Perhaps the biggest takeaway from the health insurance provisions tucked into the giant stimulus legislation known as the American Rescue Plan is not the financial help directed at those seeking coverage on the Obamacare insurance exchanges or the six months of free COBRA coverage aimed at laid off workers. It was the signal that the health insurance industry was back, commanding once again its privileged position as the payer of American health care. It was no longer the villain it had become in the late 2000s, before the passage of the Affordable Care Act. Back then, demonizing insurers made good copy. When Los Angeles Times investigative reporter Lisa Girion revealed that insurance giant Wellpoint was raising premiums for thousands of policyholders because the cost of their care exceeded what they had paid, that revelation helped push the Affordable Care Act over the finish line a few weeks later.
This year, however, there has been no public outcry about profiteering insurers. Indeed, there’s been little acknowledgement of the fragility of work-sponsored coverage. There have been few questions raised about the Congressional gift of $61.3 billion, which will help lower premiums for people who already buy insurance in the Obamacare exchanges and give new subsidies to help those with high incomes (over $104,800 for a family of four and $51,040 for a single person) buy coverage. These increases ushered in by the pandemic are temporary and end after two years.
People who’ve lost their jobs in the past year and the health insurance that came with them got some help too — up to six months of free COBRA coverage, allowing them to extend their health insurance. After Sept. 30, 2021, laid-off workers must start paying their premiums again to keep their insurance. COBRA requires workers to pay all of the premiums plus a 2% administrative fee, and for most people, coverage lasts 18 months, longer in special circumstances.
So the question is: Did the country get a lot of bang for its buck? Or were there other ways to spend that much money — $34 billion to extend the ACA subsidies for two years, $22.8 billion for COBRA subsidies, and $4.5 billion for the full costs of ACA premiums for people getting unemployment insurance — to improve health care? For example, in late 2019 the Congressional Budget Office estimated that it would cost $30 billion over 10 years to pay for vision care for all people enrolled in the Medicare program. If those kinds of tradeoffs were discussed, they never rose to the level of public discussion.
“I’m not a bit surprised at the numbers,” said former insurance executive Wendell Potter, a sharp critic of private insurers who is spearheading a business initiative to establish a more inclusive health care system. “COBRA is costly, inefficient, and a huge waste of taxpayer dollars. It is just enriching the insurance industry, which doesn’t need enriching. Many companies had their most profitable year ever.” Indeed, some companies have expanded their offerings in the Affordable Care Act marketplaces this year. Cigna, for example, announced late last year it was increasing the number of counties in which it does business to 200 in the 10 states where it sells Obamacare policies. Indeed, a tweet from Business Insider health care reporter Shelby Livingston wrote that “big health insurers are truly bullish on the ACA marketplace these days,” noting that Cigna had announced plans “to double its geographic coverage of the individual market from 20% to 40% by 2025” and that “United Health and Aetna are also getting back into the space.”
Potter believes the new provisions won’t make a huge difference in the uninsured, adding that insurers are betting they will be able to make a significant profit now, especially since the Biden administration was looking to improve the affordability of the ACA. “One way of doing it was to increase the number of people eligible to pay the premiums,” Potter said.
A few in the media have also questioned exactly what the country is getting for its money. Kimberly Leonard, also a senior health reporter for Business Insider, wrote that the $61.3 billion in federal subsidies for ACA premiums and COBRA “would only make a small dent in reducing” the number of Americans without insurance. That figure stood at 29.6 million before the pandemic hit, and an estimated 5.4 million lost coverage between February and May 2020 alone. “Instead,” she wrote, “they’d shift how people get coverage and lower premiums for people who already have insurance.”
In her newsletter The Health 202, The Washington Post’s Paige Winfield Cunningham reported “the cost (of the insurance package) is more per person than the government spends to insure people through its major insurance programs, Medicare and Medicaid — and illustrates just how expensive it is to rely on the nation’s for-profit insurance industry to get Americans covered.” She also reported that the enhanced subsidies wouldn’t last forever, noting that the Congressional Budget Office predicted the uninsured rate would return to current levels by 2023. It’s unlikely the public and even members of Congress who voted on the bill understood the health insurance provisions. Winfield noted, “the cost of the provision is flying under the radar amid the broader debate in Congress over the $1.9 trillion relief package.”
Sarah Kliff at The New York Times also reported how smoothly the insurance provisions moved through Congress “with little opposition” because the health care industry, and Democrats see the plan as a quick and easy way to expand coverage. Kliff noted “private health plans typically pay higher price prices to doctors and hospitals.” So why would they want to look a gift horse in the mouth?
Most Americans probably didn’t focus much on the insurance provisions of the stimulus since most were unaffected by them. (The stimulus package also gave substantial financial inducements to the 12 states, mostly in the South, which have refused to expand their Medicaid programs. I will discuss those provisions in a future post.) However, if people did read a recent story from the Associated Press, they would have gotten a much different view of the relief bill’s health insurance provisions than the nuanced one Leonard, Cunningham, and Kliff gave their readers.
The Associated Press sent out a glowing report about the health care provisions. One headline on the AP story summed up Congressional action: “COVID bill to deliver big health insurance savings for many.” After giving a couple examples of how some people might benefit from the law financially, the story advised readers that “because health insurance is so complicated, consumers are going to have to do their homework to figure out if there’s something in the bill for them.” It also reported that the “biggest winners” were “the more than 11 million people already enrolled in Obamacare as well as those who are now shopping for HealthCare.gov coverage,” noting that generous tax credits would make coverage “more attractive” for some people.
What Americans often fail to understand and the media often fail to report is that the full cost of health insurance is not just the monthly premium. The real cost includes deductibles, copays, and coinsurance. It is not uncommon for an insurer to lure customers into a plan with a low premium and skip over or give short shrift to other costly policy elements — like an $8,000 deductible — that can and have sent sick people to the proverbial poor house.
To see what this cost sharing looks like, I checked out 10 policies now available on HealthCare.gov for a 35-year-old man living in Indiana. The monthly premiums for bronze and silver policies range from $311 to $414, which might be considered reasonable. But the cost-sharing was not. Deductibles ranged from $5,100 to $8,300 and out-of-pocket maximums ranged from $7,000 to $8,550. Appraisals of the stimulus package health care provisions need to be far more nuanced and realistic than the AP reported. After all, the AP has a huge readership still reaching deep into every corner of the country.
But not everyone is so gloomy about the relief act’s health insurance provisions. Katherine Hempstead, a senior policy adviser at the Robert Wood Johnson Foundation who specializes in health insurance, says the insurance provisions in the stimulus package “is a major 2.0 moment for the ACA affordability.” She added, “I think this is a big deal, and you’ll see all these plans participating more and more, and the marketplace will be a more important destination.” Even so, Hempstead agreed cost-sharing is a problem. “Making premiums affordable is not enough. There’s a real risk with cost-sharing. There’s a lot of interest in working on that piece.”
But will these ACA exchanges continue to offer insurance with deductibles and other cost-sharing mechanisms that Hempstead characterizes as “too much financial responsibility on people who have these plans?” Will they clearly reveal all the costs of becoming insured with particular policies?
We know from the last survey taken by The Commonwealth Fund right before the pandemic that 43.4% of Americans ages 19-64 were inadequately insured. Half of all adults who were uninsured or underinsured said they had problems paying medical bills or were paying off medical debt over time. Those numbers hadn’t changed much from the previous survey in 2018. Some of those findings were undoubtedly fueled by insurance plans that came with such high deductibles and coinsurance that people couldn’t pay their medical bills.
It remains to be seen whether the insurance provisions in the stimulus package will change those alarming numbers. There’s no indication they will. The stimulus package sanctioned business as usual for the health care system with yet another Band-Aid fix.
Veteran health care journalist Trudy Lieberman is a contributing editor at the Center for Health Journalism Digital and a regular contributor to the Remaking Health Care column.
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