Following the ACA Repeal-and-Replace Effort, Where Does the U.S. Stand on Insurance Coverage?

Abstract

• Issue: After Congress’s failure to repeal and replace the Affordable Care Act, some policy leaders are calling for bipartisan approaches to address weaknesses in the law’s coverage expansions. To do this, policymakers will need data about trends in insurance coverage, reasons why people remain uninsured, and consumer perceptions of affordability.
• Goal: To examine U.S. trends in insurance coverage and the demographics of the remaining uninsured population, as well as affordability and satisfaction among adults with marketplace and Medicaid coverage.
• Methods: Analysis of the Commonwealth Fund Affordable Care Act Tracking Survey, March–June 2017.
• Findings and Conclusions: The uninsured rate among 19-to-64-year-old adults was 14 percent in 2017, or an estimated 27 million people, statistically unchanged from one year earlier. Uninsured rates ticked up significantly in three subgroups: 35-to-49-year-olds, adults with incomes of 400 percent of poverty or more (about $48,000 for an individual), and adults living in states that had not expanded Medicaid. Half of uninsured adults, or an estimated 13 million, are likely eligible for marketplace subsidies or the Medicaid expansion in their state. Four of 10 uninsured adults are unaware of the marketplaces. Adults in marketplace plans with incomes below 250 percent of poverty are much more likely to view their premiums as easy to afford compared with people with higher incomes. Policies to improve coverage include a federal commitment to supporting the marketplaces and the 2018 open enrollment period, expansion of Medicaid in 19 remaining states, and enhanced subsidies for people with incomes of 250 percent of poverty or more.

Background

Marked by political controversy since its passage in 2010, the Affordable Care Act has endured a particularly turbulent seven-month period during which the newly elected Trump administration and a Republican-led Congress attempted to repeal and replace it. After the failure of that effort, some Republican and Democratic leaders in Congress have pledged to work together to address the law’s weaknesses. At this pivotal point, we use new findings from the fifth annual Commonwealth Fund Affordable Care Act Tracking Survey to assess the current status of insurance coverage in the U.S. and identify areas where more work could help increase enrollment and improve the affordability of marketplace plans. The survey firm SSRS interviewed a nationally representative sample of 4,813 working-age adults, of whom 1,204 have marketplace or Medicaid coverage, between March 28 and June 20, 2017.

Findings

Uninsured Rate Among U.S. Working-Age Adults Mainly Unchanged, with Some Losses

The survey found that the percentage of adults ages 19 to 64 who were uninsured as of March–June 2017 was 14 percent, or about 27 million people (Exhibit 1, Table 1). For a comparison with other recent survey estimates, see the Appendix. While this is slightly higher than a year ago when the rate was 12.7 percent, or 24 million adults, the uptick is not statistically significant. The current rate remains well below the 20 percent uninsured rate just prior to the ACA’s first open enrollment period in 2013. There was little significant change in uninsured rates in most subgroups in 2017 (Table 2). However, the following three groups experienced a statistically significant deterioration in coverage this year:

Adults ages 35 to 49. The uninsured rate among 35-to-49-year-olds rose from 11 percent in 2016 to 15 percent in 2017, a statistically significant increase (Exhibit 1). Compared to the overall population of uninsured people, this group of adults was more likely to be composed of foreign-born Latinos and to identify as Republicans (data not shown).

Adults with incomes above the subsidy range. There was a small but significant increase in the uninsured rate among adults whose income makes them ineligible for premium tax credits (i.e., those with incomes at or above 400 percent of poverty, $47,520 for an individual and $97,200 for a family of four) (Exhibit 2). People in this income range must pay the full insurance premium. Unlike people who receive tax credits, they are also fully exposed to annual premium increases. Premium increases in 2017 were the highest on average since the first year of the ACA marketplaces.¹ People with tax credits were mostly protected from premium spikes, but those above the subsidy range faced a significant increase in many states.

Adults living in states that have not expanded Medicaid. Since 2013, uninsured rates in states that expanded Medicaid eligibility have fallen by a much larger margin than the rates in the 19 states that have not expanded the program.² We find a widening of the divide between expansion and nonexpansion states: the uninsured rate in nonexpansion states increased by 3 percentage points in 2017 to 19 percent, nearly double the rate in expansion states (11%) (Exhibit 3).

Are the Remaining Uninsured Eligible for Insurance Under the ACA’s Coverage Expansions?

The ACA’s coverage expansions comprise two main components: a reformed individual market with subsidies for coverage through the marketplaces, and expanded Medicaid eligibility. To identify policy levers that might increase the number of people with insurance, we examine the categories of uninsured adults along with the ways in which they are eligible for coverage:

• People with incomes below 400 percent of poverty: eligible for marketplace subsidies or Medicaid in expansion states;
• People with incomes at or above 400 percent of poverty: eligible for unsubsidized individual market plans;
• People with incomes below 100 percent of poverty and living in one of 19 states that has not expanded Medicaid: eligible for unsubsidized individual market plans or possibly traditional Medicaid;
• Undocumented immigrants: eligible for unsubsidized individual market plans outside the marketplaces.

About half (48%) of uninsured adults, or 13 million people, have incomes below 400 percent of poverty and are eligible for either subsidized marketplace coverage if they lack an offer of affordable insurance through an employer or expanded Medicaid (Exhibit 4). Fifteen percent, about 4 million people, have incomes below 100 percent of poverty and live in a state that has not expanded Medicaid eligibility. Eleven percent, or about 3 million adults, have incomes of 400 percent of poverty or more.

Because we don’t ask about immigration status, we use a proxy measure based on country of birth. In the survey, foreign-born Latinos comprise a large and growing share of the U.S. uninsured adult population.³ Although they represent just 9 percent of the working-age population, they make up 26 percent of the 27 million uninsured adults (Exhibit 4, Table 3), or about 7 million people. In this analysis, we assume that these 7 million uninsured foreign-born Latinos likely have an immigration status that makes them ineligible for the ACA coverage expansions. This is a reasonable assumption, as, based on survey responses, there are an estimated 16 million foreign-born Latinos. Research has found that approximately 66 percent of Latinos born outside the U.S. are undocumented.⁴

Why Haven’t Uninsured Adults Signed Up for Coverage?

We asked uninsured adults several questions concerning their coverage status, including whether they were aware of the marketplaces, and, if they were aware of the marketplaces, why they hadn’t visited. If they had visited the marketplaces, we asked why they hadn’t signed up for coverage.

About two of five (40%) uninsured adults were not aware of their state’s marketplace or of HealthCare.gov, the federal website for people seeking health insurance (Exhibit 5). Adults most at risk of lacking coverage — those with low incomes and racial and ethnic minorities — were most likely to be unaware of the marketplaces.

Among uninsured adults who were aware of the marketplaces but had not visited them to shop for health insurance, concern that they couldn’t afford coverage was the most often-cited reason (59%) for not visiting (Exhibit 6). About one-third (34%) hadn’t visited because they thought the law was going to be repealed. About the same share (38%) didn’t think they would be eligible for insurance, and three of 10 (30%) didn’t think they needed coverage.

Among uninsured adults who visited the marketplaces but didn’t enroll, the overwhelming majority said they couldn’t find an affordable plan (Exhibit 7). When we broke this response down by the ACA eligibility categories used above, we find that about one-third (34%) of this group were likely not eligible for expanded Medicaid or marketplace subsidies: 14 percent had incomes below 100 percent of poverty and were living in a state that did not expand Medicaid, 13 percent had incomes of 400 percent of poverty or higher, and 7 percent were foreign-born Latinos, who, as we note above, likely had an immigration status that made them ineligible for Medicaid or marketplace subsidies (data not shown). Two-thirds (66%) of those who cited affordability as the main reason for not enrolling had incomes that made them eligible for marketplace subsidies or Medicaid.

It is unclear whether better information about choices and costs would have made people more likely to enroll, but it could potentially have an impact, particularly if people were, in fact, eligible for subsidies. The survey indicates that personal assistance during the enrollment process makes a significant difference in completing enrollment. Controlling for demographic differences, two-thirds (66%) of adults who received personal assistance when they shopped for coverage enrolled, compared to fewer than half (48%) who had not received assistance (Exhibit 8).

Among people who did enroll, affordability was a significant factor in their choice of plan. More than half (55%) of people with private plans through the marketplace said the cost of premiums (33%) or deductibles (22%) was the most important factor in in their decision (data not shown). Twenty-three percent said that choice of providers in the plan’s network was the most important factor.

Costs and Affordability for Marketplace Enrollees

To shed more light on the affordability concerns and to inform potential public policy solutions, we examined marketplace enrollees’ reports about the costs of their plans and whether they perceived them as easy or difficult to afford.

Premiums

Premium costs. Of the 10.3 million people enrolled in marketplace plans in 2017, 84 percent, or 8.7 million, are paying for their premiums with help of premium tax credits.⁵ Enrollees’ premium contributions are based on income, ranging from 2 percent of income for a person with income at 100 percent of poverty ($11,880 for an individual) to 9.7 percent of income for people earning between 300 percent and 400 percent of poverty ($35,640 to $47,520 for an individual) (Table 4).

The sliding-scale contributions in marketplace plans have the effect of making them less expensive, on average, than employer-based coverage for people with incomes below 250 percent of poverty ($29,700 for an individual). Seventy-one percent of people in marketplace plans with incomes in that range paid less than $125 per month for their premiums, including 30 percent who paid nothing (Exhibit 9). Fewer people in employer plans paid that amount, although many in employer plans did not know the amount of their premium payment.

The story is starkly different for people with incomes at or above 250 percent of poverty. Enrollee premium contributions rise with income in marketplace plans, while generally no such adjustment is made in employer plans: in most companies, everyone contributes the same amount. Consequently, only 24 percent of people in marketplace plans in that income range paid less than $125 or nothing for their premiums compared to 57 percent of people in employer plans.

Premium increases. Marketplace enrollees with incomes below 250 percent of poverty were better protected from annual premium increases than were people with higher incomes. Over the time that they had had their health plans, 70 percent of adults with incomes below 250 percent of poverty said that their premiums had either stayed the same or decreased (Exhibit 10). In contrast, only 35 percent of adults with higher incomes reported this; they were much more likely to say their premiums had increased.

Perceptions of premium affordability. People’s views of the affordability of their premium also follow this pattern. Nearly two-thirds (64%) of adults in marketplace plans with incomes below 250 percent of poverty reported that their premium costs were very or somewhat easy to afford; 56 percent of people in employer plans in that income range said the same (Exhibit 11). In contrast, about one-third (34%) of marketplace enrollees with incomes of 250 percent of poverty or higher said their plans were easy to afford compared to 78 percent of adults in employer plans in that income range.

Deductibles

The ACA requires insurers that sell in the marketplaces to offer “silver-level” plans that come with cost-sharing reductions for adults earning between 100 percent and 250 percent of the federal poverty level.⁶ These reductions lower an individual’s deductible, copayments, and coinsurance; substantially so for enrollees with the lowest incomes.⁷ In 2017, 57 percent of marketplace enrollees, or 5.9 million people, are estimated to be covered by plans with these reductions.⁸

The effect is clear: among marketplace enrollees with incomes below 250 percent of poverty, 28 percent said they had deductibles of $1,000 or more (Exhibit 12). But two-thirds (67%) of marketplace enrollees at 250 percent of poverty or more reported deductibles of $1,000 or more.

The cost-sharing reductions have made deductibles similar to those faced by people in employer plans. The share of lower-income adults with high deductibles is similar in marketplace plans and in employer plans. At higher incomes, however, marketplace enrollees were significantly more likely than employer plan enrollees to have a high deductible.

Marketplace and Medicaid Enrollees Are Satisfied with Their Coverage

Four years after the ACA’s major coverage expansions, large majorities of marketplace and Medicaid enrollees continue to report satisfaction with their health insurance overall. In 2017, 82 percent of adults with marketplace plans and 94 percent of those enrolled in Medicaid were very or somewhat satisfied with their health insurance (Exhibit 13). People in marketplace plans with incomes below 250 percent of poverty were significantly more likely to be satisfied than people with higher incomes (92% vs. 70%) (data not shown).

Conclusion and Policy Implications

The findings of this study could inform both short- and long-term actions for policymakers seeking to improve the affordability of marketplace plans and reduce the number of uninsured people in the United States.

Short-Term

The most immediate concern for policymakers is ensuring that the 17 million to 18 million people with marketplace and individual market coverage are able to enroll this fall.

Congress could take the following three steps:

1. The Trump administration has not made a long-term commitment to paying insurers for the cost-sharing reductions for low-income enrollees in the marketplaces, which insurers are required to offer under the ACA. Congress could resolve this by making a permanent appropriation for the payments. Without this commitment, insurers have already announced that they are increasing premiums to hedge against the risk of not receiving payments from the federal government. Since most enrollees receive tax credits, higher premiums also will increase the federal government’s costs.⁹
2. While it appears that most counties will have at least one insurer offering plans in the marketplaces this year, Congress could consider a fallback health plan option to protect consumers if they do not have a plan to choose from, with subsidies available to help qualifying enrollees pay premiums.
3. Reinsurance to help carriers cover unexpectedly high claims costs.¹⁰ During the three years in which it was functioning, the ACA’s transitional reinsurance program lowered premiums by as much as 14 percent.

The executive branch can also play an important role in two ways:

1. Signaling to insurers participating in the marketplaces that it will enforce the individual mandate. Uncertainty over the administration’s commitment to the mandate, like the cost-sharing reductions, is leading to higher-than-expected premiums for next year.
2. Affirming the commitment to ensuring that all eligible Americans are aware of their options and have the tools they need to enroll in the coverage that is right for them during the 2018 open enrollment period, which begins November 1. The survey findings indicate that large shares of uninsured Americans are unaware of the marketplaces and that enrollment assistance makes a difference in whether people sign up for insurance.

Long-Term

The following longer-term policy changes will likely lead to affordability improvement and reductions in the number of uninsured people.

1. The 19 states that have not expanded Medicaid could decide to do so.
2. Alleviate affordability issues for people with incomes above 250 percent of poverty by:
   1. Allowing people earning more than 400 percent of poverty to be eligible for tax credits. This would cover an estimated 1.2 million people at an annual total federal cost of $6 billion, according to a RAND analysis.¹¹
   2. Increasing tax credits for people with incomes above 250 percent of poverty.
   3. Allowing premium contributions to be fully tax deductible for people buying insurance on their own; self-employed people have long been able to do this.
   4. Extending cost-sharing reductions for individuals with incomes above 250 percent of poverty, thus making care more affordable for insured individuals with moderate incomes.
3. Consider immigration reform and expanding insurance options for undocumented immigrants.

In 2002, the Institute of Medicine concluded that insurance coverage is the most important determinant of access to health care.¹² In the ongoing public debate over how to provide insurance to people, the conversation often drifts from this fundamental why of health insurance. At this pivotal moment, more than 30 million people now rely on the ACA’s reforms and expansions. Nearly 30 million more are uninsured — because of the reasons identified in this survey. It is critical that the health of these 60 million people, along with their ability to lead long and productive lives, be the central focus in our debate over how to improve the U.S. health insurance system, regardless of the approach ultimately chosen.