When a family opens a health insurance bill and sees a higher premium, the problem is obvious, and the hunt for a better deal often begins. What is less obvious is whether lawmakers will diagnose the problem correctly.
Washington state’s Affordable Care Act (ACA) exchange numbers are already being treated as a simple story: Federal enhanced ACA premium subsidies expired, premiums rose and thousands of people became uninsured.
The Washington Health Benefit Exchange headlined a May press release, “Unprecedented number of Washingtonians drop health insurance following Congress’ failure to renew enhanced premium tax credits.” And the lead of a Seattle Times story about the state’s nearly 13 percent decrease in qualified health plan enrollees compared to last year reads, “Thousands of Washingtonians have opted out of buying their own health insurance this year after monthly premiums spiked for middle-income households.”
The enhanced subsidies increased taxpayer assistance for many exchange customers and temporarily extended subsidies to people above 400% of the federal poverty level. Their expiration was especially significant for some middle- and higher-income households that had been receiving help unavailable under the original ACA subsidy structure.
It isn’t until the 12th paragraph of that Seattle Times article that readers get this important nugget: “Not every household that disenrolled is necessarily uninsured. Some people may have chosen to get coverage through an employer instead.” That information never even appears in the press release from the state exchange.
ACA enrollment decline is not a simple story, and disenrolled does not necessarily mean uninsured.
Some recipients of taxpayer subsidies may have pursued other, less-expensive coverage now that enhanced, COVID-era subsidies have ended. Some are eligible for employer coverage, Medicare or Medicaid. In fact, during the insurance open enrollment period, the state exchange reported 28,000 customers actively dropped their coverage on the exchange, but 6,000 of those customers moved to Apple Health, the state’s Medicaid program. That’s important and shows the point that disenrolled does not necessarily mean uninsured.
Others who disenrolled may have been weakly attached to their plan or improperly enrolled in the first place. Duplicate enrollment could represent some of the decline. The Centers for Medicare & Medicaid Services (CMS) reported significant cleanup activity involving ineligible subsidies, unauthorized enrollments, and Medicaid or CHIP overlap. I would not be surprised if duplicates explain some of the decline on Washington’s exchange, too.
It is misleading to treat every lost enrollee as a newly uninsured patient.
In addition to those leaving the exchange for their health insurance coverage, some customers also moved to a leaner tier of coverage, a sign that affordability pressure may have shaped plan choices. Many workers with employer-provided coverage can relate. They’ve seen premiums rise, deductibles grow or benefit choices narrow year after year.
It will be important to learn who remains covered over time and what share of the decline represents people becoming uninsured, movement to other coverage or program-integrity corrections. Hospitals’ experience with uncompensated care will also be important. Until more follow-up data are available, policymakers should be careful not to equate every exchange enrollment decline with confirmed uninsured status.
That said, the expiration of enhanced subsidies is no doubt monetarily painful for some. It also forces something many have avoided for years: an honest conversation about what health care and health insurance really cost.
The end of enhanced ACA subsidies has many saying the sky is falling. But people should know taxpayers will continue subsidizing most marketplace enrollees, while also paying for their own rising health care costs, and the ACA will continue to operate as written.
People should also understand that enhanced subsidies were not making health care less expensive and should never have been extended so long. They did make insurance premiums less expensive to some enrollees by shifting more of the cost to taxpayers. That cost-shift does not reduce the underlying price of hospital care, physician services, prescription drugs, administration, mandates or the regulations that limit competition.
Treating subsidies as a substitute for reform has to stop. Higher insurance premiums are a symptom, not the disease.
