costs more by the year, their options for choosing healthcare providers and their covered services are dwindling.
The American Health Care Act Moving to Replace the Affordable Care Act
Overhauling the current healthcare system is one of the core promises of the new Trump administration. At the time of writing, their latest proposal—the American Health Care Act (AHCA)—had failed to be passed, however, it continues making its way through the various political channels seeking approval.
Yet, even with politics aside, experts question if the Republican’s proposed new plan might improve the current failings of the ACA in making healthcare accessible and affordable for all.
On March 13, the Congressional Budget Office (CBO) released its Cost Estimate for the American Health Care Act, estimating that approximately 24-million more Americans would be without insurance in 2026 than if the ACA remained as implemented.
The above graph is from the Kaiser Family Foundation report and is based on data provided by Healthcare.gov. (Image copyright: Kaiser Family Foundation.)
Under the failed Republican proposal, tax credits toward approved insurance plans would switch from the ACA’s income-based structure to an age-based structure. Younger people would see larger credits to encourage this often-healthier younger demographic to enlarge the risk pools. While that proposal would remove the mandated coverage requirement, a 30% premium increase would apply to all plans if a consumer’s coverage lapses in the prior year.
An article in the Harvard Business Review notes that the proposed system would increase coverage costs for low- and moderate-income consumers. (This is true, because the ACA’s federal subsidies of these premiums would end.) Insurers could also charge older consumers more for similar coverage than under the current ACA laws.
However, the CBO Cost Estimate noted that premiums under the AHCA would eventually decline. The CBO predicted short-term increases until 2020, when the market and risk pools begin to stabilize. Premium estimates for single policyholders in the non-group market in 2026 are 10% lower than projections using the current ACA models.
Ensuring Adequate Consumer Protection While Re-Aligning Financial Concerns
Despite dismantling much of the financial structure of the ACA, Kaiser Family Foundation’s “Summary of the American Health Care Act” shows the Republican’s AHCA also keeps many of the core provisions of the ACA intact for consumer protections and ensured services. This means that consumers can still count on coverage for preventative services, such as clinical laboratory testing, and cannot be turned down for coverage due to pre-existing conditions.
That AHCA bill would also increase the contribution limits for Health Savings Accounts (HSAs) substantially and lower the fee for using HSA withdrawals for non-qualified expenses. While this would do little for helping low-income consumers reduce the costs of healthcare, it might offer added opportunities for middle-class consumers and those currently struggling to afford premiums and deductibles without subsidies.
The Future of Health Insurance in America
The article in the Harvard Business Review lists the need for greater affordability above the 400% FPL as critical for improving the state of the health insurance market. The authors also noted that controlling the costs of healthcare services will remain essential to minimizing the rise of premiums. Medical laboratories and pathology groups could play a large role in this process as precision medicine and advanced diagnostics continue to uncover new ways to approach both the diagnosis and treatment of diseases.
Regardless of whether the proposed AHCA makes it through the coming debates and legislative process in its current state to become law, it’s clear that creating a healthcare reform plan that offers affordable, accessible insurance coverage to a population as large and diverse as America’s will remain a challenge for the new presidential administration. Even if legislators maintain the current pace of progress in creating a new plan, the true impact of healthcare reform could take longer than a two-term Trump presidency to stabilize.
—Jon Stone
Related Information:
When Obamacare Costs $19k Before You Get a Penny Back
Where Both the ACA and AHCA Fall Short, and What the Health Insurance Market Really Needs
Millions Excluded from Obamacare Aid, Pass on Coverage
United States Health Care Reform: Progress to Date and Next Steps
Fewer Americans Would Be Insured with G.O.P. Plan than with Simple Repeal
Summary of the American Health Care Act
