Affordable Care Act Update

August 02, 2018|5:33 p.m.| ASTHO Staff

While state public health agencies recognize that much of what contributes to health lies outside the doctor’s office, there is evidence demonstrating that stable and ongoing insurance coverage enables consumers to utilize preventive and primary care services that improve outcomes and downstream healthcare spending. Changes to the Affordable Care Act (ACA) that have occurred over the past several years are likely to impact market stability and insurance coverage, as well as actions states are pursuing, given uncertainty around the future of ACA.

One of the primary goals of the ACA was to create broad access to rich health insurance coverage through several mechanisms:

  • Individual mandate for all to have insurance coverage or face a tax penalty.
  • Employer mandated coverage for large employers.
  • Subsidies and out-of-pocket protections for purchasing in the individual federal marketplaces.
  • Guaranteed issue and community rating of premiums.
  • Expansion of Medicaid to low-income adults.
  • Ten essential health benefits requirement for all marketplace insurance sold on the individual federal marketplaces, which includes requirements to cover services for mental health, substance abuse, and reproductive health.

Since the enactment of ACA, the percentage of uninsured working-age adults decreased from 19.9 percent in 2013 to 12.7 percent in April 2016. Studies have shown that coverage expansions have led to increased access to preventive services, higher rates of having a usual source of primary care, and increased affordability of care. However, according to the latest findings from the Commonwealth Fund, ACA tracking survey coverage has declined to 15.5 percent as of March 2018. This is due to a lack of federal legislative actions to improve weaknesses, as well as current actions by the Administration to exacerbate weaknesses in the legislation.

In October 2017, the Administration announced that it would end cost-sharing reduction payments, a program that previously reimbursed health insurance companies for the out-of-pocket protections available to some individuals who purchased coverage on the individual marketplaces. This likely contributed to higher premium rates in the individual marketplaces for 2018. Near that time, the Administration also issued Executive Order 13813 , which expanded the use of association health plans (AHPs) and short-term, limited duration insurance (STLDI). These plans may create parallel markets in which healthier individuals move to cheaper plans that offer barebones coverage, segmenting and destabilizing the marketplace through adverse selection.

As a result of a new law approved by Congress, the individual mandate tax penalties will be $0.00 effective January 2019, which may again affect consumer behavior. Estimates of the number of uninsured resulting from this change vary. In July 2018, the Commonwealth Fund predicted the elimination of the penalty will result in at least 2.8 million fewer Americans with coverage. In comparison, the Congressional Budget Office (CBO) estimates that the number of people with health insurance will decrease four million by 2019 and 13 million by 2027. The CBO’s estimate is based on a full repeal of the mandate. However, it is noted that if the penalty was repealed on its own, estimates would be very similar.

Beyond the impact of the individual mandate, the Commonwealth Fund also predicts a rise in premiums for plans in the individual market. In July 2018, CMS cut funding for the federally-facilitated Exchange Navigator Program, which may also contribute to decreased enrollment rates. CMS also announced in July that it would freeze $10.4 billion in 2017 risk adjustment payments for individual and small group markets. However, CMS then released a final rule on July 24 to reinstate payments, which caused concern as insurance companies were setting premium rates for next year.

Everyone benefits from access to primary and preventive services (including behavioral and reproductive health services), specialty care, and culturally appropriate care. If the individual insurance market continues to destabilize or does not include affordable plans that offer comprehensive services, consumers may face expensive and inaccessible healthcare options. In order to safeguard health insurance access and coverage, there are several levers states may use:

  • Several states have passed individual mandates for health insurance coverage. Massachusetts was the first in 2006, with laws in New Jersey, Vermont, and Washington, D.C. taking effect in 2019 and beyond. This lever acts as a disincentive for healthy consumers to leave the individual insurance marketplace, thereby lowering premiums and reducing uncompensated care.
  • States are using Section 1332 waivers to institute reinsurance programs in their individual federal marketplaces. These waivers allow states to reimburse insurers for extremely high claims above a certain threshold in order to offset potential premium increases. Minnesota’s reinsurance program led to a 15 percent drop in insurance premiums in 2018. Alaska and Oregon also have approved 1332 applications for this option, with other state applications pending.
  • States have the authority to define minimum essential health benefits (EHBs) and enact regulations for AHPs and STLDI. States could use this authority to safeguard the ten EHBs or require coverage of individuals with pre-existing conditions. Alternatively, states may require less comprehensive coverage, which could dilute benefit packages in a “race to the bottom” where insurance companies compete to offer the lowest-priced package. Alabama is requesting a minor revision to its EHBs in their 2020 plan year to reduce pill counts for certain types of prescription drugs in an effort to reduce premiums and respond to the opioid crisis.
  • In recent months, several states have looked to expand Medicaid coverage, due in part to new guidance from CMS on flexibility for work or community engagement requirements for certain Medicaid beneficiaries. In June, Virginia passed Medicaid expansion with a work requirement. Utah is also pursuing partial Medicaid expansion with work requirements. Four states who previously expanded Medicaid have received approval to test work requirements for the Medicaid expansion population, with pending applications from eight other states. However, a federal judge blocked Kentucky’s work requirements, prompting CMS to reopen a public comment period and contributing to broader uncertainty about both Medicaid expansion in Kentucky and the approval of similar Section 1115 waivers in the future.

Finally, an increasing number of state and territorial health agencies are conducting outreach and enrollment for health insurance, and local public health agencies are often providing clinical services to uninsured individuals.

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