Consumer Power Report #509
Despite the sticker shock many Americans are experiencing after thinking the Affordable Care Act (ACA) would lead to affordable health insurance, most of the law’s unintended consequences were predictable and therefore avoidable.
Sky-high premiums, cost-prohibitive deductibles, and the exodus of giant insurance companies from the Obamacare exchanges after losing hundreds of millions of dollars in the individual marketplace have become easy – and legitimate – targets for prognosticators now saying I told you so.
Less discussed but equally pernicious for many Americans are the unintended consequences of ACA’s employer and individual mandates, which lawmakers ought to replace with policies that empower employers and patients.
The consequences of ACA mandates are not bizarre side effects from treating a patient’s main ailment with an edgy new medication. ACA is not a pill that keeps you from balding only to give you diarrhea. Instead, the mandates directly undermine their main purpose, thereby working against many of the employees and individuals the law’s proponents claim they want to help.
ACA’s employer mandate gave business owners a financial incentive to keep their number of full-time employees below 50. The mandate requires businesses with 50 or more full-time employees to provide those employees with health insurance. Moreover, the law considers any employee working at least 30 hours per week or 130 per month as full-time, departing from the traditional 40-hour threshold.
As a result, ACA gave business owners an irresistible two-pronged incentive – because the alternative is often unaffordable – to offer their employees fewer hours, or to employ fewer workers than they otherwise might have. By laying off, cutting the hours of, or refusing to hire additional full-time employees, financially savvy business owners can avoid tripping the mandate’s expensive wire.
The mandate has left some employers counting the cost of staying in business at all, according to Dawn Sweeney, president and CEO of the National Restaurant Association, and Katherine Lugar, president and CEO of the American Hotel and Lodging Association, writing for The Hill in 2015.
“After weeks of number crunching, I have found that complying with ACA under a 40-hour full-time employee threshold is possible, but 30-hours per week would involve a major reworking of my business model or even rethinking of staying in the business altogether,” Steve Palmer, owner of Palmer Place Restaurant & Biergarten in La Grange, Illinois, told Sweeney and Lugar.
“A $250 to $300 monthly hike per employee really increases the cost of a pizza or a banquet for my customers,” Mike Rastrelli, owner of Rastrelli’s restaurant in Clinton, Iowa, told Sweeney and Lugar. “The unfortunate alternative is to trim hours. Full-time employees will become a financial liability, as do part-time employees who work too many hours. And anyone who wants to pick up an extra shift or make some extra cash? That will soon be a thing of the past.”
After edging employees out of potentially full-time work with the employer mandate, ACA then requires these people to purchase health insurance in the individual marketplace – or pay a fine. Under the law’s individual mandate, individuals who choose not to purchase health insurance face fines up to $2,085 in 2016.
The health insurance the law requires them to buy is so good that approximately 33 million Americans continue to go uninsured – including many who qualify for government assistance, in the form of a federal subsidy, Medicare, or Medicaid, to help pay for their insurance premiums, according to the polling group FiveThirtyEight.
About 7 million of the uninsured are noncitizen immigrants who don’t qualify for assistance, and almost 4 million more people fall in the Medicaid gap, earning too much to qualify for Medicaid in their state but too little to qualify for a federal subsidy.
The remaining 22 million who choose to go uninsured are an economically diverse group that includes 14.4 million people not easily categorized and 7.7 million individuals aged 19–34, FiveThirtyEight wrote in September 2015. The latter – sometimes termed “young invincibles” – is historically a healthy group that costs little to insure. For the same reason – their being the picture of health, or thinking they are – young invincibles are less inclined than others to buy insurance.
Their reluctance could be due to the continually surging cost of premiums for individual plans, which increased by at least 20 percent on average in 17 states in 2016. Or these individuals may hesitate because deductibles – the medical costs one pays before benefits kick in – increased in 41 states in 2016, according to Freedom Partners’ Obamacare calculators.
One reason for the rising costs is the individual mandate and fine are more persuasive to less healthy Americans, who are more expensive to insure than healthy Americans. A surge in demand for insurance drives up costs, especially when meeting that demand is inordinately expensive.
For one reason or another – there are many, as future issues of Consumer Power Report will show – ACA’s individual mandate and penalty have proven insufficient incentives for millions of Americans who, more than six years after the law’s passage and three years into its implementation, choose to go uninsured.
Like the employer mandate, the individual mandate has put affordable health care further out of reach of many Americans whom the ACA was supposed to help. Lawmakers should right their wrongs by replacing them with policies currently before Congress that would empower employers to offer, and individuals to buy—or forego buying—health care coverage of their choice.
— Michael T. Hamilton
IN THIS ISSUE
You may have heard that insurers are hiking Obamacare premiums by 30%, 40% or even more next year.
Certainly, some companies have requested hefty rate increases for certain policies. But that doesn’t mean that everyone will be writing a much bigger monthly check to their insurer.
The benchmark silver plan premiums are projected to rise 10% for 2017, on average, according to a new Kaiser Family Foundation report that looked at insurers’ proposed rate increases for a 40-year-old consumer in 14 major cities. That’s double the 5% increase for 2016 policies, but it could change since state regulators often reduce insurers’ rate requests.
The average figure, however, belies the wide range of requested premium increases in different cities. For instance, in Providence, Rhode Island, the benchmark plan would cost $229 a month, down 13% from this year. But in Portland, Oregon, it would cost $308, or 18% more. …
Insurers are raising their rates for several reasons, said Cynthia Cox, Kaiser’s associate director of health reform. First, two federal programs to minimize insurers’ exposure to high-cost enrollees are ending. Also, health care costs rise every year.
And perhaps most important, many Obamacare enrollees are turning out to be sicker and more expensive than insurers predicted. So the premiums didn’t cover the claims.
SOURCE: Tami Luhby, CNN Money
The state of Texas is experiencing a health care workforce crisis, and the most severe shortage is in mental health. So why, then, has the Texas Medical Association taken legal action to ensure that marriage and family therapists in Texas may no longer diagnose and treat mental health disorders?
Marriage and family therapists had effectively and efficiently been diagnosing and treating mental health disorders in Texas for years. In 2008 the Texas State Board of Examiners of Marriage and Family Therapists sought to edit state code to more clearly indicate the profession’s ability to independently diagnose. Then, in a grand overreach, the Texas Medical Association sued the board to prevent diagnosis as part of the scope of practice for MFTs in the state.
On May 27, the Supreme Court of Texas denied a petition to review a Court of Appeals decision supporting the medical association’s assertion that MFTs can not diagnose. The Texas Medical Association describes the outcome of the Supreme Court’s decision as favorable. But, favorable for whom?
It certainly isn’t favorable for the enormous percentage of the population that requires mental health care but can not access it.
Approximately 80 percent of Texas counties are designated Health Profession Shortage Areas for mental health. The Department of State Health Services has said that one-third of adults with serious and persistent mental illness receive the services they need, while the percentage is worse for children with severe emotional disturbance. The crisis is more severe for underserved populations, including people in rural areas, those who don’t speak English, minorities, and those without adequate financial resources or health insurance.
Rather than taking a step to improve access to care by continuing to allow marriage and family therapists to appropriately diagnose mental health conditions independently, the Texas Medical Association and the state supreme court removed this resource. Who do they propose to do all the work to diagnose and treat serious mental illness? The physicians that don’t take Medicaid, won’t see people who pay $5 for each appointment, don’t have any training or experience in mental health? Primary care physicians willing and able to help mental health patients literally do not exist in the numbers needed. Further, few practicing physicians agree with the official position of the medical association, rather, most doctors welcome assistance in caring for patients with mental health concerns. …
SOURCE: Sarah Woods, The Dallas Morning News
The Rev. John Riley takes his health seriously.
Diagnosed with cancer in 2014, the military veteran and pastor with Smyrna First Presbyterian Church is vigilant about check-ups and his overall well-being, but hasn’t seen a primary care doctor in the last year.
That hasn’t been by choice; his doctor’s office has had issues hiring another physician after his left. Though he enjoys working with the nurse practitioner, he said, he would like to see a doctor.
“It’s more than just an interview problem,” Riley said.
Riley’s issues are not unique.
Delaware is plagued with numerous health care issues. There are shortages of psychiatrists and dentists, and the general health of the state’s population is less than stellar, ranking 32nd in the nation, according to the United Health Foundation. But one of the most urgent problems, experts say, is the cost to the state for providing care. …
In white papers posted on the Delaware Center for Health Innovation website, preliminary estimates show the state could save more than $700 million annually by financing health information technology, new payment models and resources that support doctors. …
Health care claims data in Delaware is considered private, and only insurers have access to the sensitive information. But legislation working its way through the General Assembly would create an all-payer claims database based on every insurance claim made for healthcare. Though insurance companies have concerns about the bill, it passed the state Senate unanimously on Thursday. …
Providers would then know the difference in cost of services and what ZIP codes have a prevalence of a certain illness or procedure, such as knee replacements. Then they could budget and negotiate with insurance companies to financially support a specific population’s care.
SOURCE: Jen Rini, The News Journal (Delaware)
Legislation to repeal North Carolina’s certificate of need requirements before building hospitals and other medical centers and purchasing high-tech diagnostic equipment got support Tuesday from some physicians and conservative activists in a Senate committee.
It’s unclear, however, if Senate Republicans will try to push through their chamber this year the legislation, which is opposed intensely by the North Carolina Hospital Association. No vote was taken by the Senate Health Committee, whose leaders are now sending the matter to the chamber’s GOP caucus for private discussion. The bill would have to get through the full Senate and House in the legislature’s final weeks.
“We’re going to be reporting on what we heard today,” said Sen. Louis Pate, R-Wayne, a committee co-chairman. “We’ll see what the members of the caucus have to say.”
The measure would eliminate in early 2021 the requirement that state health regulators sign off on any “new institutional health service.” The certificate is designed as a way to ensure the orderly distribution of health care statewide based on population and to encourage services in rural areas. At least 14 states have discontinued their programs since a federal mandate for having such rules ended in the 1980s.
SOURCE: Gary D. Robertson, Associated Press, The Charlotte Observer