Obamacare Could Leave 1 in 10 Rhode Islanders Uninsured

Tuesday, August 06, 2013

Kate Nagle, GoLocalProv News Contributor

 

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A new report issued today says that the number of uninsured Rhode Islanders could still be as high as 1 out of 10 under Obamacare.

A new report issued today by the Rhode Island Center for Freedom and Prosperity claims that under the Affordable Care Act (ACA), nearly one out of ten Rhode Islanders could remain uninsured or underinsured under the new law.  

"Left Behind by Health Reform in Rhode Island" is the second in a series of three by researcher Sean Parnell intended to examine the potential impact of the ACA in the state. The first, released this past May, stated that there will be financial disincentives in Rhode Island for a "significant number of individuals and families" to obtain private health insurance coverage under the ACA.

Today, Parnell, President of Impact Policy Management, a public policy consulting in Washington, D.C., and adjunct scholar with the Center for Freedom and Prosperity, makes the case that the number of Rhode Island residents expected to remain uninsured after implementation of the ACA could range from "over half to up to three-quarters of the current uninsured population of 124,000; or approximately 70,000 – 97,000 people in the state."

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"We've been talking about this for two decades," said Parnell. "They've been treating the uninsured until now as a homogeneous group, when in fact there a very different, distinct reasons for people being uninsured."

Parnell specifically points to five "sub-populations" that would be most impacted and potentially "remaining or becoming uninsured" under Obamacare, which includes "young invincibles," self-employed or people "gaming" the system, those exempt due to Medicaid eligibility, those exempt because premiums exceed 8% of their income, those employed but "at-risk", and undocumented immigrants.

Ian Lang with the Rhode Island Health Benefits Exchange however countered the findings of Parnell's research. 

'This report looks at a number of data points, and comes to their conclusion," said Lang. "The only track record and real-world results we can point to right now is that of Massachusetts, who already has universal health care -- and their insurance rate is 98%. We're going to be moving in that right direction here in Rhode Island."

Report highlights population subsets that could be "left behind" under Obamacare 

In the report released today, Parnell writes that even after the ACA is fully implemented in 2016, it is "widely expected that a large number of persons will remain uninsured."

"While estimates vary depending on source, the Congressional Budget Office and Congress’ Joint Committee on Taxation anticipate the number of uninsured in America will be roughly cut in half after implementation of ACA, reducing the number of uninsured from 56 million persons to only 30 million after implementation. If this is accurate, the national uninsured rate would decline to approximately 11%, an improvement from the current 20% estimated rate," writes Parnell.

He continues, "For Rhode Island, results would likely be modestly better, owing in large part to having an already lower rate of uninsured as well as a smaller-than-average population of undocumented immigrants. The number of uninsured persons in Rhode Island has recently been estimated to be 124,000, or 13.6% of the state’s under-65 population. A paper by the Robert Wood Johnson Foundation estimated that approximately 53,000 Rhode Island residents would remain uninsured after ACA implementation, reducing the rate of uninsured to 5.8%."

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The report issued today by the Rhode Island Center for Freedom and Prosperity claims that several categories of uninsured or underinsured will not decline significantly under the new healthcare law.

However, Parnell was doubtful that even that level of reduction could be achieved, claiming there are "key reasons" why the number of uninsured in Rhode Island may not decline as substantially as predicted under Obamacare, which is based on his following findings.

* The tax penalty for not purchasing health insurance is lower than the expected after-subsidy out-of-pocket premium for purchasing insurance.

* Younger persons are likely to see premiums rise substantially above current rates, pricing many of them out of the market and exempting them from the mandate.

* ACA’s ‘guaranteed issue’ and ‘community rating’ requirements provide incentive for relatively healthy younger persons to delay purchasing insurance until they are sicker and older.

* The IRS is limited in its ability to collect the tax penalty for not purchasing insurance, only being permitted to reduce tax refunds

* Small businesses are exempted from the requirement to provide insurance to employees, and tax credits to help with the cost of providing coverage are "too small, too complex, and temporary."

* Large employers subject to the employer mandate generally already provide insurance to employees, and many of those that do not (particularly in the restaurant and retail industries) are able to shift employees to part-time status to avoid the penalty.

* Even with the penalty, larger firms employing mostly low- and moderate-income employees may find it financially advantageous to terminate coverage and pay the fine rather than paying health insurance premiums.

* A moderately lower out-of-pocket premium payment paired with a weak penalty for not purchasing insurance is unlikely to prompt large numbers of people to purchase insurance.

"What we're saying is what a lot of other national groups are saying," said Mike Stenhouse, CEO of the Center for Freedom and Prosperity, pointing to data from the Congressional Budget Office and Health Affairs as two examples. "We're just taking an extra step to look specifically at Rhode Island numbers here."

"The main point is that the health exchange isn't going to solve all our problems. The exchange will help some, but it's obvious not going to achieve its original goal," said Stenhouse. "We just can't sit back, wash our hands and say we've got this problem covered, but we don't. We're going to keep pressing."

Healthcare Exchange Prepping for October 1st

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"Healthsource RI is designed to reach Rhode Islanders within different backgrounds and demographics through a number of different mediums," Lang told GoLocal of the state's recently officially launched health benefits exchange.  

"We started our "39 in 3" tour to have healthcare staff go out into all of Rhode Island's cities and towns leading up to October 1st, when the exchange officially opens," continued Lang.

"One of the things we'll be explaining, of course, is why coverage is important," said Lang. "Sure, there might be "young invincibles" for example who don't think they need health insurance, but there's a real cost associated with, say, breaking your arm. You don't plan on that. It's beyond your control, and you're in fact vulnerable -- and there's a cost that comes with that."

"That will be part of the conversation. We want to have transparent, open dialogue, especially letting people know that there are open enrollment periods -- this one's from October 1 until the end of March -- that will limit people's ability to choose."

Lang said he was undeterred by the report's projections, saying that reducing the number of uninsured will be a "long term effort."

"This is not a one-year thing. We have to build this for the long term," said Lang. "We have full employee choice in the small business market, and will continue to find new ways to provide different healthcare options moving forward."


 

 

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