Gov. Rick Perry’s rejection of Medicaid expansion will force private health insurance premiums to rise by an average of 9.3 percent for Texans buying coverage on their own, a new study finds.
GOP lawmakers, strongly encouraged by Perry, decided not to add poor adults to Medicaid’s rolls and that means about 1.3 million fewer Texans will have health coverage of some sort by 2016 than if the federal health law were fully carried out in the Lone Star State, according to a study by the nonprofit research organization RAND Corp..
About 320,000 adult Texans just above the poverty line will take advantage of Obamacare’s federal subsidies and buy coverage in the individual insurance market, the researchers found. Those are people who would have been enrolled in Medicaid, as the federal law was written and before that part of it was altered by a Supreme Court ruling. The RAND experts said that because low-income people generally are not as healthy as people with higher incomes, their inclusion in the private health insurance exchange — a second big piece of the law — will alter the claims experience of insurers serving the individual market. Currently, fewer than one in 20 Texans buys in that market, though it’s about to grow dramatically. Including the 320,000 low-income adults will force a 9.3-percent increase in premiums for all 3 million Texans who will be enrolled in the individual market by 2016, the RAND researchers said.
“When exchange subsidies become available to lower-income individuals, the average health of the exchange population declines slightly, and premiums increase,” they wrote.
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In Texas, the exchange, or marketplace, opens next month. It will be run by the federal Department of Health and Human Services because Perry in 2011 threatened to veto a Republican House lawmaker’s bill calling for a state-run exchange. In this year’s legislative session, no Republican dared propose a state-run exchange. In 2013, Republicans fought mostly over whether to dicker with the federal department over a “Texas style” alternative to Medicaid expansion that would draw down the tens of billions of federal dollars Texas is forgoing. They ended up not proposing or setting guidelines for such a negotiation. Instead, they required Perry and his appointees, who already have authority to request Medicaid waivers from the feds, to obtain lawmakers’ approval before expanding coverage for poor adults. Perry is showing no signs of backing down, as some GOP governors have done.
Despite Perry’s recalcitrance, the RAND study shows that President Barack Obama’s signature health care legislation will cause more than a tripling of the share of Texas’ non-elderly population that will be enrolled in the individual insurance market in 2016 — from 2.9 percent, if Obamacare had not been passed, to 11.3 percent. Spurring that increase is the law’s “advance premium tax credits,” or subsidies that the study says could reach 69 percent of those buying their own coverage. The law also requires that individuals buy coverage, and at least some young healthy people are expected to comply, RAND’s researchers said.
With Medicaid expansion, the percentage of Texas’ non-elderly population that’s uninsured would drop in 2016 from 28.2 percent to 12.4 percent, they said. Obviously, that won’t happen. Still, the number of uninsured Texans will decline from more than 6 million currently to just over 4.2 million. With full implementation of the Affordable Care Act, the number would have shrunk to 2.9 million. Undocumented immigrants can’t gain coverage under the law, so in states such as Texas and Florida, the uninsured rate will remain high, the researchers found.
When premiums are standardized to reflect the law’s enriched health plan benefits and guidelines on how much insurers can charge when they consider things such as age and tobacco use, the average out of pocket premium expenditure will be $2,739 a year for a person in Texas’ individual market in 2016, the study said. That compares with $3,340 the person would be paying if the Affordable Care Act hadn’t been passed. The study projected only a slight gain in enrollment and virtually no change in premiums — again, after considering the richer benefits and the “rate bands” — in Texas’ small group market, which mostly consists of small businesses. But researchers acknowledged their computer model doesn’t account for the possibility that some companies might make “fundamental changes to their business models, such as reducing the number of full-time workers, to avoid new regulations.” Obamacare critics have predicted a vast shift by employers toward part-time workers, though the evidence so far is mostly anecdotal and Obama has delayed enforcement of rules on them for a year.
Date: September 2, 2013