Obamacare aid: Lots eligible, lots leave it on the table

The federal government is willing to shoulder a share of the medical costs with millions of people, but many of them are still saying, "Thanks, but no thanks."

A new analysis reveals that nearly 14 million people next year could get financial help to pay out-of-pocket costs if they enroll in Obamacare health plans, a new analysis finds.

That federal aid, known as cost-sharing reductions, can reduce the amount people pay in deductibles, co-payments, co-insurance and maximum out-of-pocket costs that they incur when they go to the doctor or hospital. Those costs are the share of services not covered by a person's health plan.

But large numbers of the relatively low-income people—nearly half of whom live in the South—who are eligible for that aid are not taking advantage of it, even though it could save them an average of $479 in health costs annually.

"Enrollment is ramping up more slowly than originally expected," noted Larry Levitt, senior vice president at the Kaiser Family Foundation health policy research group.

The new analysis issued by the Urban Institute sheds light on who the potential beneficiaries of that aid are, and underscores how much they could save.

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The report also notes that cost-sharing reductions "can play an important role in creating effective access to medical care for those with low income."

"There is plenty of concern about the impact of high-deductible plans on peoples' ability to pay for care," said Kathy Hempstead, who directs coverage issues at the Robert Wood Johnson Foundation, which funded the report.

"It's important to remember that more than half of those eligible for marketplace plans with tax credits are also eligible for cost-sharing reductions, which make a huge difference in the burden of out-of-pocket costs on those with modest incomes."

The report comes at the tail-end of Obamacare's second open enrollment season.

The federal government, despite issuing a slew of other enrollment-related data, has not released information about how many customers of Obamacare exchanges in 2014 received cost-sharing reductions, or how many enrollees in plan year 2015 qualified for them.

Who's eligible

A customer for heath insurance under the Affordable Care Act sits with an advisor with UniVista Insurance in Miami.
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A customer for heath insurance under the Affordable Care Act sits with an advisor with UniVista Insurance in Miami.

However, the Urban Institute report found that by 2016, about 13.8 million people would qualify for both cost-sharing reductions and help in paying for their health plan's monthly premiums.

An additional 9.4 million people would qualify only for monthly premium payment assistance, the Urban Institute said.

"Those eligible for both forms of assistance are most likely to live in the South, be single adults without children, and be white, non-Hispanic," the report found. This group is "more likely to be young adults and to report being in fair or poor health."

Linda Blumberg, one of the report's authors, said the fact that almost 48 percent of that eligible group lives in the South reflects the lower incidence of employers who offer health insurance to workers in that region.

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The South is also the clear leader of all regions when it comes to people who are eligible only for help with their premiums: 39 percent of people in this category in that region.

The cost-sharing reductions are one of two forms of subsidies included in the Affordable Care Act to make it more affordable for uninsured people to sign up for health insurance and to actually use it.

Under the ACA, people who earn between 100 percent and 400 percent of the federal poverty level—$11,770 to $47,080 per individual—get federal subsidies to help pay for monthly premiums if they buy plans sold on government-run Obamacare exchanges.

The subsidies can be applied to any so-called bronze, silver, gold or platinum plans. (The "metal" categories reflect how much of the cost of medical care is borne by a health plan as opposed to the customer—the pricier the metal, the more generous the plan is in covering costs.)

Obamacare customers who make between 100 percent and 250 percent of the FPL—$11,770 to $29,425—also qualify for cost-sharing reduction assistance. However, those subsidies can be accessed only if a person buys a silver plan, which, on average, covers 70 percent of a customer's medical costs—the rest is paid for out-of-pocket by the customer.

Kaiser's Levitt said the cost-sharing reductions can be a "huge" benefit for their recipients.

"Silver plans are the benchmark plans on the marketplace, and the deductible can easily be $2,500 or more per person," Levitt said. "So a low-income person could potentially save thousands of dollars if they get medical care and they qualify for cost-sharing reductions."

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The average savings from CSRs, according to the Urban Institute, range from $693 per year for those with incomes below 150 percent of the poverty line to $217 for people with incomes that fall between 200 to 250 percent of poverty.

Despite those potential savings, many people will not avail themselves of it, even if they are Obamacare customers.

"There are at least some people who are eligible, but who sign up for a bronze plan because they are trying to save money on the premium," Levitt said. Bronze plans, as a rule, have the lowest premiums but also have the highest out-of-pocket costs.

Can get help, won't take it

But other people won't sign up at all for any plan.

Last year, there were about 6.7 million paying Obamacare customers, about 85 percent of whom got help paying for their premiums. Currently, more than 10 million people have signed up for Obamacare plans effective in 2015.

However, there are still as many as 29 million people or so who don't have health insurance. Many of those people would qualify both for premium subsidies and cost-sharing reductions.

Recent surveys have shown that significant numbers of the uninsured aren't sure how to apply for health coverage, or have been told, possibly incorrectly, that they are not eligible for it.

Blumberg, the report's co-author, said that widespread confusion about Obamacare, language barriers and lower literacy about health insurance among the uninsured population have all played a role in keeping enrollment lower than it otherwise might be.

But Blumberg also said that even with knowledge of the financial aid, there is no guarantee that Obamacare plans would achieve full enrollment from the population eligible for that help.

"We always anticipated there was going to be a phase-in period ... you see that in every public program out there," Blumberg said. She said that even in future years of Obamacare enrollment, "the maximum you're going to get is in the 70 to 75 percent range." In other words, 25 percent of the uninsured would be without coverage.

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"There's always people who will make a decision not to enroll in coverage when there's financial assistance available to them," she said.

Supreme Court threat

For many of those people who have taken advantage of cost-sharing reductions, there is the chance they will lose that help this year.

The Supreme Court on March 4 is scheduled to hear oral arguments in a case that challenges government-funded financial aid to Obamacare enrollees on HealthCare.gov, the federally run exchange that serves 37 states. Plaintiffs in the case argue that the ACA only explicitly authorizes aid to customers of state-run exchanges.

The high court is due to decide the case in late June.

If it rules for the plaintiffs, over the objection of the Obama administration, millions of people who receive premium assistance and cost-sharing reductions would lose that aid, and many of them would then be expected to then drop out of the health insurance markets.