At What Cost?
Featured in the November issue of our magazine.
Farming. Producers say it’s in their blood. They put their hearts into it. They thrive on being their own bosses. They count it a privilege to work closely with family. But healthcare today exposes some risks of full-time farming. For much of the full-time working population of the U.S., the boss pays for health insurance, with options for the whole family. For farmers, if that blood exerts high pressure, or that heart fights a clogging artery, or the family grows with a pregnancy, or a serious accident happens…the whole picture changes. The farmer as boss provides the health insurance for family and employees, and it can be pricey. As the American Health Care Act (AHCA) begins in 2019, replacing the Affordable Care Act (ACA) implemented in 2014, uncertainty further clouds the murky health insurance picture.
Many Illinois producers fit the non-group plan market supported by the ACA. But those with incomes more than 400 percent above poverty are ineligible for premium tax credits through the Healthcare.gov Marketplace. This group wants alternatives (see related story on page 9).
“A recent rule allows for more loosely-regulated health insurance plans outside of the ACA,” says Karen Pollitz, a senior fellow with the Henry J. Kaiser Family Foundation (KFF) who focuses on health reform and private insurance.
Pollitz co-authored a KFF issue brief in April, “Proposals for Insurance Options That Don’t Comply with ACA Rules: Tradeoffs in Cost and Regulation,” summarizing the situation and alternatives. The study reports most Marketplace insurers underpriced ACA plans and lost money between 2014 and 2016. They compensated with higher prices in 2017 and 2018. Subsidies protected 85 percent of Marketplace participants from those increases.
But the nearly seven million ineligible for subsidies experienced major premium increases. Alternative health plans reduce premiums for this group by relaxing rules for required benefits rules, coverage of pre-existing conditions and community rating, according to the KFF brief.
“With health insurance plans, it’s very hard to compare apples to apples,” says Pollitz. “But cheaper plans typically offer less protection. That means they are less likely to take care of you when and after you get sick.”
She says ACA plans cover defined essential health benefits with limits on deductibles, while charging the same rate based on universal factors like age. Pre-existing conditions don’t impact individual costs.
Alternative plans can be more selective of participants. “Under ACA alternatives, insurance companies have more options, like medical underwriting, that allow them to decide who and what services they will cover,” Pollitz says. “This creates a less risky pool of participants, so they can charge less.”
The alternatives appeal to those in good health. “The drawback is that the ‘choices’ don’t apply to those with pre-existing conditions,” she says. “Because they are a greater risk, they likely won’t qualify for alternatives. That leaves them in the Marketplace, but if lower-risk people opt out, overall ACA premiums could increase.”
AHCA removes the mandate for health insurance and associated
tax penalties, which also may impact the risk pool and ACA premiums.
Pollitz notes that public attitudes about health insurance have shifted during ACA and AHCA discussions, and research shows people want health insurance protection when needed. “After ACA was implemented, our polls showed support split roughly in half, with constant shifts between more favorable and unfavorable perceptions,” she says. “Since AHCA passed, opinions favoring ACA increased slightly and have held steady for several months.”
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“It’s too early to tell how options developed in response to the new rule will impact the overall health insurance market,” says Pollitz. Her KFF brief notes nearly onethird of individual market enrollees are self-employed, so the impact of AHPs and other options could be significant.
“We don’t know how people, the government and health insurance companies will respond. Will less regulated options be promoted to this group? How will insurance companies compete within this segment?” she asks. “This uncertainty can change the market every year.”
Affordable options will allow many to provide families and employees with health insurance. But for those with pre-existing conditions, alternatives and the absence of a mandate could push affordable health insurance further out of reach.