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More Insured, but the Choices Are Narrowing
Business Day
In
the midst of all the turmoil in health care these days, one thing is
becoming clear: No matter what kind of health plan consumers choose,
they will find fewer doctors and hospitals in their network — or pay
much more for the privilege of going to any provider they want.
These
so-called narrow networks, featuring limited groups of providers, have
made a big entrance on the newly created state insurance exchanges,
where they are a common feature in many of the plans. While the sizes of
the networks vary considerably, many plans now exclude at least some
large hospitals or doctors’ groups. Smaller networks are also becoming
more common in health care coverage offered by employers and in private
Medicare Advantage plans.
Insurers,
ranging from national behemoths like WellPoint, UnitedHealth and Aetna
to much smaller local carriers, are fully embracing the idea, saying
narrower networks are essential to controlling costs and managing care.
Major players contend they can avoid the uproar that crippled a similar
push in the 1990s.
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“We
have to break people away from the choice habit that everyone has,”
said Marcus Merz, the chief executive of PreferredOne, an insurer in
Golden Valley, Minn., that is owned by two health systems and a
physician group. “We’re all trying to break away from this fixation on
open access and broad networks.”
But
while there is evidence that consumers are willing to sacrifice some
choice in favor of lower prices, many critics, including political
opponents of the new health care law, remain wary about narrowing
networks. A concern is that insurers will limit access to specialists or
certain hospitals. “Too often, Obamacare cancels the policy you wanted
to keep and tells you what policy to buy,” Senator Lamar Alexander, a
Tennessee Republican, said in a speech in April.
Dr.
Monica Wehby, a pediatric neurosurgeon, is using the potential reaction
to narrower networks as momentum for her campaign for Senate in Oregon.
A Republican promising to repeal the Affordable Care Act, her slogan is
“Keep your doctor. Change your senator.”
Other complaints involve confusion over which providers are participating in which plans.
“The
thing you’re buying is access to the provider network,” said Lynn
Quincy, a policy expert at Consumers Union. “Right now it feels like
you’re forced to guess.”
In
response, state and federal regulators say they are more closely
monitoring the plans being offered in the coming year to be sure they
are clear and that consumers have sufficient access to hospitals and
doctors. In some cases, they are already insisting on changes.
Nonetheless,
for people who are directly picking plans in the open markets, insurers
say price is turning out to be critical. People “are weighing
affordability and breadth of network,” said Karen Ignagni, the chief
executive of America’s Health Insurance Plans, an industry trade group.
“What we’re finding is individuals are experiencing a preference for
affordability,” she said.
Minnesota would seem to be a case in point.
On
the state exchange, PreferredOne offered an inexpensive plan with a
network of 13 hospitals, but those low premiums helped the insurer grab
60 percent of the individual insurance market.
While
many insurers are including only those hospitals and doctors willing to
charge lower prices, experts say the makeup of the networks is likely
to evolve over time, focusing less directly on price and more on the
ability of providers to deliver coordinated and high-quality care.
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Although
a similar attempt to restrict choice failed in the early ‘90s, after
opposition to H.M.O.s and managed care, insurers insist these efforts
will not run into the same resistance because they are now working more
closely with providers, and customers are more concerned about costs.
“It’s a new era,” said Dr. Sam Ho, the chief medical officer for United
Healthcare.
Others
agree. “You’re going to see this as a dominant strategy,” said Jeff
Hoffman, who works closely with hospitals for Kurt Salmon, a consulting
firm.
Blue
Shield of California, for example, was able to recruit a fairly sizable
group of providers interested in discounting their rates. Just as the
plans must compete on the exchanges, “the doctors and hospitals are
competing with each other to get in,” said Juan Davila, an executive
vice president with the insurer. The next step, Mr. Davila said, is to
work with providers to develop more sophisticated networks, where the
insurer will team with those doctors and hospitals to provide better
care.
Outside
the exchanges, insurers are also promoting smaller networks for
employers as a way to reduce overall health care costs, said Larry
Boress, chief executive of the Midwest Business Group on Health. “The
larger the network is, the higher the cost,” he said.
Employers
remain concerned about the quality of the networks, said Mr. Boress,
and many are doing an analysis to see how disruptive changing the
network would be for their workers.
Nonetheless,
the bottom line is that more employers are considering smaller
networks. Many, like Walmart and General Electric, have gone so far as
to steer employees to specific hospitals for certain expensive
procedures like joint replacements.
In
2010, 24 percent of the largest employers offered smaller networks,
chosen for their low costs or quality. Last year, 27 percent offered
them and 44 percent said they were considering them, according to
Mercer, a benefits consulting firm. Some companies are experimenting
with different tiers of networks, charging workers more if they go to
the broadest network, said Joseph Kra, a Mercer consultant.
There
has been pushback, however. When United Healthcare reduced the size of
networks in some Medicare Advantage plans, consumer groups and
regulators balked. Dr. Ho, the chief medical officer, said the insurer
offered patients the opportunity to continue receiving certain
treatments, like chemotherapy, with their existing provider.
Medicare
recently announced it would require Advantage plans to give advance
notice of any significant changes to a network and might allow
beneficiaries to switch during the year if the network underwent too
much change after they had already signed up. Federal officials, who had
floated the idea of requiring exchange plans to submit their networks
for review, said they would instead focus on specific types of doctors,
like cancer specialists, to make sure people have adequate access to
care.
“We
intend to continue monitoring plans,” a Medicare spokeswoman said in a
statement, “and learn from that review, to determine if further rules
are needed in the coming years to ensure that Marketplace plans offer
quality networks to consumers.”
State
regulators are also contemplating action. In Washington State, Mike
Kreidler, the insurance regulator, issued new rules last month that set
certain minimum standards for access to a doctor and require insurers to
make clear who is in the network. “I want to make sure carriers are not
in a race to the bottom,” he said.
After much debate, New York regulators decided last month not to require health plans to offer out-of-network benefits in 2015, despite pressure from patients and doctors.
New
Hampshire regulators are also trying to weigh in on the decision by the
state’s only insurer, WellPoint, to exclude some hospitals.
In Washington, Seattle Children’s Hospital is challenging state insurance regulators because some of the plans exclude it.
Regulators are also working with insurers to make it clearer which providers are included in a network.
Despite
some of the resistance, insurers say they think people will grow
accustomed to choosing a plan based on what network it offers rather
than necessarily which insurer sells it. “The network experience becomes
the glue that holds it together,” Mark T. Bertolini, the chief
executive of Aetna, told investors earlier this year.
Wednesday, May 14, 2014
Monday, May 12, 2014
Wednesday, May 7, 2014
Friday, May 2, 2014
Uh oh: House committee claims only two-thirds of federal ObamaCare enrollees paid first premium by April 15
Posted April 30, 2014 by Allahpundit
The figure that’s been cited for months on payment rates is 80 percent. The Energy and Commerce Committee claims it’s actually significantly lower, at least when it comes to enrollees on the federal exchange, i.e. Healthcare.gov. As you read, focus on the following question. Why couldn’t HHS have calculated this?
Data provided to the committee by every insurance provider in the health care law’s Federally Facilitated Marketplace (FFM) shows that, as of April 15, 2014, only 67 percent of individuals and families that had selected a health plan in the federally facilitated marketplace had paid their first month’s premium and therefore completed the enrollment process. Nationwide, only 25 percent of paid enrollees are ages 18 to 34…One big caveat here: Because they’re only looking at states that use the federal exchange, they’re missing the numbers from states that run their own exchanges — which include hugely populous behemoths like California and New York. If those states are seeing higher rates of payment, for whatever reason, then the payment rate nationally is actually higher than this. We’ll need to wait and see. If the payment rate in those states isn’t higher then the number of true, paid enrollments nationally is something on the order of 5.36 million, more than two and a half million less than the number Obama’s been waving around. As for the age breakdown among those who paid:
On April 17, 2014, President Obama declared the success of his law, claiming that 8 million Americans had signed up for health insurance, but data from the insurance providers reveals that the president’s figure is largely misleading. As of April 15, 2014, insurers informed the committee that only 2.45 million had paid their first month’s premium for coverage obtained through the federally facilitated marketplace. While the administration has relied on questionable nationwide figures to boast the law’s success, the state-by-state breakdown compiled by the committee underscores the serious problems facing some states…
“In a sad reversal away from its vows of transparency, the Obama administration, from inside the Oval Office on down, has gone to extraordinary lengths to keep basic details of the health law from the public. Tired of receiving incomplete pictures of enrollment in the health care law, we went right to the source and found that the administration’s recent declarations of success may be unfounded,” commented full committee Chairman Fred Upton (R-MI). “We need a complete picture of how this law is working. We will continue to strive for transparency and hold the administration accountable for this law’s shortcomings and broken promises.”
Under 18: six percent;That’s not disastrous for the White House, I think. They’ve got 31 percent overall who are paid up aged 34 or younger; I remember reading somewhere that they could probably function reasonably well as long as there are no fewer than 25 percent of “young invincibles” in the risk pool. It’s probably also true that young adults are overrepresented among the one-third of sign-ups who haven’t paid yet. Logically, older people who need insurance more desperately than younger people do will be scrupulous about making their payments on time to guarantee that the coverage is in effect. If the White House can do something to give young deadbeats more time (and incentive) to make their payments, they can probably tilt the risk pool a bit younger than it is right now. Which means those grace periods for payment that insurers have extended are likely to be extended quite a bit longer.
Ages 18 to 25: 10 percent;
26 to 34: 15 percent;
35 to 44: 16 percent;
45 to 54: 23 percent;
55 to 64: 29 percent;
65 and older: 1 percent.
Thursday, May 1, 2014
Qualifying for a subsidy can make your clients ineligible for an HSA plan
Did you know that qualifying for a subsidy on the exchange can make your client ineligible for an HSA plan?
Here’s what happens
When a client buys a Health Savings Account (HSA) plan, federal law requires that health plan to have a deductible of at least $1,250 per individual and $2,500 per family to be paired with an HSA.
When your clients select a Silver level HSA plan on the exchange, they follow appropriate steps to determine if they are eligible for a subsidy. If they do not qualify for a subsidy, they get the Silver HSA plan selected. If they do qualify for a subsidy, they might not be eligible for the Silver HSA plan they wanted.
Here's why it happens
Premium subsidies actually decrease the deductible and out-of-pocket costs. Sometimes a subsidy can decrease these amounts enough to drop them below the federal government's minimum deductible threshold for HSA eligibility. And if that happens, your client would become ineligible for the HSA feature but automatically enrolled in the base plan without the HSA component. Unfortunately at this time, there’s no messaging on the exchange to tell your clients this is happening.
If this happens to your client
Consider these options if this happens to your client:
Here’s what happens
When a client buys a Health Savings Account (HSA) plan, federal law requires that health plan to have a deductible of at least $1,250 per individual and $2,500 per family to be paired with an HSA.
When your clients select a Silver level HSA plan on the exchange, they follow appropriate steps to determine if they are eligible for a subsidy. If they do not qualify for a subsidy, they get the Silver HSA plan selected. If they do qualify for a subsidy, they might not be eligible for the Silver HSA plan they wanted.
Here's why it happens
Premium subsidies actually decrease the deductible and out-of-pocket costs. Sometimes a subsidy can decrease these amounts enough to drop them below the federal government's minimum deductible threshold for HSA eligibility. And if that happens, your client would become ineligible for the HSA feature but automatically enrolled in the base plan without the HSA component. Unfortunately at this time, there’s no messaging on the exchange to tell your clients this is happening.
If this happens to your client
Consider these options if this happens to your client:
- If they want to keep the plan they have, along with their subsidy, they don’t need to do anything. They won’t have the HSA feature, but they will have a lower-cost health plan, due to the subsidy assistance.
- If they want to switch to a plan with an HSA, they can do so during the next open enrollment period, October 15 through December 15, 2014. They'll get more information on this in the fall. But changing to a plan with the HSA feature means giving up their premium subsidy, which also means their coverage will cost more.
Monday, April 28, 2014
When Less Is More: Issues Of Overuse In Health Care
April 25th, 2014
About 18 months ago, Daniel Wolfson, executive vice president of the American Board of Internal Medicine (ABIM) Foundation began asking audiences of clinicians if any of them had ever seen a patient subjected to unnecessary medical care. As one of the architects of the Choosing Wisely campaign, an initiative of the ABIM Foundation intended to reduce overuse of medical services, Wolfson had a particular interest in the answer to this question. He was surprised to find that in some of his audiences, a majority of clinicians have personal experience with overuse.
Clinicians’ newfound willingness to concede that overuse is a problem comes as good news for people who have long labored to increase awareness of this aspect of medicine in America, including the authors of this post and many of the readers of Health Affairs.
Overuse is costly, pervasive, and causes harm to patients, yet it has been remarkably difficult to get the medical profession, health care industry, and general public to take note of it, much less take steps to reduce it. Today, however, there are multiple efforts underway that offer hope for real change, including Choosing Wisely, the growth of palliative care, and the Lown Institute’s Right Care Alliance; but until now, the most difficult step has been the first: for patients, payers, physicians and policymakers to acknowledge the scope of the problem.
Current Estimates
Current estimates for unnecessary expenditures on overuse range from 10 to 30 percent of total health care spending. Even the lower estimate, from the Institute of Medicine, amounts to nearly $300 billion a year. No specialty is immune from practices that lead to overuse, as a recent spate of papers in medical journals can attest. In cardiology, even using criteria that are relatively permissive, an estimated 11 percent of stents are delivered to “inappropriate patients.” At some hospitals, that rate is closer to 20 percent.
In primary care, antibiotics are still prescribed for upper respiratory infections caused by viruses, and patients with uncomplicated acute low back pain are still referred for MRI imaging tests. The Dartmouth Atlas reports that many patients in the terminal stages of cancer undergo chemotherapy that is likely to do nothing to lengthen life, but all too often makes their last days more miserable.
Then there’s renal denervation, a surgical treatment for millions of patients with resistant hypertension initially touted as a potential “cure” by the American Heart Association, which has now been shown to be no better than sham surgery. At least it only took three years for the well-controlled study to be conducted.
And this is just the tip of the iceberg. The problem of overuse is so widespread, so deeply embedded in American health care, that even the popular press has begun to notice. A series that began last year in Bloomberg News details the overuse of stenting and other cardiac procedures in hospital after hospital, including a major academic medical center. The New York Times has published stories and op-eds on the overuse of everything from CT scans to Mohs surgery.
Clinical Evidence
And yet, for such a significant issue, there’s an astonishing amount we still don’t know. The U.S. has no research agenda on overuse, and thus we do not know with any precision how often it occurs. We can name its myriad causes, such as fee-for-service payment, defensive medicine, supply-induced, patient demand, and a poor base of clinical evidence, but we do not know how much each factor affects clinician behavior. There is remarkably little information about the rate and nature of the harm overuse causes to patients, families, and clinicians.
To date, most research on overuse has focused on overtreatment, or rates of inappropriate delivery of such treatments and tests as cardiac stenting, antibiotics, ear tubes, elective induction of labor, and tonsillectomy, discreet medical services for which appropriateness criteria have been established.
This leaves a lot of uncharted territory. Only a minority of the decisions that clinicians make are based on valid science, leaving a vast swath of procedures and tests that are performed in the face of incomplete knowledge, if not an absolute dearth of clinical evidence. Even when developed by specialty societies, clinical practice guidelines are often little more than expert opinion. They are generally not subject to unconflicted external professional review, nor are they reviewed by unbiased patient or other public bodies.
There is also increasing attention being paid to rates of misdiagnosis and overdiagnosis from such screening tests as the PSA test and calcium imaging, which pick up lesions or conditions that would not have caused symptoms had they been left undetected, or detect lesions that are not necessarily abnormal but lead to further tests and complications.
The Dartmouth Atlas has documented wide geographic variation in rates of “preference-sensitive” treatments and tests, such as cardiac bypass surgery and elective cholecystectomy, as well as hospital-based rates of “rescue care” for patients at the end of life.
Understanding Harm
While it’s not clear what the appropriate rate for such treatments might actually be for any given population, there’s ample evidence that a significant percentage of elective care is given to patients who would have chosen to avoid it, had they better understood their choices and the tradeoffs involved.
Of the three aspects of overuse that bear greater and more systematic scrutiny, harm is probably the least understood and the most important, especially for older patients with serious conditions. Although hard data are scarce, anecdotal evidence of widespread and egregious harm to chronically ill, frail, elderly patients can be found in any hospital in the country.
Multiple surveys show that most Americans would prefer to die at home, yet the majority still die in the hospital, many in the intensive care unit. Indeed, in private, some clinicians say the American way of death is a form of slow torture. Addressing this vast and devastating problem will not be easy, but the hard work has begun.
The Choosing Wisely campaign has elicited lists of “top five” procedures and tests that are overused from more than 30 different specialty societies. While many observers note that these lists consist of low-hanging fruit – the most obvious or least remunerative examples of overused procedures – they have triggered a wide variety of quality improvement efforts in clinics and hospitals around the country.
However, overuse is more than a technical problem – “it’s part of the air we breathe,” as physician and bioethicist Howard Brody put it at the Avoiding Avoidable Care Conference, sponsored by the Lown Institute in 2012. Patients often believe implicitly that there’s always one more test, one more treatment to try, and that their doctor would never recommend a procedure or a stay in the ICU that was not in their best interest.
For clinicians, overuse is reinforced through the hidden curriculum of medical education, lack of training on how to communicate with patients and families about advance directives while assuring continuing support and care, and by other factors such as financial rewards, discomfort with uncertainty, and fear of liability.
Thus quality improvement efforts aimed at reducing the inappropriate use of discrete tests and treatments must be amplified by efforts to address the embedded culture of overuse. It is not enough to promote clinical guidelines for appropriate use when we often have so little information on what works and what doesn’t, for which patient, and what the patient prefers. Moreover, changing that culture of overuse will require shifts in the infrastructure of health care, the manner in which we train young clinicians, and public views of the power of medicine to prevent death.
We must also implement shared decision making, a formal process for informing patients of their treatment options and eliciting their preferences, through incentives such as quality guidelines and payment, and young clinicians must be explicitly trained to practice it. We need better systems for ensuring that advance directives and person-determined goals for care are respected.
Rates of completion of and compliance with advance directives should be a reportable quality measure. Another reportable measure: the percentage of elective surgery patients who have access to shared decision making and high-quality patient decision aids. And as many health policy experts have already pointed out, we need payment models that value effective care directed at patient goals over simply putting “heads in beds” and performing more procedures.
Palliative care has a central role to play. Patients and their families are quite capable of understanding that there are tradeoffs involved in virtually every medical choice. But there is often a wide gulf between what patients want, how they express it, and what clinicians may subsequently feel compelled to deliver; between patient-centered care and tests and treatments applied by harried and risk-averse clinicians who work in hospitals, nursing homes or other sites of care that are not organized around the needs of patients.
Palliative care practitioners recognize, whether explicitly or not, that patients and families often need help in forming concrete and achievable goals for care, and they need to understand both the potential benefits and the harms of alternative paths, and the limits to what medicine can do to improve the quality of life and lengthen it.
This is especially true for the frail elderly, where personalized home care can improve quality of life, even length of life, while dramatically reducing hospitalizations and the use of expensive but potentially harmful and futile technology.
If we want to break the cycle of overuse, certainly we must give clinicians the evidence and other tools they need to know what the right care is, and a legal system that ensures they won’t be sued if that’s what they deliver. And we must train them to be better appraisers of evidence. We need a research agenda for the problem of overuse, and ways of measuring compliance practices.
But more than all of these, we need to change the culture of medicine, towards an ethic of “doing more for the patient, and less to the patient,” in the words of cardiologist and humanitarian Bernard Lown. It’s time to challenge the implicit belief, on the part of both clinicians and patients, that more is better.
Thursday, April 17, 2014
Important Notice Illinois Notice of Health Plan Coverage for Eligible Dependents under the Age of 26
As part of the federal Patient Protection and Affordable Care Act (more commonly
known as Health Care Reform), dependents under the age of 26 — regardless of
marital status — may be eligible for coverage under your employer sponsored health
plan (medical, vision and/or dental benefits), if dependent coverage is offered.
In addition, under Illinois law, any unmarried dependent child under 30 years of
age is eligible for dependent coverage if the dependent meets all three (3) of the
following conditions:
i. is an Illinois resident,
ii. served as an active or reserve member of any U.S. Armed Forces and
iii. received release or discharge other than dishonorable discharge
Enrollees must submit to the insurer a form approved by the Illinois Department of
Veterans’ Affairs stating the date on which the dependent was released from service.
Please note your employer may require you to pay for all or part of the cost of your
dependent’s health care coverage.
known as Health Care Reform), dependents under the age of 26 — regardless of
marital status — may be eligible for coverage under your employer sponsored health
plan (medical, vision and/or dental benefits), if dependent coverage is offered.
In addition, under Illinois law, any unmarried dependent child under 30 years of
age is eligible for dependent coverage if the dependent meets all three (3) of the
following conditions:
i. is an Illinois resident,
ii. served as an active or reserve member of any U.S. Armed Forces and
iii. received release or discharge other than dishonorable discharge
Enrollees must submit to the insurer a form approved by the Illinois Department of
Veterans’ Affairs stating the date on which the dependent was released from service.
Please note your employer may require you to pay for all or part of the cost of your
dependent’s health care coverage.
Wednesday, April 9, 2014
Wednesday, March 26, 2014
Health Insurance Coverage Is Just The First Step: Findings From Massachusetts
March 26th, 2014
As the rollout of coverage expansions under the Affordable Care Act (ACA) continues across the country, more Americans are gaining insurance coverage, with all the benefits that that implies in terms of health care access and financial protections. However, if, as President Obama has argued, affordable health care is a cornerstone of economic security for American families, findings from a survey of Massachusetts residents suggest that insurance coverage alone will not be enough. Since its 2006 health reform initiative, Massachusetts has had the nation’s highest level of insurance coverage. But though there have been improvements in access to health care and health care affordability, insurance coverage has not eliminated the burden of high health care costs for Massachusetts families.
Health care costs are a problem for many insured adults. In 2012, more than one-third (38.7 percent) of Massachusetts adults with health insurance coverage for all of the past year reported problems with health care costs, with the level much higher for low-income insured adults (41.6 percent for those with family income at or below 138 percent of the poverty line—the income eligibility standard for the Medicaid expansion under the ACA) and middle-income insured adults (49.5 percent for those with income from 139 to 399 percent of poverty—the income group targeted by the new health insurance Marketplaces). Insured adults in Massachusetts report going without needed health care, cutting back on other spending, reducing savings, and taking on debt to deal with health care costs.
The challenges faced by low-income and middle-income Massachusetts families are particularly worrisome given that the consumer protections for out-of-pocket health care costs are generally better in Massachusetts than those required under the ACA. For individuals with family income between 100 and 200 percent of poverty who are enrolled in the state’s subsidized health insurance program, out-of-pocket spending for covered prescriptions and medical services is limited to $1,000 per benefit year. The ACA allows individuals in this income cohort to have out-of-pocket costs that can sum to more than double this amount ($2,250).
Even with these stronger consumer protections, more than 4 in 10 insured low-income Massachusetts adults had trouble covering their health care costs in 2012. Nearly a third (31.6 percent) reported problems related to their spending on health care (e.g., problems paying medical bills or medical debt), and 23.6 percent reported going without some type of needed health care because of the cost.
The experience in Massachusetts demonstrates that while expansions in insurance coverage do lead to improved access to care – as evidenced, for example, by the higher shares of Massachusetts adults with preventive care visits and dental visits after reform – having insurance is not necessarily sufficient to provide protection from the challenge of health care costs.
Taking the next step to address costs. While health insurance coverage is a necessary component of affordable health care, high cost-sharing requirements combined with high health care costs can make access to needed health care services a challenge for many American families, leading to gaps in health care use, problems paying health care bills, and medical debt. To achieve the promise of health care affordability for all, we must consider the implications for families with limited resources of policy initiatives aimed at reducing health care costs.
Monday, March 24, 2014
Are ObamaCare's Tax Credits Harmless? The Little Understood Dark Side Of The Subsidies
Op/Ed 19,675 views
Josh Archambault, Contributor
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By accepting a tax credit, low-income or lower-middle class families face significant tax ramifications and potential financial risk. Congress has changed the rules twice on consumers for the credits, making the income cliffs steeper, and fully equipping the IRS to claw back overpaid subsidies (unlike the individual mandate penalty).
The flip side of the tax credits is almost unknown to the general public.
IRS building. Photo credit: Jim Watson/AFP/Getty Images
The ACA’s tax credits are given directly to the insurance companies, and are calculated on a sliding scale, based on family size, and in theory, to those making between 138% and 400% of the federal poverty level (FPL) in states that have expanded Medicaid eligibility. In states that have not expanded Medicaid, the tax credits are available to those making between 100% and 138% FPL.
However, individuals can claim them by estimating that they will make over 100% FPL even if they end up making 90% FPL in these states, effectively closing the coverage gap we have heard Medicaid expansion supporters and the media complain so loudly about. However, the tax credits are unavailable to those with an “affordable” offer of employer-based insurance, or for those on other forms of government-approved coverage like standard Old Medicaid or Medicare.
Yet, soon to be published research by my colleague Jonathan Ingram will show that the tax credits phase out quickly for those in the exchange, and are therefore unavailable for many young people (18-34) in numerous states making far less than 400% FPL, based on the complex formula used to calculate the subsidies, and the price of the plans available on the exchange. This fact is only making the Administration’s job of convincing young people to sign up even harder.
The credits can only be used in a government-sanctioned ObamaCare exchange. In other words, individuals purchasing private insurance on their own must decide if they want to keep their current insurance plan without a subsidy or drop their coverage to take the tax credit. Since so many states rejected the President’s call to renew policies for those facing cancellations, and the recent extension of that policy, millions of Americans are facing this exact decision of joining an exchange or buying elsewhere by March 31st.
All citizens that take the credit must file a tax return to receive the credits regardless of their income. Failure to do so will result in them being prohibited from seeking a credit in the future. Married couples must file a joint return.
How You Take The Credit Could Determine Exposure
The initial tax credit calculation will be based on an applicant’s income tax return from the previous year, or a best estimate of what it will be next year. The credit can be taken in advance at the beginning of the year. However, individuals who enroll in the ObamaCare exchange will run the risk of having to pay back a significant portion of the tax credit if their life circumstances change (more on this below).
The credit can also be taken on the following year’s return in the form of a refund. However, individuals who make this decision will be responsible for coming up with the full cost of the ObamaCare exchange insurance at the beginning of the year. Individuals and families do have the option of taking a partial credit.
Congress Has Changed ObamaCare’s Tax Credit Rules Twice
Republicans have by and large ignored the tax credit issue unless talking about the budget implications. Perhaps the silence is due to the fact that Congress has voted to change ObamaCare twice to increase the financial risk that families could face when they take the credit.
Since the enactment of ACA, these limits have been amended twice: first under the Medicare and Medicaid Extenders Act of 2010 (P.L. 111-309), and then under the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayment Act of 2011 (P.L. 112-9). Congress changed the payback protection to vanish at the 400% poverty level and increased the payback amounts at 200% and 300% FPL from what they had been before.
The result will be surprise bills from the IRS in the mail come tax time 2015, in the order of a couple hundred dollars all the way up to full value of any subsidy received if a family crosses the 400% FPL threshold. (This could be $10,000-$12,000 for a family of four, as an example.) Just a few dollars of extra income could result in thousands of back taxes to be paid.
Life Change Should Be Reported To The Exchange, Requiring A New Application
Our lives are constantly in flux. Lower and middle-class families rarely find themselves in static work and life environments, but that is exactly what ObamaCare assumes. Even the most common and mundane life changes could significantly impact an individual’s financial situation if he or she decides to take the tax credit. So ObamaCare recommends that individuals report these changes immediately.
In a recently released presentation by CMS, it was outlined that individuals will have to submit a new application to re-determine eligibility, triggering a special enrollment period and subsequently termination of the old policy.
As reported by Sara Hansard at Bloomberg:
Life events resulting in a special enrollment period eligibility are:…
• adding a member, such as a birth or by marriage;
• relocating;
• losing access to other coverage, such as employer coverage;
• being released from incarceration; and
• changing citizenship or immigration status.
The presentation also listed life events that don’t result in special enrollment period eligibility: removing a member as a result of death or divorce; gaining access to other coverage, such as employer coverage; becoming pregnant; a change in tax filing status; a change in status as American Indians, Alaska Natives or tribal status; changes in disability status; corrections to date or birth or Social Security number; or some changes in income.However many of these rules will cause significant confusion as a death or divorce could change the income of a family significantly, making some households appear more wealthy as they jump down a family size level on the FPL scale. Or gaining employer coverage should make an individual ineligible for a subsidy.
36-40% Of California Exchange Eligible Enrollees Will Owe the IRS Money Next Year
To put a finer point on how many people are likely to be subject to a life chance significant enough to trigger a payment to the IRS, UC Berkley’s Ken Jacobs and Dave Graham-Squire, Elise Gould from the Economic Policy Institute, and Dylan Roby at UCLA wrote an illustrative piece for Health Affairs. Largely overlooked by the media the article “Large Repayments of Premium Subsidies May Be Owed to the IRS if Family Income Changes are Not Promptly Reported,” made some important observations about the exchange eligible population in California that can be extrapolated to most of the rest of the country.
Income Fluctuation Is Very Common In This Population.
Nearly three-quarters (73.3 percent) of the predicted subsidy recipients were in families with income changes of more than 10 percent between the two years. Of those recipients, 37.8 percent had large income increases, while 35.5 percent had large decreases. Thirty percent of recipients were in families whose income increased more than 20 percent, and 18.9 percent had income increases of more than 40 percent.To be fair, some will receive even more subsidy as a result of a life change, the Health Affairs piece estimated that 41% would receive an additional credit. But given the level of income fluctuation in this population, one bad economic year (but a good subsidy year) is likely to be followed by a good economic year (but a bad subsidy year).
A Sizable Portion Will Owe The IRS The Entire Value Of The Credit.
We estimate that 9 percent of those who are eligible for a subsidy at the beginning of 2018 would end the year with an annual income of more than 400 percent of poverty, requiring them to pay back any subsidy that they had received. Nineteen percent of those who started with an annual income of 251-400 percent of poverty would end the year with an annual income of more than 400 percent of poverty.Many Will Owe Money Even If They Report All Life Changes.
…if no income changes were reported…38.4 percent of individuals receiving subsidies would be in families that were predicted to owe repayments…If income changes of 10 percent of more were reported and the new income was used to adjust subsidy levels”…35.8 percent would…” still owe repayments.
Percent of CA Exchange Subsidy Recipients Owing Repayment, 2019, By Scenario
Source: Health Affairs, September 2013 vol. 32 no. 9 1538-1545
Median Payments Are Substantial. Median repayment amounts with no income changes reported or subsidy adjustments will be close to $900.
Nationally repayment will be a very big deal if we buy the estimates by the Kaiser Family Foundation that 48% of those that purchase individual policies will now qualify for a premium subsidy.
Small Raises Could Mean Tens Of Thousands In Back Taxes To The IRS
In a recently released report I co-authored with CPA Jonathan Small, “Too Risky Too Exchange?” we looked at five very common life events that could dramatically impact citizens’ life, perhaps most dramatically near the income cliff found at the 400% FPL of eligibility. But there are income cliffs baked into ObamaCare around 133%FPL and 250% FPL as well.
If you are interested, even more technical information on this issue can be located in this CRS report, “Health Insurance Premium Credits in the Patient Protection and Affordable Care Act (ACA).”
More Education About Exchange Subsidies Could Depress Enrollment
A pull quote from the Health Affairs piece might have hit the nail on the head for why the report was largely ignored by the media.
If there is much media attention to the need for repayments, some people could be dissuaded from participating in the exchanges.Sadly the media has once again failed, and left millions of American with only half the information that is needed to make an intelligent decision about ObamaCare’s tax credits. We can anticipate a flurry of sad stories of families receiving multi-thousand dollar bills from the IRS next April, and quotes from the families wondering why no one told them the truth about the ObamaCare tax credits.
Does the Obamacare Deadline Apply to Me?
Photo credit: Pete Souza
Are you “covered,” as the White House keeps asking in its endless advertising? Because if you don’t have health insurance by March 31, you will have to pay a penalty on your income tax form next year.
For 2014, the penalty for not purchasing insurance will be either $95 or 1 percent of your annual income (whichever is greater). But as Heritage expert Alyene Senger explains, “Very few, if any, people will end up paying just $95, because individuals with an annual income of only $9,500 or less would likely qualify for Medicaid or a hardship exemption from the mandate.”
If you don’t make enough income to file a federal tax return, you’re already exempt. Do you think you qualify for a hardship exemption? Check out the application (subject to approval by Health and Human Services) here. For example, did you:
- Receive “a shut-off notice from a utility company”?
- Recently experience the death of a close family member?
- Receive a notice that your health plan was being canceled, and “you consider the other plans available unaffordable”?
Despite all these possible exemptions, The Fiscal Times reports, “A new study by Bankrate.com shows that about one-third of uninsured Americans are going to remain without coverage and opt to pay the penalty.” In fact, more than half of the uninsured are “unaware of the March 31 deadline.”
If you think the penalty is no big deal right now, Heritage’s Senger warns that “The mandate increases drastically in coming years, rising to $325 or 2 percent of income in 2015, and $695 or 2.5 percent of income in 2016—whichever is greater.”
The Congressional Budget Office estimates that from 2015 to 2024, the mandate penalty—which the Supreme Court ruled is essentially a tax—is expected to cost Americans $51 billion.
And that was after President Obama promised not to raise taxes on the middle class.
It’s worth mentioning the official name of this tax—because it just doesn’t get any more Orwellian. Really, it’s the left’s ideal name for all taxes: the “shared responsibility payment.”
Friday, March 21, 2014
Tuesday, March 18, 2014
Medical Debt Among People With Health Insurance
Jan 07, 2014 | Karen Pollitz, Cynthia Cox, Kevin Lucia and Katie Keith
This report examines medical debt through case studies of nearly two dozen people who recently experienced such problems, and reviews their experiences in light of other studies and surveys about medical debt. It focuses primarily on problems of medical debt among insured individuals and families. Most of the case studies feature people who struggled with medical debt while covered under health plans that would be considered typical and mainstream today. The report concludes with a discussion of how provisions of the Affordable Care Act (ACA) may influence the factors that contribute to medical debt.
Study Approach
In order to gain more detailed insights into the problems and causes of medical debt, we collaborated with a national, non-profit credit counseling agency to identify individuals struggling with medical bills and study their experiences. We partnered with ClearPoint Credit Counseling Services (ClearPoint),3 a non-profit consumer credit counseling agency based in Atlanta, Georgia, that provided counseling and debt management services to over 200,000 people nationwide in 2011. Most ClearPoint clients self-refer when they are in financial distress, for example, when they can no longer make minimum payments on loans and debts or when they’re contacted by debt collectors. Others are referred for recommended or required counseling, for example, when they apply for mortgage foreclosure relief or file for bankruptcy. In 2011, roughly 12 percent of ClearPoint clients identified medical bills as the first or second leading cause of their financial difficulties.We developed an online screening survey to send to clients who had recent difficulty paying medical bills and for whom email addresses were available. The survey requested information not already collected by ClearPoint, such as insurance status and coverage changes, the total amount and types of medical bills, and whether illness triggered other problems, such as job loss or missed rent or mortgage payments. It was also used to identify individuals with medical debt who were willing to participate in in-depth interviews. Of the 129 respondents to the screener survey, 23 completed hour-long interviews providing detailed information about their medical bills, insurance coverage and financial status. While neither ClearPoint clients – nor survey respondents or interview subjects – can be considered representative of the broader population, their circumstances are consistent with findings of other studies of medical debt. This report examines the case studies in light of these other, broader studies.
A brief overview of each case study is displayed in Table 1. Stories of the 23 people interviewed appear in the Appendix. Several key characteristics of these individuals and their circumstances are summarized in Table 2.
| Table 1: Case Study Overview | |||||||
| Name * | Age | Occupation | Income (% FPL) | Insurance Source | Amount Bills | Bill Timeline | Whose Bills? |
| Ben | 59 | Trucker | $68,000 (590%) | Large employer | $5,000 | 2012 | Self |
| Kris | 56 | Construction | $38,000 (330%) | Large employer | $6,000 | 2011 | Self |
| Kieran | 43 | Car dealer | $75,000 (240%) | Large employer | $20,000 | 2007-2011 | Spouse, children |
| Sonya | 49 | Homemaker | $85,000 (360%) | Large employer | $60,000 | 1994-2011 | Self, son |
| Stuart | 48 | Sales manager | $74,000 (315%) | Large employer | $6,000 | 2010-2011 | Spouse |
| Duncan | 45 | Teacher | $50,000 (255%) | Large employer | $10,000 | 2010-present | Spouse |
| Maisy | 51 | Librarian | $66,000 (280%) | Large employer | $30,000 | 2004-2011 | Spouse |
| Richard | 36 | Financial adviser | $130,000 (550%) | Large employer | $30,000 | 2007-2011 | Self, daughter |
| Dorothy | 59 | Teacher | $34,000 (300%) | Large employer | $4,500 | 2011-2012 | Self |
| Gwen | 57 | Medical transcriptionist | $22,000 (140%) | Large employer | $40,000 | 2011 | Spouse |
| Dillon | 48 | Repairman | $59,000 (529%) | Large employer | $19,000 | 2003-2010 | Self |
| Jeanne | 64 | Retired | $24,000 (220%) | Large employer | $2,000 | 2010-2011 | Self |
| Safiya | 22 | Restaurant worker | $10,000 (90%) | Large employer | $5,000 | 2011 | Self |
| Connie | 47 | Nurse | $50,000 (210%) | Small employer | $36,000 | 1996-present | Spouse, children |
| Elsie | 37 | Writer | $60,000 (310%) | Small employer | $20,000 | 2007-2009 | Self, child |
| Katherine | 46 | Customer service rep | $19,200 (167%) | Small employer | $35,000 | 2006-2009 | Self |
| Morgan | 51 | Entertainer | $51,000 (220%) | Non-group | $35,000 | 2008-2012 | Self |
| Millie | 52 | Realtor | $65,000 (340%) | Non-group | $20,000 | 2007-present | Self |
| Louise | 58 | Unemployed | N/A | Interrupted | $50,000 | 2005 | Self |
| Gillian | 59 | Artist | $10,000 (90%) | Interrupted | $10,000 | 2009-2010 | Self |
| Claire | 44 | Unemployed | N/A | Uninsured | $50,000 | 2008-2011 | Self |
| Tanisha | 47 | Unemployed | N/A | Uninsured | $7,000 | 2008 | Self |
| Charlene | 51 | Teller | $38,000 (195%) | Uninsured | $23,000 | 2010-2011 | Self, daughter |
| * Names and certain other characteristics of individuals have been changed to protect their identity.* Names and certain other characteristics of individuals have been changed to protect their identity. | |||||||
| Table 2: Case Study Highlights | ||
| Characteristic | Number of Cases | |
| Age | < 30 | 1 |
| 31-40 | 2 | |
| 41-50 | 9 | |
| 51-64 | 11 | |
| Amount of medical bills/ medical debt | < $5,000 | 4 |
| $5,001 – $10,000 | 5 | |
| $10,001 – $20,000 | 4 | |
| $20,001 – $50,000 | 9 | |
| > $50,000 | 1 | |
| Time period bills incurred | < 1 year | 6 |
| 1-2 years | 4 | |
| > 2 years | 13 | |
| Whose bills? | Self or one family member | 17 |
| Multiple family members | 6 | |
| Household income | <$20,000 | 6 |
| $20,000 – $50,000 | 7 | |
| $51,000 – $75,000 | 8 | |
| $76,000 – $100,000 | 1 | |
| >$100,000 | 1 | |
| Illness triggered income loss? | Yes | 18 |
| No | 5 | |
| Health insurance source | Large employer | 13 |
| Small employer | 3 | |
| Non-group | 2 | |
| Uninsured | 3 | |
| Coverage interrupted | 2 | |
| Health plan deductible (per person)* | <$500 | 3 |
| $501 – $1,000 | 5 | |
| $1,001 – $2,500 | 3 | |
| >$2,500 | 6 | |
| Significant out-of-network costs* | Yes | 7 |
| No | 11 | |
| Other medical debt impacts | Damaged credit | 21 |
| Lost home/home equity | 6 | |
| Deplete retirement, other savings | 13 | |
| Other financial deprivation | 9 | |
| Bankruptcy | 15 | |
| Access to care barriers | 5 | |
| * Insured cases only | ||
Key Interview Themes
Together, these cases reveal cross cutting themes and insights into the problem of medical debt, its causes and potential solutions.Medical debt can affect almost anyone. People we interviewed ranged in age from 20s to 60s and lived in various states. Some were single, others headed families. Their annual incomes ranged from less than $10,000 to more than $100,000. Most were insured continuously in job-based group plans; a few were covered in non-group policies. Two others were insured at the outset of illness, and then lost coverage. Three were uninsured the entire time. For most in our study, this instance of medical debt was the first time they had experienced serious financial or credit problems. The onset of an illness, accident, or pregnancy generated expenses that they did not anticipate and which they were unprepared to pay. Some faced tens of thousands of dollars in medical debt. For others, just a few thousand dollars of bills proved unaffordable, particularly when a chronic illness meant bills would continue year after year.
Among insured individuals, unaffordable medical debts resulted primarily from cost-sharing for care covered by their insurance. Some insured people faced exceedingly high levels of health plan cost-sharing (e.g., $10,000 or more per person per year). For most, though, much smaller amounts proved unaffordable. Some with limited incomes and/or cash savings had trouble paying even a few thousand dollars. Others might have been able to handle a single year of cost-sharing liability for one person, but when treatment spanned two plan years or when more than one family member made significant claims, cost-sharing expenses multiplied and became unaffordable.
Out-of-network charges also proved burdensome. Typically health plan coverage is less for care rendered by non-network providers. Many people inadvertently received non-network care while hospitalized. Though they had selected a network facility, other hospital-based professionals whom they did not and could not select – such as anesthesiologists and emergency physicians – were not in network. As a result, patients owed much more out-of-pocket than expected.
Coverage limits and exclusions and unaffordable premiums also caused problems. In some cases, patients were left to pay bills for care their policy simply didn’t cover. Some also fell into debt trying to pay health insurance premiums they couldn’t afford.
Related problems can often exacerbate medical debt. Often significant health events triggered loss of income, rendering unaffordable bills that might otherwise have been manageable. For the vast majority of those interviewed, the medical event associated with the debt also left the patient unable to work or prompted a working family member to quit or reduce hours in order to become a caregiver. Significant health events can also compromise a person’s ability to manage the paperwork of medical bills. Nearly all those interviewed emphasized how the sheer volume of bills during a major health event was overwhelming. They had trouble tracking what had been paid, what was owed, and what had been transferred to collections. Their task was made more difficult by confusing provider bills and insurance company statements that lacked key information. Most didn’t know where to seek help, and the burdens of illness made it harder to resolve problems on their own.
Once it starts, medical debt can be hard to stop. Most of those interviewed struggled for years to climb out of medical debt, and for some, new debts arose even after prior ones had been resolved. This was the case for people with chronic health conditions as well as for people with high medical bills from a single health event. Fifteen of those interviewed used credit cards to pay at least some of their outstanding medical bills, and resulting finance charges increased their debt.
Medical debt can trigger other severe consequences. The economic and personal impact of medical debt can be devastating. Most of those interviewed ended up declaring bankruptcy as a direct result of high medical bills. Others depleted retirement or college savings, lost homes to foreclosure, or did without basics such as home heat. Almost all suffered damage to their credit rating. Some eventually bounced back from medical debt problems while others permanently reduced their standard of living. Some people experienced barriers to care. Nearly all expressed a strong ethic to pay their bills and deep regret, even shame, to be in medical debt.
Thursday, March 13, 2014
HARDSHIP Application for Exemption from the Shared Responsibility Payment for Individuals who Experience Hardships
You may qualify for a hardship exemption if you experienced one of the following:
Submit this documentation with your application
1 You were homeless.
None
2 You were evicted in the past 6 months or were facing eviction or foreclosure.
Copy of eviction or foreclosure notice
3 You received a shut-off notice from a utility - Copy of shut-off notice from a utility company
company.
4 You recently experienced domestic violence.
None
5 You recently experienced the death of a close family member.
Copy of death certificate, copy of death notice from newspaper, or copy of other official notice of death
6 You experienced a fire, flood, or other natural human-caused disaster that caused substantial damage to your property.
Copy of police or fire report, insurance claim, or other document from government agency, private entity, or news source documenting event
7 You filed for bankruptcy in the last 6 months.
Copy of bankruptcy filing
8 You had medical expenses you couldn’t pay in the last 24 months.
Copies of medical bills
9 You experienced unexpected increases in necessary expenses due to caring for an ill, disabled, or aging family member.
Copies of receipts related to care
10 You expect to claim a child as a tax dependent who’s been denied coverage in Medicaid and the Children’s Health Insurance Program (CHIP), and another person is required by court order to give medical support to the child.
Copy of medical support order AND copies of eligibility notices for Medicaid and CHIP showing that the child has been denied coverage
11 As a result of an eligibility appeals decision, you’re eligible either for: 1) enrollment in a qualified health plan (QHP) through the Marketplace, 2)lower costs on your monthly premiums, or3)cost-sharing reductions for a time period whenyou weren’t enrolled in a QHP through the Marketplace.
Copy of notice of appeals decision
12 You were determined ineligible for Medicaid because your state didn’t expand eligibility for Medicaid under the Affordable Care Act.
Copy of notice of denial of eligibility for Medicaid
13 You received a notice saying that your current health insurance plan is being cancelled, and you consider the other plans available unaffordable.
Copy of notice of cancellation
Submit this documentation with your application
1 You were homeless.
None
2 You were evicted in the past 6 months or were facing eviction or foreclosure.
Copy of eviction or foreclosure notice
3 You received a shut-off notice from a utility - Copy of shut-off notice from a utility company
company.
4 You recently experienced domestic violence.
None
5 You recently experienced the death of a close family member.
Copy of death certificate, copy of death notice from newspaper, or copy of other official notice of death
6 You experienced a fire, flood, or other natural human-caused disaster that caused substantial damage to your property.
Copy of police or fire report, insurance claim, or other document from government agency, private entity, or news source documenting event
7 You filed for bankruptcy in the last 6 months.
Copy of bankruptcy filing
8 You had medical expenses you couldn’t pay in the last 24 months.
Copies of medical bills
9 You experienced unexpected increases in necessary expenses due to caring for an ill, disabled, or aging family member.
Copies of receipts related to care
10 You expect to claim a child as a tax dependent who’s been denied coverage in Medicaid and the Children’s Health Insurance Program (CHIP), and another person is required by court order to give medical support to the child.
Copy of medical support order AND copies of eligibility notices for Medicaid and CHIP showing that the child has been denied coverage
11 As a result of an eligibility appeals decision, you’re eligible either for: 1) enrollment in a qualified health plan (QHP) through the Marketplace, 2)lower costs on your monthly premiums, or3)cost-sharing reductions for a time period whenyou weren’t enrolled in a QHP through the Marketplace.
Copy of notice of appeals decision
12 You were determined ineligible for Medicaid because your state didn’t expand eligibility for Medicaid under the Affordable Care Act.
Copy of notice of denial of eligibility for Medicaid
13 You received a notice saying that your current health insurance plan is being cancelled, and you consider the other plans available unaffordable.
Copy of notice of cancellation
Monday, March 3, 2014
Tuesday, February 25, 2014
10 Myths About the Obamacare Medicaid Expansion
As Obamacare’s Medicaid expansion is being debated in the
states, many myths are being perpetuated by its advocates. Here,
Heritage provides the research to debunk such myths:
1. Myth: Expanding Medicaid is “free money” for the states.
Reality: The expansion adds an estimated $638 billion in new government spending from 2013–2023. New spending at the federal or state level is reckless in light of the country’s trillion dollar budget deficits and over $16 trillion in national debt. As Governor Rick Perry (R–TX) stated, “[T]here is no such thing as ‘free’ money. We know there’s only money that’s collected from taxpayers, and money borrowed from other countries like China against the good credit of our children and grandchildren.”
2. Myth: Expanding Medicaid will entail little to no costs to the states.
Reality: Within three years, costs would exceed any projected savings. Heritage research shows 40 of 50 states would see increases in costs due the Medicaid expansion. If all states expand, state spending on Medicaid would increase by an estimated $41 billion by 2022.
3. Myth: Medicaid expansion can bring savings to the states.
Reality: Analysis by Heritage shows that by 2022 any projected state savings are dwarfed by costs. Moreover, these projected savings assume states will further reduce payments to hospitals and clinics for uncompensated care. But, as Heritage’s Ed Haislmaier points out, it is more likely that hospitals will lobby state legislatures for more money rather than less.
4. Myth: States can opt out of the Medicaid expansion if they change their mind later.
Reality: Some proponents of the expansion claim that states could drop out of the expansion if the federal government reneges on its commitments. But as legal experts Robert Alt and Dan Greenberg state, “[I]n fact, there is substantial reason to believe that when a state chooses Medicaid expansion, it is something like a decision to go down a one-way street” and that “legislators are mistaken to ignore the possibility that expansion cannot be abandoned as easily as it was entered.”
5. Myth: States can circumvent Medicaid requirements for the expansion population.
Reality: In its recent Frequently Asked Questions, the Centers for Medicare and Medicaid Services (CMS) clearly states that beneficiaries under any premium support arrangement would still be Medicaid beneficiaries, “entitled to all benefits and cost-sharing protections,” and that states must provide “wrap around” to fill in any gaps. As Ed Haislmaier has pointed out, “[A]ny state that agrees to the Medicaid expansion will get exactly what the term expansion implies: simply a bigger version of the same expensive and dysfunctional program.”
6. Myth: States must act quickly before Obamacare cuts hospital payments.
Reality: Hospitals are pushing states to expand Medicaid coverage because Obamacare is going to reduce their payments for uncompensated care by $56 billion over 10 years. However, the President’s latest budget proposes delaying the Medicaid disproportionate share hospital (DSH) payment reductions until 2015, which raises questions over the future of the cuts. But regardless, as Heritage’s Nina Owcharenko points out, “[m]aybe it is time for the states to tell the hospitals to shift their attention to the real problem: Obamacare.”
7. Myth: Hospitals will go out of business if states do not expand Medicaid coverage.
Reality: Hospitals have been lobbying hard on the idea that without expansion, the Obamacare uncompensated care payment cuts will be unsustainable for their business. But according to Ohio Media Trackers, about 80 percent of Ohio hospitals would still net millions in profits if their charity care was cut.
8. Myth: States can trust the federal government to keep its funding promises.
Reality: “Although Obamacare stipulates the federal government will pay at least 90 percent of the benefit costs of the Medicaid expansion,” Heritage explains, “state lawmakers have no guarantee future Congresses will keep that promise.” In fact, the Obama Administration has already proposed changing the deal in its fiscal year 2013 budget proposal.
9. Myth: Medicaid expansion will help low-income workers out of poverty.
Reality: Medicaid expansion actually locks low-income workers in poverty because of its backward incentives that discourage work. As Dan Greenberg explains for Advance Arkansas, “[E]mployees who earn too much money—or who work too many hours—face a set of unpleasant choices. They can quit. They can work fewer hours. They can decline raises. Realistically, a large number of employees who face such choices will opt to preserve Medicaid coverage by reducing the hours they legally work.”
10. Myth: Medicaid is quality health coverage.
Reality: Research has consistently shown that Medicaid produces worse access and health outcomes than private insurance. As Heritage’s Kevin Dayaratna writes, “By further expanding this broken program, Obamacare only exacerbates the situation by adding millions of low-income Americans to a failing program.”
1. Myth: Expanding Medicaid is “free money” for the states.
Reality: The expansion adds an estimated $638 billion in new government spending from 2013–2023. New spending at the federal or state level is reckless in light of the country’s trillion dollar budget deficits and over $16 trillion in national debt. As Governor Rick Perry (R–TX) stated, “[T]here is no such thing as ‘free’ money. We know there’s only money that’s collected from taxpayers, and money borrowed from other countries like China against the good credit of our children and grandchildren.”
2. Myth: Expanding Medicaid will entail little to no costs to the states.
Reality: Within three years, costs would exceed any projected savings. Heritage research shows 40 of 50 states would see increases in costs due the Medicaid expansion. If all states expand, state spending on Medicaid would increase by an estimated $41 billion by 2022.
3. Myth: Medicaid expansion can bring savings to the states.
Reality: Analysis by Heritage shows that by 2022 any projected state savings are dwarfed by costs. Moreover, these projected savings assume states will further reduce payments to hospitals and clinics for uncompensated care. But, as Heritage’s Ed Haislmaier points out, it is more likely that hospitals will lobby state legislatures for more money rather than less.
4. Myth: States can opt out of the Medicaid expansion if they change their mind later.
Reality: Some proponents of the expansion claim that states could drop out of the expansion if the federal government reneges on its commitments. But as legal experts Robert Alt and Dan Greenberg state, “[I]n fact, there is substantial reason to believe that when a state chooses Medicaid expansion, it is something like a decision to go down a one-way street” and that “legislators are mistaken to ignore the possibility that expansion cannot be abandoned as easily as it was entered.”
5. Myth: States can circumvent Medicaid requirements for the expansion population.
Reality: In its recent Frequently Asked Questions, the Centers for Medicare and Medicaid Services (CMS) clearly states that beneficiaries under any premium support arrangement would still be Medicaid beneficiaries, “entitled to all benefits and cost-sharing protections,” and that states must provide “wrap around” to fill in any gaps. As Ed Haislmaier has pointed out, “[A]ny state that agrees to the Medicaid expansion will get exactly what the term expansion implies: simply a bigger version of the same expensive and dysfunctional program.”
6. Myth: States must act quickly before Obamacare cuts hospital payments.
Reality: Hospitals are pushing states to expand Medicaid coverage because Obamacare is going to reduce their payments for uncompensated care by $56 billion over 10 years. However, the President’s latest budget proposes delaying the Medicaid disproportionate share hospital (DSH) payment reductions until 2015, which raises questions over the future of the cuts. But regardless, as Heritage’s Nina Owcharenko points out, “[m]aybe it is time for the states to tell the hospitals to shift their attention to the real problem: Obamacare.”
7. Myth: Hospitals will go out of business if states do not expand Medicaid coverage.
Reality: Hospitals have been lobbying hard on the idea that without expansion, the Obamacare uncompensated care payment cuts will be unsustainable for their business. But according to Ohio Media Trackers, about 80 percent of Ohio hospitals would still net millions in profits if their charity care was cut.
8. Myth: States can trust the federal government to keep its funding promises.
Reality: “Although Obamacare stipulates the federal government will pay at least 90 percent of the benefit costs of the Medicaid expansion,” Heritage explains, “state lawmakers have no guarantee future Congresses will keep that promise.” In fact, the Obama Administration has already proposed changing the deal in its fiscal year 2013 budget proposal.
9. Myth: Medicaid expansion will help low-income workers out of poverty.
Reality: Medicaid expansion actually locks low-income workers in poverty because of its backward incentives that discourage work. As Dan Greenberg explains for Advance Arkansas, “[E]mployees who earn too much money—or who work too many hours—face a set of unpleasant choices. They can quit. They can work fewer hours. They can decline raises. Realistically, a large number of employees who face such choices will opt to preserve Medicaid coverage by reducing the hours they legally work.”
10. Myth: Medicaid is quality health coverage.
Reality: Research has consistently shown that Medicaid produces worse access and health outcomes than private insurance. As Heritage’s Kevin Dayaratna writes, “By further expanding this broken program, Obamacare only exacerbates the situation by adding millions of low-income Americans to a failing program.”
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