Employers are likely to adopt private health exchanges in growing numbers, seeking to save money and meet consumer demands. Health plans will have to invest in IT and re-orient their sales efforts to the individual.
The government health insurance changes established under the Patient Protection and Affordable Care Act may be faltering, but private exchanges will grow significantly in the next few years, driven in large part by consumer expectations and healthcare reform, according to a recent analysis.
Several factors are positioning health insurance exchanges (HIX) for rapid growth, says Nancy Fabozzi, principal digital health analyst with consulting firm Frost & Sullivan.
"Healthcare reform efforts are continuing to focus on expanding the private insurance market and private insurance coverage," Fabozzi says. "Republicans are looking to expand market opportunities by lowering regulatory barriers and restrictions, which I think is going to lead to more price competition, market expansion, and hopefully innovation."
Like the government-run exchanges, private HIX are self-service online stores or marketplaces that individuals can use to select health plans and other benefits, Fabozzi notes. Private HIX predate the Obamacare exchanges, but employers have not chosen HIX for their employee coverage as much as some industry leaders had expected, she says.
Employers are likely to use HIX more now because beneficiaries have come to expect a better e-commerce experience after shopping online so much, she says, and they expect easier enrollment, control over the benefit selection process, and pricing transparency.
The exchanges can help employers save money on healthcare costs, so they are increasingly popular, especially with employers that have a large retiree population, Fabozzi says. In many cases, employers provide a defined contribution to the employee for health insurance, and the employee can shop on the exchange chosen by the employer.
Healthcare reform probably will include incentives that lead more employers to use defined contributions, Fabozzi says. Some HIX sell additional insurance products such as dental, vision, life, and disability.
"Even before the Republican effort for reform, we had seen a move toward high deductibles and consumer-driven health plans, and that's definitely going to continue no matter what happens with health policy in Washington. It's just the trend in the market," Fabozzi says.
"There is a culture change with people being more comfortable having choices and using a shopping cart approach online. As they spend more money out of their pockets for benefits, they want to have choices."
The growth of HIX will depend on health plans investing more in IT and adapting their business strategies to be more consumer-friendly, she says.
"These health plans have traditionally been very conservative and their customers have been employers, not individuals," Fabozzi says. "We're seeing them retool for a better approach to the consumer, hiring people with experience in retail sales to guide them in a more consumer-driven environment."
"The back end, with all the robust technology that is required to serve the individual consumer and protect their privacy, that's where we're seeing it can be a challenge for some of the health plans that have a mishmash of IT systems from their own grown and past mergers," Fabozzi says.
The percentage of Americans without health insurance rose slightly in the first quarter of 2017, but a recent poll indicates a majority now approve of the Affordable Care Act.
The rate of uninsured increased to 11.3% in the first quarter, up from 10.9% in the last two quarters of 2016, according to a report from Gallup and Healthways. The 10.9% was the lowest rate of uninsured Americans since the groups began tracking it in 2008. The highest rate was 18% in the third quarter of 2013, just before the ACA took effect.
Even with this small increase in the uninsured rate in the first quarter of 2017, the number of U.S. adults without health insurance is still 6.7 percentage points lower than it was at its peak in the third quarter of 2013.
Gallup and Healthways conducted interviews with almost 45,000 adults from Jan. 1 to March 31, 2017. Gallup said the increase in the number of uninsured Americans in the first quarter of 2017 could be attributed at least in part to uncertainty over the fate of the Affordable Care Act.
Gallup data indicates that health plans are succeeding in recruiting more young people, considered essential to keep utilization rates overall at a reasonable level.
Adults aged 18 to 25 have seen more than a seven-percentage-point decline in their uninsured rate since 2013, and Gallup says that may be a result of the ACA provision that allows young adults to remain on their parents' health insurance until age 26. Those aged 26 to 34 have seen a nearly 10-point drop.
For the first time ever, a Gallup poll has found that a majority of respondents approve of the ACA. Fifty-five percent of Americans now support the ACA, Gallup says, changing the balance from just five months ago when 42% approved and 53% disapproved.
"Republicans, Democrats, and independents are all more likely to approve of the ACA now than in November, a few days after Donald Trump's victory in the presidential election left Republicans in control of the legislative and executive branches. Independents have led the way in this shift toward approval, increasing by 17 percentage points compared with 10-point changes for both Republicans and Democrats," Gallup says.
"When including 'leaners' (independents who lean toward either the Republican or Democratic Party) in the totals for both major party groups, Democratic approval has increased by 16 points, compared with eight points for Republicans."
Forty-eight percent approved of the healthcare law the first time Gallup asked the current version of the question in November 2012.
"In response to a previous version of the question that asked whether Americans thought passing the healthcare law was a good thing or a bad thing, 49% said it was a good thing when the question was first asked in early 2010," Gallup says. "However, support was a few percentage points lower each of the next two times it was asked."
Refusing to pay health plans the subsidies for low income consumers, as President Trump has suggested, might push struggling insurers to leave the ACA marketplace.
If President Trump follows through with his suggestion that he might withhold subsidy payments to insurers as a way to force Democrats to the negotiating table, the move might have little effect on his political opponents but push struggling health plans out of the ACA marketplace.
The president indicated in an interview with the Wall Street Journal last week that he was considering not making the cost-sharing reduction (CSR) payments that insurers depend on to recoup the cost of covering very low income consumers.
The goal would be to pressure Democrat leaders to negotiate on overhauling or repealing the Affordable Care Act, he said, but it could have more effect on insurers than politicians.
There is nearly universal support for continuing the CSR payments among healthcare stakeholders, and many Republican leaders have been favorable as well, notes Joel Ario, managing director with the consulting group Manatt Health.
That may make it difficult to get a majority vote in the House Republican caucus, he says.
"In that context, the decision may well come down to President Trump, who has multiple ways to keep the payments flowing including simply deciding to continue the lawsuit or agreeing to further delays with the House Republicans," Ario says.
"The president is unlikely to gain any leverage with the Democrats by holding out since he pretty clearly will be blamed for the fallout if he cuts off the payments, especially now that he has acknowledged that he could keep the payments flowing."
The fallout could be severe, Ario says, with insurers on the edge deciding not to participate in 2018 and those that remain having to raise rates an estimated 19% to cover the shortfall.
Ironically, most of that cost would be borne by the federal government in the form of higher tax credits, but the process would be messy and the resulting destabilization would not bode well for future efforts to make bipartisan changes to the ACA, Ario says.
CSR Payments Unconstitutional?
Some Republicans have challenged the CSR payments as being unconstitutional because the funds were not appropriated, but the government has set a precedent by making the payments, says Sally C. Pipes, CEO of the Health Care Policy at the Pacific Research Institute.
"It's unfortunate that they made these payments when they hadn't been appropriated because now we're in a mess," she says. "A number of insurers have said they're going to cut way back again next year as far as participating in the exchanges, and in the case of Humana they're not going to be in any exchanges. If Trump withholds the CSR payments, there probably will be even more insurers who say they are going to get out of the exchange market."
The insurers have lost so much money on the exchanges because the "young invincibles" didn't sign up in the numbers necessary to compensate for the older and sicker customers, and the cost of insuring very low income people only added to the financial burden, Pipes notes. The CSR payments at least helped some insurers keep their heads above water, she says.
Taking the payments away could push some insurers to concluding they just can't make the numbers work.
"It could lead to a faster death spiral of Obamacare," Pipes says.
Health plans that have struggled to find success in the health insurance exchanges have taken the wrong approach, a health plan CEO says. They're acting as if the customers are like those from the employer-driven market.
The healthcare insurers that have pulled out of the Affordable Care Act exchanges, and some of those remaining, blame their failure to thrive on the way the exchanges work and the populations they serve, but one health plan CEO sees it differently.
He says they're just doing it wrong and they're slow to realize their mistake.
The mistake is looking at the exchanges in the same way insurers see employers and individuals who do not qualify for the exchanges, says Richard Topping, CEO at NC-based Cardinal Innovations Healthcare. It bills itself as the largest specialty health plan in the country, serving 720,000 members through its Medicaid, state and county funded plans.
Cardinal is not currently on the exchanges, but has not ruled out that possibility for the future. The plan is about 85% Medicaid-driven, with the remainder in state and local programs that mostly serve the uninsured.
"A lot of the insurers in the exchanges have approached it like a commercial market. It's really not," Topping says. "It's much more like a Medicare managed market or a Medicaid market. It is not an employer-based, large group commercial market."
The consumers on the exchanges are individuals who typically have multiple healthcare needs and complex conditions, so the health plan must do much more than just pay for medical care, Topping says. To be successful with these customers, he adds, a health plan must coordinate care and manage their health.
Topping notes the example of giants Blue Cross Blue Shield and Aetna. In North Carolina, where Cardinal Innovations is based, BCBS lost $405 million on medical expenses for ACA customers in 2014 and 2015. It is still in the marketplace for 2017.
Aetna pulled out of the North Carolina market in 2016, citing total pretax losses of more than $430 million since January 2014.
Both insurers run exchange plans through the commercial side, not the Medicaid division, Topping explains. Centene, an insurer that has been more successful in the exchanges, runs that business through its Medicaid division, he says.
"I talk with my peers at other insurers and they say it's unbelievable how the people they get through the exchanges don't sign up in open enrollment, wait till they need care, lie about eligibility, pay premiums only for the three months they're in treatment, then stop paying premiums and disappear," Topping says.
"And I think, well of course they did. That's our Medicaid enrollment all day long. If you are operating in the exchange market as a traditional commercial insurer, you're going to lose your shirt. And that's what's happening."
'A Social Services Approach'
Serving customers in the exchanges is not a healthcare problem but a "bus pass problem," Topping says. If the insurer does not address the underlying issues that prevent some customers from seeking preventative care and early intervention, it can never achieve cost savings because it will always be in a reactive mode, he says.
That factor is far less influential in the commercial market, he says.
"Insurers avoided Medicaid in the past because they saw it as unprofitable, so they're all staffed up with people who cut their teeth on the commercial side of the house," Topping explains.
"A Medicaid-type population is not so much about healthcare cost management and much more like a social services approach. Half of my employees are frontline care coordinators, essentially social workers, whose job is to go and link our customers up with care- or community-based social support rather than waiting for them to show up in the ED."
Almost half of women surveyed had gaps in health insurance coverage in the months before after giving birth. Those gaps create a significant health risk, researchers say.
The months before and after childbirth produce a high percentage of health insurance churn for women, putting the health of mother and child at risk from coverage gaps, according to a report from Harvard T.H. Chan School of Public Health.
Low-income women experience insurance disruptions more than others, the report says. Jamie Daw, the study's lead author and a doctoral student in health policy at Harvard University, notes that the study is the first to use national data to look at month-to-month health insurance coverage for women during and after pregnancy.
"Ideally, every woman would have access to coverage not only for prenatal care and delivery, but also for preconception and extended postpartum care," Daw says.
"We find there is much more work to be done to ensure that women retain continuous coverage for services we know are critical for reducing adverse birth outcomes and supporting the health of moms and babies."
Data from more than 2,700 women surveyed from 2005-13 by the Medical Expenditure Panel Survey, a nationally representative government survey, indicated that women had the highest rates of coverage at the time of delivery.
But Daw says that coverage masked considerable churning during the prenatal and postpartum months, especially for women who had coverage through Medicaid or the Children's Health Insurance Program (CHIP) in the month of delivery.
Sixty-five percent of women covered by Medicaid or CHIP at delivery were uninsured for at least one month during their pregnancies. In the six months after childbirth, 55% of these low-income women had a gap in coverage for at least one month, and 25% experienced two or more uninsured months. The researchers suggest that those gaps are noteworthy because postpartum depression and other post-childbirth problems may be overlooked or untreated.
Though low-income women were most likely to have insurance gaps, nearly half of all women experienced a period without insurance coverage before or after childbirth, amounting to an estimated 1.8 million families in 2013, according to the authors.
The high rate of low-income women without insurance after childbirth suggests that many have no viable insurance options other than pregnancy-related Medicaid coverage, which ends 60 days after delivery in all states, the study says.
Risk factors associated with insurance loss after delivery included not speaking English at home, being unmarried, having Medicaid or CHIP coverage at delivery, living in the South, and having a family income of 100–185% of the poverty level, the study found.
The study data was collected before the Affordable Care Act's Medicaid expansion in 2014, and the authors note that the ACA probably resulted in significant improvements in continuity of coverage for women before and after childbirth.
But the risk most likely is unchanged for women in the 19 states that chose not to expand Medicaid, where 40% of U.S. babies are born, the researchers said.
Now that health plans have a better understanding of what it is required to do business under the Affordable Care Act, they are likely to increase premiums and more will pull out of the exchanges, some analysts say. They also question the viability of the individual market.
Uncertainty is now the driving factor in the healthcare insurance industry, but in the short run, plans are searching for ways to be successful under the Patient Protection and Affordable Care Act, which remains in place, for now.
It's an interesting time for the industry, says Michael A. Morrisey, PhD, professor and head of the Department of Health Policy & Management in the School of Public Health at Texas A&M University. The demise of the repeal and replace effort in the Congress leaves health insurers in a state of considerable uncertainty, he says.
"Last year insurers finally got a handle on the true nature of the claims experience they had in the exchanges. As a result, this year more insurers moved to offering only narrower panel HMOs, many left the exchange markets altogether, and others raised premiums, sometimes dramatically," Morrisey says.
"The uncertainty is whether the narrower networks and premium increases are enough to cover the claims experience. If not, I think more insurers would exit the exchanges and premiums will rise."
The new administration raises the degree of uncertainty exponentially, he says, citing several areas of concern.
If the funding for the low-income cost sharing subsidies is withdrawn, many people currently covered by the exchanges are likely to allow their coverage to lapse, Morrisey explains, and these are likely to be the healthier enrolled consumers.
"Similarly, if the administration chooses not to enforce the penalties for non-enrollment, many of the disproportionately healthy among the current enrollees will likely drop coverage," he says. "Tinkering with the benchmark definition of the essential health benefits is a more complex problem. Insurers would struggle to cost out new, less generous benefit packages and price them."
On the other hand, he says, if states expand Medicaid as some are currently considering, this is likely to draw off some of the less healthy exchange enrollees and reduce cost pressure on the insurers.
"All that said, unless the administration moves quickly to reassure the industry, one way or the other I think we can expect more insurer withdrawals from the market and much higher premiums," Morrisey says.
The question of subsidies is weighing heavily on health plans, says Kevin Fitzgerald, a partner and healthcare analyst with the law firm of Foley & Lardner in Milwaukee, WI.
Health plans know that the exchanges and tax subsidies will still be available, he says, but nobody knows what approach the Trump administration and HHS Secretary Price will take towards subsidies, employee health benefits, enforcing the individual mandate and other issues that remain open with respect to the implementation of the Affordable Care Act.
"Uncertainty about whether 'repeal and replace' would pass in some form has merely been replaced by new uncertainty around cost-sharing reductions and profitability," Fitzgerald says.
The viability of the individual market is in question, he says. It is unclear whether HHS is committed to supporting the individual market, or at least whether HHS is as supportive as it was under the Obama administration, he notes.
The biggest and most immediate risk, he says, is the possibility that cost-sharing reductions won't be paid this year. The Trump Administration made those payments in February, but there are a number of looming threats to cost-sharing reductions, including the possibility that Congress will not appropriate the necessary funds and the potential that HHS may not be as creative in finding money to make the payments, he says.
"Without the cost-sharing reduction payments, there will likely be no sustainable individual market," Fitzgerald says.
The Affordable Care Act remains the law of the land for the foreseeable future, but health plans will continue to pull out of the insurance marketplaces and feed uncertainty, one analyst says.
Healthcare insurers have been busy strategizing for the many possible outcomes of healthcare reform or the repeal of the Patient Protection and Affordable Care Act, but now have to switch focus to surviving under the current healthcare law.
For many, that will mean following in the steps of others who abandoned the ACA because they could not be profitable under ACA restrictions and requirements, one analyst says.
House Speaker Paul Ryan pulled the GOP's bill reforming Obamacare just before a planned vote, after criticism from many within the party, including the influential House Freedom Caucus.
Some companies might have been hoping that ACA reforms would make it possible for them to continue in the individual market, but since that didn't happen, many health plan leaders are probably considering their options for getting out, says Julius W. Hobson Jr., an attorney and healthcare analyst with the Polsinelli law firm in Washington, DC.
Insurers' 2018 Status Unknown, for Now
"I expect to see more insurers pulling out of the individual market because this adds to the uncertainty," Hobson says.
"Insurers, like [companies in any other industry], like as much certainty about the future as they can get, and right now you don't have any for healthcare organizations. The Republican plan might have been good or bad for them, but they would know what's coming and prepare for it. Now it's just uncertain, and that's always bad."
Health plans are locked in for 2017 and don't have to make their 2018 status known until late in the year, so Hobson says they are unlikely to make public comments right away.
Hobson also says that another attempt at reforming or repealing the law is unlikely to materialize soon. The Republican attempt to push a bill through on their own will not be tried again, he says.
President Trump remains intent on pursuing legislation. On Saturday he tweeted:
"The only way we'll see any change in healthcare is if Democrats are involved," Hobson says. "The idea of letting it implode on its own isn't going to work because the responsibility for that would be on the Trump administration. He's not going to be able to sell that."
Any effort to reform the ACA will require cooperation from legislators on both sides of the aisle, and Democrats are less inclined than ever to help Republicans gut their signature piece of legislation under former President Barack Obama, Hobson says.
"The failure is now on the Republican side of the ledger, so Democrats don't have any incentive to come to the table. If they ever had any willingness at all to negotiate, and I doubt they did, now they don't want to help the president recover from this," Hobson says.
"The failure of this first effort means we won't see any changes to the healthcare law any time soon."
Adopting more efficient ways to collect and analyze patient data for risk adjustments will help health plans maximize reimbursements.
Risk adjustment incentivizes health plans to take on people with pre-existing conditions, and insurers are paying more attention than ever to the importance of gathering the right data to get the most reimbursement they can for each enrollee.
The effort is likely to survive any changes to the Patient Protection and Affordable Care Act.
With about 16 million patients enrolled, Medicare Advantage (MA) covers a substantial portion of the population and most insurers have MA plans they administer on behalf of the Centers for Medicare & Medicaid Services.
To ensure that capitated payments to the health plan accurately reflect the expected cost of each beneficiary's medical care, CMS provides a risk adjustment based on the specific characteristics of each enrollee. They can include medical diagnoses in addition to demographics and Medicaid eligibility.
That adjustment addresses the potential problem of capitated payments incentivizing health plans to enroll only the most healthy patients, but it means practitioners must document clinical diagnoses accurately and insurers must obtain that data.
Otherwise, health plans are leaving money on the table.
The Case for Automation
Leading health plans are moving toward a more automated approach to reviewing charts for information that could justify a larger risk adjustment, but others are still doing it in a largely manual way.
That sets them up for missed reimbursements and compliance issues, says Anand Shroff, chief technology and product officer of Health Fidelity, a company that offers technology and support to companies participating in Medicare Advantage.
"We expect the rest of the market to catch up in about one to three years," Shroff says. "They're waking up to the idea that this can make the difference in your company's revenue, and it is money that is rightly owed by CMS if only they can provide the right documentation."
Health plans are looking for more efficient ways to collect and analyze patient data for risk adjustments, Shroff says. The traditional method has been to have people physically go from one hospital to another to collect data on portable computer drives and then sending that data for analysis by coders either in the United States or abroad.
That can cost up to $75 per patient chart retrieved and analyzed, he says. In addition, collecting patient data on portable drives and transmitting it to others creates many opportunities to violate the Health Insurance Portability and Accountability Act.
'Bipartisan Support' for Risk Adjustment
Risk adjustment is likely to survive intact no matter how the Trump administration changes or repeals the Affordable Care Act, Shroff says.
"Risk adjustment is a core CMS philosophy that has nothing to do with Obamacare," he says. "It was put into place under a Republican administration many years ago when Medicare Advantage first started, and the risk adjustment philosophy is something that, incredibly, has bipartisan support. That's going to continue forward regardless of what happens to the Affordable Care Act."
The value of the risk adjustment could increase, however, if changes to the healthcare law put a tighter grip on insurer revenue, so Shroff encourages health plans to revisit their processes for obtaining the best possible risk adjustment.
"Risk adjustment operations are crucial to a health plan's success, especially in the Medicare Advantage area, and if health plans pay close attention and take it on as an operational priority for the year, they could make tremendous strides and make their businesses better," he says.
Health plan leaders are "giddy" over repealing the health insurance tax, but believe that losing the individual mandate will deprive them of the much-needed healthy, young customers.
The American Health Care Act would bring welcome changes to the insurance industry, but also has health plan executives worried about how repealing the individual mandate will affect their mix of customers.
Payers are concerned that a repeal of the individual mandate provision in the current law will leave them with too few healthy customers.
This is one of the problems that caused many plans to leave the Affordable Care Act market exchanges, notes Public Affairs Director Jennifer Walsh with the law firm of Foley & Lardner in Washington, DC.
She previously was vice president for federal government affairs at a top 20 Fortune 500 healthcare company and works closely with former U.S. Congressman Dennis Cardoza (D-CA), who chairs the firm's public affairs practice.
Walsh has been watching reactions of health plan leaders since the AHCA was released and she says they are skeptical about how much the bill would reduce healthcare costs, and worried that parts of the bill could be detrimental to the insurance industry.
The main concern of health insurers, she says, is that the AHCA would eliminate the individual mandate in favor of a financial penalty, sometimes steep, for those who go without insurance for a time and then buy a new policy.
"Losing the individual mandate is a problem because they think they won't have enough healthy people incented to buy insurance without that mandate," Walsh says.
"But they've also always felt that the individual mandate was kind of weak the way it was written [into the ACA]. With the ability to put a 30% hike on your premium if you drop coverage and then try to get back in, some plans think that's good. But some plans think it doesn't go far enough to make up for losing the individual mandate."
Health plan executives are responding favorably to the bill's structure for health savings plans, she says.
"They generally love the health savings account model, so they're responding well to the bill's proposal for moving away from help with premiums to an advanceable tax credit. They're both subsidies, more or less, but they like this move to put more money in health savings accounts," Walsh says.
"Most of the plans have fared pretty well with Medicaid expansion, so they're not thrilled that Medicaid expansion would be phased out over time. However, because Medicaid will ultimately become a capitated rate to the states or a block grant, I really see that as ultimately states having to put their Medicaid patients in managed care. That would be a good thing for the plans."
Health Insurance Tax Repeal
The bill's plan for repealing the health insurance tax has health plan leaders "absolutely giddy," Walsh says. Eliminating the tax has been a priority for health plans since Obamacare was introduced, but the industry always felt the issue took a back seat to repealing the tax on medical device manufacturers, she explains.
The Republican bill is a big improvement in that regard, she says.
"They're not getting everything they want, but overall, they're pretty satisfied," Walsh says. "You're not going to hear them say that because it's not their style. They're not going to negotiate against themselves before all is said and done. But they definitely see it as an improvement over the Affordable Care Act."
The GOP proposal to replace the Affordable Care Act includes a penalty for forgoing insurance that can be higher than the current charge. As many as 30 million people could be affected, according to a Commonwealth Fund analysis.
Critics of the Affordable Care Act have directed special ire to the tax penalty for failure to buy healthcare insurance, but the Republican plan for repealing Obamacare would impose a surcharge that could be even higher for some people.
"The American Health Care Act" (AHCA), introduced by Republicans to repeal and replace certain provisions of the ACA, would replace the ACA's individual requirement to have health insurance with a requirement to maintain continuous coverage.
Anyone who applies for insurance in the individual or small-group markets can be charged a penalty by their insurer equal to 30% of their monthly premium if they had a gap in their insurance of more than 63 days in the prior year.
Insurers can levy the penalty for 12 months regardless of how long the gap was. The Commonwealth Fund survey suggests that an estimated 30 million working-age adults would be affected by the penalty, which in some cases is higher than what the ACA imposed on the uninsured.
The Commonwealth Fund estimated premiums for a plan in 2018 with the average medical costs covered for people enrolled in silver-level plans under the ACA. Insurers can currently charge older people only three times more than younger people, but the House bill allows them to charge up to five times more.
That means premiums rise significantly with age under the House bill, and it also means that the amount people can be charged for not maintaining continuous coverage is significantly higher for older people than for younger people, according to a survey report written by Commonwealth Fund Vice President for Healthcare Coverage and Access Sara R. Collins and Senior Research Associate Munira Z. Gunja.
For people with incomes under $100,000 a year, the GOP's repeal bill's penalties probably will be more punitive than what they would have faced under the ACA, the report says.
It cites the example of a 30-year-old with a gap in coverage of longer than 63 days in the past 12 months. That person would face a surcharge of $84 per month for the next 12 months, for a total of $1,007. A 50-year-old with a gap in coverage of the same length would be charged $96 more than a younger person per month, or $1,154 more over 12 months, for a total of $2,161.
If the same 50-year-old under the ACA had an income of $30,000 and had a coverage gap of four months, he would owe $232 in penalties through his taxes, compared to the $2,161 in premium surcharges under the repeal bill.
In 2016, 21% of adults ages 19 to 64, an estimated 40 million people, had experienced a gap in their health insurance, the survey report says. About 75% of them, 30 million people, had been uninsured for longer than three months, putting them beyond the 63-day gap period allowed under the House bill.
"Overall, because people who had a coverage gap would face higher premiums when they enrolled, they would have a strong disincentive to re-enroll, leading to larger numbers of people uninsured," they write. "This effect would be most visible among lower-income people, for whom the surcharge would fall most heavily relative to income."