affordable care act

ACA Subsidies and Labor Market Participation

Since the passage of the Affordable Care Act (ACA) in 2010, many economists have predicted that the Act will cause a reduction in labor market participation and a recent New York Times article seemingly vindicates these expectations. The article recounts how the rapid increase in insurance premiums have led Anne Cornwell to cut her working hours, and thus her yearly income, by 30 percent in order to be eligible for health insurance subsidies.

Is The ACA Helping to Fuel the Opioid Overdose Rate?

Leaders at all levels of government and civil society are alarmed at the continued rise, year after year, in the death rate from opioid overdose. The latest numbers for 2015 report a record 33,000 deaths, the majority of which are now from heroin. Health insurers are not a disinterested party in this matter.

Cigna, America’s fifth largest insurer, recently announced it has made good progress towards its goal of reducing opioid use by its patients by 25% by mid-2019. To that end, Cigna is limiting the quantities of opioids dispensed to patients and requiring authorizations for most long acting opioid prescriptions. Cigna is encouraging its participating providers to curtail their use of opioid prescriptions for pain patients and is providing them with data from monitoring the opioid use patterns of their patients with an aim towards reducing abuse.

In a Washington Post report on this announcement Cigna CEO David Cordani said, “We determined that despite no profit rationale—in fact it’s contrary to that—that societally we needed to step into the void and we stepped in pretty aggressively.”

No profit rationale?

Paying for fewer opioids saves the insurer money in the short run. And opioids have become costlier as “tamper-resistant” reformulations, encouraged by the FDA, have led to new patents allowing manufacturers to demand higher prices.

There is growing evidence that, as doctors curtail their opioid prescriptions for genuine pain patients, many in desperation seek relief in the illegal market, exposing them to adulterated opioids as well as heroin. For the same reason, recent studies on the effect of state-based Prescription Drug Monitoring Programs (PDMPs) suggest they have not led to reductions in opioid overdose rates and may actually be contributing to the increase. It is reasonable to be skeptical that Cigna’s internal prescription drug monitoring program will work any differently.

Further research suggests the community rating regulations of the Affordable Care Act may be contributing to the problem. The ACA requires insurance companies to sell their policies to people who have very expensive health conditions for the same premiums they charge healthy people. At the same time, the ACA’s “risk-adjustment” programs systematically underpay insurers for many of their sickest enrollees. The overall effect is that the ACA penalizes insurers whose networks and drug formularies are desirable to those who are sick. Insurers respond to this disincentive by designing their health plans to have with provider networks, drug formularies, and prescription co-payment schedules that are unattractive to such patients, hoping they will seek their coverage elsewhere. This “race to the bottom” between the health plans results in decreased access and suboptimal health care for many of the sickest patients.

Five Questions I Will Use to Evaluate the Phantom Senate Health Care Bill

Rumor has it that tomorrow is the day Senate Republican leaders will unveil the health care bill they have been busily assembling behind closed doors. So few details have emerged, President Trump could maybe learn something from Senate Majority Leader Mitch McConnell about how to prevent leaks. Even GOP senators are complaining they haven’t been allowed to see the bill.

Survey: What Turns Democrats against the Affordable Care Act’s Core Regulations?

The 2010 Patient Protection and Affordable Care Act, also known as Obamacare, may perhaps be the most contentious and polarizing law we’ve seen enacted in the past several decades. For seven years, Democrats have remained convinced they like it and Republicans confident that they don’t.

But once we get past the partisanship and polarization, what do Democrats and Republicans think about the fundamental regulations that constitute the core of Obamacare? These core regulations include pre-existing conditions rules that require insurance companies cover anyone who applies (guaranteed issue) and charge people the same rates regardless of pre-existing conditions (community rating).

All government policies and their ostensible benefits come with a price. What are Americans willing to pay?

As I’ve previously written, the Cato Institute 2017 Health Care Survey found that while Americans initially support core Obamacare regulations of community rating and guaranteed issue, support plummets if such regulations harm access to high quality medical services, require higher premiums or higher taxes. That being said, Americans appear to care more about their access to high quality medical services than they care about higher taxes, higher premiums, or universal coverage for those with pre-existing conditions.

Democrats are unique, however. They are the only group who says they’d be willing to pay more if it guaranteed coverage to those with pre-existing conditions. Six in 10 Democrats say they’d be willing to personally pay higher taxes and 58% say they’d pay higher premiums so that insurance companies wouldn’t charge people higher rates based on pre-existing conditions (community rating). Similar shares say they’d pay higher taxes (60%) and premiums (51%) so that insurance companies would cover anyone who applies (guaranteed issue).

New Cato Survey: Large Majorities Support Key Obamacare Provisions, Unless They Cost Something

Support for the ACA’s community-rating provisions flips from 63%-33% support to 60%-31% opposed if it harms the quality of health care. 55% say more free-market competition not government management would best deliver high-quality affordable health care. FULL RESULTS (PDF)

Most polling of the Affordable Care Act finds popular support for many of its benefits when no costs are mentioned. However, a new Cato Institute/YouGov survey finds that support plummets, even among Democrats, if its popular provisions harm the quality of health care. The poll finds that risks of higher premiums, higher taxes, or subsidies to insurers are less concerning to Americans than harm to the quality of care. 

By a margin of 63% to 33%, Americans support the ACA’s community-rating provision that prevents health insurers from charging some customers higher rates based on their medical history. However, support flips with a majority opposed 60%-31% if the provision caused the quality of health care to get worse.

Majorities also come to oppose the ACA’s community-rating provision if it increased premiums (55% oppose, 39% favor), or raised taxes (53% oppose, 40% favor). However, threats to the to quality of care appear to be a pressure point for most Americans.

Could It Be Unconstitutional to Raise the Obamacare “Tax” for Not Purchasing Health Insurance?

As many predicted, especially us at Cato, the Affordable Care Act is beginning to make health insurance less affordable for many Americans. Part of the problem, in a nutshell, is precisely what my colleague Michael Cannon described in 2009, the young and the healthy avoiding signing up for health insurance and choosing to pay the fine, or, as Chief Justice John Roberts would call it, a tax.

MIT economist Jonathan Gruber, often described as an architect Obamacare, recently said that some of these problems can be alleviated by increasing the “tax” on those without insurance. “I think probably the most important thing experts would agree is we need a larger mandate penalty,” said Gruber.

Depending on how high the penalty goes, there could be a constitutional problem with that. In the opinion that converted the “penalty” into a constitutional “tax,” Chief Justice Roberts described the characteristics of the “shared responsibility payment” that made it, constitutionally speaking, a tax rather than a penalty. One of those characteristics is that the penalty was not too high: “for most Americans the amount due will be far less than the price of insurance, and, by statute, it can never be more. It may often be a reasonable financial decision to make the payment rather than purchase insurance, unlike the ‘prohibitory’ financial punishment in Drexel Furniture.” In Drexel Furniture, also known as the Child Labor Tax Case, the Court struck down a 10 percent tax on the profits of employers who used child labor in certain businesses. One reason the Court struck it down was because its “prohibitory and regulatory effect and purpose are palpable.”

Wave of Health Insurance CO-OPs to Shut Down in Latest ACA Failure

Hundreds of thousands people will lose their insurance plans as a raft of health insurance cooperatives (CO-OPs) created by the Affordable Care Act will cease operations. Just last week, CO-OPs in Oregon, Colorado, Tennessee and Kentucky announced that they would be winding down operations due to lower than expected enrollment and solvency concerns (although the one in Colorado is suing the state over the shutdown order).  They join four other CO-OPs that have announced that they would be closing their doors. In total, only 15 out of the 23 CO-OPs created by the law remain. These closures reveal how ill-advised this aspect of the ACA was both in terms of lost money and the turmoil for the people who enrolled in them. The eight that have failed have received almost $1 billion in loans, and overall CO-OPs received loans totaling $2.4 billion that might never get paid back. In addition, roughly 400,000 people will lose their plans.

Sources:  Sabrina Corlette et al. “The Affordable Care Act CO-OP Program: Facing Both Barriers and Opportunities for More Competitive Health Insurance Markets,” The Commonwealth Fund, March 12, 2015; Erin Marshal, “8 Things to Know About Insurance CO-OP Closures,” Becker’s Hospital Review, October 20, 2015. Created using Tableau.

Notes: Hawaii and Alaska not shown. Neither state had a CO-OP. CoOportunity Health served both Iowa and Nebraska.

Pages

Subscribe to RSS - affordable care act