Hospitals' worries about Obamacare plans misplaced

February 14, 2014
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Hospitals fretted last year that so-called “zero-premium” health plans sold in the Obamacare exchanges would bring them a flood of customers that still couldn’t pay their bills.

That was because the Obamacare tax subsidies could get so large—especially for middle-aged buyers with low-incomes—that they would cover all of the premiums on plans with the highest deductibles.

But that meant low-income patients would come into the hospital with deductibles as large as $12,700.

“That’s a heck of a lot of money,” Doug Leonard, president of the Indiana Hospital Association, told me last fall. “It’s not a lot different than when they were uninsured.”

But data released Wednesday by the Obama administration show that 76 percent of Hoosiers enrolling in the exchange have signed up for either a silver plan or a gold plan, which typically do not feature deductibles as large as the lower-cost bronze plans sold on the exchanges.

(For those of you not familiar with these labels, here’s the quick explanation: bronze plans pay 60 percent of the estimated medical bills; silver plans pay 70 percent of expected claims and gold plans pay 80 percent of expected claims.)

In Indiana so far, 24 percent of exchange shoppers have enrolled in bronze plans, 68 percent have enrolled in silver plans, and 8 percent have enrolled in gold plans.

The nearly 48,000 Hoosiers that have enrolled so far have been older than anticipated.

Only 23 percent are between the ages of 18 and 34, compared with national predictions of 40 percent. Fifty-seven percent are aged 45 to 64.

They also have lower incomes. A whopping 87 percent of Hoosiers enrolled so far qualified for a tax subsidy to help them buy insurance. That means they have household incomes below 400 percent of the federal poverty limit. That’s $46,680 for a single person and $95,400 for a family of four.

Before Obamacare, 63 percent of Hoosiers who were buying individual insurance before had incomes low enough to qualify them for a tax credit, according to an analysis of Census data by the Center on Budget and Policy Priorities.

So far, enrollment is also lower than anticipated. There were 178,000 Hoosiers buying individual insurance last year, and the Indiana Department of Insurance estimated that 108,000 of them had their policies cancelled last year due to Obamacare’s new rules.

Obamacare enrollment will need to more than double in Indiana if it’s even going to equal the extent of coverage that existed before the law kicked in—let alone expand it.

Fewer patients covered—rather than skimpier coverage—might end up being the bigger Obamacare problem for hospitals.
 

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