The primary focus of the ACA was to reduce the number of people without health insurance. The ACA also requires that health insurance policies meet certain minimum coverage standards and not exclude enrollment based on pre-existing conditions.
In theory, reducing the number of individuals without insurance would help contain the costs of health care and of insurance. The ACA’s focus on the uninsured included forcing businesses to provide insurance to their full-time employees and providing ways for the low-income to obtain insurance if they didn’t have it through their employment. Because more than 800,000 individuals in Idaho receive health insurance through their employer’s health plans, Idaho’s business community has a big stake containing the costs of care and insurance.
From the outset, the ACA was very unpopular in many places, including Idaho. The outcome of the recent presidential election and the continued majority in both houses of Congress puts the majority party squarely in position to fulfill a major campaign promise ‒ the repeal of the ACA. It is anyone’s guess as to the timing of any repeal, how repeal of the ACA would be implemented, and whether there will be a “repeal and replace” solution. Much is up in the air. What we do know is that repeal without a replacement solution will certainly have an effect on the health insurance premiums your company now pays.
As originally passed, the ACA provided two pathways to provide health insurance for low-income individuals and families who did not have health coverage through an employer. First, the ACA established health insurance exchanges where subsidized health insurance coverage could be obtained by those making between 100 percent of the federal poverty level (or $24,250) and those earning up to 400 percent of the federal poverty level (or $97,000).
Second, the ACA allowed states to expand their Medicaid programs to provide health care coverage to those individuals and families who make less than 138 percent of the federal poverty level ($33,465 for a family of four). For states that expanded their Medicaid programs, the ACA required the federal government to pay 90 percent of the long-term costs associated with that expansion, with states paying 10 percent of those costs.
Idaho partly implemented the ACA by enacting legislation in 2013 that established Idaho’s health insurance exchange, now known as “Your Health Idaho.” The Idaho Legislature repeatedly declined to expand Idaho’s Medicaid program to provide basic health coverage for the 78,000 residents of Idaho who live below the federal poverty level and do not have health care coverage.
So what would be the affect of a repeal in Idaho? According to the U.S. Department of Health and Human Services, the percentage of Idaho residents without insurance dropped from 17.7 percent in 2010 to 11 percent in 2015 as an additional 109,000 Idahoans obtained coverage as a result of the ACA. The costs of providing care to the indigent through the counties and the State’s Catastrophic Health Care Fund dropped from $55 million in 2012 to less than $19 million in 2015.
As of last March, Your Health Idaho had helped 94,270 residents of Idaho obtain health insurance, with 82,802 of those plan enrollees receiving subsidized coverage under the ACA. The average monthly subsidy for these marketplace enrollees is $265. Doing some basic math, Idaho’s low income residents receive about $263 million each year from the federal government to help pay for their health insurance premiums. Repeal without replacement certainly puts those insurance subsidies in jeopardy.
Each year at renewal time, Idaho businesses face the ever-increasing costs of providing health insurance for employees. However, many businesses fail to realize that a portion of each health insurance premium reflects the costs associated with health care provided to Idaho residents who have no insurance. Idaho’s health care providers write off millions of dollars of uncompensated care each year for services provided to patients with no insurance. Those very real costs are then passed on to the health insurance companies who have no choice but to pass these costs on to their customers.
Repealing the ACA would likely lead to approximately 100,000 or more Idahoans again being uninsured ‒ more than doubling the number of uninsured in Idaho. Unfortunately, these individuals will delay receiving health care until their condition becomes acute. What could have been managed through blood pressure and cholesterol medication is now a serious heart condition requiring surgery. These uninsured individuals will resort to receiving care at the emergency room, where the cost of care is the highest and where they will not be turned away based on their inability to pay.
The high cost of this care and its follow-up often send patients into bankruptcy, or the costs are just written off by hospitals and physicians. To stay in business, these same hospitals and physicians seek additional higher reimbursement rates from private insurance companies who provide coverage to your company and your employees. This is quite a cycle.
Any repeal of the ACA should include a replacement solution to prevent an otherwise dramatic increase in the number of individuals without health insurance. Idaho’s businesses simply cannot afford a major step backwards when it comes to subsidizing the health care costs incurred by Idaho’s uninsured.
Tom Mortell is a partner at Hawley Troxell and chairs the firm’s health law practice group. He is also a member of the firm’s governing board. He can be reached at email@example.com.