By Rebecca Adams, CQ HealthBeat Associate Editor

September 5, 2013 -- Health care premiums in the new marketplaces will be lower than expected in many cases, according to two surveys released last week. But the costs will vary significantly for people who are getting the same kind of coverage, which could create more political problems for supporters of the law.

Younger people in many places will end up paying higher costs for some plans than people in their 60s for a similar type of coverage. In Los Angeles, for instance, healthy 25-year-olds will pay about $90 more every month for their plans than a 60-year-old for the same type of basic health plan, even when both make the same income.

In Washington, D.C., 25-year-olds will pay $95 more than 60-year-olds who earn the same. The data come from the nonpartisan Kaiser Family Foundation, which analyzed costs in 17 states and the District of Columbia in the most comprehensive look at premiums to date.
Consumers also will see differences in their costs when compared to people in other states. And people who live in one region in a state will face different costs than people in other regions.

That variability could lead to confusion or hard feelings among consumers that other people are getting a better deal, and create another political problem for supporters of the law.

"I do think you'll see a great deal of regional variability in pricing, not only between states but also within states between metro and rural areas," said Joel Ario, who previously oversaw the exchanges and is a supporter of the health care law (PL 111-148, PL 111-152). "That is going to be an issue around the country."

A separate analysis by the consulting firm Avalere Health showed big differences in the costs within a state for the same person. In New York, for instance, the cheapest silver level plan (in which insurers pick up 70 percent of the costs) for a 40-year-old nonsmoker was $276 per month and the priciest was $694 per month. That's a difference of $418 per month.

"This may be one more step in calling attention to variations in prices that may lead to further steps to addressing it" in the long term, said Mark McClellan, who ran the Centers for Medicare and Medicaid Services (CMS) during the Bush administration.

More Subsidy Dollars for Near-Seniors

The surveys show that in the places where rates are already known, the costs are lower than first projected by the Congressional Budget Office and others. More information will be revealed later this month when federal and state officials release data on rates in additional states.

One quirk about the law that the Kaiser Family Foundation data put into greater relief is that there are some cases in which young people will pay more for the same type of plan than older people who earn the same.

Although people in their 20s who do not get subsidies face lower premiums than unsubsidized 60-year-olds for the same coverage, the young adults can pay relatively more for some plans than near-seniors if they are subsidized.

Federal subsidies are available for individuals with income between about $11,490 per year and $45,960 per year in 2013.

That is because of the way the federal subsidies work.

The subsidies set a limit on the percent of a person's income that he or she would have to spend on the second-cheapest silver plan in an area, which cover 70 percent of the costs. Younger people have lower medical costs and face lower premiums for silver plans than older people. So their subsidies are a lower amount in terms of dollars than older people's subsidies.

When a younger person applies the amount of dollars that they get in subsidies to a different plan, the result is that the young person's final costs are higher.

Take the example of a 25-year-old in Washington, D.C., who earns $28,725 per year. Let's say that person wants to buy a bronze plan (which covers 60 percent of costs and has a lower monthly premium than the silver plan). The unsubsidized costs for that person are $147 per month. The subsidies don't change that very much, bringing it down to $140 per month, according to the Kaiser calculations.

For an older person, the federal subsidies are much higher. A 60-year-old in Washington earning the same income would pay $357 per month for a bronze plan, the Kaiser data show. After subsidies, the monthly cost is $29.

"That's a serious problem," said Doug Holtz-Eakin, a former Congressional Budget Office director and president of the right-leaning American Action Forum. "They're throwing more subsidies at the older people. That's going to strike some people as unfair, and the insurance markets don't work without the young people."

CMS officials have tried hard to recruit younger, healthy people to enroll in the marketplaces because their lower costs will make up for the higher costs of older people. CMS officials did not respond to a request for comment.

Location, Location, Location

As in the current markets for individuals and small companies, consumers will continue to see variations in prices depending on where they live.

A 40-year-old person earning the national median income of about $52,000 would pay $336 per month in Burlington, Vt., $308 per month in New York City, and $250 per month for the cheapest bronze plan that would cover 60 percent of the person's medical costs, according to the Kaiser survey. A person earning that amount would not get a federal subsidy.

But in places like Baltimore, Albuquerque, and Portland, the prices are lower. The cheapest bronze level plan for the same person would be $146 in Baltimore, $155 in Albuquerque and $165 in Portland.

That jibes with what other analysts are finding. Austin Bordelon, an analyst at Leavitt Partners, said in an interview that he had noticed that a Blue Shield PPO Silver plan that costs $255 for a single 40-year-old in north Los Angeles County will cost $375 in San Francisco for the same policy.

For people buying the level of plans that the subsidies are based on, the subsidized rates are much more uniform, the Kaiser report shows. For a family of four with an income of $60,000, the subsidized rate is $409 per month in all the cities that Kaiser surveyed.

The states analyzed by Avalere were California, Connecticut, Indiana, Maryland, New York, Ohio, Rhode Island, South Dakota, Vermont, Virginia, and Washington.

Kaiser also examined rates in Colorado, Maine, Montana, Nebraska, New Mexico, and Oregon.

By Anne L. Kim, CQ Roll Call

September 5, 2013 -- Up to 42 percent of periodically or chronically uninsured adults living in the 26 states that either have decided against or are unsure about expanding their Medicaid programs would not have access to the new health law coverage options, according to a recent report from The Commonwealth Fund.

The report surveyed people between the ages of 19 and 64 in 2011 and 2012 and found that two in five individuals living in those 26 states who were uninsured at some point in the survey period had annual incomes below the poverty line ($11,170 in 2012) in one or both of the years surveyed.

That potentially would leave these people "without access to the provisions for part or all of the time they were without coverage," according to the report.

The 2010 health care law (PL 11-148, PL 111-152) called for states to expand Medicaid coverage to people who make less than 138 percent of the federal poverty level. But the 2012 Supreme Court decision on the constitutionality of the overhaul said that states would not lose matching federal money for their existing programs if they decide not do so. That gave states the ability to decide whether or not to expand.

Many of the states that have decided against the Medicaid expansion are led by Republican governors and legislatures that are strongly opposed to the overhaul law. And although the federal government will initially pick up the tab for all the costs of broadening the program and eventually reimburse states for 90 percent of the added Medicaid expenses, the GOP lawmakers have said they don't want to expand the government program.

The report says that tax credits are available to help pay premiums for private insurance for people who earn between 100 percent and nearly 400 percent of the poverty level as well as to legal immigrants who earn less than the poverty level during a five-year Medicaid waiting period. But because lawmakers thought that all states would expand their Medicaid programs, similar allowances weren't made for those who earn below the poverty line.

"Yet the decision by many states not to participate in the law's Medicaid expansion means that many of the lowest-income adults will continue to lack access to affordable coverage," the report states.

The report also found that nearly 30 percent of people in households with incomes between 100 percent and 133 percent of the poverty level in 2011 saw their income reduced to below the poverty line in 2012. That's compared to the 12 percent of people who had made between 133 percent and 249 percent of the poverty level in 2011 who saw their income reduced to lower than the poverty line in 2012. In 2011, 30 percent of people who earned less than the poverty line saw their income increase in 2012 to the point where they would qualify for subsidized coverage.

Sara R. Collins, a coauthor of the report, said in an email that people with low incomes experience high instability in health insurance, moving in and out of coverage. And, she said, their income level can also change.

"So rather than have a steady source of coverage in the Medicaid expansion regardless of their employment status (those under 133 percent of poverty), people with low incomes in states that don't expand their programs will continue to experience periods without coverage and are at risk of having no new affordable options (either Medicaid or the premium subsidies) if their income falls below poverty," she said.

The researchers say that the data from the survey "reveal why it is critical for all states to fully explore the benefits of participating in the law's Medicaid expansion." The report also says Congress could amend the health care overhaul to allow for people who make less than 100 percent of the poverty level and do not qualify for Medicaid to participate subsidized private plans offered through the exchanges.

September 3, 2013 -- The Michigan legislature gave final approval last week to a bill that would expand Medicaid in the state, starting in the spring.

Michigan Republican Gov. Rick Snyder had been pressuring his GOP colleagues to accept a broadening of the Medicaid program, as allowed under the health care law (PL 111-148, PL 111-152). The House passed the plan in June, but the Senate took longer to decide the issue. On Aug. 27, the Michigan Senate voted 20-18 to approve its version of the plan. The House gave its final approval with a 75–32 vote.

The version that goes to Snyder's desk requires the measure to take effect 90 days after the final day of the legislative session, which is expected to end sometime in December. That timing is expected to delay the expansion in Michigan until at least late March, rather than in January, which is when the federal law allows the benefits to become available.

Framers of the health law had expected the expansion of Medicaid to be routine. But when the Supreme Court ruled on the constitutionality of the overhaul last year, the justices said that states that chose not to expand their Medicaid programs wouldn't lose the rest of their federal reimbursement for that health program for the poor. As a result, so far only about half the states have decided to expand the program. The federal expansion means that people with annual incomes of up to 138 percent of the federal poverty rate will be able to enroll.

A spokesman for Michigan Speaker of the House Jase Bolger, a Republican, said that the chamber is working to process the bill and send it to Snyder for his signature. It is unclear whether Snyder will sign it before or soon after he returns from a trip to Asia that he will start on this week.

National advocates for expansion immediately reacted positively to the legislature's vote.

"The Michigan legislature's decision to accept federal funding to broaden access to health coverage through Medicaid is an example of bold leadership in the fight against cancer," said Chris Hansen, the president of the American Cancer Society Cancer Action Network. "The decision will give more than 400,000 currently uninsured Michiganders access to the care they need to help prevent, treat and survive cancer—a disease that claims the lives of more than 20,500 people in the state annually. Once Governor Synder signs the bill into law, thousands of Michigan families will have the security of knowing they will have access to mammograms, colonoscopies and other lifesaving cancer screenings and treatments they cannot currently afford."

The group had found in a survey that 63 percent of registered voters in Michigan support the expansion when asked if they want the state to take federal dollars to cover more people. The poll had been done by a bipartisan pair of polling firms, Lake Research Partners and GS Strategy Group.

By Rebecca Adams, CQ HealthBeat Associate Editor

September 4, 2013 -- Negotiations over a potential expansion of Medicaid in Indiana can begin in earnest now that the Obama administration has granted Republican Gov. Mike Pence's request to keep a Medicaid program that waived federal rules in place for one year.

Obama administration officials would like Indiana to expand Medicaid to people whose income is up to 138 percent of the federal poverty line, as the health care law (PL 111-148, PL 111-152) allows. Pence, a former congressman, has held out the possibility that he would consider doing that if federal officials would let him keep operating the Medicaid program in his state the way that it has run under a waiver for the past few years. The waiver has allowed Indiana's Medicaid program to mirror high-deductible health plans and health savings accounts.

That waiver that allows Indiana to bypass some federal Medicaid rules was set to expire this year. But last week, the Centers for Medicare and Medicaid Services (CMS) announced that it would approve a one-year extension. It's unclear whether that and any other potential CMS concessions that could emerge will be enough to get the conservative Pence to join several other GOP governors in supporting an expansion. Michigan was the most recent state led by a Republican governor to pass legislation to allow the program to be broadened next year.

The announcement has implications beyond Indiana. A handful of other states—including Iowa, Oklahoma, and Utah—also have programs that are operating under waivers that will expire within the next few months.

"We may see a pattern start to develop with one-year extensions" for programs in those states, Joan Alker, executive director of the Georgetown University Center for Children and Families, said in an interview. Those potential extensions, if they occur, could add momentum to a push by advocates for Medicaid expansion.

"That will be a critical question: whether those Republican governors with expiring waivers really want to get coverage to their low-income citizens," Alker said.

Indiana Expansion

If Indiana were to expand Medicaid, the Urban Institute estimates that the state would gain more than $88 billion in federal matching grants over the next 10 years. The number of uninsured people in the state would be projected to decline by more than 56 percent during that same time.

Indiana's waiver was adjusted so that starting in January, people with incomes between 100 and 200 percent of the federal poverty level will get their coverage through the new marketplace instead of through the Indiana Medicaid program. Indiana elected not to create their own marketplace so these Medicaid recipients will get their coverage through the federal exchange.

It's essentially too late for Indiana to expand its Medicaid program in order to start the coverage in January, but advocates hope that the approval of the waiver will improve the chances for expansion in the future.

"We encourage all states to adopt the Medicaid funding made possible by the Affordable Care Act, which provides 100 percent federal funding for three years and never falls below 90 percent federal funding for people newly eligible for Medicaid," said CMS spokeswoman Emma Sandoe. "We look forward to working with Indiana and all other states in bringing a flexible, state-based approach to Medicaid coverage expansion and encourage the state to explore these options."

By Melissa Attias, CQ Roll Call

September 4, 2013 -- Former President Bill Clinton in a recent speech urged those on both sides of the 2010 health care law to overcome their divide and implement and improve the overhaul, while pointing to three key problems that he thinks should be fixed.

Clinton cited the affordability of health insurance for workers' dependents, the small business tax credit and a gap in Medicaid coverage as items that should be improved. While his remarks were blended with praise for the law and a plea for unity, they also represented an acknowledgment from a senior Democrat that the overhaul could be made better.

Clinton's remarks, delivered at the Clinton Presidential Center in Little Rock, Ark., and carried by the White House blog, came less than a month before the health insurance exchanges are slated to begin open enrollment. While Republicans have continued their efforts to repeal and dismantle the overhaul (PL 111-148, PL 111-152), Clinton pushed for an "all hands on deck" approach to implementation.

"It seems to me that the benefits of reform can't be fully realized and the problems certainly can't be solved unless both the supporters and the opponents of the original legislation work together to implement it and address the issues that arise whenever you change a system this complex," he said. "We're going to do better working together and learning together than we will trying over and over again to repeal the law or rooting for reform to fail and refusing to fix relatively simple matters."

But Chris Jacobs of The Heritage Foundation contested several aspects of Clinton's speech in a blog post, including the former president's message about working together to repair the overhaul. Jacobs questioned why conservatives should move on from their efforts to repeal the health care law, which they believe is harmful, if President Barack Obama is continuing to press for a repeal of the budget sequester because of its perceived harm.

"The answer is simple," Jacobs wrote. "Liberals didn't abandon their belief in a government-centric scheme for health care after President Clinton's failed effort in the 1990s. Likewise, conservatives should not now abandon their belief—based on all the implementation failures to date—that Obamacare won't deliver for the American people. It is so unworkable that it should be defunded and repealed."

Clinton touted Obama's signature law and explained its benefits in detail, but he also acknowledged that there are some problems with the measure that need to be addressed. He said his greatest worry is whether the families of workers with modest incomes face barriers to obtaining coverage.

His comments appeared to line up with some groups' concerns that families will not be able to access affordable coverage through a worker's plan or receive subsidized coverage through the exchanges under a final Treasury Department rule released in January.

"It's obviously not fair and it's bad policy, but it's not clear to me based on what I can determine that anybody intended this," Clinton said. "I think Congress should fix it."

Clinton also said he believes the current tax credit for small businesses to provide their employees with insurance is too low. While he noted that a 50 percent tax credit sounds like a lot, he argued that "if you read the fine print and how it's calculated, there are relatively few companies eligible for the 50 percent tax credit." As the average wage increases, he said, the tax credit decreases to below 50 percent.

Clinton said he wants Congress to make the tax credit "available to more firms for more employees under the 50-employee limit and actually make it more generous to more firms so more will show up."

A third issue Clinton pointed to, which he called "a whopper," stems from the Supreme Court's ruling that states can opt out of the law's Medicaid expansion without putting the rest of their federal Medicaid funding at risk. Clinton argued that Congress never dreamed states would turn down the Medicaid money, but since the ruling about half the states have.

In those states, Clinton said individuals with incomes between 138 percent and 400 percent of the poverty line will be eligible for subsidies on the exchanges. But those with incomes at or below 138 percent of the poverty line are not eligible for anything, he said.

"So you get the worst of all worlds, where you say, 'I'm sorry but you're too—you're working 40 hours a week but you're too poor to get help.' Not too rich, too poor. And this is a serious problem," Clinton said.

"Because of the Supreme Court decision, this is a problem that only the states can fix," he added.

In addition, Clinton used the speech to rebut two other persistent questions about the law —whether enough young, healthy people will enroll in coverage and whether requirements related to the number of employees and full-time hours will cause a shift to part-time work. He also said many people are worried about computer issues, but that he's been impressed with what he's seen so far.

"Now there may be glitches, but so far there's no evidence to suggest that they won't be able to be fixed quickly," he said.

Clinton said he agreed to give the speech because of the level of "misunderstanding" about the current health care system and changes required under the law. He said that studies show that the United States ranks first in the percent of income spent on health care costs but ranks only 25th to 33rd in outcomes.

"The health of our people, the security and stability of our families and the strength of our economy are all riding on getting health care reform right and doing it well," Clinton concluded. "That means we have to do it together."

By John Reichard, CQ HealthBeat Editor

September 5, 2013 -- Since its birth, the health law has had one Damoclean sword or another suspended over it. The latest: Will health insurance exchanges actually launch given the complex streams of data they must coordinate?

Right up until the exchanges' scheduled debut 26 days from now, the answer to that question won't be known for sure. But there's little evidence at the moment to suggest that exchanges won't ever launch, or that any delays will be so serious as to keep the uninsured from getting coverage by the start of 2014.

"Soft" launches here and there, or maybe in every state, loom as a possibility. That means the capacity to enroll people in coverage may be limited in the days right after exchanges are scheduled to open Oct. 1. But that date still leaves three months for Americans to get signed up before their coverage actually begins Jan. 1—a cushion that gives time to fix data problems.

Boding well, too, for the ultimate survival of the law (PL 111-148, PL 111-152) is the growing body of evidence, strengthened recently by a new Kaiser Family Foundation survey, that premiums offered on exchanges for 2014 coverage will be within the reach of most buyers.

But if soft launches and rate shock aren't a menace to the success of exchanges, a hard landing may be, in the form of "benefit shock" when the newly insured realize they'll face huge deductibles before their new insurer begins to pick up a share of their medical bills.

Insurance industry consultant Robert Laszewski, who coined the term, notes that even those on the left are worried that subsidies in the health care law are too small to keep young and healthy people from feeling overwhelmed by their out-of-pocket costs for health coverage. There are also concerns about whether those young adults they will keep coming back year after year to exchanges in numbers big enough to offset the costs of sicker enrollees and keep premiums affordable.

Feverish Last-Minute Efforts

The people at the Department of Health and Human Services (HHS) and in the states building the exchanges are working feverishly to meet the Oct. 1 deadline and the implementation effort is showing signs of stress. Meanwhile, Republicans hostile to the law are throwing up roadblocks. Rep. Kevin Brady, R-Texas, chairman of the House Ways and Means Health Subcommittee, has said he doesn't think many of the exchanges will even open.

Perhaps the biggest source of uncertainty is the federal "data hub," a mechanism that routes to exchanges the various streams of data they'll need to verify citizenship, determine income, establish eligibility for subsidies to buy coverage, and determine the size of those subsidies. It involves linking databases maintained by state agencies, the Department of Homeland Security, the Social Security Administration. and the Internal Revenue Service.

The HHS Office of the Inspector General recently raised eyebrows with a report revealing that HHS won't certify the federal data hub as secure until the day before the exchanges are set to open. The original HHS schedule called for that certification by Sept. 4.

Failure to certify by Oct. 1 would either mean operating exchanges without assuring sensitive personal data are secure, or putting off the opening of the exchanges until the data are secure. Since the data hub is needed to operate both the federal insurance exchange and the state-run exchanges, every exchange in the country would be affected.

Also, HHS officials confirmed in recent days that the signing of final contracts between HHS and insurers to offer coverage on exchanges is being delayed by several days, until the middle of September. The delay gives HHS more time to assure insurers that their plans are displayed accurately on exchanges before they formally agree to offer coverage and to resolve any remaining technical issues to the satisfaction of participating insurers.

Meanwhile, the navigators to which HHS has given grants to help exchange customers sign up for coverage face demands for information from Republican leaders of the House Energy and Commerce Committee. Another headache for health law promoters is the widespread ignorance about exchanges among young adults, the very population they need to keep premiums affordable in the long run. According to a survey by The Commonwealth Fund, only 27 percent of 19-to-29-year-olds are aware of the marketplaces.

Around-the-Clock Work

But virtually around-the-clock efforts are underway both within federal and state governments and the insurance industry to stand up the exchanges by Oct. 1, sources say.

At the end of August, the Centers for Medicare and Medicaid Services (CMS) posted a 300-page final rule on exchanges, the last major regulation the agency had to get out before exchanges open. CMS officials have suggested that the inspector general's report raising questions about the federal data hub was based on older information, and they downplay the significance of the delay in signing final contracts with insurers.

"We remain on track to open the marketplace on time on Oct. 1," said CMS spokesman Brian Cook in an email message earlier this week asking about the delay. CMS is an a "plan preview period" that allows insurers to ensure that their plans are displayed accurately by exchanges. Through the delay of a few days, "we are providing them with flexibility and time to handle technical requests," Cook said.

There are also some signs that the insurance industry will launch its own aggressive efforts to market plans sold on exchanges even as Congress denies HHS the money it wants for outreach, and that the young themselves may be more interested in getting coverage than the stereotype of them as "young invincibles" uninterested in getting coverage makes them out to be.

Humana recently announced a partnership in which it will sponsor events at YMCAs in states in which it will offer health coverage on exchanges. The events during the health care law's initial six-month enrollment period will give people information on coverage options under the health care law. Also, GoHealthInsurance, an online brokerage company, has inked an agreement in which the tax preparation firm H&R Block will offer its own branded service giving clients the ability to shop and sign up for coverage under the health care law online, using premium subsidies if they qualify. Where government falls short on outreach, market incentives may motivate industry efforts that at least partly fill the breach.

Also, according to the Commonwealth Fund survey, the market for exchange plans among young adults may be better than some analysts predict. "The stereotype of 'young invincibles' assumes that young adults go without health coverage because they believe they do not need it," the survey said. "But there is considerable evidence suggesting that affordability is the key reason young adults are not enrolled in a health plan."

It noted that following passage of the mandatory coverage law in Massachusetts, the uninsured rate among 19- to 26-year-olds fell from 21 percent to 8 percent. The strong growth in coverage from the part of the health care law that lets young adults stay on their parents' coverage "demonstrates the importance of health insurance to this age group and their families," the survey added.

In addition, it reported "high enrollment rates among young adults offered health benefits through their jobs," suggesting that young adults want to have coverage when it is affordable. The Commonwealth Fund analysis said subsidies "will keep premium costs low for most young adults covered through the marketplaces."

Benefit Shock

But insurance industry consultant Laszewski isn't exactly upbeat about the future of exchanges and suggests their launch could be rocky.
"The delays and glitches continue to mount," he says. "Already, Oregon has said they will do a soft launch by delaying web-based enrollment by two to four weeks" with consumers able to sign up only through insurance agents and partner organizations initially. And California, the state that has invested heavily in a new exchange, "has also said it is seriously considering some sort of soft launch" to give more time to vet its systems, he noted.

A bigger issue than rate shock, he added, "may well be benefit shock—that consumers will look at what they will be getting for their premium payments and that they will be surprised at what their out-of-pocket costs will be before they get anything." If enrollment in exchanges is held down by early administrative problems that deter would-be buyers, and if healthy people have concerns about just how much value they'll get for paying hard-won income for insurance, "that will lead to a pool of insured that is too often sick rather than healthy," potentially making 2015 premiums and 2016 premiums in exchanges more costly, he predicted. "This is the real long-term threat the ACA faces."