Lower Prices, Less Debt: What Is So Wrong With That?
The Federal Reserve Bank of New York researchers recently looked at medical debt collection efforts in communities in those states that supported the Medicaid expansion of Obamacare. Medical debts fell like a rock between 2013 and 2015 in counties that previously had a high rate of uninsured. See http://www.bloomberg.com/news/articles/2016-06-07/u-s-states-that-embraced-healthcare-reform-are-seeing-less-debt-sent-to-collection-agencies
The Urban Institute looked at the rise in premiums of the lowest cost silver plans in the Exchanges. http://www.urban.org/research/publication/increases-2016-marketplace-nongroup-premiums-there-no-meaningful-national-average/view/full_report In California these premiums increased by 1.4% between 2015 and 2016.
The researchers from the Federal Reserve cautioned that their findings only looked at financial impacts, not health impacts. These findings are particularly important in states and communities like California and Los Angeles that started with high rates of uninsured and experienced large decreases in their uninsured rates due to the ACA’s coverage expansions.
The researchers from Urban Institute looked at premiums in the Exchanges/Marketplaces like Covered California. They looked at premiums in the lowest priced silver plans. Why might they have chosen these premiums? They offer the best combination of premium assistance and copay and deductible assistance. With silver plans, subscribers with low and moderate incomes can also qualify for reductions in their levels of copays and deductibles as well as help with their monthly premiums.
Their findings were 1) that more competition means lower premiums and a slower rate of premium growth and 2) that more participation by Medicaid insurers also means lower premiums and a slower rate of premium growth. Two other factors were also a work: 1) in states, counties and regions with small populations and fewer plan competitors, premiums were higher and premium growth rates were higher and 2) in states, counties and regions where initial premiums were very low as compared to the national average, large increases had occurred because the plans had underpriced their products. In addition, some of these counties were experiencing price increase due to decreased competition as the lowest priced plans went out of business or exited the market.
The reports looked at seven states with low rates of increase: California, Texas, Florida, Michigan, Virginia and Ohio. In California, premiums in 2015 were 8% over the national average, they fell by 4.5% in West Los Angeles, by 3.3% in San Diego, and by 1.1% in high priced San Francisco. Premiums increased by 2.2% in the rest of the state and by 5.4% in East Angeles where the 2015 premiums had been 15% below the national average. The authors pointed to strong competition among Health Net, Blue Cross/Anthem, Kaiser and Blue Shield and the important roles of Medicaid insurers, LA Care and Molina in adding competition to local markets.
What do we need going forward here in California? We need the regional Medi-Cal managed care plan in the Northern Rural regions to add competition in that high priced market. We need a regional Medi-Cal managed care plan to add competition in the high priced Bay Area market. We may also need to regulate the pricing of natural or created provider monopolies.
Prepared by: Lucien Wulsin
Dated: June 8, 2016