The Impact of Federal and State Health Care Policies on Consumer Costs
The focus on providing healthcare coverage to the millions of uninsured in the United States has led to significant positive and negative effects on consumer costs. Current policies such as the Affordable Care Act (ACA), Medicaid Expansion, and health insurance marketplaces have created accessibility and affordability of health insurance while taxing higher costs and premiums to individuals just above the poverty level. The following will explore the challenges and obstacles consumers have faced due to federal and state health reform while recognizing some of the positive effects.
Individual Mandate Penalty
When the ACA was enacted in 2012, one of the mandates penalized individuals for not obtaining insurance throughout the year. Individuals unable or unwilling to establish health benefits had to pay a tax penalty. In 2017 Congress passed the Tax Cuts and Jobs Act, which eliminated the individual mandate effective January 1, 2019 (Eibner & Nowak, 2018). Without the penalty, it is speculated that younger or healthier individuals would drop their coverage, causing insurance providers to raise their costs (Eibner & Nowak, Understanding the impact of eliminating the individual mandate penalty, 2018). Losing revenue from healthy individuals would require insurance companies to raise their premiums on beneficiaries requiring insurance. Simultaneously, eliminating the individual mandate shows the ACA's instability while questioning the constitutionality of insurers' inability to deny coverage or charge higher premiums to preexisting conditions (Eibner & Nowak, Understanding the impact of the elimination of the individual mandate penalty, 2018).
Defunding of Cost-Sharing Reduction Payments
Insurers remain on edge on how to handle continued discussions of reducing or suspending cost-sharing subsidies. States have jumped in to help provide clarity to insurers. Insurers have taken one of four general approaches toward protecting themselves (Kamal, Semanskee, Long, Claxton, & Levitt, 2017):
1. Not adjust rates at all
2. Increase premiums for all ACA-compliant individual market policies inside and outside the marketplace
3. Increase premiums for silver-level plans inside and outside the marketplace
4. Increase premiums for silver-level plans inside the marketplace
Kaiser Family Foundation (KFF) estimates that a silver marketplace premium would have to increase 19% on average to compensate for the loss of cost-sharing reduction (CSR) (Kamal, Semanskee, Long, Claxton, & Levitt, 2017).
Small Business Group Insurance Programs
Association Health Plans (AHP) are groups of small businesses banding together to identify as a large group and gain reduced medical premiums. AHPs provide great options for reducing premiums, but a history of defrauding members required congress and state to step in (Keith, 2018). New proposals in 2018 have helped restructure the definition of "employer" and the requirements of an AHP (Keith, 2018). If AHP can gain back trust, these options would provide greater access to low-cost premiums for small business owners. Healthcare start-up device companies have been able to provide their employees with adequate health benefits while covering 90-100% of the costs by joining association health plans.
States Taking Their Own Course of Action
States have become more involved with cost control mechanisms within their own exchange markets, which have helped manage premiums. States such as Delaware, Massachusetts, and Pennsylvania have the authority to analyze healthcare cost data and make recommendations (Murray, King, Delbanco, & Lehan, 2019). Transparency of costs has been an ongoing challenge within the healthcare industry. Sixteen states have implemented mandatory all-payor claims databases to collect and house health care price and quality information, while eight states have gone a step further by publishing the information via state-based websites (Murray, King, Delbanco, & Lehan, 2019).
Conclusion
It is highly evident that federal and state healthcare policies' instability has a direct impact on consumer costs. The majority of the adverse effects pertain to increases in premiums for insurance companies to cover their losses. However, states are now taking a more active role in premium hikes by establishing costs and premium regulations. Small business owners are doing the same by joining groups such as association health plans for premium reductions and improved benefits.
References
ibner, C., & Nowak, S. (2018, July 11). The effect of eliminating the individual mandate penalty and the role of behavioral factors. Retrieved from The Commonwealth Fund: The Effect of Eliminating the Individual Mandate Penalty and the Role of Behavioral Factors | Commonwealth Fund.
Eibner, C., & Nowak, S. (2018, August 9). Understanding the impact of the elimination of the individual mandate penalty. Retrieved from The Commonwealth Fund: Elimination of Individual Mandate Penalty | Commonwealth Fund
Kamal, R., Semanskee, A., Long, M., Claxton, G., & Levitt, L. (2017, October 27). How the loss of cost-sharing subsidy payments is affecting 2018 premiums. Retrieved from Kaiser Family Foundation: How the Loss of Cost-Sharing Subsidy Payments is Affecting 2018 Premiums
Keith, K. (2018, January 5). The association health plan proposed rule: what it says and what it would do. Retrieved from Health Affairs: https://www.healthaffairs.org/do/10.1377/hblog20180104.347494/full/
Murray, R., King, J. S., Delbanco, S. F., & Lehan, M. (2019, August 22). The state of state legislation addressing health care costs and quality. Retrieved from Health Affairs: https://www.healthaffairs.org/do/10.1377/hblog20190820.483741/full/
The focus on providing healthcare coverage to the millions of uninsured in the United States has led to significant positive and negative effects on consumer costs. Current policies such as the Affordable Care Act (ACA), Medicaid Expansion, and health insurance marketplaces have created accessibility and affordability of health insurance while taxing higher costs and premiums to individuals just above the poverty level. The following will explore the challenges and obstacles consumers have faced due to federal and state health reform while recognizing some of the positive effects.
Individual Mandate Penalty
When the ACA was enacted in 2012, one of the mandates penalized individuals for not obtaining insurance throughout the year. Individuals unable or unwilling to establish health benefits had to pay a tax penalty. In 2017 Congress passed the Tax Cuts and Jobs Act, which eliminated the individual mandate effective January 1, 2019 (Eibner & Nowak, 2018). Without the penalty, it is speculated that younger or healthier individuals would drop their coverage, causing insurance providers to raise their costs (Eibner & Nowak, Understanding the impact of eliminating the individual mandate penalty, 2018). Losing revenue from healthy individuals would require insurance companies to raise their premiums on beneficiaries requiring insurance. Simultaneously, eliminating the individual mandate shows the ACA's instability while questioning the constitutionality of insurers' inability to deny coverage or charge higher premiums to preexisting conditions (Eibner & Nowak, Understanding the impact of the elimination of the individual mandate penalty, 2018).
Defunding of Cost-Sharing Reduction Payments
Insurers remain on edge on how to handle continued discussions of reducing or suspending cost-sharing subsidies. States have jumped in to help provide clarity to insurers. Insurers have taken one of four general approaches toward protecting themselves (Kamal, Semanskee, Long, Claxton, & Levitt, 2017):
1. Not adjust rates at all
2. Increase premiums for all ACA-compliant individual market policies inside and outside the marketplace
3. Increase premiums for silver-level plans inside and outside the marketplace
4. Increase premiums for silver-level plans inside the marketplace
Kaiser Family Foundation (KFF) estimates that a silver marketplace premium would have to increase 19% on average to compensate for the loss of cost-sharing reduction (CSR) (Kamal, Semanskee, Long, Claxton, & Levitt, 2017).
Small Business Group Insurance Programs
Association Health Plans (AHP) are groups of small businesses banding together to identify as a large group and gain reduced medical premiums. AHPs provide great options for reducing premiums, but a history of defrauding members required congress and state to step in (Keith, 2018). New proposals in 2018 have helped restructure the definition of "employer" and the requirements of an AHP (Keith, 2018). If AHP can gain back trust, these options would provide greater access to low-cost premiums for small business owners. Healthcare start-up device companies have been able to provide their employees with adequate health benefits while covering 90-100% of the costs by joining association health plans.
States Taking Their Own Course of Action
States have become more involved with cost control mechanisms within their own exchange markets, which have helped manage premiums. States such as Delaware, Massachusetts, and Pennsylvania have the authority to analyze healthcare cost data and make recommendations (Murray, King, Delbanco, & Lehan, 2019). Transparency of costs has been an ongoing challenge within the healthcare industry. Sixteen states have implemented mandatory all-payor claims databases to collect and house health care price and quality information, while eight states have gone a step further by publishing the information via state-based websites (Murray, King, Delbanco, & Lehan, 2019).
Conclusion
It is highly evident that federal and state healthcare policies' instability has a direct impact on consumer costs. The majority of the adverse effects pertain to increases in premiums for insurance companies to cover their losses. However, states are now taking a more active role in premium hikes by establishing costs and premium regulations. Small business owners are doing the same by joining groups such as association health plans for premium reductions and improved benefits.
References
ibner, C., & Nowak, S. (2018, July 11). The effect of eliminating the individual mandate penalty and the role of behavioral factors. Retrieved from The Commonwealth Fund: The Effect of Eliminating the Individual Mandate Penalty and the Role of Behavioral Factors | Commonwealth Fund.
Eibner, C., & Nowak, S. (2018, August 9). Understanding the impact of the elimination of the individual mandate penalty. Retrieved from The Commonwealth Fund: Elimination of Individual Mandate Penalty | Commonwealth Fund
Kamal, R., Semanskee, A., Long, M., Claxton, G., & Levitt, L. (2017, October 27). How the loss of cost-sharing subsidy payments is affecting 2018 premiums. Retrieved from Kaiser Family Foundation: How the Loss of Cost-Sharing Subsidy Payments is Affecting 2018 Premiums
Keith, K. (2018, January 5). The association health plan proposed rule: what it says and what it would do. Retrieved from Health Affairs: https://www.healthaffairs.org/do/10.1377/hblog20180104.347494/full/
Murray, R., King, J. S., Delbanco, S. F., & Lehan, M. (2019, August 22). The state of state legislation addressing health care costs and quality. Retrieved from Health Affairs: https://www.healthaffairs.org/do/10.1377/hblog20190820.483741/full/