[PPT] - ACA Cost-Sharing Subsidies: How One Decision Could Disrupt Obamacare PowerPoint Presentation

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Web Briefing for Journalists: ACA Cost-Sharing Subsidies: How One Decision Could Disrupt Obamacare Marketplaces

Presented by the Kaiser Family Foundation April 6, 2017

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Vice President of Communications Rakesh Singh

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Vice President Kaiser Family Foundation

Gary Claxton

Senior Vice President for Special Initiatives Kaiser Family Foundation

Larry Levitt

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The law provides two types of protections for lower-income

enrollees, premium tax credits and reduced cost sharing

– Recognizes that many lower-income people do not have the resources to meet the deductibles and other cost sharing in nongroup policies – For lower-income marketplace enrollees in silver plans, insurers reduce the deductibles, out-of-pocket limits and other cost sharing, with the cost reimbursed monthly by the government

The authority to make these reimbursements is subject to a court

challenge by the U.S. House of Representatives

– Case in abeyance, next court date May 22 – House leadership suggesting it will appropriate funds as part of CR – Uncertainty for insurers, may affect rates and even participation

Cost-sharing reductions, described

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Insurers offer variants of each silver plan which meet higher

actuarial values:

– Enrollees with incomes under 150% of poverty get a plan with an AV

f 94%

– Enrollees with incomes 150% to 200% of poverty get a plan with an AV

f 87%

– Enrollees with incomes 200% to 250% of poverty get a plan with an AV

f 73%
Maximum out-of-pocket limits are reduced:

– Standard plans: $7150 – Enrollees with incomes below 200% of poverty: $2,350 – Enrollees with incomes 200% to 250% of poverty: $5,700

Cost-sharing reductions, how they work

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Total 2017 marketplace plan selection with a cost-sharing

reduction: 7,050,298

Average federal payment per beneficiary of cost-sharing reductions

in 2016: $1,136

Estimated total cost-sharing reduction payments in 2017: $7 billion

Source: HHS, Kaiser Family Foundation analysis, Congressional Budget Office

Cost-sharing reductions, by the numbers

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Cost-Sharing Reductions - Impact on Deductibles Average Medical Deductible In Plans with Combined and Separate Medical and Prescription Drug Deductible, 2017

$3,609 $2,904 $809 $255 $3,276 $2,627 $645 $172 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000

Silver CSR73 CSR87 CSR94 Combined Medical and Prescription Drug Deductible Separate Medical and Prescription Drug Deductible

Source: Kaiser Family Foundation analysis of Marketplace plans with the 39 states with Federally Facilitated or Partnership exchanges in 2017 (including Arkansas, New Mexico, Oregon, Kentucky, and Nevada). Data are from Healthcare.gov health plan information for individuals and families available at https://www.healthcare.gov/health-plan-information-2017/.

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Cost-Sharing Reductions - Impact on Out-of-Pocket Limits Average Savings in Plan Deductibles Between Silver Plans and Cost-Sharing Reduction Plans, 2017

$705 $2,800 $3,354 $648 $2,631 $3,103 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000

CSR73 CSR87 CSR94

Combined Medical and Prescription Drug Deductible Separate Medical and Prescription Drug Deductible

Source: Kaiser Family Foundation analysis of Marketplace plans with the 39 states with Federally Facilitated or Partnership exchanges in 2017 (including Arkansas, New Mexico, Oregon, Kentucky, and Nevada). Data are from Healthcare.gov health plan information for individuals and families available at https://www.healthcare.gov/health-plan-information-2017/.

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19% 15% 21%

0% 5% 10% 15% 20% 25%

All Healthcare.gov States Medicaid Expansion States Non-Expansion States

Source: Kaiser Family Foundation analysis of HHS data on cost-sharing reduction payments and premiums by county. Amounts represent cost- sharing reduction payments as a share of benchmark silver premiums for a 40 year-old in 2016.

How much silver premiums would have to rise to compensate for loss of cost-sharing reduction payments

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27% 25% 25% 23% 23% 21% 21% 20% 20% 19% 18% 18% 17% 17% 17% 16% 16% 16% 15% 15% 15% 15% 15% 15% 14% 14% 14% 14% 14% 13% 13% 13% 13% 11% 11% 10% 10% 9%

0% 5% 10% 15% 20% 25% 30% MS FL AL SC GA HI TN LA NC TX MO KS VA OK WI SD ME PA AR MI NV WV UT NE NJ WY IN IA IL AZ OH MT NM DE AK NH OR ND

Source: Kaiser Family Foundation analysis of HHS data on cost-sharing reduction payments and premiums by county. Amounts represent cost- sharing reduction payments as a share of benchmark silver premiums for a 40 year-old in 2016.

Premium increases to compensate for the loss of cost- sharing reduction payments, states using healthcare.gov

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Insurers participating in marketplaces would likely raise premiums

for silver plans.

– For enrollees not receiving cost-sharing reductions, bronze and gold plans would be a much better value. – The cost to the government of premium tax credits would rise. – There would be significant uncertainty for insurers, since the adequacy

f premiums would depend on the share of enrollees receiving cost-

sharing reductions.

Given the uncertainty, many insurers would likely exit the

marketplaces (particularly if cost-sharing reduction payments end mid-year).

Potential scenarios if cost-sharing reduction payments are eliminated

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The archived web briefing will be available later today. Slides are available for download.

http://kff.org/health-reform/event/web-briefing- for-journalists-aca-cost-sharing-subsidies-how-one- decision-could-disrupt-obamacare-marketplaces/ Today’s Web Briefing Will Be Recorded

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Estimates: Average ACA Marketplace Premiums for Silver Plans Would Need to Increase by 19% to Compensate for Lack of Funding for Cost- Sharing Subsidies

http://kff.org/health-reform/press-release/estimates-average-aca-marketplace- premiums-for-silver-plans-would-need-to-increase-by-19-to-compensate-for-lack-

f-funding-for-cost-sharing-subsidies

Impact of Cost Sharing Reductions on Deductibles and Out-Of-Pocket Limits

http://kff.org/health-reform/issue-brief/impact-of-cost-sharing-reductions-on- deductibles-and-out-of-pocket-limits/

Consumer Assets and Patient Cost Sharing

http://kff.org/health-costs/issue-brief/consumer-assets-and-patient-cost-sharing/

Kaiser Family Foundation Resources

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