Health Insurance

Here's what drove health coverage post-Obamacare

Obamacare may be new school, but old school has ruled when it comes to insuring extra people.

While the Affordable Care Act introduced new ways of getting uninsured people health coverage, the biggest gains in health coverage—by far—are from increased enrollment in that old standby of work-based health plans, a study released Wednesday reveals.

Obamacare health insurance agency
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An estimated 9.6 million people who became newly insured since the fall of 2013 did so by enrolling in employer coverage, traditionally the largest source of health insurance in the U.S., the Rand Corp. study found.

That tally easily bests the estimated 6.5 million newly insured who got covered by Medicaid, and the 4.1 million newly insured now covered through plans sold on government-run exchanges. Expanded eligibility standards for Medicaid, the government health program for the poor, and the creation or Obamacare exchanges are two key components of the ACA's program to reduce the U.S.' persistent uninsured rate.

The gains seen from employer-based plans undercut the prediction some Obamacare critics made that the law would encourage companies to reduce their health insurance offers to workers.

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"We don't see any evidence of a decrease in the offer of employer-based insurance," said Rand economist Katherine Carman, lead author of the report, published in the journal Health Affairs.

She said 43 percent of the newly insured in job plans had previously been offered coverage though their employer in 2013, but did not take it up until afterward.

Overall, Rand found there were 22.8 million newly insured people since Obamacare launched, while 5.9 million people lost coverage—a net gain of 16.9 million people. (Tweet This)

"The number of people gaining insurance was more than three times as large as the people losing coverage," said the report's authors, who analyzed responses from 1,589 people invited to share their experiences with health insurance from September 2013 through this past February. The report is the first detailed look at transitions between different sources of health insurance since the second Obamacare open enrollment period ended in February.

The report also found that 80 percent of the nonelderly population who had insurance as of 2013—or more than 125 million people—saw no change in their source of insurance through the winter of 2015.

Pace drops off in May 2014

While nearly 25 million moved from one source of insurance coverage to another in that time frame, the study "suggests the ACA isn't just shuffling people around in different types of insurance, it is bringing people in who were previously uninsured," said Carman.

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But she also noted that "the vast majority in the reduction in the uninsured was as of May 2014," with a marked drop-off in the pace of reducing the uninsured rate since the first open enrollment period.

Carman said she thinks there could be stronger progress in reducing the number of uninsured in future years. But, she added, "I'm not ready" to make predictions on when that could happen.

The gains seen in 2014—the first year Obamacare exchange plans went into effect—came from a surge of people who most needed insurance and those who were most likely to be influenced by encouragement to sign up for those plans, Carman said.

That year, the health-reform law barred insurers from discriminating against customers with pre-existing conditions and mandated that nearly all Americans have health coverage or be subject to a tax penalty.

"Since then, there hasn't been a thing to really change things," she said.

Still too expensive?

"I think for some people it's [health insurance] still expensive," Carman said when asked to explain the slowdown in reducing the number of unsinsured. And, she said, "They may be unaware of the penalties ... they may not know how much the penalties are going up next year, and some people might not think the insurance is worth it," Carman said.

In 2015, the penalty for failing to have health insurance is the higher amount of $325 per adult, or 2 percent of household income. That penalty rises to the higher of $695 per adult, or 2.5 percent of household income in 2016.

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Despite those potential penalties, an estimated 25.8 million nonelderly adults remain uninsured, Rand found. That's down from 42.7 million pre-Obamacare.

"We still have some people who are uninsured who have offers of insurance and are not taking it up," Carman said. "We've got people that are going to be harder to convince, for a wide variety of reasons."

The Rand study also looked at what happened to people who were insured via individual health plans in 2013. Many of those plans did not comply with new Obamacare minimum standards, which led to fears in late 2013 that people would have plans canceled and be unable to get affordable replacement coverage.

"We found that the vast majority of those with individual market insurance in 2013 remained insured in 2015, which suggests that even among those who had their individual market plans canceled, most found coverage through an alternative source," the report said.

Of the 11.2 million people that Rand estimated are insured through government-run Obamacare exchanges, an estimated 7.1 million had transitioned to those marketplace plans from another source of coverage, such as individual plans sold outside those exchanges.

Of the 12.6 million new Medicaid enrollees during the period surveyed, 6.1 million people were previously insured, while the remaining 6.5 million were newly insured, the report found.