Could Health Reform Really Eliminate Most Of The Uninsured And Underinsured?

Two recent reports suggest that the Patient Protection and Affordable Care Act (ACA) could reduce the majority of uninsured and underinsured in the country. Does that make the law worthwhile? For employees? For employers?

A Commonwealth Fund study found that provisions in the ACA to increase health insurance affordability could reduce the number of underinsured by 70%.

The number of underinsured adults—those with health insurance, but high medical expenses relative to income—rose by 80% between 2003 and 2010, from 16 million to 29 million, according to the Commonwealth Fund. The study defined underinsured adults as those who reported at least one of the following conditions:

• family out-of-pocket medical care expenses (not including premiums) that are 10% or more of income;

• among low-income adults (those with incomes below 200% of the federal poverty level (FPL)), medical expenses that are 5% or more of income; or

• per-person deductibles that are 5% or more of income.

Nearly half (44%) of U.S. adults, or 81 million people, were either underinsured or uninsured in 2010, up from 75 million in 2007 and 61 million in 2003. Low-income families were most at risk of being underinsured, according to the Commonwealth Fund. Seventy-seven percent of those with incomes below 133% FPL, and 58% of those with incomes between 133% and 250% FPL were either underinsured or uninsured. If the ACA succeeds in reaching these individuals (those with incomes lower than 250% FPL), the number of underinsured could be reduced by 70% once the law is fully implemented.

According to the report, "The ACA can diminish these risks and alleviate concerns for families; however, the extent to which it will do so depends on benefit design, the choice of plans offered through the health insurance exchanges, and growth in health care costs relative to family income. If plan designs allow for high deductibles that apply to primary care and medications or high cost-sharing for essential care, more families will be exposed to financial risk. As such, designs will need to take a value-based approach that ensures access and financial protection for essential care."

The study, Affordable Care Act Reforms Could Reduce the Number of Underinsured U.S. Adults by 70 Percent, published in the online journal Health Affairs, contained responses from 4,005 adults age 19 and older in the continental United States.

Uninsured Could Be Down To 5%

In response to the ACA, three-quarters of Americans without health insurance are likely to obtain coverage starting in 2014, according to a recent survey by the Health & Life Sciences practice of Oliver Wyman, part of Marsh & McLennan Companies. Consequently, it appears that the ACA would reduce the proportion of uninsured to 5% of the population.

Under the ACA, approximately 33 million Americans will be required to purchase health insurance for themselves, and another 18 million uninsured will be eligible to receive coverage under Medicaid. Many will receive federal subsidies, and those who choose not to obtain coverage will pay a penalty.

The study, completed through detailed surveys of approximately 800 currently uninsured individuals, asked about their health status, their income, and their attitudes toward the health system. To determine how the uninsured would make buying decisions, participants were asked to choose from among a number of actuarial-appropriately priced potential options that may be available through the health insurance exchanges beginning in 2014. Participants also could elect to could buy insurance and instead pay the applicable penalty.

Overall, 76% of respondents chose to purchase insurance. "Our research shows that uninsured Americans overwhelmingly see value in coverage," said Terry Stone, a partner in Oliver Wyman's Health & Life Sciences practice. "But few really understand their options or even what a health care exchange is. They need to be educated."

Beginning in 2014, taxpayers with household income between 100% and 400% of the federal poverty line can qualify for a sliding-scale refundable health insurance premium assistance credit. With lower federal premium assistance credits, middle-income uninsured are less likely than low-income or high-income uninsured to buy health insurance: 34% of respondents with incomes between 300% and 400% of the FPL, and 28% of those with incomes between 250% and 300% of the FPL would not buy health insurance, compared with 18% of low income (those with incomes at 100% to 133% of FPL) and 19% of those with greater disposable income at 600% or higher of FPL.

"In today's political and economic climate, we can expect pressure to reduce subsidies," said Mr. Stone. "If that happens we're likely to see more people go without insurance—and unable to purchase coverage on their own. And the group most affected will not be the poorest, but middle-income Americans."

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