Wyden: Healthcare law's 'family glitch' leaves dependents without coverage
- 03/27/13 10:28 AM ET
Sen. Ron Wyden (D-Ore.) said Tuesday that millions of workers’ dependents would still be left without options for affordable family health insurance under the Affordable Care Act.
“Without action, millions of hard working Americans are going to be squeezed by the family glitch,” Wyden said. “Many people will be left with a false choice of taking family coverage through work they can’t afford or struggling to find a better plan in the exchange without a subsidy.”
Wyden said that there is a “family glitch” because workers will be ineligible for federal tax credits to help them buy into the health insurance exchanges starting in 2014, unless the cost of their individual employer-based health coverage premium exceeds 9.5 percent of a worker’s household income. Wyden said that glitch ignores the fact that family coverage is much more expensive than individual coverage, and could leave some middle-class workers in a tough spot.
The Centers for Medicare and Medicaid Services (CMS) responded to Wyden’s concerns, saying that there will be flexibility for the states in the exchange programs that could help.
“Under employee choice, an employer picks a metal level of coverage (bronze, silver, gold or platinum) and defines a contribution towards its employees’ coverage; an employee then will apply that employer contribution toward the premium for the [Small Business Health Options Program], SHOP, plan of his/her choice,” CMS wrote in a letter to Wyden.
Wyden said more flexibility for the individual still wouldn’t solve the “family glitch.” He said as many as 3.9 million dependents could be negatively affected because an employer’s individual coverage choice is considered affordable, while the family plan is not.
“Even in the states that allow for employee choice, it will be limited to a small number of workers,” Wyden said. “SHOP exchanges will not solve the family glitch.”
During the healthcare law debate, Wyden proposed the Free Choice Vouchers system that would have allowed an employee to receive an employer contribution if the employee could not afford the premium offered by their work. The employee would have then been able to shop in the health exchange for insurance that met their family needs. But the Free Choice Voucher was removed from the law in 2011 when the continuing budget resolution passed.
From Reuters
Little hope seen for millions priced out of health overhaul
MIAMI |
(Reuters) - Millions of Americans will be priced out of health insurance under President Barack Obama's healthcare overhaul because of a glitch in the law that adversely affects people with modest incomes who cannot afford family coverage offered by their employers, a leading healthcare advocacy group said on Tuesday.
Tax credits are a key component of the law and the White House has said the credits, averaging about $4,000 apiece, will help about 18 million individuals and families pay for health insurance once the Affordable Care Act takes full effect, beginning in January 2014.
The tax credits are geared toward low and middle-income Americans who do not have access to affordable health insurance coverage through an employer. The law specifies that employer-sponsored insurance is affordable so long as a worker's share of the premium does not exceed 9.5 percent of the worker's household income.
In its rule making, or final interpretation of the law, the IRS said affordability should be based strictly on individual coverage costs, however.
That means that, even if family coverage through an employer-based plan far exceeds the 9.5 percent cutoff, workers would not be eligible for the tax credits to help buy insurance for children or non-working dependents.
"It's an issue. It needs to be fixed," Ron Pollack, executive director of Families USA, an influential healthcare advocacy group said on Tuesday, referring to what he called "the family glitch problem."
He spoke on a teleconference calling attention to a report, released by his organization on Tuesday, that said more than 1.7 million Floridians will be eligible for the new premium tax credits next year.
'TEA PARTY INFUSION'
"The tax credit subsidies are a game changer. They will help make health coverage affordable for huge numbers of uninsured families in Florida who would have been priced out of the health coverage and care they need," Pollack said.
He had no estimate for the number of people in Florida affected by the affordability question and IRS policy. But he said there was little hope for a legislative fix in Congress, where the House is controlled by Republicans still bent on repealing Obamacare.
The problem comes on top of another more contentious healthcare issue in Florida, where the state legislature has opposed Republican Governor Rick Scott's endorsement of an expansion of Medicaid. Without the expansion, envisioned under Obama's 2010 reforms, Pollack said about 1.8 million Floridians would be left without healthcare coverage.
"It would mean that the poorest of the poor really would be left out in the cold," he said.
Pollack was joined on the teleconference by Florida Representative Debbie Wasserman Schultz, a congressional champion of healthcare reform who also chairs the Democratic National Committee.
"I think one only has to look at the budget the Republicans crammed through the House last week, with the repeal of the Affordable Care Act attached to it, to know that the odds of adding coverage and improving coverage in Obamacare in this Tea Party-infused House of Representatives is very unlikely," she said.
"The way to improve this law and to address concerns that have come up with it is not to repeal it, not to throw it out, but to simply make modifications to it. It would be wonderful if we had Republican colleagues in our chamber, on the other side of the aisle, who were willing to sit down and do that."
Speaking after the call, Families USA health policy director Kathleen Stoll told Reuters recent studies showed that anywhere between 2 million and 4 million people across the United States would be adversely affected by the federal rule limiting aid and the IRS interpretation of whether an employer's health plan is affordable.
"We'd like to see it fixed because it clearly doesn't reflect what Congress intended," Stoll said.
"It could mean the difference between being able to move in to purchasing private insurance and not purchasing private insurance. Hopefully within the next couple of years there will be room to fix it."
(Reporting by Tom Brown. Editing by Andre Grenon)
From AP
STUDY: HEALTH LAW TO RAISE CLAIMS COST 32 PERCENT
WASHINGTON (AP) -- A new study finds that insurance companies will have to pay out an average of 32 percent more for medical claims on individual health policies under President Barack Obama's health care overhaul.
What does that mean for you?
It could increase premiums for at least some Americans.
If you are uninsured, or you buy your policy directly from an insurance company, you should pay attention.
But if you have an employer plan, like most workers and their families, odds are you don't have much to worry about.
The estimates from the Society of Actuaries could turn into a political headache for the Obama administration at a time when much of the country remains skeptical of the Affordable Care Act.
The administration is questioning the study, saying it doesn't give a full picture - and costs will go down.
Actuaries are financial risk professionals who conduct long-range cost estimates for pension plans, insurance companies and government programs.
The study says claims costs will go up largely because sicker people will join the insurance pool. That's because the law forbids insurers from turning down those with pre-existing medical problems, effective Jan. 1. Everyone gets sick sooner or later, but sicker people also use more health care services.
"Claims cost is the most important driver of health care premiums," said Kristi Bohn, an actuary who worked on the study. Spending on sicker people and other high-cost groups will overwhelm an influx of younger, healthier people into the program, said the report.
The Obama administration challenged the design of the study, saying it focused only on one piece of the puzzle and ignored cost relief strategies in the law, such as tax credits to help people afford premiums and special payments to insurers who attract an outsize share of the sick.
The study also doesn't take into account the potential price-cutting effect of competition in new state insurance markets that will go live Oct. 1, administration officials said.
At a White House briefing Tuesday, Health and Human Services Secretary Kathleen Sebelius said some of what passes for health insurance today is so skimpy it can't be compared to the comprehensive coverage available under the law. "Some of these folks have very high catastrophic plans that don't pay for anything unless you get hit by a bus," she said. "They're really mortgage protection, not health insurance."
Sebelius said the picture on premiums won't start coming into focus until insurers submit their bids. Those results may not be publicly known until late summer.
Another striking finding of the report was a wide disparity in cost impact among the states.
While some states will see medical claims costs per person decline, the report concluded that the overwhelming majority will see double-digit increases in their individual health insurance markets, where people purchase coverage directly from insurers.
The differences are big. By 2017, the estimated increase would be 62 percent for California, about 80 percent for Ohio, more than 20 percent for Florida and 67 percent for Maryland. Much of the reason for the higher claims costs is that sicker people are expected to join the pool, the report said.
Part of the reason for the wide disparities is that states have different populations and insurance rules. In the relatively small number of states where insurers were already restricted from charging higher rates to older, sicker people, the cost impact is less.
The report did not make similar estimates for employer plans that most workers and families rely on. That's because the primary impact of Obama's law is on people who don't have coverage through their jobs.
A prominent national expert, recently retired Medicare chief actuary Rick Foster, said the report does "a credible job" of estimating potential enrollment and costs under the law, "without trying to tilt the answers in any particular direction."
"Having said that," Foster added, "actuaries tend to be financially conservative, so the various assumptions might be more inclined to consider what might go wrong than to anticipate that everything will work beautifully." Actuaries use statistics and economic theory to make long-range cost projections for insurance and pension programs sponsored by businesses and government. The society is headquartered near Chicago.
Bohn, the actuary who worked on the study, acknowledged it did not attempt to estimate the effect of subsidies, insurer competition and other factors that could offset cost increases. She said the goal was to look at the underlying cost of medical care.
"We don't see ourselves as a political organization," Bohn added. "We are trying to figure out what the situation at hand is."
On the plus side, the report found the law will cover more than 32 million currently uninsured Americans when fully phased in. And some states - including New York and Massachusetts - will see double-digit declines in costs for claims in the individual market.
Uncertainty over costs has been a major issue since the law passed three years ago, and remains so just months before a big push to cover the uninsured gets rolling Oct. 1. Middle-class households will be able to purchase subsidized private insurance in new marketplaces, while low-income people will be steered to Medicaid and other safety net programs. States are free to accept or reject a Medicaid expansion also offered under the law.
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AP White House Correspondent Julie Pace contributed to this report.
From The Washington Examiner
Obamavote: Health care application registers voters too
The 61-page online Obamacare draft application for health care includes asking if the applicant wants to register to vote, raising the specter that pro-Obama groups being tapped to help Americans sign up for the program will also steer them to register with the Democratic Party.
On page 59, after numerous questions about the applicant's identity and qualification for Obamacare, comes the question: "Would you like to register to vote?" The placement of the question could lead some to believe they have to register to vote to get health care.
In the introduction of the document, the Centers for Medicare & Medicaid Services declare: "This document -- the 'questionnaire' -- represents each possible item that may need to be asked for successful eligibility determinations."
In a letter to Health and Human Services Secretary Kathleen Sebelius Monday, Rep. Charles Boustany Jr., chairman of the House Ways and Means Oversight subcommittee, said HHS is overstepping its bounds by a mile.
"The draft documents wander into areas outside the department's purview and links applications for health insurance subsidies to voter registration," he wrote in the letter provided to Secrets. "The position of the question could lead some to think voter registration is somehow tied to subsidy eligibility," he added.
Boustany, a Louisiana Republican, said the application raises two alarming issues: What does HHS plan to do with all the information it collects on each applicant, and will pro-Obama groups like AARP and Families USA -- which might be tapped as "navigators" to sign people up to Obamacare -- steer them to register as Democrats. Others have indicated that groups like Planned Parenthood and ACORN could also act as navigators.
In his letter, Boustany demands from HHS guidance for the navigator program, especially whether navigators will be encouraged to ask applicants about their voting status. He set an April 8 deadline for HHS' response.
He added that the Affordable Care Act does not let HHS probe into an applicant's choice to vote. What's more, he said the Paperwork Reduction Act requires that federal agencies seek only information needed to do their job.
"While the health care law requires that government agencies collect vast information about Americans' personal lives, it does not give your department an interest in whether individual Americans choose to vote," wrote Boustany.
From The Hill
Premiums could rise under healthcare law, Sebelius concedes
The Obama administration acknowledged Tuesday that some people could see their premiums rise under the healthcare reform law.
Health and Human Services (HHS) Secretary Kathleen Sebelius told reporters that "there may be a higher cost associated with getting into that market" where "folks will be moving into a really fully insured product for the first time."
Health and Human Services (HHS) Secretary Kathleen Sebelius told reporters that "there may be a higher cost associated with getting into that market" where "folks will be moving into a really fully insured product for the first time."
The comment was among the first from the Obama administration to reveal a degree of uncertainty about the impact of the law on insurance premiums.
Sebelius said that transparency and "market strategies" will ease any potential instances of rate shock for consumer buying insurance.
"This is the first time ever in the history of the United States that insurance companies have to file their rates, it has to be very transparent, they have to offer the same kind of coverage without 5,000 tiny little lines and internal caps, and they have to compete for customers. And I am a believer in the market strategies that in and of itself will minimize the rate impact," Sebelius said.
Sebelieus added that people "are really going to see much better benefit for the money that they're spending" as the law kicks in, and noted that many will receive subsidies from the government to help pay for insurance.
The secretary's concession on premiums put the White House on the defensive. When asked about Sebelius's remarks, a spokesman for President Obama said healthcare costs are falling thanks to the reform law.
"I would actually point to the results that we're already seeing from the Affordable Care Act, which is a savings of $2.1 billion and the analysis from the [Congressional Budget Office] that actually says, in the future, we're gonna see rates that are lower for higher benefits," deputy press secretary Josh Earnest said Wednesday.
"I would actually point to the results that we're already seeing from the Affordable Care Act, which is a savings of $2.1 billion and the analysis from the [Congressional Budget Office] that actually says, in the future, we're gonna see rates that are lower for higher benefits," deputy press secretary Josh Earnest said Wednesday.
Several key provisions of the Affordable Care Act will take effect next year, and the two parties are battling over how it should be implemented.
Premiums have been a hot topic for debate. Critics of the healthcare law have long charged that rates could rise substantially in the individual and small-group insurance markets under the law, particularly for younger adults.
Premiums have been a hot topic for debate. Critics of the healthcare law have long charged that rates could rise substantially in the individual and small-group insurance markets under the law, particularly for younger adults.
The comments were published online late Tuesday by The Wall Street Journal.
—Justin Sink contributed.
This story was first posted at 9:38 a.m. and has been updated.
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