Panel 3: Health Care Coverage in the United States

Speaker 1 (00:01):

Amazing. Well, with that, we will wrap up lunch and welcome to any new faces that have joined since lunchtime, we’re glad to have you. I’m Bailey Wilbanks, I’m Health Policy education advisor at the Alliance and really excited to be with everybody today. Quick reminder, we are recording the panel session, but we are not recording q and a, so you can ask any questions. Please raise your hand if you have a question, we’ll bring a mic to you, or if you’re feeling shy, you can write it on those green cards that are on your table. Just write a nice, clear, big font, so to make it easier on our moderators. And then finally, I will turn it over to our next panel, introduction of Healthcare Coverage in the United States. Our wonderful moderator today is Debbie Curtis. She serves as the vice President of McDermott Plus she spent 24 years in the house, most of it in a dual role as staff on the Ways and Means Health Subcommittee and Chief of Staff to Health Subcommittee, former chairman Pete Stark. She left the hill after the passage of the Affordable Care Act and helped implement the law in DC as the Deputy Director of the District of Columbia’s Health Exchange. She’s been at McDermott nearly four years now, and she told me to add that she benefited greatly from the Alliance for Health policies, events during her time on the Hill and is thrilled to be with us today. So that lovely sentiment. I will pass it to you, Debbie.

Speaker 2 (01:25):

Thanks, Bailey.

Speaker 1 (01:26):

Oh, and I will, there’s Debbie.

Speaker 2 (01:29):

That’s me.

Speaker 1 (01:30):

I’ll wait for you.

Speaker 2 (01:31):

We’ll go to our speakers because that’s where, okay, so really thrilled to be with you all today and I asked Bailey to say that because it’s so true. Coming into this room is such a flashback. I feel like I’m 23 again, which is a very good thing. So it’s just great to be here with you today. This panel is going to give you a high level overview of healthcare coverage programs in the United States because as we all know, there are many ways that people get covered. Let me go through who you’re going to be hearing from and each one is going to cover a different topic. So first we have Chris Halt Meyer, and he is going to discuss employer-sponsored coverage. Chris is the VP of Legislative and regulatory policy at the Blue Cross Blue Shield Association. He oversees the regulatory and policy development for them and has more than 25 years of experience in strategic analysis, policy development and federal representation.

(02:26):

Next we have Kip Piper and he’s going to cover Medicaid. KIPP is the president and founder of the Health Results Group and he’s the CEO of omics and he has more than 35 years of experience in health policy at the federal level. He’s worked at CMS and OMB and what’s really important for the discussion he’s having today with us all is that he was at one time Wisconsin’s Medicaid director. So he has real Medicaid director experience. And next we’ve got Neil Patel who will focus on Medicare. He’s a senior fellow at the and policy director of Medicare Policy Initiative at Georgetown Center for Health Insurance Reform. And before he joined them, he was a senior analyst at the CMS Office of Legislation. And before that he worked at the Ways and Means Committee, which is where I worked on the Hill. So always fond association with my fellow ways and means staff.

(03:20):

And finally, we have Cynthia Cox who’s going to focus on the Affordable Care Act. Cynthia is a VP at Kaiser Family Foundation and the director of the program on the A CA. And she connects economic and policy research on the Affordable Care Act there. Prior to joining KFF, she held research and advocacy positions at Columbia University Medical Center and the American Cancer Society. So we have a really great group of people. And before we turn it over to get started, I thought it was helpful to just throw this slide up to kind of level set for all of us at the beginning because where do people get their health insurance in America? And so this slide breaks down how it’s through employers, it’s through individual purchase in the marketplace. It’s through Medicaid and chip Medicare, tricare, and I can’t even see that last one. Va, obviously va. So there are a variety of ways that people get coverage at America and that’s just helpful to keep in context as we travel through this conversation. And I’m going to now pass the baton to Chris.

Speaker 3 (04:31):

Thank you Debbie, and good afternoon everyone. It’s great to be with you today. So I’m going to talk about employer sponsored insurance, and I was asked to start with a little bit of history on health insurance in the United States. And I think that the history of health insurance in the United States is very much intertwined with employer coverage. So there were some kind of small experiments with employer provided insurance, health insurance back in the early 19 hundreds. But health insurance really came of age during the Great Depression. So back in 1929, the Baylor Health System went to a group of teachers in Texas and created kind of the first Blue Cross plan. So as you can see on the slide, that plan provided 21 days of inpatient hospital, say for 50 cents a month, a little bit different than today. And then in the 1930s you had the origin of Blue Shield plans, which were physician service plans that were providing initially coverage to loggers and other related industries in the Pacific Northwest.

(05:34):

Medical societies and hospital associations across the country really popularized Blue Cross and Blue Shield plans. They were really the first widespread modern health insurance plans that were available during World War ii. There was a limit placed on wages, but it exempted benefits. And so there was a pretty big increase in employer sponsored coverage at that time. And then the clarification from IRS in 1954 that employer health insurance was deductible was another major milestone for employer sponsored coverage. And of course the enactment of the Employer Retirement Income Security Act or ERISA in 1974 really created a framework for national coverage for both retirement and health programs. It makes it much easier for employers to sponsor coverage. So that’s a little bit on the history of employer sponsor of health insurance. Whoops, I’m missing a slide here. Well, I wanted to talk a little bit about why employer sponsor insurance, and I think there are three main reasons.

(06:39):

If you look at some of the survey data on coverage on benefits rather health insurance is the most widely regarded or most important employee benefit that employers offer. So it’s really important in terms of recruitment and retention of employees. And then I work a lot with employers and employer associations. I think the other major reason they offer coverage is because they really believe that coverage improves the health and productivity of their workforce. So there’s a very strong incentive for employers to offer. As you can see on this slide, the offering of employer sponsored coverage is nearly universal if you look at the largest firms, but a little less common for smaller employers. And you have seen a little bit of a reduction in offer rates for smaller employers in recent years. There are a variety of reasons for that. I’m happy to talk about them more during q and a.

(07:39):

It’s probably important to also mention that employers can ensure or self-fund their benefits. And I wanted to talk just a little bit about what that means. So if an employer insures their benefits, they work with an insurance company, they transfer their risk for health coverage to that insurance company, when they self-fund their benefits, they are taking on that risk themselves. They usually work with a third party administrator or TPA to actually administer those benefits. But the risk resides with that employer. Self-funding is much more common among larger employers than small employers, but we have seen a little bit of an uptick in self-funding of coverage among smaller employers in recent years.

(08:22):

Employers offer a wide variety of plan types. The most popular is a preferred provider organization or PPO. Those types of plans provide generally a very broad network of doctors and hospitals. They provide out of network coverage and they don’t require the use of a physician referral or PCP at the point of getting a specialty care. One thing that we’ve seen over the last 20 years or so has been a real growth in high deductible health plans. Now, a high deductible health plan can be offered in with each of these plan types and typically is offered in combination with a health account like a health savings account. And recently we’ve seen a new type of arrangement. This was a rule finalized during the Trump administration that allowed for an individual coverage, health reimbursement arrangement or icra. So this is a kind of defined contribution arrangement where employers can, on a tax preference basis, provide funds for people to buy coverage in the individual health insurance market. That is starting to see some uptake in the smaller, among smaller firms today.

(09:35):

Couple key facts about employer sponsored coverage. Employers tend to provide very generous coverage. So they cover about 83% on average of employees healthcare costs. So this is what we kind of refer to in the industry as an actuarial value. If you think about this in relationship to the coverage that people buy on the exchange where you have metal levels, this would be above a gold level on the exchanges and there’s very high satisfaction with people’s own health insurance coverage. 93% of people report that they’re satisfied with their own plan. One thing that I think it’s important to point out is just the value that employer provided coverage provides to the federal government. So the provision of employer sponsored coverage is actually one of the largest tax expenditures in the federal government, federal budget, about 400 billion per year, but we get a huge return on that investment. So for every $1 in terms of the tax expenditure, employers voluntarily kick in about $6. And if you compare that to the cost of providing coverage in other types of programs like Medicaid or the exchanges, it’s a much less costly proposition for subsidized employer coverage. So those are the facts I wanted to provide to you and I’ll turn it over to Kip.

Speaker 4 (11:02):

Alright, so I have the scary part. They have the same parts, so I just want you to know that. So I have Medicaid lucky me, I kid, but it’s really messy and complicated. And if you ever run into anybody who says that they would design Medicaid today exactly as it is now, please find one of those jackets that ties in the bag and comfortably get them to inappropriate mental health professional quickly. So what are we talking about? So we’ve got this joint federal state program. So the number of people right now, roughly 79 million, and when I’m talking about 79 million, I’m including both Medicaid, which is about 72 or 72, almost 72 million of those and the rest are in the children’s health insurance program. Now, most states run the children’s health insurance program chip for most people most of the time and most benefits, but not always very closely aligned with Medicaid.

(12:31):

And so when you deal with Medicaid, the one joke that we have, and it’s not even a joke, is that everybody that’s ever dealt with Medicaid, even tangentially will know these different phrases that you will hear. One is if you’ve met one state, you’ve met one state, if you know one, you know one, that’s it, right? It’s that. And then the second thing that I tell folks, and I’ve told all sorts of people and federal officials and state officials and whatnot, when they ask me perfectly rational, logical questions, they proceed to get my first answer, which is, it depends, right? It depends because there isn’t any straight answer in Medicaid, but I’ll try to give you some sense of things. So you’ve got 79 million people. Now that’s actually about 11% increase since right before the pandemic. So it’s actually more people than were right before the public health emergency kicked in.

(13:35):

It went up very significantly and then dropped significantly as people were redetermined, but it’s more people are enrolled now than before the program dimensions, right? So you’ve got 56 different Medicaid programs, so every state, dc, Puerto Rico, and four territories. So you’ve got 56 different dimensions. Each one of them is fairly significantly different in certain ways. There’s certain federal requirements that have to be met. Now the territories are handled a bit differently. The overall structure, again is federal and state. So you’ve got shared financing. Now this year, if you count both benefits and administration and all the different funds, both federal money and what we call state share, which is about 32% on average, nationwide is would call state, but it’s really non-federal share, okay? Coming from things like state general fund provider taxes, intergovernmental transfers, things like that. So the financing is quite different.

(15:01):

Medicaid federally is a bit of a platypus. It is appropriated and mandatory. Okay, try that one. So there are others. VA health care, for example, is one of those where it’s appropriated every year and mandatory, nobody’s ever tested a situation. What would happen if there wasn’t an appropriation, but with the spending continue probably. But it’s not purely mandatory. The states claim the funds, they go off and claim those funds and it’s different matching levels. Everything from about 50% to 90% depending on the state and depending on the population and also depending on the type of administrative service, the eligibility is very complex. There’s 66 different ways, either mandatory or optional ways, state options that somebody could get onto Medicaid, either through because of income or certain categories, certain characteristics like age, whether the person’s pregnant, whether they’re disabled, so forth, or a combination of income and assets or whether they’ve spent down. So those kinds of dimensions are always a factor. Plus, there are waivers and there are additional pathways that are created, eligibility pathways that are created by what are called basically research waivers under section 1115 of the Social Security Act. But that’s, they’re called research waivers, but they don’t act really like research. They’re not really, they’re supposed to be, but they’re not really in practice. You don’t research something forever.

(16:58):

The types of spending right now, probably about 951 billion will be this year. Okay? So it’s pretty big and it’s growing. Like two years ago, CBO did their best estimate and they underestimated the Medicaid spending by 8% last year. They did their best job and it’s good, they do good. I’m not complaining about them, they’re kind of in a data problem, data inadequacy, but they underestimated federal Medicaid spending by 12%, and a lot of those are states and managed care organizations taking advantage of certain options that we’re creating. So you’ve got this managing back and forth. You’ve got a legal governance structure, so you’ve got federal statutes, you’ve got three different titles of the Social Security Act, title 19 Medicaid, title 21 was chip and Title 11, which is a whole bunch of things, okay? Program integrity, administrative requirements, research waivers and so forth. Then you have federal regulations, sub-regulatory guidance and so forth.

(18:13):

Now that’s at the federal level. You now also have state regulations, state statutes, state guidance and instructions, manuals and so forth. I once have attempted, my team and I have tried to, and we’re talking millions of words of requirements, okay? Hundreds of thousands of pages, different things, and they change. Each state with CMS has an agreement called the state plan, which is going to be generally about a thousand to 2000, give or take pages long, and that sets up a whole bunch of things. It’s basically the state saying, yes, we will comply with this, or this is the option that we choose, and that’s not the waivers. Then you have the waivers, okay, there are 401 as of this morning approved federal waivers. There’s a little over about 270 home and community based waivers. You’ve got another 50 or so that are 40 something that are research waivers, and then you’ve got a whole bunch of others that are managed care waivers.

(19:23):

So each of those have terms and conditions that are on top of whatever the statutes say. And so you have a federal role with this. So you have CMS is of course in charge of overseeing and making sure that the requirements that are met, the federal requirements are met. They propagate the federal regulations, do a lot of the oversight either directly or through contractors. Then you’ve also got OMB, which has to approve by OMB policy, all the research waivers in addition to HHS approving them. So they have a role there in an operational sense. Then on a routine basis, the waivers, you’ve got probably about two thirds of Medicaid spending is under waivers. Now, it’s not through statutory authority, but it’s through waivers, which is an issue which kind of creates this dynamic. The states, every state has a Medicaid agency. They are responsible for administering. They really are the ones that administer the program day to day.

(20:33):

They have to do it within both federal and state law and the requirements. They have a staff, they have contractors. Now, the benefits very complicated, but there’s a series of mandatory and optional benefits plus benefits are added on because of waivers. And then you also have the delivery system. Most Medicaid eligibles, their services are delivered through a contract between the state and what we call managed care entities. They come in different flavors, different kind of contractors. They’re basically risk insurers, and there are significant pros and cons of risk insuring in Medicaid, and it’s pretty much the only type of, there’s nothing else. Medicare doesn’t do it the way Medicaid does. Commercial definitely doesn’t do it that way, and it tends to be somewhat more expensive in some ways, at least in terms of efficiency, it’s a lot less efficient. But you also have some other advantages for the state.

(21:34):

And just to give you an example, the state administrative costs cost about a state, about 4% of benefits. I got to stop now because way over 4% of Medicaid benefit of Medicaid is the state administration, okay? About 4%. It’s pretty stable, about 4%. Now, state to state, that varies from some states like Florida is about two and a half percent, okay? They obviously have some economies of scale and different policies. They also push a lot of the administration onto the plans. You have a couple of states that are up to 10% of Medicaid is, and there’s no, by the way, Ryan or a reason, if you have more managed care, it does not lower your administrative costs than Medicaid. It’s quite the opposite. Your administrative costs go up, but that’s not the only thing. Then you have the administrative costs and the overhead and other things of the plans.

(22:27):

So overall, the cost of Medicaid is about anywhere from about 15 to 20%, which is very high for any kind of, because if you didn’t have, because of the managed care contracting. So it’s very awkward, and that’s because, again, the requirements and processes there are much different than they are again at Medicare or in the commercial world. And so the interactions, I’ll just leave it with this one. You have a lot of people who are eligible because they go in and they’re eligible in Medicare through those pathways, but then they also become eligible through Medicaid, either because of income or other one of those 66 different categories or a waiver category, in which case they become a dual eligible, okay? They’re eligible for both programs. Now, Medicare and private coverage is primary, so there’s a pecking order. If multiple, somebody has multiple coverage, there’s a pecking order as to who pays.

(23:29):

Okay? So you have private insurance is at the top of the heap in terms of their primary. Primary, they pay first. The next is whoever’s secondary, and if the person is on Medicaid at that point, then Medicaid is secondary. If they’re on, and this can happen if they’re, they have private coverage and Medicaid, A lot of kids, for example, the private coverage will kick in first. Then Medicaid will cover whatever is not covered there. Medicaid also covers a lot more benefits than any insurer, any type of program in the United States or in any country, at least on this planet. Okay?

(24:10):

I can’t say anything about other planets. I haven’t been to Neptune. I looked at Uranus once and Mars and telescopes and so on. I’ve not seen any health insurance, but Medicaid covers a lot more populations, a lot more services, and therefore it’s much more complicated and much more important in a lot of ways to those individuals because of those types of services. And of course, it covers things that are not just medical. There’s a whole bunch of non-medical services that only Medicaid covers. And now that I’ve given you the reverse of the fire hose, I’ll turn it over here.

Speaker 5 (24:53):

Thank you. Ki Yeah. So this is, oh, guess he’ll grab this little clip too. All right. I need to see my face, but now I’ll do an overview of the Medicare program and we’ll talk a little bit about eligibility, enrollment, some brief history, and just an overview of the different parts of Medicare. So you probably hear part A, part B, C, and D. So Kip talked a good amount about the Medicaid program, and most people think of Medicaid as for lower income folks and Medicare as the program for elderly folks. And that’s mostly right about 80%. I think almost 90% of Medicare beneficiaries are over the age of 65, but there are other eligibility criteria. This includes individuals with end stage renal disease, A SL, also certain people with disabilities. And as an overview right now, there’s almost 70 million Medicare beneficiaries as of December of last year.

(26:00):

So depending on where you look, you’ll see about half of them are in what’s called traditional Medicare. So that’s Medicare parts A and B. We’ll talk a little bit more about the different parts here. And then the other half of Medicare beneficiaries, and really it’s slightly over half, are now in what’s called Medicare Advantage. And that’s where private plans actually contract with the federal government to provide these Medicare parts A and B benefits. And that’s become really, really important because actually enrollment in Medicare advantage plans has pretty much doubled since about 2010. And then the last part that we’re going to talk about a little bit more here is Medicare Part D, which is the prescription drug coverage. And I know that’s been on a lot of folks heads in the past few years because of all of the big changes, but know that about 80% of Medicare beneficiaries have Medicare Part D.

(26:58):

If you’re in traditional Medicare, usually you’re getting that through a standalone part D plan that you can enroll in. But if you’re getting it through Medicare Advantage, a lot of times you might get in one single plan that’s going to give you your Medicare part A, B, and D benefits all in one, and not just because of the enrollees. It’s a very vulnerable population. But also this is really important because of, it’s a very, very expensive program. It accounts for about 14% of federal spending, and that’s about almost 850 billion a year. Alright, so some brief history here, 1965 was the establishment of the Medicare program. It’s mostly in Title 18, also Title 11 of the Social Security Act. And that really just created Medicare as parts A and B. So that traditional Medicare program wasn’t until a little bit later that private plans started getting involved.

(27:59):

I believe actually it was the tax, I don’t have it on here, but I think in 1982 it was the tax equity, Tera, what is it? Tax Equity Financial Responsibility Act, that really sort of established this idea of private plans contracting with the federal government to provide these part A and B benefits. But in 1997, the Balanced Budget Act established the private Medicare plus choice healthcare program, which is now we refer to as Medicare Advantage or Part C. Interestingly enough, the prescription drug program didn’t exist until about 2006 as the Medicare Modernization Act had established that program. I wanted to also point out some recent legislation, I guess we could call the A CA recent, but in 2010, the A CA made certain improvements to Part D really focused a lot on innovation. So it created the CMS Innovation Center that’s been testing out all kinds of different value-based design programs and different payment programs in Medicare and also covered preventive benefits.

(29:09):

And then finally, the Inflation reduction Act that was signed into law in 2022 did a significant amount of prescription drug reform that we’ll talk about a little bit later. But I wanted to also point out this is what created the Drug Price negotiation program where CMS is annually negotiating the price of certain high priced drugs. So in the different parts of Medicare, so part A is the hospital insurance program. So this covers things like inpatient hospital care, nursing, home care, hospice, and then part B is the supplemental medical insurance program, which is really outpatient care, medical devices, preventive services, also behavioral health counseling, a lot of these important pieces.

(30:02):

And Medicare Part C is the Medicare Advantage program. So this is where, again, these private plans are able to contract with the federal government to basically provide Medicare parts A and B benefits. The idea here was we should allow Medicare enrollees to have a choice between whether they want to get their insurance directly from the government or through a private plan. And finally, the Part D program is a prescription drug benefit program. So like I mentioned, a lot of Medicare beneficiaries who are on traditional Medicare parts A and B might be able to get this through just a standalone part D plan that they enroll in, or sometimes they can enroll in a Medicare Advantage plan that offers parts A, B, and D benefits. Now, there’s a lot of things Medicare doesn’t cover. So examples of this, traditional Medicare doesn’t cover a lot of dental benefits.

(31:03):

Hearing vision benefits, you’ll hear that a lot. So a lot of times individuals also need some kind of supplemental insurance. KIPP talked a little bit about the dual eligible program or dual eligible beneficiaries who have both Medicare and Medicaid, but Medicare beneficiaries can also enroll in what’s called a Medigap plan that provides supplemental insurance. And I also wanted to point out the low income subsidy program that provides a lot of people refer to it as extra help, but it provides some support for prescription drug costs. Now, I also wanted to point out too that Medicare Advantage plans have a little bit of flexibility in the benefits they offer. So they can offer, they’re required to offer the part A and B benefits, but a lot of times they can use what’s called their rebate dollars to offer additional benefits including dental, vision, adhering benefits, or sometimes lower out-of-pocket costs, which is really one of the big reasons that it’s become such a popular program. And we’ve seen so much increase enrollment.

(32:14):

Oh, here, I guess I’ll compare traditional Medicare and Medicare Advantage a little bit more. So the enrolling population, it’s pretty similar, but there’s slightly more. In Medicare Advantage, the way that payment works is very different, and that’s very important. So in traditional Medicare, it’s a fee for service system where the federal government is paying providers directly for the cost of services. In Medicare Advantage, you have a system where Medicare Advantage plans actually submit bids. The federal government that gives you an estimated cost of what they think it’s going to cost their to cover their enrollees, and they’re paid a monthly capitated or fixed amount that is based on the expected costs of their enrollees. So enrollees with more diagnoses who appear to be sicker and likely to be more costly, those plans that enroll those kinds of individuals are typically paid more because of the difference in the payment programs, you have different incentives that are built into that.

(33:26):

So in traditional Medicare, since providers are being paid for each individual service, you might see higher volume of service. There’s nothing to really kind of reduce the service, but at the same time, there’s no real incentive for providers to be coding diagnoses because they’re not getting paid based on the diagnoses of the coding. In Medicare Advantage, the plans are actually paid based on how sick or how many diagnoses their enrollees actually have. So as a result, you have incentives for higher diagnosis, but since plants are getting paid a fixed monthly rate, there’s actually an incentive for less services to be offered as far as providers go. If you’re in traditional Medicare, you can see anyone that accepts Medicare anywhere in the country in Medicare Advantage plans, these work pretty similar to their private insurance plans, so you’re limited to your in-network providers typically. Finally, one really, really important piece here on out-of-pocket costs and traditional Medicare, there’s no annual out-of-pocket limit, but in Medicare Advantage, we do have this maximum out of pocket limit, and that’s probably another reason why enrollees have been shifting towards that program.

(34:44):

And then I just really quickly wanted to cover the prescription drug program. So like I mentioned, we have the Medicare Part D program. This program has been increasingly been more expensive, and right now it represents about 15% of total Medicare spending. So the Inflation Reduction Act of 2022 did a significant amount of things to try to reduce prescription drug spending and prescription drug costs on enrollees. So we capped insulin cost sharing at $35 per month per monthly supply of insulin. There’s no cost sharing for adult vaccines, and it also requires drug manufacturers to pay a rebate to the federal government if the prices of their drugs increase faster than the rate of inflation. The big one that you’ve probably heard about is the drug price negotiation program, or each year CMS is negotiating the price of certain high expenditure brand name drugs. And then finally, there is now a $2,000 annual out-of-pocket cap for Part D drugs. And that I will turn it over to Cynthia.

Speaker 6 (35:56):

Thank you. Okay, so I’m Cynthia Cox. I’m with KFF. That stands for Kaiser Family Foundation. But I want to be very clear that we are not affiliated with Kaiser Permanente. We were founded by the same wealthy industrialist, but we are an independent nonprofit, nonpartisan, mostly the think tank, but we also have a journalism branch. So if you want to subscribe to our newsletter, you can also get all of the latest health news from KFF Health News. So I’m going to talk about the Affordable Care Act. The A CA is huge. I’m not going to be able to cover everything in eight minutes, even if I do go over time. But one thing I want to flag is that we actually have an online textbook. So if you’re kind of feeling like you need more basics, we have an a CA 1 0 1 chapter. We also have a Medicare 1 0 1, Medicaid 1 0 1, you name it.

(36:48):

And so I’d encourage you to check that out too. Now, the A CA, just to give very big picture, is kind of trying to solve two big problems in our healthcare system that existed before the A CA and to some extent may still exist now, but one was the uninsured rate. A lot of people were uninsured before the Affordable Care Act, and that was for a couple of different reasons, I would say costs and just the cost of insurance was one barrier, but also being denied coverage was another barrier. So that’s the thing that you’ve probably heard about when you hear about Obamacare or the A CA, you hear about preexisting conditions. And so that was a particular problem for people who were trying to buy their own health insurance in what’s called the individual market. This is where people would go if they don’t get coverage through work or through Medicaid or Medicare.

(37:42):

They have to go buy it on their own. But before the A health insurance companies would typically deny coverage to people who had a very severe preexisting condition that could include cancer or HIV or heart disease or even diabetes depending on the severity. And each insurance company might have different rules about what they denied, what they accepted. Sometimes they would accept you but charge you a higher premium or a higher deductible. So that was one kind of bucket. But there were also other ways that health insurance companies would discriminate against people with preexisting conditions. One example that I personally have a story from was one of my friends who was in her twenties got diagnosed with cancer, breast cancer, but the health insurer went back through her records and realized that she had taken Accutane, which is a very expensive drug for acne, and she had not disclosed this when she applied for her health insurance.

(38:44):

And so her health insurance was rescinded. And another example of another problem that would come up was lifetime or annual limits. And this was even common in employer sponsored coverage too, where if you had a very expensive health event or very expensive condition, you might reach a max where your health insurance basically ends at that point. And so I have another friend who had a premature baby and basically by the time that baby left the neonatal intensive care, he had reached his limit on his insurance coverage. So these are just some examples of some of the problems that the A CA was trying to fix. But again, I’m not going to be able to go into a tremendous amount of detail. I’m really going to focus on some of the current issues too that you’re going to be hearing about with the A CA. So as I mentioned, reducing the rate of uninsurance was a big goal of the A CA, which clearly from this chart, the A CA had a big effect on the uninsured rate in the United States.

(39:46):

But also clearly from this chart, there are still a lot of people who are uninsured in the United States, and we have all kinds of polling and survey data to kind of explain why that is, which I can also talk about more if you want to. So what the A CA did is it shrunk the uninsured rate by increasing the number of people who were through other means, primarily by expanding Medicaid and through these Obamacare markets or ACA marketplaces like healthcare.gov or covered California, which is what I’m mostly going to be focusing on through the rest of the presentation. So you can see that orange slice of the pie shrink while the blue parts grew. It’s basically half of the growth of the uninsured. I mean half of the shrinking of the uninsured rate was due to Medicaid expansion, and the other half is due to a marketplace coverage.

(40:39):

It used to be more disproportionately Medicaid. But in recent years, the a c marketplaces have been playing a bigger role. So on average nationally, about one in six people who are under the age of 65 get their health insurance directly through the A CA, either through Medicaid expansion or the A marketplaces or what’s called a basic health plan, which only a couple of states do. This is not counting people who are under age 26 and still on their parents plan or other kinds of ways, but basically direct a coverage, one in six non elderly people, which is about 44 million people. And of course that varies by state, and part of the variation there is whether the state expanded Medicaid or not or how many people are signed up on their a c marketplace. So as I mentioned, the a c marketplaces, which are also called Obamacare markets or healthcare.gov, or they have cute names in every different state like Covered California or that sort of thing, had been playing somewhat of a role of offering coverage to people.

(41:49):

But really in the last few years it’s grown substantially. In fact, since 2020, the number of people getting coverage through the a c marketplaces has more than doubled. That is because of these enhanced subsidies, which I’m going to talk about more in the response to covid in the American Rescue Plan Act, there were these additional subsidies. So the A already had subsidies. It meant that if you made between one and four times poverty, you had to pay a certain share of your income on a silver plan, which is kind of like a mid-tier plan. Anything above that the federal government would cover. Now that range of how much you had to pay was on a sliding scale. So the lowest income people would have to pay about 2% of their income and the higher income people towards four times poverty would have to pay about nine, nine and a half percent of their income.

(42:47):

What the Inflation Reduction Act did is it lowered those costs across the board. So then instead of paying 2% of your income, if you’re low income, you pay zero. And if you’re on the higher end of the income spectrum, instead of paying nine and a half percent of your income, you pay eight and a half percent of your income. Now, as I mentioned before, in the original a CA, if you made four times poverty, you got a subsidy. If you made 401% of poverty, you did not get a subsidy. And so that created what was like this cliff where a lot of people made literally a couple of dollars too much, and then they went from paying maybe 9% of their income to 20% of their income on insurance. These enhanced subsidies also got rid of that cliff and naturally phase it out at eight and a half percent of your income. Now, if you’re making a bajillion dollars a year, you’re never going to spend eight and a half percent of your income on insurance. This is the max. So it makes it so that it kind of gradually phases out.

(43:48):

And then I’m going to speed through the rest of this because I’m out of time, but the marketplaces have grown a lot, especially in Texas and Florida and Louisiana, some southern red states where there had been high uninsured rates and the marketplaces have really been picking up there. We have a couple of resources because these enhanced tax credits are set to expire at the end of this year. This is an example of a calculator where you can put in a constituent’s information like their income, where they live, how many people are signed up, and it tells you how much they would pay now and how much they would pay if the enhanced tax credits expire. We also have a congressional district level map that is kind of doing the same thing. It’s an interactive tool where you can just choose from a few different examples to see how your constituents might be affected. On average, the people who would be losing subsidies altogether, those people over four times poverty are pre-retirees or early retirees and or live in rural areas. So this is kind of the demographic of the people who will lose coverage or lose subsidies altogether.

(44:58):

I’m going to speed through this. This is how you can see the green section, how the premiums dropped. That’s going to go back up when these enhanced subsidies expire. And deductibles have also been pretty flat in the last few years, in part because there’s a lot more low income people signing up who get help with their deductible. It’s called cost sharing reduction. And so we haven’t seen much growth in average deductibles in recent years either. So these are just a list of kind of hot topics to watch, which we can talk about in the q and a. And then just last, I just want plug that we have a ton of A related resources on kfp.org, and this is my contact information. Also, Lauren is our director of public affairs or outreach, and so she’s the person to contact if you want to talk about anything other than the a CA. And I’ll pass that back to Debbie.

Speaker 2 (45:53):

Great. Alright, so that’s your 35 minute overview of the US healthcare system, which is pretty impossible to do, but I think there was a good flavor of it there.