February 6, 2013
Contrary to every thing you have read or heard these past three years, many believe that there is a very real and logical possibility that the uninsured population in California may increase as the Affordable Care Act (ACA) is implemented in 2014. I know that many of those, that dutifully support the ACA, have been convinced that come 2014 there will be somewhere between 20 million and 40 million US citizens lined up to apply for coverage. But a growing list of facts and variables suggests that there may be a lot of shoppers but not many buys.
I think the estimates of millions of newly covered Americans are wrong because on main street where people really live and work the math does not add up to more covered Americans.
One could fill a book with the specifics behind my statement but the facts boil down to two simple reasons:
- Human Nature
- Everyone projects premium in 2014 to be much higher than 2012 and 2013. In fact, many carriers have been increasing their premiums already, in preparation for the ACA, much to the chagrin of regulators. You have heard the facts behind the projections on higher premiums – 3-to-1 rating slope, mandated benefits including vision and dental for kids, all of the new fees intended to “level the playing field” and affects from Medical Loss Ratios (MLRs) on pricing, just to name a few.
- The fact is employers and employees can’t afford the current premiums being charged; so how will they afford higher premiums next year? The result may be that many employers will no longer sponsor or pay for their employee’s health plans. Employers will be forced to let employees buy their own coverage through the Exchange.
2. Human Nature: Here are several examples
- Let’s look at the current uninsured population for starters. Many could afford and acquire coverage now but choose not to. What makes anyone think that they will suddenly have a change of mind and then enroll in a plan that is higher priced than the plans they don’t buy today.
- Many uninsured are uninformed or not interested in buying their own insurance. Nothing in 2013 or 2014 will change their perspective.
- It is predicted that many employers will discontinue the current plan they offer and tell their employees to buy their insurance from the Exchange. These newly uninsured folks have not shopped or purchased insurance on their own before because their employer always provided it. Now these members will be forced to shop on their own which many will choose not to do.
- This newly uninsured population (formerly covered by employers) will also discover, for the first time, the actual cost of insurance. The “sticker shock” may/will prevent them from buying their own plans.
- Uninsured who do shop, want to enroll, and even qualify for subsidy will discover that the subsidy does not cover their entire premium and the remaining premium may be more than the citizen is willing to pay.
There are many more examples of “human nature” I could mention. For these reasons, I fear that sometime in 2014 we may hear reports that the number of uninsured is actually increasing. Those reports will drive the politicians supporting the ACA, who have their credibility on the line, to go looking for scapegoats. They will want to place blame and you know where it will be pointed.
They will point blame toward insurers, brokers, employers and providers.
So, let’s hope that in the few months remaining before 2014 plans are released that the HHS and its minions will make changes that encourage employers to stay in the game.
If we can make it easier and more affordable for employers to continue sponsoring their group health plans then we can make a dent in the uninsured population. HDHPs with integrated HRAs are one solution so watch for our announcements.
Unfortunately, I am a skeptic trapped in an optimist body and therefore I fear we should prepare for a higher number of uninsured, while working hard to provide solutions and make a difference.
Let me know what you think,
Mark Reynolds, RHU