As we enter a new political season, the direction health care policy and practice should take will be hotly debated. Do we know if expanded coverage has increased access to care? How affordable is that care, really? And, in turn, what impact has the increased access to care had on the health of populations? Drawing on a range of evidence from the Oregon Medicaid experiment to the national coverage and access trends under the Affordable Care Act, this column tees up the debates on “if not Obamacare, then what?” And if we actually do proceed as planned with the ACA and marketplace reform, how do we improve the connection between coverage and health?
The Connection between Coverage and Health
Giving people insurance cards doesn’t mean that you have necessarily improved their access to health care and health. That connection is not lost on health policy leaders. As Peter Lee, executive director of Covered California, told me in an interview: “We are very focused on all parts of the chain connecting affordable insurance coverage to access to care that the insurance provides and, in turn, to the performance of the health care system in delivering health for the population we serve.”
It is undeniable that coverage has been expanded substantially under Obamacare, with approximately 20 million of the 50 million uninsured gaining coverage (half through Medicaid and half through exchanges). Coverage expansion has been achieved in every state (except Wyoming), even in states that were strongly opposed to coverage expansion through Medicaid. Indeed, a recent state scorecard report published by the Commonwealth Fund covering data through 2014 found that 39 states had reductions in the rate of uninsured of 3 percent or more. Ten states had even more major reductions (6 to 9 percent), from around 20 percent uninsured to around 12 percent. These 10 states, including California, Washington and Kentucky, expanded Medicaid and established high-functioning state exchanges.
The Commonwealth Fund report also lays out substantial progress in many states on such performance measures as access to care; equity and affordability; prevention; and health system performance on such issues as readmissions and preventable harm. On balance, it seems that much has been achieved across the country in coverage expansion, access to care and improving health.
But there is also evidence that the promise of Obamacare has not been completely fulfilled in many aspects, such as true affordable coverage (particularly for ambulatory services), reduction of unnecessary emergency department visits, access to primary care and specialty care services, and impact on health outcomes.
This wide range of emerging evidence, sometimes contradictory, is being used (and sometimes abused) in political and policy circles as candidates prepare for party primaries and the presidential election debates ahead. What should we make of the progress so far? What matters to hospitals and health systems? And what does it mean for the future?
Following the Chain from Coverage Expansion to Health
The chain between coverage expansion and health starts with affordable coverage, and that affordability has two main components: premium levels and out-of-pocket costs. The cornerstones of the ACA were Medicaid expansion and insurance exchanges. Medicaid is characterized by low cost-sharing and premium-sharing in most states, although Republican governors and legislatures in states like Ohio and Indiana have pursued Medicaid expansion using more aggressive cost-sharing: skin in the game for poor people. Brilliant.
The core starting point of affordable premiums is a high-functioning risk pool and the rules of the road to maintain it. Covered California’s Lee points to the principles that the California exchange has followed from its inception: “We are an active purchaser state; using standardized benefit designs with fewer simpler, clear and comparable options; and no plan differences in the individual market inside or outside the exchange.”
Rate increases nationally on insurance exchanges for 2016 vary widely, but the basic lesson is that if consumers are prepared to shop around, the rate increases for 2016 can be manageable and modest. Take Nebraska, a typical non-expansion state with moderate numbers of uninsured close to the national average. In Nebraska, the approved exchange insurance premium rates increased anywhere from 15 to 30 percent for 2016; however, two new insurers entered the market for 2016, offering rates that were identical if not slightly lower than the market leading rate of 2015. So, careful consumers could have zero increase in premium from 2015 to 2016.
That is the general story: The more high-functioning the exchange (such as an active purchaser like California), the more competitive the insurance market (not sheer numbers of players but also their capability and commitment to the market) and the more the consumer is prepared to shop around, the more affordable the rate is likely to be. Hey, that’s why they call it a market.
Obamacare critics carp about “corporate welfare for insurers,” referring to the three Rs program (risk corridors, reinsurance and risk adjustment) that are intended to make insurers whole, financially, if they suffer extraordinary adverse selection from sick patients. Similarly, United Healthcare recently complained that it is losing money on its exchange business nationally and threatened to pull out in 2017. No such concerns exist in California, according to Lee: “Insurers are not losing money in California, and they paid into the national risk-corridor program rather than needing a rebate.” Again, here is testimony to a high-functioning risk pool and an active purchaser marketplace.
But elsewhere, the picture is not always so rosy. For example, the CO-OPs (local, community-based, nonprofit startup health plans created with seed funding from the ACA) were all counting on three R bailouts to make it through the next winter. Not happening. Sorry, CO-OPers, this was a bad idea from the start. I had a slide when CO-OPs first were conceived that showed a grainy picture of an Amish barn raising, onto which I Photoshopped a neon sign that said: “North Dakota CO-OP: We suck! But we’re Local.” Weirdly prophetic. This was amateur hour and it should never have happened. Just like we need to shut out the crazies on the right, we need to shut out the crazies on the left; CO-OP is a perfect example of Liberals Gone Wild.
Done correctly, exchanges orchestrate access to private insurance and, most importantly, they are the vehicle for delivering both premium subsidies and cost-sharing support. Nearly 90 percent of Americans gaining access to coverage through state and federal exchanges are receiving some form of subsidy. And let’s be clear, many of those folks (some would argue most) would not buy the coverage without a subsidy, because they simply could not afford coverage and still eat.
Critics of exchanges (from both the right and the left) have argued that Obamacare is not really affordable coverage even after subsidy because of the high deductibles. It is true that Obamacare has legitimized high deductibles by establishing high thresholds for individuals and families, but compared with what? Employer-sponsored coverage? Surveys show that 40 percent of workers with employer-sponsored coverage now have a deductible of $1,000 or more, and 20 percent have a deductible of $2,000 or more (and the proportion of Americans with ever-higher deductibles grows every year).