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PA House Democratic Policy Committee Hearing

PA House Democratic Policy Committee Hearing

The Pennsylvania House Democratic Policy Committee recently held a hearing about the implications of repealing the Affordable Care Act and Medicaid Expansion. It was hosted on March 29 by State Representative Dan Frankel at the Jewish Healthcare Foundation.

Cassie Narkevic, one of our Certified Health Care Navigators, gave testimony about how changes to the law would impact consumers. Read Cassie’s spoken testimony to the committee below. You can find her full written testimony that she submitted to the committee, including all cited sources, by clicking on the link at the bottom. You can also read more about the committee hearing and see legislators respond.

 

cassie at hearing 3 29 17 3Good morning. I would like to thank the Committee for inviting me to speak this morning. I’m honored to be here to represent the consumer voice.

My name is Cassie Narkevic. I’m a Certified Navigator with Consumer Health Coalition. Certified Navigators are specially trained through the Center for Medicare and Medicaid Services (CMS). We provide enrollment and education about the Health Insurance Marketplace, Medicaid, and CHIP.

I want to tell you about Rita. Before the Affordable Care Act, she had been uninsured for years, because comprehensive, affordable coverage didn’t exist. She wanted insurance, but it was too expensive. I have helped hundreds of people like Rita. It is because of people like her that I am testifying today.

Since 2013, Consumer Health Coalition has been the lead grantee of a statewide consortium providing Navigation assistance across Pennsylvania. During the latest Open Enrollment period, our consortium assisted over 5,000 consumers.

Financial Assistance Via the ACA

The ACA offers two types of financial assistance: Advance Payments of the Premium Tax Credit (APTC) and Cost-Sharing Reductions (CSR).

APTC are dynamic, refundable tax credits that reduce the cost of the monthly premium. Many consumers tell me they can only afford their health plan because of their tax credit

Cost-Sharing Reductions are discounts on out-of-pocket expenses like deductibles, copays, and coinsurance. Many consumers tell me they couldn’t afford care without them.

Proposed changes to the ACA include changing the tax credits so that most consumers would receive a smaller credit than they currently do. Cost-Sharing Reductions would be repealed completely.

Over 80% of Pennsylvania Marketplace enrollees receive APTC. Over 54% receive CSR. Most of these people couldn’t afford to keep or to use their insurance without these savings.

I want to draw your attention back to Rita, who I mentioned at the beginning. Thanks to the ACA, she was able to buy comprehensive health insurance for the first time. CSR lower her deductible to only $100. If Rita’s CSR were taken away, her deductible would skyrocket to $3,250. There’s simply no way she could afford that.

There are things we can do to help more people benefit from the ACA.

Federal level

Fix the family glitch

The ACA doesn’t offer tax credits to consumers whose employers offer them health insurance that meets certain standards, like affordability. The affordability test only considers the cost of the lowest price, employee-only plan. Since most employers contribute to the employee’s premium, most employer coverage meets this standard.

However, the employer often does not contribute to the cost of family coverage. Even though the consumer would be responsible for the full cost of family coverage, only the cost of individual is considered in the affordability test.

Due to this conflict, some Pennsylvania families are caught in a coverage gap.

State level

Let Marketplace make a final determination for Medicaid or CHIP eligibility.

Pennsylvania chose not to allow the Marketplace to determine a consumer eligible for Medicaid or CHIP. If a consumer who is eligible for these programs applies through the Marketplace, the Marketplace, which has already evaluated the application, must send the application to the Dept of Human Services. DHS then takes about 30 days to notify the consumer of their eligibility. Meanwhile, the consumer’s health insurance situation is up in the air.

The Marketplace is able to provide electronic, instant verification of identity, citizenship status, and income. With the state’s permission, the Marketplace could make a final decision on Medicaid and CHIP eligibility, giving consumers peace of mind and further streamlining the enrollment process.

State-sponsored outreach and advertising for enrollment

As you may have heard, during the final week of the recent Open Enrollment period, the new administration canceled advertisements reminding consumers of the deadline. This resulted in a drop in enrollment during the final week.

HHS has proposed to cut the next Open Enrollment period in half. Many Navigators are concerned this will cause confusion. If they also decide to reduce advertising, or to reduce call center staffing, this could lead to a drastic reduction in enrollment for consumers who need this insurance.

The state could increase outreach and advertising to educate PA residents on their health coverage options, encourage them to enroll, and direct them to the correct enrollment venues.

Conclusion

Over 20 million Americans, including 1.1 million Pennsylvanians, gained coverage thanks to the ACA. Millions more benefit from consumer protections.

As a Navigator, I see firsthand how the ACA helps people every day. I remember Trish, who didn’t think she could afford coverage, but came in to apply for her kids. Trish had a lump on her neck, but without insurance, she couldn’t get it checked out. An ACA tax credit helped Trish afford a health plan. Luckily, she only had a benign cyst. She still cried over the phone, relaying her story. She was so relieved to have an answer.

With the threat of repeal, I have heard from consumers are scared about the future of their healthcare.

I hope I’ve helped you learn more about their experiences today. Thank you for your time.

Click here to read Cassie's full written testimony.

Written Testimony of Cassie Narkevic, BSW
Certified Navigator
Consumer Health Coalition
Before the House Democratic Policy Committee
Pittsburgh, PA
MARCH 29, 2017

Good morning. I would like to thank the Committee for inviting me to speak this morning, and for specifically reaching out to a Certified Navigator. I’m honored to be here and appreciate the opportunity to represent the consumer voice in this discussion.

My name is Cassie Narkevic. I’ve been a Certified Navigator since 2014. I work at Consumer Health Coalition, a health advocacy nonprofit on the North Side. Certified Navigators are specially trained and certified through the Center for Medicare and Medicaid Services (CMS) to educate and enroll consumers into Health Insurance Marketplace plans. We also enroll consumers into Medicaid or the Children’s Health Insurance Program (CHIP). Navigators are required to remain unbiased and to act in the consumers’ best interest. We’re not permitted to accept payment from insurance companies. Our assistance is provided at no charge.

I’m here today to provide information and education on the consumer experience with the Affordable Care Act in Pennsylvania and the potential impact of the proposed repeal bill.

I want to tell you about Rita. Before the ACA, she had been uninsured for years, because comprehensive, affordable coverage didn’t exist. Her family had tried to purchase private health insurance for her before the ACA, but it was too expensive. Plans they could afford were bare bones plans that wouldn’t cover her needs and carried low annual limits that limited Rita’s benefits. She truly wanted health coverage but could not get it. Under the Affordable Care Act, I helped her enroll in a comprehensive, affordable plan. This gave her peace of mind and true access to health care services. I have helped hundreds of people like Rita. It is because of people like her that I am testifying today.

Since 2013, Consumer Health Coalition has been the lead grantee of a statewide consortium providing Navigation assistance across Pennsylvania. Our consortium partners are PA Health Access Network, Benefits Data Trust, the Healthcare Council of Pennsylvania, and the Erie Multicultural Resource Center. During the latest Open Enrollment period, November 1, 2016 through January 31, 2017, our consortium achieved the following assistance and enrollment numbers:

Enrollments completed: 3,334

Other assistance provided: 2,091

Throughout my testimony, I will provide examples of real consumers that I have assisted. To protect their privacy, I have changed their names.

Impact of ACA on Pennsylvania

Passed into law on March 23, 2010, the Affordable Care Act created new health coverage options for people without access to employer or public health coverage. It created new consumer protections and regulations for the healthcare industry. Nationwide, the ACA has helped over 20 million people gain health coverage.

In 2010, the uninsured rate in Pennsylvania was 12.4%. (Garrett & Gangopadhyaya, 2016) By 2016, the uninsured rate in Pennsylvania had dropped to 6.4%, the 15th lowest in the nation. (Office of Governor Tom Wolf, 2016) In our state, over 1.1 million people have gained coverage thanks to the ACA. A repeal puts their coverage at risk. (Jacobs, 2017)

Consumer protections in the ACA benefit many people, no matter how they get insurance. About 5.5 million Pennsylvanians living with pre-existing conditions can no longer be denied coverage based on their health status. About 4.6 million in our state, including over 1 million children, benefited from the ACA’s ban on lifetime coverage limits. The ACA closed the Medicare donut hole, which used to force seniors to temporarily lose payment help for their prescription drugs. Thanks to the ACA, Pennsylvania seniors with Medicare have saved $1.3 billion on prescription costs. These are only some of the many consumer protections and benefits contained in the ACA. (Families USA, 2016)

ACA Financial Assistance

To help make health insurance more affordable, the ACA offers two types of financial assistance to consumers: Advance Payments of the Premium Tax Credit (APTC) and Cost-Sharing Reductions (CSR).

APTC are dynamic, refundable tax credits available to consumers with a household Modified Adjusted Gross Income (MAGI) between 100 – 400% of the Federal Poverty Level, FPL. For a family of four, the range is between $24,300 – 97,200 annually. (Healthcare.gov, 2017)  APTC is adjusted based on four factors: age, income, family size, and location (since plan costs vary by geographic area.) The basic idea is that a person should not have to spend more than a certain percentage of their income on their health insurance premium. The tax credit adjusts to ensure that the second lowest cost Silver level plan available to that person would not cost more than their expected contribution. The expected contribution varies based on income, but is never higher than 9.5%. (Center on Budget and Policy Priorities, 2013)

The consumer can choose how to receive their APTC. The vast majority choose to receive the maximum credit available, paid on a monthly basis directly from the federal government to their chosen insurer. This makes their monthly bill lower. I have seen this as the clear most popular choice as a Navigator and often hear people express that they simply cannot afford the monthly payments without these tax credits.

Many consumers tell me that they can only afford their health plan because they receive APTC. According to the most recently available data from CMS, the average monthly premium in Pennsylvania is $533 per month. However, among consumers receiving APTC, the average premium consumers are actually billed is $130 per month. (Centers for Medicare and Medicaid Services, 2017)

Cost-Sharing Reductions (CSR) are discounts on out-of-pocket expenses achieved by lowering the actuarial value of a health plan. They are available to consumers with a household MAGI income between 100 – 250% FPL. (Healthcare.gov, 2017) CSRs help consumers with the lowest incomes afford to use their health insurance by providing discounted deductibles, copays, and coinsurance. CSRs are only available on Silver level plans. (Healthcare.gov, 2017)

As a Navigator, I often explain this option to people and have found that people are far more likely to select Silver level plans when there are cost-sharing reductions. These might bring down the cost of seeing a PCP from $30 to $5. It can reduce a deductible by thousands of dollars.

At the end of the 2017 Open Enrollment period, 426,059 Pennsylvanians had enrolled into Health Insurance Marketplace plans. Of those enrolled, 80.1% received APTC to lower the cost of their monthly premium, and 54.8%, received CSR to lower their out-of-pocket expenses. The statewide average monthly APTC is $424. (Centers for Medicare and Medicaid Services, 2017)

In my experience as a Navigator, this means that over 80% of Pennsylvania enrollees could not afford to keep their health insurance without at least their current level of APTC, and over 54% likely could not afford to use their health insurance or might elect not to buy the coverage without the lower out-of-pocket costs due to CSR.

Barriers to Obtaining Coverage

Even with the current level of financial assistance, some consumers still cannot afford to purchase insurance. Consumers who are eligible for APTC still may not be able to afford the additional monthly expense, when they are facing other debt or financial responsibilities.

I assisted a consumer —I’ll call her Sarah — whose income is slightly over the limit to qualify for Medicaid Expansion. On the Marketplace, Sarah could purchase a Silver plan for about $59 per month, with the highest level of Cost-Sharing Reductions. She takes multiple medications and has been hospitalized several times in past years. However, she felt she could not afford even a $100 deductible. Since Sarah receives SSDI, she was able to qualify for the Medical Assistance for Workers with Disabilities program, so luckily she was still able to get insurance. The stringent eligibility requirements mean that most people who cannot afford private coverage are not eligible for this program.

Consumer Concerns about the ACA repeal bill

I want to share some consumer phone calls I received after this repeal bill was introduced. Consumers are worried about the future of their health insurance, and it’s important for their voices to be heard.

Rashad called me, frantic. He had been watching the news talking about the ACA repeal bill. He has a heart condition, and before the ACA, one of his medications cost $500 per month. He asked me if the ACA had been repealed. He said, “I have a cardiologist appointment in two weeks. Am I going to have insurance?”

I got a call from Debbie, who had cancer last year. Thanks to her ACA tax credit and Cost-Sharing Reductions, she got the treatment she needed at a price she could afford. She’s scared because the repeal bill would lower her tax credit and eliminate Cost-Sharing Reductions. She takes a medication to prevent a relapse, but wonders if she will be able to afford it in the future.

I heard from a consumer who is a legal immigrant from a majority Muslim country. He is concerned that enrolling in health insurance and accepting a tax credit, which he is legally eligible for, could make him a target. He hopes to stay in the United States permanently, but now he worries that may not be possible. His concern doesn’t stem from the repeal bill, but it could affect his health if he decides to cancel his enrollment and then needs care.

How the Repeal bill would affect PA if it were passed

On March 6, 2017, Congressional Republicans introduced legislation called the American Health Care Act (H.R. 1628) (House Republicans, 2017), which intends to repeal or replace a number of key ACA passages through the budget reconciliation process. This process can only address pieces of the ACA which impact the federal budget, so at this time the repeal does not include the many popular ACA consumer protections.

Like every bill, the American Health Care Act would benefit some consumers, but it would do much more harm to consumers. The people who would be harmed the most are older Americans who live in areas where health insurance is more expensive.

Cost-Sharing Reductions

The bill completely repeals Cost-Sharing Reductions, discounts on out-of-pocket expenses that help consumers with the lowest incomes afford to use their health insurance. This repeal would go into effect on January 1, 2020. (Kaiser Family Foundation, 2017) As I described above, in my experience as a Navigator, most consumers receiving CSR could not afford to actually use their health insurance without these savings. They might not feel it’s worth even buying health insurance without these savings. A sentiment people often express is “Why do I have to pay so much for health insurance and then I have to still pay so much more to actually use it?”

Repealing CSR will cause consumers to see their deductibles increase by thousands of dollars. As a Navigator, I have seen CSR reduce a consumer’s deductible from $3,250 to $100. I have worked with consumers who cannot afford a $100 deductible, but a $100 bill will not bankrupt them in the way that a higher deductible could. By repealing Cost-Sharing Reductions, the American Health Care Act keeps healthcare out of reach for these consumers.

Consumer example – Russell

Russell is a 54-year-old man in Allegheny County. His income is $20k annually, but his job doesn’t offer health coverage. He takes cholesterol medication and needs to have access to a doctor and blood work. Without treatment and monitoring, he could be at risk for a heart attack or stroke.

He enrolled into a Silver level Marketplace plan. He receives APTC of $3,660 per year. His premium is $83 per month, or $996 per year. Due to his low income, he is eligible for CSR. His deductible is reduced to $1,000. A visit to his specialist is only $25. An emergency room visit costs $150.

The proposed bill would slightly decrease his tax credit, to $3,500 per year. His premium would increase to $96 per month or $1,152 per year. The major effect for Russell will be the loss of CSR. His deductible would increase to $3,250. His specialist visit would cost $70. An emergency room visit would cost $750.

The loss of Cost-Sharing Reductions would significantly affect his ability to use his health insurance. Living on a gross monthly income of only about $1,667 per month, he needs to keep his costs down. If he did think he was having a heart attack or stroke, any reasonable person would urge him to go to the emergency room. With his current plan, he would owe a copay of $150 per ER visit. That’s already a hardship. If his ER copay rose to $750 per visit, that would be nearly half of his gross monthly income. Under these circumstances, he may second guess himself and avoid going to the ER right away, putting himself at greater risk.

Changes to Tax Credits

As I described above, the ACA issues refundable tax credits that consumers can use to lower the cost of their monthly premium.

The American Health Care Act repeals these dynamic tax credits. It replaces them with stagnant tax credits that adjust only based on age. Consumers would receive a set amount of credit depending on their age range. (Kaiser Family Foundation, 2017) Experts say these credits are significantly lower than the ACA provides, and the credits would be insufficient to purchase insurance. An analysis by the Center for Budget and Policy Priorities found that in Pennsylvania, the average increase of total plan costs for current Marketplace consumers in 2020 would be almost $4,000. Taking into account a change made to the bill on March 20, 2017, the report found that average increases in Pennsylvania would still be about $3,000 per consumer. The analysis incorporated expected increases in both premiums after the tax credit and out-of-pocket expenses like deductibles. (Aron-Dine & Straw, 2017)

The updated version of the bill includes a provision that would allow consumers to deduct healthcare expenses from their taxes if the expenses exceed 5.8% of their annual income. An analysis by Families USA found that this provision would not help most consumers. The primary reason is that consumers would still have to pay much higher premium and out-of-pocket costs throughout the year. The increased cost is expected to cause millions of consumers to drop insurance because it will be unaffordable.

As I have heard from people in my experience as a Navigator, if they cannot afford to purchase health insurance, they will not buy it. Being able to deduct that cost on their taxes is not helpful if they can’t pay for it in the first place. The updated version of the bill did not include any provisions to reduce out-of-pocket costs like deductibles, which are expected to rise substantially. (Families USA, 2017)

Under this bill, some consumers who currently do not qualify for an ACA tax credit would receive a tax credit. Some moderate-income young people do not qualify for an ACA tax credit because the cost of a Silver level health plan in their location is relatively low and is considered affordable. The repeal bill’s age-based tax credits would be available to them. These people may benefit from the changes. However, the bill is expected to hurt older, low-income consumers the most. (Quealy & Sanger-Katz, 2017)

Using the Kaiser Family Foundation tax credit estimation tool, anyone can make an apples to apples comparison between current levels of ACA tax credits to tax credits issued under this new bill. (Kaiser Family Foundation, 2017) Here is an example:

Allegheny County

Under the ACA, a 60-year-old adult with an annual income of $20k currently receives APTC of $6,120 per year. The consumer would pay only $960 per year in premiums. The consumer would receive CSR, lowering their deductible to $100.

Under the proposed bill, the same 60-year-old adult would receive a flat tax credit of $4,000 per year. Their premium contribution would be 28% of their annual income. After the tax credit, their premium contribution would be lowered to $5,510. After the tax credit, the consumer would still experience a premium increase of 475%. The consumer would not receive CSR, because the bill repeals these savings. The consumer would be responsible for a deductible of $3,250.

Montgomery County

Under the ACA, a 60-year-old adult with an annual income of $20k currently receives APTC of $11,600 per year. After applying the APTC, the consumer would pay only $960 per year in premiums. The consumer would receive CSR, lowering their deductible to $1,000. The deductible only applies to some services.

Under the proposed bill, the same 60-year-old adult would receive a flat tax credit of $4,000 per year. Their premium contribution would be 64% of their annual income. After the tax credit, their premium contribution would be lowered to $12,860. After the tax credit, the consumer would still experience a premium increase of 1,243%. The consumer would not receive CSR, because the bill repeals these savings. The consumer would be responsible for a deductible of $2,500. All out-of-pocket expenses would increase, as well.

This drastic increase in premium and out-of-pocket expenses would force many consumers to drop coverage simply because they could not afford the cost. The nonpartisan Congressional Budget Office (CBO) estimates that under the American Health Care Act, 14 million people would lose coverage by 2018 alone. By 2026, 24 million people would lose coverage. (Congressional Budget Office, 2017)

Consumer example: Rita

I want to draw your attention back to Rita, who I mentioned at the beginning.

Rita is a 75-year-old woman living in Allegheny County. She is a permanent resident who is not eligible for Medicare. Her income of about $13k is over the limit to qualify for Medicaid for someone over age 65. At the end of the latest Open Enrollment period, 2,634 Pennsylvanians over age 65 had enrolled in Marketplace plans. (Centers for Medicare and Medicaid Services, 2017)

Rita had been uninsured for years before the ACA made it possible to find comprehensive, affordable coverage. She receives APTC of $6,372 per year. She enrolled in a Silver level plan with a premium of only $14 per month or $168 per year. Due to her low income, she is eligible for the highest level of CSR. Her deductible is only $100, and a visit to her specialist is only $15.

The proposed repeal bill would reduce Rita’s tax credit to $4,000, raising her premium cost to $2,544 per year. The bill eliminates all CSR. Rita’s deductible would increase to $3,250 per year. Her specialist visit would cost $75.

These increases would be financially devastating for Rita. She cannot afford to spend over $2,000 on her premium alone. If she were hospitalized, she could not afford a $3,250 deductible. If this bill were passed, Rita would not be able to afford to pay for health coverage. Perhaps her family could help her financially, but a mother doesn’t want to rely on her children to support her, and many other seniors do not have that option.

Use of Proposed New Tax Credits

From my perspective as a Navigator, the proposed rules about use of tax credits raise concerns about ease of consumer choice. The ACA created the Health Insurance Marketplace, the online state exchanges where consumers can easily view, compare, and enroll in a health plan.

The proposed bill would allow consumers to use their healthcare tax credits on both Marketplace and off-Marketplace plans, as long as the plan meets the standard of a Qualified Health Plan.

As a Navigator who is required to consider the consumer’s best interest, I am concerned that this change will make it difficult for consumers to compare all the plans available to them with their tax credit. Many consumers who come to a Navigator for assistance aren’t familiar with health insurance, and/or aren’t familiar with computers. If these consumers then had to visit multiple websites to search for health plan options, it would be confusing and difficult.

Even with the current streamlined Marketplace, consumers contact us every year because they went to a fake Marketplace website and were duped into buying a non-Marketplace policy. There is no reason to add more steps to the enrollment process.

Actuarial value ratings

The ACA requires Qualified Health Plans, such as those sold on the Marketplace, to have an actuarial value of at least 60%, meaning the insurer covers at least 60% of healthcare costs. Marketplace plans are divided among five levels: Bronze, covering 60%; Silver, covering at least 70; Gold, covering 80%; and Platinum, covering 90%.

In Pennsylvania, 81% of Marketplace enrollees are enrolled at the Silver level. (This is also true nationwide.) These consumers’ plans cover at least 70% of their healthcare costs. Consumers who are eligible for Cost-Sharing Reductions and enroll at the Silver level (54.8% of all Pennsylvania enrollees) see the actuarial value of their Silver plans increased to lower their out-of-pocket costs. Depending on income, a Silver plan for these consumers covers between 73 – 94% of their healthcare costs. (Centers for Medicare and Medicaid Services, 2017)

The American Health Care Act eliminates the actuarial value requirement. Under this provision, insurers could offer plans that cover less than 60% of healthcare costs. It eliminates the ACA requirement for plans to be offered at Bronze, Silver, Gold, or Platinum levels. An analysis by Health Affairs states this could make it difficult for consumers to compare plans.  (Jost, 2017)

From my perspective as a Navigator, this does not only harm consumers by providing them with less coverage. Currently, the Marketplace makes it very easy to compare similar plans from different companies, side-by-side. A consumer can easily decide, for example, to compare all available plans on the Silver level. The consumer knows they are viewing plans that will cover at least 70% of their healthcare costs. They know this is an apples-to-apples comparison. If plans suddenly didn’t adhere to uniform coverage categories, it would become extremely difficult for consumers to compare their plan options. They would not know for certain if they were comparing similar coverage levels.

Repeal of revenue-generating measures

The ACA includes a slew of measures designed to raise revenue to pay for the law’s expenditures. These include taxes on health insurers and pharmaceutical manufacturers, an increase in the Medicare payroll tax for high-income taxpayers (income over $200k annually for an individual), and tax penalties associated with the individual and employer mandate.

These new measures were intended to essentially pay for ACA subsidies, so the ACA would not add to the federal deficit or take funding from other programs, like Social Security. (Ydstie, 2013) The original CBO score for the ACA estimated it would reduce the federal deficit by $143 billion during the period 2010 – 2022. (Congressional Budget Office, 2010) After the U.S. Supreme Court ruled that Medicaid Expansion was optional, not mandatory, for states, the CBO issued an updated cost estimate in 2012. At that time they estimated the ACA would reduce the federal deficit by $83 billion during the same time period. (Congressional Budget Office, 2012) Those predictions have been accurate. These savings were achieved while increasing the nonelderly insured rate nationwide to 89.7%. (Jackson, 2017)

The proposed American Health Care Act would repeal all of these revenue-generating measures. It has been described by public policy experts as a tax cut for the wealthy. An analysis found that the repeal of these taxes will cost $593.7 billion over the next 10 years. (Jost, 2017) The CBO estimate shows that the bill saves money by drastically cutting Medicaid funding and ACA tax credits. The bill trades tax revenue from the highest earning taxpayers for giant losses of coverage among low-moderate earning individuals.

If the AHCA were passed, they expect 52 million people to be uninsured by 2026. (Congressional Budget Office, 2017)

In Pennsylvania, 1.1 million consumers could lose coverage. (Jacobs, 2017)

Age rating

The ACA restricts insurance plan age rating to a 3:1 ratio. An insurer cannot charge the oldest person on a health plan more than 3x the price charged to the youngest person on the plan. Insurance costs typically rise with age, so this rating keeps prices balanced for older folks. (Blumberg & Buettgens, 2013) The individual mandate, which requires younger, healthier people to enroll in insurance or face a tax penalty, helps to balance the risk pool and “make up” for the age rating restriction. (Eibner & Saltzman, 2015)

The American Health Care Act increases the age rating to a 5:1 ratio, allowing insurers to charge older folks up to 5x the price charged to a younger person for the same plan. It permits states to set higher or ratio if desired. Several reports, including the official scorecard from the nonpartisan Congressional Budget Office, state that this change will drastically increase the price of health insurance for people age 50 – 64. (Congressional Budget Office, 2017) As costs rise, older consumers could be forced to drop health coverage altogether. (Kliff, 2017)

Continuous coverage incentive

The American Health Care Act eliminates the tax penalty for people who remain uninsured. Experts expect some people, mostly young and healthy consumers who think they don’t need insurance, to drop coverage if the penalty is eliminated.

Instead of penalizing people who choose not to enroll, this bill proposes to penalize consumers who choose to enroll. At the time of enrollment, consumers would be subject to a 12-month coverage review. If they were without health coverage for more than 63 days in the prior 12-month period, the consumer will be charged a 30% penalty that gets added to their premium for a year. This penalty is paid to the insurance company, not to the IRS, as the individual mandate penalty is paid. (Kaiser Family Foundation, 2017)

Rather than encouraging uninsured consumers to enroll, experts expect this penalty to discourage healthy uninsured consumers from seeking coverage. (Congressional Budget Office, 2017)  Coverage gaps most often occur when a consumer faces financial difficulties, such as a drop in income. This penalty only adds to that challenge. (Hagan, 2017)

The penalty shifts from people who are uninsured onto people who get insurance.

Conclusion

Since its passage in 2010, the Affordable Care Act has helped over 20 million Americans gain health coverage, including 1.1 million Pennsylvania residents. Many of these consumers had been locked out of health coverage in the past, often due to burdensome cost or discrimination against pre-existing conditions.

As a Navigator, I have seen firsthand how the ACA helps people every day. I remember Trish, who didn’t think she could afford to purchase health coverage, but came in to apply for her children. Trish had a lump on her neck, but without insurance, she couldn’t afford to get it checked out. An ACA tax credit helped Trish afford a health plan. Luckily, Trish only had a benign cyst. She still cried over the phone, relaying her story. She was so relieved to have an answer.

Since the introduction of the proposed American Health Care Act, I have heard from consumers are scared about the future of their healthcare. After comparing the bill to the current law, and reading expert analysis, it seems clear that the proposed bill would hurt low-moderate income families like the ones I work with every day. For people most in need of financial assistance, the proposed tax credits are not as generous as the ACA. Eliminating Cost-Sharing Reductions will cause out-of-pocket costs to skyrocket. Other changes, like increasing age rating, will specifically target older people who may be more in need of care.

It’s my job to represent the consumer voice. By sharing consumer stories today and a description of this bill’s potential impact on Pennsylvania Marketplace enrollees, I hope I’ve helped you learn more about the consumer experience.

Thank you for your time today.

 

Sources Cited

Aron-Dine, A., & Straw, T. (2017, March 22). House GOP Health Bill Still Cuts Tax Credits, Raises Costs by Thousands of Dollars for Millions of People. Retrieved from CBPP.org: http://www.cbpp.org/research/health/house-gop-health-bill-still-cuts-tax-credits-raises-costs-by-thousands-of-dollars

Blumberg, L., & Buettgens, M. (2013, March). Why the ACA’s Limits on Age-Rating Will Not Cause “Rate Shock”. Retrieved from Robert Wood Johnson Foundation website: http://www.rwjf.org/en/library/research/2013/03/why-the-aca-s-limits-on-age-rating-will-not-cause–rate-shock-.html

Brooks, T. (2016, July 27). Fixing The ‘Family Glitch’ Will Boost Economic Security For Low-Income Families And Increase Marketplace Stability. Retrieved from Health Affairs Blog: http://healthaffairs.org/blog/2016/07/27/fixing-the-family-glitch-will-boost-economic-security-for-low-income-families-and-increase-marketplace-stability/

Center on Budget and Policy Priorities. (2013, July). Premium Tax Credits: Answers to Frequently Asked Questions. Retrieved from Health Reform Beyond the Basics: http://www.cbpp.org/sites/default/files/atoms/files/QA-on-Premium-Credits.pdf

Centers for Medicare and Medicaid Services. (2017, March 15). 2017 Marketplace Open Enrollment Period Public Use Files. Retrieved from CMS.gov: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Marketplace-Products/Plan_Selection_ZIP.html

Congressional Budget Office. (2010, March 20). H.R. 4872, Reconciliation Act of 2010 (Final Health Care Legislation). Retrieved from CBO.gov: https://www.cbo.gov/publication/21351

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