How Obamacare has affected Michigan 5 years after rollout

Nov. 01--Who has health insurance in Michigan -- and how much they or the government pays for it -- has changed considerably since the tumultuous day five years ago when the federal government's Healthcare.gov website crashed during the Affordable Care Act's rollout.

Despite that early setback, the health care law signed by then-President Barack Obama has since succeeded in offering or expanding insurance coverage to 1.2 million Michiganders, most of whom wouldn't otherwise be insured today.

Michigan's uninsured rate was down to 5.2 percent last year, compared with 11 percent in 2013, according to U.S. Census Bureau data.

The health care law, commonly known as Obamacare, was primarily designed to extend and subsidize insurance coverage for more people -- not rein in medical costs. That is why the price of health insurance continues to increase, even as more Michiganders face large annual deductibles that can reach $3,000 or more per person.

"So at least in that one big metric of the uninsured rate, we have come pretty close to what people would have expected when the act passed," said Richard Hirth, a professor of Health Management and Policy at the University of Michigan School of Public Health.

The Affordable Care Act's sixth annual Healthcare.gov marketplace open enrollment begins Thursday and runs to Dec. 15 for plans that begin coverage on Jan. 1. This period is generally the only time of year that individuals can buy insurance on their own outside of significant life events such as a job loss or relocation.

The average sticker price of plans for sale on Michigan's marketplace is 1.7 percent higher this year than 2017. That is relatively modest compared with last year's giant 26.9-percent price jump, which was partly because of the Trump administration's decision to end a type of subsidy for insurance companies called cost-sharing reduction payments.

Prices are going up less in 2019 because insurers such as Blue Cross Blue Shield of Michigan are seeing more stability and fewer spikes in claims among the population that is buying insurance on the marketplace, according to Rick Notter, director of individual business for The Blues.

"This year, we think we are in a much better position," he said.

Another big 2019 change: For the first time, there is no penalty for not buying insurance. The law's tax penalty has been $695 per adult, or 2.5 percent of household income, whichever is greater.

The elimination of that individual mandate was tucked into last year's federal tax overhaul.

Medicaid expansion

Although Healthcare.gov is often viewed as the centerpiece of Affordable Care Act, only 5.5 percent of Michiganders -- about 540,000 people -- get health care on the individual market, according to U.S. Census Bureau data.

Most state residents still get coverage through their employer.

Of all those who gained insurance through the Affordable Care Act, the majority received it through the law's April 2014 expansion of Medicaid eligibility to nearly 700,000 more poor people.

This optional expansion was approved by Michigan's Republican-controlled state Legislature as the Healthy Michigan program.

Starting in January 2020, Healthy Michigan recipients with incomes above the poverty line must prove they are either working, looking for work or in school. If not, they will get booted out of Medicaid.

Officials in the 17 states that didn't expand Medicaid eligibility have often cited the cost of expansion. Although the federal government initially paid for 100 percent of states' expansions, that figure is now decreasing by 1 percent each year and will eventually flatline in Michigan in 2020 with the federal government picking up 90 percent of costs.

Even then, Michigan is still projected to save money through the Medicaid expansion because the expansion involved shifting costs for some state programs, such as prisoner health care, onto Medicaid.

Healthy Michigan could potentially shut down next decade -- reversing Medicaid expansion -- if its cost ever exceed the savings.

Good for hospitals

For most Michigan hospitals, the Affordable Care Act's Medicaid expansion helped to make the law a net positive for them, according to Laura Appel, a senior vice president at the Michigan Health & Hospital Association.

That is because the newly insured can now pay for regular doctors and hospital visits. Previously, those individuals may have turned up in emergency rooms without insurance or any means of payment. Under federal law, hospitals can't kick people out of the ER for inability to pay.

Since the Affordable Care Act rolled out, Michigan hospitals have seen a 50 percent drop in uninsured people arriving in emergency rooms, Appel said.

New Medicaid patients are nevertheless not a financial windfall for hospitals, Appel said, because Medicaid reimburses medical providers at payment rates that are typically below the cost of treatment.

As for Medicare, hospitals nationwide have given up planned increases in Medicare payments as part of the Affordable Care Act. Those payment reductions were done because of the anticipated influx of newly insured patients, which help to boost hospitals' bottom lines.

By 2020, Michigan hospitals will have foregone a total of $7 billion in Medicare payments under the ACA, Appel said. Those reductions are on top of an additional $6.9 billion in expected Medicare payment reductions because of the 2013 federal budget sequester.

Nevertheless, for most hospitals in Michigan, the ACA "has financially been positive, but it has not been a panacea," she said.

Businesses keep coverage

When Healthcare.gov went live five years ago, some predicted that businesses could begin dropping health care as an employee benefit, thereby forcing workers to buy insurance on their own.

But that hasn't happened.

In fact, more people in Michigan now have employer-based insurance (50 percent) than they did in 2013 (49 percent).

"Half of our state continues to get coverage through their employer," said Megan Friedman, an analyst at the Center for Healthcare Research and Transformation, an Ann Arbor-based think tank. "So we've been able to grow the individual market and grow Medicaid, but it hasn't come at a cost to all the other coverages in our state."

Obamacare subsidies

Last year, 82 percent of Michiganders who bought insurance through Healthcare.com qualified for the health law's subsidies to make their plan more affordable.

Those subsidies increase as the cost of premiums increase, meaning that taxpayers in general foot much of the bill when insurance companies raise rates. The subsidies are available to individuals and families making one to four times the federal poverty level, which last year maxed out at $48,240 for an individual and $98,400 for a family of four.

Some middle-class earners make too much to qualify for the subsidies, but not enough to comfortably afford the full cost of the Healthcare.gov insurance premiums.

"We still need some work on that population who aren't making a ton of money and are paying full market price for their coverage," said Maggie Randolph, also an analyst at the Ann Arbor think tank. "When we have years like last year, where we had huge premium increases, they are feeling the full brunt of that."

Deductible shock

Those who shop on Healthcare.gov are often surprised by the high deductibles in the plans sold there. Deductibles are the amount of out-of-pocket spending required before insurance kicks in.

The average deductible this year for a "silver" plan in Michigan on Healthcare.gov was about $3,880, according to the Center for Healthcare Research and Transformation in Ann Arbor.

Health care experts say these big deductibles are one reason why some younger, healthier individuals chose to go without insurance.

The unsubsidized price of Healthcare.gov plans are more expensive than some pre-Obamacare plans because they include more extensive coverage, such as no annual or lifetime limits and no discrimination based on pre-existing conditions

Still, experts say the Affordable Care Act is not to blame for the high-deductibles trend in insurance. Many private businesses, to save money, also have put their employees into plans with big deductibles.

"This has been going on since the early 2000s" said Friedman, the health care analyst. "The trend of rising premiums and rising deductibles is not just limited to the individual market -- the Obamacare market."

Enter Oscar

Next year, the number of insurance companies offering Healthcare.gov plans steps up to 11 when New York-based insurance startup, Oscar Health Insurance Corp., makes its Michigan debut for people in Wayne, Oakland, Macomb and Washtenaw counties.

Co-founded in 2012 by Joshua Kushner, the younger brother of President Donald Trump's son-in-law Jared Kushner, Oscar Health is known for featuring free 24/7 telemedicine in most of its insurance plans. That option lets members speak with doctors about minor conditions without the need to schedule and pay for actual appointments.

In Michigan, Oscar members will be limited to seeing doctors affiliated with either the Detroit Medical Center or the Together Health Network, which includes Ascension Health, Trinity Health and the University of Michigan's hospital system.

Contact JC Reindl: 313-222-6631 or jcreindl@freepress.com. Follow him on Twitter @JCReindl.

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