Commonwealth Fund: New Coverage Options Could Help Millions of Underinsured

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Although much Patient Protection and Affordable Care Act media coverage has focused on the law's ability to help the uninsured get healthcare coverage, a new analysis from The Commonwealth Fund has found the law could benefit another group as well: the underinsured.

checkBased on data from the U.S. Census Bureau's Current Population Survey, Fund researchers found that, in 2012, there were 31.7 million underinsured people younger than 65. The report defines "underinsured" as those with health insurance who spent 10 percent or more of their income on medical care (not including premiums), or 5 percent for those earning less than 200 percent of the federal poverty level ($22,980 for a single person and $47,100 for a family of four in 2013).

People in low- and middle-income households have the greatest risk of being either uninsured or underinsured, according to the report. Nationwide, 63 percent of those earning less than the poverty level ($11,490 for single people and $23,550 for a family of four in 2013) were uninsured or underinsured in 2012, according to the report. Additionally, 47 percent of those earning between 100 and 199 percent of the poverty level were uninsured or underinsured. And one out of five (20 percent) of people with incomes solidly in the middle class were either uninsured or insured but underinsured as of 2012.

Being underinsured has negative effects for both patients and providers, says the report's lead author, Cathy Schoen, senior vice president for policy, research and evaluation at the Fund. "Instead of having a patient that comes in with an insurance policy and able to pay their bills, they're at risk for becoming a  bad debt and charity case or going without care because of fear of costs," she says. "With high-deductibles and high cost sharing, even insured patients cannot always pay their bill."

However, expanded Medicaid eligibility and premium assistance and other provisions available under the PPACA can help make coverage more affordable for the underinsured, according to the report. The law gives states the option of expanding their Medicaid programs to cover those earning as much as 138 percent of the federal poverty level ($15,856 for a single person and $32,499 for a family of four as of 2013) starting this year. Additionally, those earning between 100 percent and 400 percent ($45,960 for singles and $94,200 for families) of the poverty level qualify for subsidies to help cover the cost of premiums for health plans purchased through the PPACA exchanges. And for those in the lower income range, there are provisions for lower cost-sharing as well as premium help.

However, according to the report, as yet 24 states haven't expanded their Medicaid programs. Of those states, only Wisconsin provides Medicaid coverage up to the poverty level for childless, nondisabled adults. In the remaining 23 states, Fund analysts found there are approximately 15.2 million people with incomes below the poverty level who are either uninsured or underinsured.

"Although some may be ineligible based on immigration status and others may be eligible under current Medicaid but not yet signed up, unless these states participate in the Medicaid expansion, there will be no new subsidized coverage option for these people since their income is too low to qualify for premium assistance," the report states.

The lack of affordable coverage options available to underinsured people in those states will also place more financial pressure on hospitals, health systems and other providers, especially as the federal government reduces Medicare and Medicaid payments meant to compensate for charity care, Ms. Schoen says. Medicare disproportionate share hospital/uncompensated care payments will decline in 2015 and beyond under the PPACA; MedPAC projects that Medicare DSH payments will decrease from roughly $12 billion this year to $9 billion in 2015.

The PPACA has the ability to help relieve the burden of high healthcare costs on both patients and providers. However, the report concludes whether or not that potential becomes a reality will critically depend, in part, on the states' decisions. There's still open debate surrounding Medicaid expansion in five states, according to the Kaiser Family Foundation.

"Many of the states not participating in Medicaid expansion have among the highest rates of uninsured or underinsured people as a share of their total state populations," the report says. "Without Medicaid expansion, this vulnerable group will remain at high risk for access, health and financial problems."

More Articles on Healthcare Affordability:
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AHIP President Advocates for Lower Tier of PPACA Health Plans 

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