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A podcast hosted by FAH’s Chip Kahn that shines a light on everything hospitals; from the advancements in patient care to how a hospital benefits its community.
Larry Levitt [00:00:02]:
Another aspect of insurance, health insurance, that is underappreciated, which is financial security, that it's not only about health, although that is certainly important, but it's about keeping people out of debt and giving people financial peace of mind. You know what I always come back to? I mean, even for people who argue that health insurance isn't, isn't necessary or important, I would hazard a guess that almost all of those people are actually insured themselves and wouldn't turn it down if they had the opportunity to get it.
Narrator [00:00:40]:
Welcome to Hospitals in Focus. From the Federation of American Hospitals, here's your host, Chip Kahn.
Chip Kahn [00:00:51]:
Good health care coverage and good health go hand in hand. In other words, health coverage is critical path to ensuring health care is available when and where one needs it. Today we are at the high watermark of health coverage in America. More Americans than ever before benefit from the peace of mind that health care insurance affords them and their families. With over 92% of Americans covered, they receive that coverage through employer provided insurance, Medicare, Medicaid, and the individual insurance marketplaces. With recently passed OBBA and administration actions that target Medicaid and implement new rules for marketplaces, however, these coverage levels unfortunately will decline. This revives an old what is the pathway forward for making health coverage access universal for all Americans and how do we keep coverage affordable for those who have it now? Joining us today to discuss this challenge is Larry Levitt, KFF's executive vice president for health policy. Larry is a veteran policy expert steeped in knowledge of Medicare, Medicaid and the healthcare marketplace who understands just how central health coverage is for all of us.
Chip Kahn [00:02:25]:
Thanks for joining me today, Larry.
Larry Levitt [00:02:27]:
Thanks, Chip. I don't know if I like being called a veteran, but.
Chip Kahn [00:02:33]:
We'll leave it at expert, a young expert or youthful expert, I should say. So let's get started. Be talking about health insurance coverage today. You know, there have been some out in the think tank world that have raised some criticisms of health coverage recently. How important is health coverage to health?
Larry Levitt [00:02:59]:
You know, it sounds like a simple question. It's actually not that simple a question. And this is, you know, this is an issue I thought we had resolved a long time ago. I mean, for decades the argument against providing universal access or universal coverage has been that insurance coverage is not necessary for health. And it is true. I mean, there are many things that go into people's health and people's mortality. One is genetics, environment, behavior. But access to healthcare is a big part of it.
Larry Levitt [00:03:43]:
It's not the only factor, but it is a big Part of keeping people healthy and making them healthy if they get sick. And I mean, healthcare is expensive. So for many types of healthcare, the only way people are gonna get access is if they have insurance. And, you know, there's a debate among economists as to whether insurance should be catastrophic only for very expensive illnesses, or whether it should cover preventive care. I mean, we know that if you provide insurance for preventive care, that more people will get it. And I think there's another aspect of insurance, health insurance, that is underappreciated, which is financial security, that it's not only about health, although that is certainly important, but it's about keeping people out of debt and giving people financial peace of mind. You know what I always come back to? I mean, even for people who argue that health insurance isn't necessary or important, I would hazard a guess that almost all of those people are actually insured themselves and wouldn't turn it down if they had the opportunity to get it.
Chip Kahn [00:04:58]:
I certainly agree with you. I mean, I think all of us, you know, fear the attack of some kind of illness or condition. And I, I just can't even fathom what I would do or, or my, my loved ones would do if we didn't have that coverage. We, we're. We're at a high watermark. I mentioned that. And I guess this, this graph up started in, in 2009, 2010, with the legislation that passed that year. How would you characterize where we are now in terms of health coverage, really? Well, less than 10% of Americans are uncovered.
Larry Levitt [00:05:38]:
That's right. And we are as close to universal coverage as we've ever been, possibly as close to universal coverage as we ever will be, at least in the foreseeable future. Future because of some of the changes coming or potentially coming. You know, we have this crazy patchwork quilt of a system that has been able to get almost everyone insured. You know, the biggest source of coverage is employer, and that remains true and has been true for quite some time. You have Medicare that covers seniors and people with disabilities. Medicaid, particularly with the expansion under the Affordable Care act or Obamacare, covers roughly 80 million people. And then the ACA marketplaces with the subsidies for people who.
Larry Levitt [00:06:34]:
Or tax credits for people who buy insurance on their own, now covers about 24 million people. And through that crazy patchwork, we've been able to get to very close to universal coverage. You know, it doesn't look the same way it does in Canada or European countries, but, you know, we have, I would argue we have, if not Universal coverage. Now we have universal access to affordable coverage.
Chip Kahn [00:07:02]:
Yeah. You know, what I thought was the brilliance in a sense of this process that we went through in 9 and 10 was the recognition that if you take people who are covered now and change it significantly, you're going to have concerns. And if you can sort of take everyone in place and then figure out sort of at the edges how to fill the gaps, we can make it work. And in a sense, that's why we ended up with the system we have now. And it's a system, at least in 20, 20, 25, the year we're in, that that is covering, you know, all but about 8% of Americans. And then we have legislation. The Congress comes in its wisdom and passes this big, beautiful bill, the OBBBA and also the cms, the agency that oversees Medicare and Medicaid. They take action in terms of program integrity and concerns about fraud and abuses in the marketplaces that where individual Americans get, get their coverage.
Chip Kahn [00:08:10]:
Can you talk a bit about what the changes are implied by the OBBA and the actions of the administration on program integrity in terms of this structure we've begun to talk about here?
Larry Levitt [00:08:25]:
Yeah. So there is, I mean, there are, there are many pieces of the oba, bba, whatever, whatever you want to call it, reconciliation law, tax and spending cut law. You know, there are changes that will make more people uninsured, you know, work requirements in Medicaid. Vast majority of enrollees in Medicaid are already working or already qualify for an exemption. But the mere fact of requiring people to report potentially as often as every month will mean people will fall through the cracks and millions more people will be uninsured. There are cuts in the law to provider taxes that help states finance their Medicaid programs, which will also lead to cuts in the program and more people uninsured. There are also a whole set of measures that have been framed as going after fraud and abuse. And, you know, they don't directly go after fraud and abuse.
Larry Levitt [00:09:30]:
Frankly. Fraud and abuse in the ACA and in Medicaid is primarily perpetrated by brokers, rogue brokers, or rogue healthcare providers. It's generally not perpetrated by individuals. And there's really very little in this law or in regulations that go after these rogue providers or brokers. But, but there are measures that will require people to jump through more hoops to verify their income. I'll give you one example, and this is in the regulation issued by CMS that in order to qualify for ACA Marketplace and premium tax credits, your income has to be above poverty. Now, people with incomes just above poverty in most of the country are covered in Medicaid. But in the 10 states that have not expanded Medicaid under the ACA, they qualify in the ACA marketplace.
Larry Levitt [00:10:26]:
And there are millions of people who have qualified for health insurance through that pathway. The way the ACA works is you have to estimate your income in advance for what it's gonna be the next year, and you qualify for a premium tax credit based on your estimated income. So there are a lot of people who may have current incomes below poverty because they lost their job or they were forced into part time work. They don't think they're going to have to stay there for the whole next year. They think they're going to get a new job or they think they're going to get more hours at work. So they estimate their income as above poverty. While their income might not end up actually being above poverty. If there is this mismatch between official tax records or official employment records and what you estimate your income will be, then you will have to jump through more hoops to somehow verify that you really will get a new job imminently, or you have a new job or you have more hours.
Larry Levitt [00:11:27]:
Some people, many people will not be able to navigate that process and will end up not getting coverage, not getting premium assistance. Now that will eliminate some fraud that may be out there with people purposely misestimating their income or brokers aiding people or recommending that people do that. But a lot of other people will end up getting hurt in the process as well.
Chip Kahn [00:11:56]:
Well, I guess to sort of add insult to injury, we're at a point now where those who sign up in the marketplace for coverage don't have to face just these issues looking towards 2026. They're also going to face unless Congress otherwise acts, the end of something called the enhanced tax credits. And those enhanced tax credits mean that well over 50% of the people in the marketplaces are paying little if any premium now. And we're talking about relatively or very low income people that need that coverage. Can you talk a bit about the effect of the enhanced tax credits and the implications when Congress acted a number of years ago to institute the tax credits, I guess for budgetary reasons and some other reasons, they decided to only have them go through 25. Not that they intended them to stop after 25, but that's how long they they last. And so something has to be done to extend them. What are the implications of these tax credits?
Larry Levitt [00:13:04]:
Yeah, so the biggest wrap on the ACA or Obamacare from the start was that even though it provided a lot of assistance to people through these premium tax credits, coverage was still unaffordable or out of reach for many people. And almost from the moment the ACA passed, advocates were advocating for more premium assistance to make coverage more affordable. You know, that was during a period when Republicans were trying to repeal the law outright. And so, you know, there were all kinds of fights during those years. And it wasn't until 2021, when Democrats had control of Congress and the White House and in the middle of a pandemic, that Democrats were able to in some ways make the ACA look what they wanted it to look like from the start, which with enhanced premium tax credits that made coverage much, much more affordable for people. And as you said, the very lowest income people with incomes just above the poverty level now are getting full premium subsidies, so they don't have to pay anything out of pocket for a plan. And these are people who don't have much in their pockets to begin with to pay for health insurance. And the result is that enrollment has grown tremendously.
Larry Levitt [00:14:28]:
Enrollment has doubled to more than doubled to 24 million people. But as you said, these tax credits are slated to expire at the end of 2025 if Congress doesn't act to extend them. And you know, we see this all the time in Congress. You've seen it hundreds of times, I'm sure, where, you know, for budgetary reasons, for political reasons, you know, you can't create a permanent program. You do what you can, you create a temporary program, you create a cliff that forces action by Congress. And that cliff is coming up imminently. If those enhanced tax credits are not extended, the effects would be huge. I mean, on average, people would end up having to pay out of pocket over $700 more in premiums.
Larry Levitt [00:15:22]:
These are ACA Marketplace enrollees. Their out of pocket premiums would increase by an average of more than 75%. And just to give you a couple examples, one, like a low income person, let's say someone making $25,000, you know, they would go go from paying about $150 a year for their health insurance to over $1,000 a year for their health insurance money that that person just doesn't have. At the other end of the spectrum, you know, one of the things these enhanced tax credits provide is assistance to people making over four times the poverty level who were excluded entirely in the original aca. You know, these are middle income people. Imagine, you know, think about a farmer or a small business Owner, self employed person. If you think about someone, let's say a 55 year old making about $60,000, little over $60,000, they would go from paying $5,100 for their health insurance today with the enhanced premium tax credits to over $10,000 a year without them. So a doubling in their premiums.
Larry Levitt [00:16:31]:
I mean, this would be an enormous shock if these tax credits are not extended.
Chip Kahn [00:16:37]:
You know, one of the critiques of the marketplaces, in a sense, a critique of the extended extending these tax credits is that the tax credits means that many people are covered who don't use health care in any particular year. I worked for the insurance industry in my past and having a risk pool with people who don't use insurance, plus those who do, all paying premiums used to be considered like the principle of insurance and the way that insurance worked. But that was a critique. Can you talk a bit about that and how these tax credits play into that? Because one of the facts that's now coming out is that potentially we're seeing for those who have coverage in the program, assuming that the tax credits expire, because the insurers have to assume that because they're not in current law for 20, 26, they're talking about rate increases of 22%. And I understood on average, and I understood today that even in Florida, it could be as high as 35%. And that's excluding or not including, I should say, that portion that gets paid by the tax credit. That's just what the premiums would go up. What's the implication of those who use and those who don't? And why is that even a discussion?
Larry Levitt [00:18:07]:
Yeah, I mean, you know, as you said, in any insurance risk pool, first of all, you want to have a combination of healthy people and sick people. That's what keeps a risk pool balanced and makes it work. Otherwise you end up with a, you know, what actuaries call a death spiral, which is as bad as it, as it sounds. And in any insurance pool, you always have people who in any given year use no health care. Fortunately, it's just the way these things work. And in fact, most of the costs in any pool of people that are insured are incurred by people with very high expenses. It's a small percentage of people who incur the vast majority of the expenses in any insurance pool. So, so you start off with, you know, in any insurance pool you're going to have a substantial percentage of people who don't use any healthcare in a given year.
Larry Levitt [00:19:04]:
There are some reasons why that's Even higher. And it's gotten even higher in the ACA marketplace. One is, you know, these subsidies that, these tax credits that mean that many low income people don't have to pay any premium at all has brought in a lot more healthy people. You know, if you're low income, you have no discretionary income, you're struggling to pay the rent, you're struggling to pay your utility bills. Even a very small premium is going to discourage you from enrolling, particularly if you're healthy and you don't think you're going to need health care this year if you provide a full premium subsidy and now you don't have to pay anything. If I'm healthy, you know, it's much more of a no brainer to sign up for the coverage. So you're going to bring in more healthy people. Also, there are a lot of people in the ACA marketplace who are only covered by part of the year.
Larry Levitt [00:19:55]:
And that's because it's kind of a residual pool of people. You know, if you have employer coverage, you're not going to end up in the ACA marketplace. So inherently you're dealing with a less stable group of people, people going in and out of jobs, you know, people losing their jobs, people ending up having their hours reduced and losing benefits. Those are the people who are going to end up in the ACA marketplace. And it might only be for, you know, three months, four months, six months out of the year. And that's going to increase the chance that, that I'm not using any health care. You know, if you eliminate these enhanced premium tax credits, healthy people drop out of the pool, insurers are going to have to raise premiums. And that's exactly what we're seeing.
Larry Levitt [00:20:40]:
You know, we looked at the average across the country, the median, and it's an 18% increase. But as you said, in some places it could be, you know, 20, 30, 40%.
Chip Kahn [00:20:50]:
Well, hopefully Congress, as it comes back in the next few days, will consider renewing these tax credits. Job one. I can't think of anything more important in terms of protecting the average American. That's, I mean, the notion of what you're describing is if you don't use the insurance during a year, you're protected. If you use the insurance during the year, you have security and financial security and hopefully health security. But the tax credits and the marketplaces are just one part of this pie that is so essential to health coverage. And we talked a bit about what the OBBBA will affect, will do in terms of affecting Medicaid coverage. Can you see a pathway forward? What do we need to do to secure the future health coverage for Americans?
Larry Levitt [00:21:52]:
Well, I would come back to the first topic we talked about, which is does health insurance matter? And I would hope we would get to a point where we can once again have a consensus that health insurance does matter and that we want more people insured. And at this point, I don't think we have that consensus right now. I would also hope that we could work to simplify the system. And I fear in some ways we're moving in exactly the opposite direction with things like work requirements and more income verification and just more red tape that makes it harder for people to sign up for coverage. You know, I think for the foreseeable future we're looking at a patchwork system like we have today. But ensuring that people whose circumstances change, who move from one program to another program can do it more seamlessly, I think can help, you know, avoid people falling through the cracks. And I think we just have to also really be frank about affordability challenges. I mean, healthcare is getting more and more expensive.
Larry Levitt [00:23:13]:
Certainly we can attack that from the cost standpoint and do what we can to help bring down the underlying cost of healthcare and making it more affordable. But the reality is that low income people are never going to be able to afford to pay for coverage or healthcare on their own. And that requires some type of government assistance to make it truly affordable for them.
Chip Kahn [00:23:38]:
You know, I think that's the key point and I think it's unfortunate. But I'm hoping that when we get into the discussion in the fall, when over the, over the tax credits and when individuals and policymakers, individuals affected and policymakers look at the premium increases and then the effect of extending the tax credits on those premium increases, which will be to bring them down, that maybe that'll be an object lesson and lead to further positive policy. Hopefully they'll be extended to 26, 27 further if possible and maybe they'll set the basis for a new discussion. I don't want to be Pollyanna, but at least we've got that ahead of us to try to make the case. So with that, really want to appreciate Larry, you spending time with us today and all the work you do. I think this was a useful discussion and hopefully will helpful in terms of enlightening people about the tax credits and coverage generally.
Larry Levitt [00:24:41]:
Hope so. Thanks for having me.
Chip Kahn [00:24:43]:
Great. No matter how you slice it, we are on the decline from the record high level of Americans with health coverage. But this doesn't have to be the end of the story. Congress has an opportunity to bring certainty to millions of hardworking Americans and safeguard their access to affordable coverage by extending the enhanced tax credits before they expire at the end of 2025. Extending these tax credits will keep coverage available and keep costs low so Americans have the peace of mind that they can access care if and when they need it.
Narrator [00:25:29]:
Thanks for listening to Hospitals in Focus from the Federation of American Hospitals. Learn more at fah.org. Follow the federation on social media @FAHHospitals and follow Chip, @ChipKahn. Please rate, review and subscribe to Hospitals in Focus. Join us next time for more in depth conversations with healthcare leaders.