The Affordable Care Act:
An Early Progress Report
David Grande, MD, MPA
Senior Fellow, Leonard Davis Institute of Health Economics
Assistant Professor of Medicine
University of Pennsylvania
February 5, 2014
Coverage
Financial security
Better health
Insurance Pricing
• We can experience rate – vary premiums
based on health status
– More affordable insurance for the healthy
– Sick get priced out
• We can community rate - “everyone” is
charged same premium
– More affordable insurance for the sick
– Healthy don’t want to join and drop out
• Insurance market outside of ESI has been a
failure
The Affordable Care Act
Eliminate
Medical
Underwriting
or
“pre-existing
conditions”
Subsidize
or Provide
Coverage
Individual
Mandate
Affordability
• How much do you have to pay for insurance?
(i.e. premium credits)
– Premium contributions as % of income
• How much cost sharing do you have to
shoulder at the point of care? (i.e. costsharing subsidies)
– Cost sharing subsidies increase actuarial value of
insurance for low income individuals (70-94%)
Source: Kaiser Family Foundation: Summary of the New Health Reform Law
Example:
• 35 year old earning $30,000 per year
(260% of FPL)
• Contribute 8.4% of income ($210/month)
• Calculate subsidy from “benchmark Silver
plan”
• $287-$210 = $77/month – apply to any plan
• Subsidies tied to prices in local markets
• Individual $ exposure: age, income, benefit
design
• Public $ exposure: prices in local markets
Source: Center for Budget and Policy Priorities; HealthCare.gov
Coverage Projections 2019
70
60
12
50
13
40
12
30
55
20
30
10
0
No Reform
Reform (2014 Update)
Uninsured
New Medicaid
New Marketplace Coverage
Shift to Marketplaces
Source: Congressional Budget Office, February 2014
It will take about 3 years…
30
22
20
10
24
25
25
13
6
8
12
12
12
12
12
2014
2015
2016
2017
2018
2019
0
-10
-20
-30
Uninsured
Medicaid
Exchanges
Shifts to Exchanges
Vermont
Washington
Rhode Island
Connecticut
California
Kentucky
Colorado
New York
Maine
Michigan
District of Columbia
North Carolina
Idaho
Nevada
Minnesota
Montana
Wisconsin
New Hampshire
United States
Delaware
Illinois
Pennsylvania
Florida
Alabama
Nebraska
Maryland
Indiana
Utah
Arkansas
Tennessee
New Jersey
Georgia
Oregon
Virginia
Arizona
Missouri
Ohio
South Carolina
Kansas
Wyoming
Alaska
West Virginia
New Mexico
Hawaii
Texas
Louisiana
North Dakota
Oklahoma
Iowa
South Dakota
Mississippi
Massachusetts
33.4%
15.2%
Marketplace
Enrollment as %
Eligible by State
8.0%
6.4%
~2 million enrolled
(January 2014)
Source: Kaiser Family Foundation
0%
5%
10%
15%
20%
25%
30%
35%
40%
Awareness of Marketplaces Among Uninsured
December 2013
HealthCare.Gov States
State Marketplace States
DK
10%
DK
11%
No
21%
Yes
69%
No
35%
Source: Robert Wood Johnson Foundation / Perry Undem Research/Communication 2014
Yes
54%
77% have not visited Marketplace
Why not?
Can't Afford Insurance
40%
Waiting Until Problems Fixed
Haven't heard about it
Not sure
Other
Haven't had time
Don’t' want health insurance
Waiting until after the holidays
Deadlines keep changing
0%
10%
20%
30%
40%
Source: Robert Wood Johnson Foundation / Perry Undem Research/Communication 2014
50%
What do they know about the ACA?
Medicaid Expansion
25%
Comprehensive Benefits
28%
Open Enrollment
40%
Subsidies
41%
Community Rating
49%
Ways to Apply
54%
Mandate
65%
0%
10%
20%
30%
40%
50%
60%
Source: Robert Wood Johnson Foundation / Perry Undem Research/Communication 2014
70%
If the young and healthy don’t buy…
will there be a “death spiral”?
Temporary Reinsurance Program
Adverse Selection – Catastrophic Losses
within a Plan
Goal: Protect against actuarial uncertainty in early
years of ACA (encourage plan participation)
Temporary Risk Corridor Program
Adverse Selection – Sicker than Expected
Enrollees within a Plan (Marketplace Plans)
Goal: Protect against actuarial uncertainty in early
years of ACA (encourage plan participation)
Risk Adjustment Program
Adverse Selection Across Plans
Goal: Long-term mechanism to guard against cream
skimming in community rated private market
Source: Kaiser Family Foundation
Healthy PA Proposal
• Changes to existing Medicaid program
– Collapse to 2 plans – low risk & high risk
– Charge monthly premiums > 50% FPL
– More limited benefits
• Expansion population
– Marketplace plans
– Requirements:
• Wellness program (HRA, annual exam, timely payment)
• Job search requirements
Healthy PA Questions
• Disruptions of coverage due to premiums
– Experience in other states: 10-50% disenrollment
• Administrative burden
– Verification systems
• Cost neutrality
– What are the assumptions?
The Future
• Coverage:
– likely close to target
• Risk Pool:
– unknown but risk of premium spike low
– premiums lower than expected
• Satisfaction:
– Resolution of early enrollment problems
– Limited networks
– High deductibles
• Politics:
– Will states get on board with implementation?
Google Searches
9-29-13 through 2-1-14
100
90
80
70
60
50
40
30
20
10
0
Week 1
Week 5
HealthCare.gov
Source: Google Trends
Week 9
Week 13
ObamaCare
Week 17
Week 21
Affordable Care Act