michelle ko md phd

social determinants + healthcare = disparities

Tax Policy as Health Policy


Do you remember that this past December, Congress passed a major tax reform bill last year? (No? So much has happened except for actual legislation.)

A major health policy change was that the individual mandate to have health insurance (a key feature of the Affordable Care Act) was ended – for this year, if you don’t want to or can’t buy/otherwise sign up for health insurance, you no longer have to pay a penalty on your taxes in April 2019.

Without this penalty, younger, healthier people are less likely to sign up, leaving older and sicker people still shopping for health insurance. To deal with a smaller pool of people who likely have more health care costs, insurance companies will be charging more…which is what we are seeing.

Maryland insurers are requesting an average 30% increase in premiums for 2019. Meaning if you have insurance that currently charges you $800/month, you would have to pay $1040/month next year.

But this is just an average- if you look at specific plans, CareFirst is requesting 91% and 64% increases for PPO plans in Maryland and Virginia.

Insurers have not started sending notices in California yet, but our own insurance marketplace may see increases around 18% this year and 35% in three years.

What does this mean for disparities?

Unclear- for lower-income individuals, they will still have subsidies from the federal government so this group may see no effective change in the cost of insurance.  Those with higher incomes will see the real pain, and they may decide not to buy insurance on the marketplaces. In California, the “higher income” people are not necessarily well– for those living in the very expensive Bay Area, insurance may be too costly because all of your money has to go towards rent.

In the long run, an even bigger concern is that as the pool gets smaller and sicker, insurance companies will drop out and not offer coverage at all. (This is so terrifically named the “death spiral.”) This may hit rural communities first, because they already have fewer choices for healthcare providers and insurance.

Healthcare Policy by Executive Order

In the absence of legislation around immigration reform, Barack Obama used executive actions to create policy, i.e. now we have DACA. Taking a similar page out of the presidential playbook, Donald Trump is using executive orders to bring about a retrenchment from the Affordable Care Act.

Today there was not one, but two, EOs that will increase uncertainty in the health insurance marketplaces, such as Covered California.

  1. Association Health Plans and Short-term Insurance: AHPs are plans for small businesses (and maybe self-employed individuals) who band together. Both AHPs and short-term plans can lead to a broader range of cheaper insurance options- in part because neither one has to meet ACA or state requirements, e.g. these plans do not have to cover essential health benefits such as prescription drugs (required for the marketplace plans). Healthy people who don’t need comprehensive coverage will be drawn to the cheaper AHPs and short-term plans, leaving behind sicker people in the marketplaces. The more sick people are packed into the marketplace, the higher premiums will go.
  2. Cost-sharing subsidies: These are payments that the federal government makes to help cover the costs of co-payments, deductibles, etc., for low-income people buying insurance in the marketplaces (over half of buyers).  Without the subsidies, health insurance plans will (and have already, due to uncertainty) increased premiums.

Both EOs could also make the cost of doing business in the marketplaces too high, and insurance plans may simply drop out.

*Now both EOs are likely to trigger lawsuits from states (1) and insurance companies (2) so it’s likely not much will happen yet. (2) can also be resolved by an act of Congress.

However, Congress has not yet renewed funding for the Children’s Health Insurance Program, employers are not required to offer plans with contraceptive coverage, and Puerto Rico–still struggling for clean drinking water and electricity– is on a Medicaid block grant.

I try to conclude these posts with a summary for implications for disparities- but they all seem to come to the same conclusion: if these EOs come to pass in the absence of other reforms, disparities by income, race and ethnicity, and gender, are all likely to widen. For all the new choices available, those with chronic and pre-existing conditions will likely see their premiums go up.




What’s up, healthcare reform? Chillin’ ’til next time

Mitch McConnell has called off the vote on Graham-Cassidy, so the last ACA repeal/replace bill for this budget reconciliation cycle is off to rest. For now.  If Congress can pass a budget resolution (simple majority) they can then trigger another opportunity for budget reconciliation, and another opportunity for ACA repeal/replace under a simple majority.

There are no winners in this situation. There are still many problems in access, quality and spending in our healthcare system, both related and unrelated to the ACA. Of course, I am biased towards coming up with thoughtful, evidence-based solutions– whether they come up in reconciliation or bipartisan effort.

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