Rising Uninsured Rates Will Be Felt in Employer Plans
The news that public healthcare exchange enrollment for 2018 closed out at 96% of the 2017 level was hailed as a victory given that the Trump administration halved the open enrollment period and cut the advertising budget by 90%. But in light of the recent report from Gallup that the overall uninsured rate rose in 2017 for the first time since 2008, it’s cause for concern that we will see further erosion in coverage levels this year.
According to Gallup, the number of Americans without healthcare insurance rose by 3.2 million people between 2016 and 2017, or 1.3 percentage points to 12.2 percent. The losses occurred in all age groups except those 65 and older (who would be eligible for Medicare), and were concentrated among lower-income Americans. We can only guess at the reasons, but the highly public attempts to repeal and replace the ACA likely made some potential enrollees uneasy, and the withdrawal of some health insurers from the exchange due to all the uncertainty left people in some parts of the country with fewer and more expensive choices.
As for future uninsured rates, the picture gets even worse with the repeal of the individual mandate penalty for 2019. The CBO estimated that 4 million more Americans will be uninsured in 2019 because of the repeal of the penalty, and 13 million more will be uninsured by 2027. These estimates may be high – I hope they are – but certainly the absence of a penalty for not seeking insurance will lead to fewer people seeking insurance, especially if nothing is done to stabilize premium costs in the individual market – for example, by allocating funds to resume reimbursing insurers for CSR subsidies.
Why all this spells trouble for employers is that, as we’ve written before, when uninsured rates climb, so do provider losses from uncompensated care – which are recouped by charging patients in group plans more. A number of factors have contributed to the continuing low trend in employer health plan costs, but one of them surely has been the drop in the number of uninsured. As that reverses, employers will need to double down on cost management efforts if they are to keep the streak going.