Harvard study reveals consequences of eliminating individual mandate on enrollment, premiums

0
46

SACRAMENTO — Covered California Executive Director Peter Lee issued the following statement in connection with the Harvard Medical School Study, “Eliminating the Individual Mandate Penalty in California: Harmful but Non-Fatal Changes in Enrollment and Premiums,” published in Health Affairs.

The Harvard study, conducted by a team lead by Dr. John Hsu, is the first national effort to measure the potential impacts of removing the individual mandate penalty based on surveying actual California consumers about their likely actions in the face of there being no penalty.

“The removal of the individual mandate penalty could result in 378,000 fewer Californians with health insurance in the individual market, including approximately 250,000 who are currently insured through Covered California.

“The drop in those with insurance would be even greater because there would also be drops in Medi-Cal, California’s Medicaid program, since consumers often find out they are eligible for Medi-Cal while shopping for coverage through Covered California.

“While California would continue to have a stable individual market, and we have the reserves and flexibility to adjust for this impact, the impacts would be real and significant for California’s consumers. Californians would be paying increased premiums, and some of those who go without insurance could face big medical bills when unforeseen health events occur.

“The consumers who leave the market would be rolling the dice, hoping they would remain healthy but the fact is that many of them will lose that bet. We know that life can change in an instant, and an illness or injury can be a moment away for all of us.

“While we all think we won’t be the ones to get sick or injured, the reality is that if 378,000 Californians decide to go without insurance, about 60,000 of them (one out of six) are likely to need medical care that will cost them more than $10,000.

“The real penalty is not what the IRS will collect through the coming year for being uninsured but rather showing up at the hospital with no insurance and leaving with a massive debt.

“In addition, with a less-healthy consumer pool, California’s individual market could be facing premium increases for 2019 of 12 to 16 percent — with the biggest driver being the removal of the individual mandate.

“Increases at this level are bad news for consumers but Californians would be in better shape than most of the nation would be. This study finds that four out of five Californians would opt to keep their coverage even with the penalty going away, and here we will once again be leaning in with a major marketing campaign to promote enrollment.

“The impact in many other states, however, is likely to be far worse. The removal of the penalty in those states will be compounded by the absence of effective marketing and the prospect of new skimpy insurance products, which would cause healthier people to leave the individual market. Premiums in many states could spike 30 percent in 2019 alone, with large increases in future years absent effective federal or state policies.

“While consumers who receive financial help — in California and across the nation — would be shielded from those rate changes, unsubsidized consumers would have no such protections. These are middle class Americans with a median income of $75,000 — approximately 800,000 in California and 6 million across the country — who would be forced to pay the entire increase or would risk being priced out of coverage.

“It is important to note that in addition to the removal of the individual mandate penalty, a variety of other factors are causing instability in the individual markets across the country, including the cuts in marketing and outreach in many states, and the prospect of short-term or limited-duration plans that fail to protect consumers or provide meaningful coverage.

“There is still time for policy makers to address these issues before they become a crisis for millions of Americans in 2019. However, just as there is not a single reason for the uncertainty we face, there is not a single solution.

There is a range of things policy makers should consider doing now to protect consumers and provide certainty for health insurance companies, including a federally supported reinsurance program, increased investments in marketing and other state-based solutions.

“Lawmakers should seriously consider these steps before we turn back the clock to a time when consumers had Swiss-cheese coverage, meaning they thought they had coverage until they sought to use it, or were turned away for having a pre-existing condition.”

View the study at https://www.healthaffairs.org/do/10.1377/hblog20180223.551552/full/

NO COMMENTS