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PITTSBURGH, June 20, 2019 – A White House initiative in 2017 – criticized by many health policy analysts as an attempt to undermine the Affordable Care Act – has had unintended consequences that have improved the affordability of health insurance for market participants. , confirms an analysis conducted by the University of Pittsburgh in public health.
The results, published today in the newspaper Health Services Research, show that the Trump Administration's reduction of ACA's cost-sharing reduction payments to health insurers led insurers to compensate by changing the distribution of premiums in order to increase federal subsidies to individuals listed on the market. And, surprisingly, geographic markets where only one insurer has a monopoly have resulted in the best prices for low-income people.
"The discourse on monopoly markets has been largely catastrophic," said Coleman Drake, Ph.D., assistant professor in the Department of Health Policy and Management at Pitt Public Health. "But in reality, in terms of affordability, monopolistic insurance markets generate very little or no cost premiums for market participants, but it is a really ineffective way. to spend federal tax money to create affordable health insurance. "
The federal government offers premium tax credits to individuals who earn income equal to or less than 400% of the federal poverty line and who purchase health insurance through HealthCare.gov or similar Marketplaces. The amount of tax credit or subsidy varies depending on the market or region of health insurance purchase, as different insurers offer different plans with different premiums.
Every health insurance company participating in the Marketplace offers health insurance plans for a "metal level" – bronze, silver, gold and platinum – with bronze being the cheapest and offering the lowest generosity of benefits. The subsidy is determined on the basis of the "premium gap" of each market, defined as the difference between the second lowest cost cash plan – the "benchmark" – and the cost plan. the lowest available on the market.
For example, a single person registered in 2018 whose income corresponds to 180% of the poverty line set by the federal government should pay $ 100 per month for health insurance. If the reference plan premium in their region was $ 200 per month and the plan with the lowest cost was $ 140, then the premium gap would be $ 60. This registrant would pay $ 40 for the plan with the lowest premium, which is the expected monthly contribution of $ 100, less the $ 60 premium differential grant.
Upon entry into force, the ACA also provided additional assistance to market participants whose incomes were equal to or less than 250% of the federal poverty line, allowing them to obtain matching policies. of a lower co-pay and deductible, also called a cost-sharing reduction grant. In turn, the government was compensating insurers for the additional costs associated with offering these more generous benefits to low-income people. The Trump Administration reduced these cost-sharing reduction subsidy payments to insurers in October 2017.
In response, the insurance commissioners of 42 states have asked insurers to "charge money", which means increasing the premium of the cash referral plans to cover these additional costs, thereby increasing the cost of money. premium gap and generating larger premium subsidies. Money loading works best in markets with a single insurer, as this monopoly insurer sets the premium for both the cash reference plan and the least expensive plan.
The average monthly premium gap before reducing the cost-sharing reduction was about $ 60. Following the reduction, the average monthly premium spread jumped to USD 133.52 in 2018 and USD 147.94 in 2019.
But this approach has not benefited individuals who bought their insurance out of the market or who are not entitled to a premium tax credit. As a result, insurance commissioners are increasingly encouraging "money transfers", under which insurers are allowed to sell off-market plans that are very similar, but not identical, to the market regimes in terms of Advantages, but only to schemes on the market. are responsible for money. This allowed non-market plans to retain lower premiums and was authorized in 24 states in 2018 and 29 in 2019.
States that allowed both money laundering and money switching had a 121% increase in premium spreads, compared to 71% in states that only allowed cash loading, indicating that insurers feared losing out-of-market customers with rising premiums in the states loading money allowed but not switching money.
The coupling of the silver charge and the silver switch thus optimizes the prices of the subscribers on the market.
"States that pass this second stage and allow both the loading of money and the change of money try to ensure that insurers continue to operate in the individual market and that consumers with incomes medium and high can afford health insurance, "said co-author Jean Marie Abraham, Ph .D., Wegmiller Professor of Health Care Administration in the Division of Policy and Management of Health. University of Minnesota School of Public Health. "Of course, an important trade-off is that such policy responses ultimately lead to higher federal government spending than would have been incurred under the original policy."
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This research was funded by the Robert Wood Johnson Foundation.
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About the Graduate School of Public Health at the University of Pittsburgh
The Graduate School of Public Health at the University of Pittsburgh, established in 1948 and now one of the highest ranked public health schools in the United States, conducts research on public health and medical care that improve the lives of millions of people around the world. Pitt Public Health is a leader in the development of novel methods for the prevention and treatment of cardiovascular disease, HIV / AIDS, cancer and other important public health issues. For more information on Pitt Public Health, visit the school's website at http://www.pitt.org
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