Although I typically focus my articles on issues that directly impact the Colorado health insurance market, I recently read an article in the Jackson, MS Clarion Ledger and felt compelled to address some of the issues it presents.
The article was written in late April, after the open enrollment extension for 2014 had ended. It’s titled “Some opt out of health insurance, citing cost.” That is certainly true in some cases. But a reader who is unfamiliar with the basics of the ACA might read this article and come away with some very flawed beliefs. So I wanted to clarify some of the details a bit.
For starters, Mississippi did not expand Medicaid. That plays a huge role in creating a situation whereby health insurance is simply too expensive to be affordable. There’s a “coverage gap” that exists in states that did not expand Medicaid. When the ACA was written, Medicaid expansion in every state was a cornerstone of the law. The idea was that household with incomes up to 138% of poverty level would qualify for Medicaid. So there was no need to provide exchange subsidies for people with incomes below poverty level. But unfortunately, the Supreme Court decided in 2012 that states could not be forced to expand Medicaid, and half the states opted to keep their existing – and often very stringent – Medicaid eligibility guidelines instead of expanding (expansion would be paid for entirely by the federal government for the first three years, and then the states would gradually start to pay a small portion of the additional costs over the next few years – but the state portion will never go above 10%). In MS, Medicaid is only available to parents with minor children if income is extremely low ($462/month for a family of four), and there are additional qualifying requirements in place besides income. Medicaid is not available at all in MS for low-income adults who do not have children.
And unfortunately, exchange subsidies are not available for them either if their income is less than 100% of poverty level. At least one person in the Clarion Ledger article appears to fall into this category: Tina Holmes is described as living on a fixed income of $500 a month – which puts her squarely in the coverage gap. That’s not mentioned in the article though. It briefly describes that she lives on $500 a month and is therefore not able to afford health insurance that costs $1000 a month. While Holmes is certainly in the coverage gap and thus is highly unlikely to be able to afford coverage, the mention of $1000/month for a single person’s premium is likely to scare away people who might otherwise consider shopping for a policy (especially since it’s not mentioned that Holmes’ situation is unique to states that didn’t expand Medicaid).
I used Healthcare.gov to compare plans, and even in the most expensive counties in MS, and assuming Holmes is 64 years old (ie, the highest premiums anyone can get, since premiums are based on age), there were plans available for under $800/month. I know that’s still not at all affordable in her case (pretty much everyone in the coverage gap is unable to find affordable coverage – but that means they do qualify for a hardship exemption from the shared responsibility penalty). It’s more likely that Holmes is younger than 64 though, and she may not be in one of the most expensive counties in the state. So there are probably options available to her for significantly less than the quotes I saw. Either way, they’re a lot less than $1000/month. Not affordable for someone making $500/month, but if you’re considering enrolling during the 2015 open enrollment, don’t be scared away from the process by stories that throw around numbers like that with little in the way of clarification.
The article also mentions that people are opting to pay the fine instead of purchasing coverage, but it does so without detailing the hardship exemptions that are available to virtually everyone in the coverage gap (other exemptions are available as well), and it also skims over the details of the penalty, describing it as “$95 per adult.” I’ve written about how the penalty calculations are more complicated than that, and how the penalty can be significantly more than $95, depending on the number of uninsured family members and the household’s income.
The Smith family’s situation is briefly described in the article, but some important details are missing. Angela Smith and her husband have three children and an option to purchase coverage for the whole family for $350 a month from her husband’s employer (this means that his employer is heavily subsidizing the coverage, as $350/month is dramatically lower than the average total family premium on a group policy). Smith describes herself and her husband as “a young, healthy couple” and mentions that they are nonsmokers. She laments the fact that the cheapest plan she could find on the exchange was $405/month for just the parents but not the children. It’s unclear why the children were not included in the quoting process, but an unsubsidized premium of $405 for two young adults is certainly within the realm of realistic numbers for ACA-compliant health plans (again, we don’t know how old they are, only that they’re “young” non-smokers).
What isn’t explained is the ACA’s “family glitch” that determines whether or not an employer’s plan is “affordable” by looking only at the cost the employee pays for self-only coverage. If family members are added to the plan – even if the entire amount of their premium is payroll-deducted – the total premium is not taken into consideration. So if Nicholas Smith can get health insurance for himself from his employer for less than 9.5% of his income, nobody in his family is eligible for a subsidy in the exchange if they are eligible to get coverage through Smith’s employer – regardless of the premium amounts. Nothing about this is mentioned in the article. But it should also be noted that even the full $350 that Smith would have to pay for family coverage is less than 9.5% of a household income of just over $44,000. Their income isn’t mentioned, nor is the self-only premium amount for Smith. But it’s important to note that $350 a month for family coverage is certainly on the low end of what employees across the country pay. That’s probably little comfort to the Smiths if their annual income is very low, but it should be considered when other people read articles like the one in the Clarion Ledger and assume that some of the scenarios might apply to themselves as well.
At the very end of the article, this sentence is added almost as an afterthought: “Some lower-income residents may qualify for tax breaks and subsidies for insurance through the federal exchange in Mississippi.” The ironic part is that for people in MS who are truly low-income, no help is available at all because of the coverage gap. For people with slightly higher incomes, subsidies are certainly available. And those subsidies extend to people who are solidly middle-class, which is how I think most of us would describe a family of four earning $95,400 a year (the cutoff for subsidy eligibility during the 2015 open enrollment that begins in November). I doubt any of us would consider them “lower-income” and yet people reading the article might be left with the impression that if they aren’t “lower-income,” there’s no assistance available.
This certainly isn’t the only anxiety-inducing, low-information ACA article floating around. But I chose to focus on it because there are so many issues that need to be further explained. The ACA is complicated. The thousands of Federal Register and IRS Regulation pages pertaining to the ACA are complicated. It is virtually impossible to boil it all down into simple sound bites… you need a lot of asterisks, links, and “however…” statements. But that’s our job if we’re writing about the ACA. We can’t just assume that the stories we hear are true without digging a little deeper.
If you’re in Colorado, rest assured that we do not have a coverage gap here. Medicaid has been expanded, and more than 178,000 people have enrolled so far. The “family glitch” does apply here though, and unfortunately there’s not a clear path to fixing it anytime soon. Congress is bitterly divided over the ACA in general and there’s also a concern about how much it would cost the government to provide subsidies to families who have “affordable” employer-sponsored coverage available but are on the hook for significant premiums to cover dependents.
Colorado also has a much more robust individual health insurance market than MS, where only two carriers offer coverage in the exchange. In general, things are better here if you’re buying your own health insurance. But it’s still easy for people to be discouraged when their read articles that skip important facts or simply tell stories about how expensive coverage is, without delving into the details at all.