That's Not the Way I Always Heard It Should Be

Now that the initial open enrollment period under ACA is drawing to a close, we’re starting to hear more about how the enrollment is going, and the news is not encouraging.  It’s getting harder and harder to find much good news about Obamacare generally.

The Administration has touted that 4 million have gotten coverage through the exchanges – still several million short of their goals – but they claim to not know much about whether ACA’s impact on the uninsured rate.  Fortunately, outside organizations are helping to fill in some of the gaps. 

The McKinsey Center for U.S. Health System Reform released the results of their individual market enrollment survey, with results from February 2014.  Only 27% of those who had obtained new coverage in 2014 reported having been previously uninsured.  Even more discouraging, only 10% percent of all previously uninsured now reported having coverage.  The faint sign of hope in the numbers is that both numbers are up sharply from previous surveys – 11% and 3%, respectively – but I doubt anyone who supported ACA’s passage thought they were signing up for only helping 10% of the uninsured.

Adding insult to injury, only three-quarters of those with new coverage reported actually having paid their premium, confirming reports that health insurers had warned about.  And that percentage was only 53% among the previously uninsured, which does not inspire much confidence that they will remain insured for very long.

Perceived affordability remains the key barrier to buying coverage, even though 80% of those citing it were actually eligible for subsides, a crucial fact that two-thirds were unaware of.

Lack of uptake from the uninsured is making providers nervous.  They had been hoping to wipe out a lot of their uncompensated care, but they’re looking at these results and getting worried, especially since disproportionate share payments that had previously helped offset these costs are being cut under ACA.  Those providers in states that don’t expand Medicaid are especially in trouble.

One glimmer of good news is that Gallop reports that the uninsured rate has, in fact, dropped, down to 15.9% (versus 17.1% in 4Q 2013).  To be fair, though, their results showed spikes in late 2013, and the 1Q 2014 results are on par with 1Q 2013 and 1Q 2011.  Coverage through an employer dropped two percentage points from 4Q 2013, while both individual coverage and coverage through Medicaid were up by slightly under 1%.   

The Urban Institute released their own survey results on ACA enrollment, conducted in December 2013.  Among all adults 18-64, 12% reported having looked for information on health plans in the marketplace (Orwellian for “exchanges”), with another 17% planning to do so.  More significantly, among the uninsured still only 19% had looked, another 33% thought they would look – and 23% had not heard about the marketplaces.  The comparable numbers for those below 138% of the federal poverty level were 13%, 25%, and 27%, respectively, highlighting that the most vulnerable groups are not getting the message.

The continued lack of broad awareness is why there is an advertising blitz going on – from health plans, the Administration, and opponents – that has been averaging $10m per week since December.

The picture isn’t really rosy anywhere.  The people who were already in the individual market continue to be buffeted by changes in the rules of the road.  For example, there is Administration’s executive decision to allow subsidies for policies purchased outside the marketplaces, in recognition that some consumers may have been too frustrated by the marketplace websites to buy from them.  How they will determine which consumers are eligible and which are not is not clear to me, and, in any case, it doesn’t make the whole process any simpler for consumers.

Then there is the “bare bones plans” mess.  After the uproar last fall about people having to lose their health plans because they didn’t meet ACA minimum standards, the Administration belated announced a one year delay in the enforcement of those standards, and has just extended that delay for yet another year, potentially meaning they won’t apply until 2016.  It’s especially confusing for consumers because the Administration’s flexibility doesn’t mean either their state’s Insurance Department or their health insurer will agree to the delays.  Health plans also worry that continuing these older policies will damage the risk pools for the new plans, which could lead to premium increases.

It’s anyone’s guess about what has happened with premiums in the individual market.  A recent analysis by the Robert Wood Johnson Foundation in selected states found (with the exception of Alabama) more competitive markets and premiums, while a report from the Manhattan Institute last fall found an average increase of 41% (much due to benefit changes), and a study by the presumably objective Society of Actuaries last spring also expected significant increases, especially for younger consumers.

Speaking of premium increases, CMS has also just admitted that ACA could lead to increases for 65% of group health plans for small employers (50 and fewer employees).  This could adversely impact 11m people, who, of course, are most likely not eligible for subsidies since they have employer coverage.  Rates for groups with sicker employees should drop, but those are paid for by the increases on that 65% of employers.

Even employees who work for large employers are facing problems too.  The latest Towers Watson/National Business Group on Health Employer Survey on Purchasing Value in Health Care found that employees’ share of health costs increased 7% from 2013 to 2014, going from $2782 to $2975.  Their share of costs has risen from 34% to 37%.  The pressure on dependent coverage continues to increase even more, with 49% of companies reporting increases such contributions more than for employee coverage in 2014 and another 19% planning for 2015.  Only 56% of employers see that subsidized dependent coverage as important in 2015 and beyond; it was 70% before.

Meanwhile, Mercer reports that the value of employment-based benefits is starting to erode among employees.  Although 49% strongly agree that getting health benefits are as important as getting a salary, only 32% say that the out-of-pockets costs they have to pay for those benefits are “definitely worth it.”  Especially ominous is that this percentage for workers under 50 has dropped from 45% to 30% in the past 2 years.

Given all this, and despite the increased publicity and more direct exposure to parts of ACA, it is perhaps not surprising that support from the American public is not increasing.  Gallop also reported that only 10% of respondents believe the law has helped them or their family, versus 23% who report it has hurt them.  Gallop says the 23% is the highest response on this question since it started asking the question in 2012 (when it was only 16%).

Not surprisingly, party affiliation plays a big part in the results.  Among Democrats, only 7% say it has hurt them – but 17% still say it has hurt them.  The figures for Independents (10% helped/25% hurt) and Republicans (3% helped/39%) continue the trend of the “hurt” outweighing the “helped.”

More discouraging, overall 55% disapprove of the law, versus only 40% who approve.  In December 2012 48% approved and 46% disapproved, so as the law has continued to be implemented it has drawn lower approval rating.   Indeed, 40% believe the law will make their family’s healthcare situation worse, and only 21% think it will make it better.

Not a rousing show of support.

Any employer with a health plan or 401k plan – or any state Medicaid director – could have warned us that voluntary enrollment typically leaves lots of eligible people not taking action, especially without constant reminders and pressure to enroll.  We should have taken the approach many 401k plans have adopted – “automatic enrollment.” Driven by disappointing participation in 401k plans, the federal law was changed to allow employers to automatically enroll employees in their 401k plan, with a default contribution rate.  Employees could still opt-out, or change the default contribution level, but employers have found that participation rates are higher and average contribution rates are higher under this approach.  What’s not to like?

The parallel here is that the open enrollment period would allow consumers to report their source of health coverage, and anyone not reporting one or not enrolling in a new health plan would automatically be enrolled in a plan, such as the lowest priced silver level plans in their area.  Medicaid programs in several states have done versions of this for years in areas with mandatory managed Medicaid plans. 

Somewhere in all this discouraging news there are probably some silver linings – certainly for previously uninsurable individuals there are – but on the whole there are still a lot of dark clouds obscuring them.