The Affordable Care Act “By the Numbers”
Welcome to the fourth edition of TPG’s Healthcare Review, a forum to keep our current clients, prospective clients, and candidates apprised of the ever-changing landscape of healthcare in a post-reform world. Tracking the iterations, implementations, extensions and exemptions of the Patient Protection and Affordable Care Act of 2010 (PPACA) can be a full time job. Each new day seems to bring a wave of information which needs to be fully digested before the next news cycle starts. Again, it is our intent to update this newsletter monthly through the end of 2014 to keep you well-informed of the latest developments and their implications. We thank you in advance for your interest, and welcome your comments and questions throughout the year.
This month’s focus will be on reports from the closing days of the open enrollment period scheduled to end on March 31, 2014. It seems unfathomable that in a country where the National Security Administration can track cell phone records of over 300 million Americans, the government can’t get an accurate count of the number of individuals enrolled through the insurance exchanges connected to PPACA. The number of enrollees, the premiums paid, those previously uninsured, etc. would seem to be significant numbers to share to justify the upheaval of our healthcare system over the past four years. The mystery behind the numbers seems to be a well-protected secret and unfortunately feeds rampant speculation by those most eager to make their respective points regarding the viability of healthcare in a post-reform world. For employers across America, adjustments to strategic plans and employment levels have become as unpredictable as the timing and scope of the next set of delays under PPACA.
5 Million Enrolles and Counting?
We’ll start with the reported numbers from the Department of Health and Human Services (HHS). As of March 18, 2014, HHS has published that they have reached the milestone of 5 million individuals enrolled through either state-run or the federal healthcare marketplace exchanges. These numbers, although unaudited, would represent a significant increase in enrollments over the first two weeks of March. Many officials within the Obama administration have been predicting a rush of last minute enrollments as we approach the March 31 deadline. If this pace continues, the administration’s projection of 7 million enrollees during the first six months of the open enrollment period may not be as out of reach as the early experience at the exchanges indicated.
Yet five and a half months into the launch of the PPACA exchanges, one has to wonder if any of the numbers which have been reported are valid. As discussed in previous newsletters, the methodology utilized by HHS to determine if someone has truly enrolled into an insurance program has not been revealed. A visit to the HHS website reads like a commercial for PPACA rather than presenting statistical facts behind the “enrollment milestone” reported. The March 18th press release included two case scenarios where individuals enrolled into unspecified plans for $22 per month. One was a male, age 25 of El Paso TX who visited an enrollment center on an unspecified Saturday. The other was a female small business owner of West Chester, PA, a cancer survivor concerned about allowing her coverage to lapse. Although these anecdotal stories are heartwarming, the HHS release does nothing to answer the questions regarding the numbers. Perhaps we will hear something a bit more enlightening next month.
70% Don’t Know About Subsidies
Back when PPACA was signed into law in 2010, the “healthcare crisis” which needed to be averted revolved around the plight of the uninsured and the increasing cost to families. Let’s take a look at the issue of the uninsured first. A recent report by Bankrate.com indicates that one third of Americans without health insurance plan to stay that way. The expense of the coverage was the number one reason given by those who intend to stay uninsured, yet 70 percent of those individuals did not know about the subsidies included in PPACA. Doug Whiteman, an insurance analyst at Bankrate.com said “This is a staggeringly high percentage (70%), the government has spent over half a billion dollars promoting the Affordable Care Act, and two-thirds of uninsured Americans still don’t know about the subsidies.” Additionally, some 46 percent of those surveyed were unaware of the March 31 deadline for being insured. Of the five million enrolled through the healthcare exchanges, estimates range from 50 to 80 percent are individuals who received cancellation notices from their insurance companies because of PPACA, so the assistance received by the uninsured due to the law is questionable.
In earlier issues of the newsletter, we reviewed the premium hikes for the initial roll-out of the marketplace exchanges. Due to the added requirements under PPACA, premium increases ranged from 15 to 150 percent, depending on where an individual lived. The premium hikes were long rumored and the sticker shock which occurred in the early weeks of October, 2013 may have led to the websites being overwhelmed. Online traffic in October and November of 2013 was heavy, but did not lead to enrollments and/or purchase of health insurance policies. There were many assumptions built into the original premium cost structures and the actual enrollment numbers across demographics have been somewhat disappointing.
Premiums May Double or Triple
According to Health Industry officials, PPACA-related premiums are facing another round of major increases. In certain parts of the country, premiums are projected to double and even triple. The expected rate hikes will be announced in the coming months rather than being withheld until the start of the next open enrollment period, which begins November 15, 2014. The hikes will be necessary to counterbalance the current mix of enrollees which include fewer young, healthy individuals (25%) rather than the 40 percent originally projected and built into the insurance company models. Additionally, a senior insurance executive stated that “all of these major delays on very significant portions of the law are going to change what it’s going to cost.” A former CIGNA executive points out that the administration, after massive public outcry, eased their policies to allow people to keep their old health plans. That kept some healthy people in place instead of making them jump into the new exchanges. For these reasons, insurance analysts are now projecting even higher costs for insurance consumers. This is not good news for those eager to experience the promised savings of $2,500 per family back in early 2010.
14 Categories of Exemptions
In one last number matter, last month we discussed the postponement of the employer mandate. The final issue to review this month is a little noticed change made to PPACA back in December. As rules were written for the “Individual Mandate,” a series of exemptions were included which could allow a large portion of the populace to escape the penalties for not having health insurance. Buried deep within the regulatory guidance or “rules,” a hardship exemption was inserted into the body of the missive which will regulate healthcare under PPACA. Joanne Peters, a spokeswoman for HHS wrote in an email “The Affordable Care Act requires people who can afford insurance to buy it, so that their medical bills are not passed onto the rest of us, which drives up health-care costs for everyone. The form allows a limited number of individuals who are facing hardship to apply for an exception.” There are 14 categories of exemptions and the Kaiser Foundation estimates that one of the exemptions alone may allow five million people to avoid the penalties and stay outside of PPACA.
How TPG Can Help Your Business
There are lots of unanswered questions and lots of “Numbers, Numbers, Numbers” in this month’s edition of TPG’s newsletter. We are staying on top of the latest PPACA news to make sure our healthcare solution will work for our current and prospective clients. We are working hard to take the PPACA guesswork out of the equation so that you can do the best job possible in projecting 2015 productivity at your place of business. To hear how The Performance Group can help to make your business life as pain free as possible, please click here to contact us. Thanks again for your interest in The Performance Group; we hope you have a safe and productive Spring.
Thomas E. Readdy
President
The Performance Group