Tuesday, October 18, 2016

Chipping away at the uninsured: What about those who can't afford employer-sponsored insurance?

Last week, I explored  why HHS's estimate that 9 million of the uninsured may be eligible for ACA marketplace tax credits is so much larger than the Kaiser Family Foundation's estimate of 5.4 million. In brief, the chief differences seem to be a) Kaiser takes into account those among the uninsured who have an offer of insurance from an employer, most of whom are probably ineligible for tax credits, and b) Kaiser also estimates and excludes those with incomes in the 250-400% FPL range who are "potentially" tax credit eligible but in fact ineligible because the unsubsidized premium for the benchmark silver plan in their area is deemed affordable by ACA criteria (i.e., costs under 8-10% of income).

Today, Kaiser updated its 2015 estimates, published in January 2016, of various categories of uninsured. The first thing to note is that the pool has shrunk: Kaiser now estimates 27.2 million nonelderly uninsured in 2016, down from 32.3 million in 2015. Next, the estimated percentage of uninsured who are eligible for financial assistance -- either Medicaid or marketplace subsidies -- is down from 49% to 43%.

That's due in large part to Medicaid enrollment: The estimate of uninsured people eligible for Medicaid is down from 8.9 million in 2015 to 6.4 million at present. But the estimate of the uninsured who are eligible from marketplace tax credits is also down, from 7.0 million in 2015 to 5.3 million now (an estimate Kaiser had already published, with minimal difference, earlier this year, and which I cited in the prior post).

As the ACA marketplace and the larger individual market with which it shares a risk pool wobble this fall, a key question is how close to capacity those linked markets are. Kaiser's new estimates suggest that not only has the pool of uninsured and potentially subsidizable marketplace candidates shrunk, but so has the pool of those who earn too much to qualify for subsidies yet remain uninsured -- from 3.7 million in 2015 to 3.0 million this year. (One thing to watch this year is whether premium spikes reverse that progress among the unsubsidized.)

Put the two together, and the pool of uninsured who might buy health insurance in the individual market has shrunk from 10.7 million to 8.7 million.

If Mark Farrah Associates' estimate of total individual market enrollment of 20.5 million is accurate, that indicates an individual market running at about 70% capacity. That's in line with Kaiser's prior estimate that 64% of those who are eligible for marketplace subsidies are currently enrolled.

It's easy to envision means by which a Democratic Congress and president might boost marketplace enrollment, improve the risk pool and so arrest this year's spike in premiums. The most obvious way is to sweeten the subsidies, which many find too skimpy to render usable coverage affordable.  The Kaiser pie chart below, however, points to one large concentration of low-hanging fruit (though it's shrunken 8% since 2015) that is ineligible for subsidies:

Figure 1: Eligibility for ACA Coverage Among Nonelderly Uninsured as of 2016

Leaving aside the undocumented, who are outside the pale of compassion in national politics (though not necessarily in all states), the largest pool of uninsured who might benefit from -- and benefit -- the ACA marketplace are those who are shut out because an employer's offer of insurance is deemed "affordable" by the ACA's not-very-generous criteria.

Those criteria malfunction most egregiously for would-be enrollees stuck in the so-called "family glitch" -- those for whom the employer-sponsored insurance on offer is deemed "affordable" for the employee alone (premium under 9.66% of income) though it may cost well more than that for his or her family. A recent Urban Institute study* estimates that over 6 million people are in families subject to the family glitch, though most of them accept the employer's offer even though the premiums exceed the 9.66%-of-income threshold: Only 500,000 of those 6 million are estimated to be uninsured -- and if the glitch were fixed, it's estimated that only about 100,000 of them would take up marketplace coverage.

These estimates suggest that the bulk of the 4.5 million uninsured that Kaiser estimates to have an ESI offer are not in the glitch** -- and that virtually all of those who would benefit from a glitch fix are currently insured through their employers. It would seem that a different legislative fix -- e.g., lowering the affordability threshold for any ESI offer -- would be needed to reach the majority of the uninsured whom Kaiser found to have access to ESI.

Nonetheless, allowing family members of those deemed to have an individually affordable ESI offer to obtain subsidized marketplace coverage would not only make coverage more affordable for many now stretched by employer-sponsored plan premiums, but would also improve the individual market risk pool -- as a relatively high percentage of those new entrants are likely to be youngish adults in two-adult households (most children in families stuck in the glitch are probably eligible for CHIP). Under the most generous change in law, allowing a whole family subject to the glitch to enroll in marketplace coverage, the Urban researchers estimate a boost of over 3.6 million in marketplace coverage. Under a more restrictive option, in which the employee with the ESI option would still be subsidy-ineligible, marketplace enrollment would grow by an estimated 1.6 million. The cost estimate ranges from $3.7 billion for the more limited fix to $6.5 billion for the more expansive  one in 2016.

While any move by a Republican-controlled house of Congress to help the ACA marketplace still seems an imaginative stretch, the family glitch would probably be the first candidate for any legislative compromise that implicitly acknowledged that the ACA marketplace is here to stay. It might, for example, be traded for giving states the option to make subsidies available to those who buy ACA-compliant plans off-marketplace -- or, perhaps, giving states the option of increasing age-banding, lowering premiums for younger enrollees while raising them for older ones.  States could theoretically bid to make these changes now, via innovation waiver. But those are subject to HHS approval and have to be shown to be revenue-neutral.

Republicans should score any move that gives states more autonomy as a victory. Alas, for today's GOP, no such old-school victory likely weighs in the scales against the sin of implicitly accepting the ACA.

* by Urban's Matthew Buettgens, Lisa Dubay and Genevieve M. Kenney

** I would have thought that a much higher percentage of Kaiser's estimated 4.5 million uninsured who were ineligible for subsidies because of an ESI offer would be family glitch victims. I wonder whether Kaiser's estimates align with Urban's on this issue.

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