Without the threat of a tax penalty, one in five Californians would not have signed up for health insurance this year, Harvard University researchers discovered as a part of a survey released Thursday.
One in five equates to roughly 378,000 state residents, said Dr. John Hsu, an associate professor of health care policy at Harvard Medical School, and perhaps not surprisingly, many in that group were people expected to use the health care system least because of their good health.
The problem is that no one has a crystal ball, said Peter V. Lee, the executive director of Covered California, the state health insurance marketplace created under the Affordable Care Act. That act also provided that many taxpayers would receive a credit if they signed up for insurance or a penalty if they did not.
“The consumers who decide to … go uninsured are rolling the dice, hoping they will remain healthy, but the fact is that many of them will lose that bet,” Lee said. “The reality is that if 378,000 Californians decide to go without insurance, over 60,000 of them – 1 out of 6 – are likely to need medical care that will cost them more than $10,000. ... The real penalty is not what the IRS would collect for being uninsured but rather showing up at the hospital with no insurance and leaving with massive debt.”
Lee stressed that Covered California had the financial reserves and flexibility to thrive despite a decline in enrollees. Rather, he said, it is middle-class Americans who receive no subsidy to assist with their insurance premiums who will suffer as enrollment declines and premiums skyrocket.
Californians, he said, will suffer some of the lowest premium price shocks – between 12 and 16 percent – but residents of the 36 states who buy insurance on the federal marketplace could see premiums spike by 30 percent.
There’s a deep concern about equity for residents of those states, said Jeanette Thornton, an executive with the trade and advocacy group America’s Health Insurance Plans, because, as policies with the consumer protections required by the Affordable Care Act become too pricey, consumers may turn to the substandard short-term policies recently proposed by the Trump administration’s Center for Medicare and Medicaid Services.
“Healthy people could be the same ones who gravitate toward these non-ACA plans, especially if they are unsubsidized and don’t qualify for the premium tax credit,” Thornton said.
Anthony Wright, the leader of the consumer advocacy group Health Access California, said in a news release: “This so-called short-term coverage is actually a long con, collecting premiums from patients but not actually covering medically necessary care. This substandard coverage imperils the finances of those who buy it, but also spikes premiums and destabilizes the insurance market for everybody else.”
Lee, Thornton and Wright said Americans must push Congress and state legislatures to protect consumers by outlawing such insurance policies. Lee told The Bee in an earlier interview that the nation is speeding toward a day when state residency will determine the “haves and have-nots” of health care.
Consumers who have access to state-based exchanges will have access to affordable coverage with consumer protections and consequently better health outcomes, Lee said, than consumers in states served by the federal exchanges.
“Those who developed the Affordable Care Act assumed that 35 or 40 states would set up what California did, a state-based marketplace,” said Lee, who was a member of the Obama administration at the time. “They assumed that, of course, states would do this themselves and they would do a better job. ... What they didn’t count on was the political backlash, and many states bought into, in some ways, the anti-Obama rhetoric and stepped back instead of stepping in.”
That was not the case in California, Lee said, where the Republican Gov. Arnold Schwarzenegger joined with a Democrat-controlled Legislature in a bipartisan effort to establish the foundation for Covered California.