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A look at future health care in Senate plan

Posted July 6th, 2017 to Blog
What Iowans need to know about coverage and costs

Health care policy is a complex issue. There’s no getting around that. But one way to consider the options vs. what we have is to look at basic, reliable estimates of the real-life impacts of the policy choices. How many Iowans would have insurance, and how many would not?

The Urban Institute has state-by-state estimates of these impacts. By 2022 — five years from now — under the Senate’s proposed Better Care Reconciliation Act, uninsurance in Iowa would more than double. Across the board of various population groups, significantly more Iowans (including children) would be uninsured than under the current Affordable Care Act, (ACA, or ObamaCare).

According to the Urban Institute:

• 148,000 non-elderly adults would be uninsured, or 8 percent, under the ACA, compared with 351,000 under BCRA, or 19 percent. This is an increase of 137 percent.

• 25,000 children would be uninsured, or 3.2 percent, under the ACA, compared with 54,000 under BCRA, or 6.9 percent. This is an increase of 117 percent.

• 115,000 non-elderly, non-Hispanic white Iowans would be uninsured under the ACA, or 5.4 percent, compared with 306,000 under BCRA, or 14.3 percent. This is an increase of 167 percent.

• 38,000 non-elderly Hispanic Iowans would be uninsured under the ACA, or 16.6 percent, compared with 53,000 under BCRA, or 23 percent. This is an increase of almost 39 percent.

For more about the impacts of the Senate proposal, see this Iowa Fiscal Partnership backgrounder by Peter Fisher of the Iowa Policy Project.


IFP News: ACA repeal plans jeopardize health care gains in Iowa

As Senate builds legislation in secret, House approach hits Iowa hard 

Full report (or 10-page PDF)

IOWA CITY, Iowa (June 22, 2017) — Proposed legislation to repeal the Affordable Care Act (ACA) jeopardizes Iowa’s recent health coverage gains and puts the state’s most vulnerable residents at risk.

A new Iowa Fiscal Partnership report shows the stakes for Iowans — particularly seniors and rural Iowans — are significant. Losses of federal subsidies to obtain individual insurance are disproportionately greater in rural counties, and for seniors, under the legislation.

Besides those inequities, the report by Peter Fisher of the nonpartisan Iowa Policy Project (IPP) notes cuts in health coverage for vulnerable Iowans come in exchange for “billions in tax cuts to wealthy individuals, drug companies, and insurance companies.”

“Supporters’ promises of more state flexibility and individual choice ring hollow,” Fisher said, adding flexibility “means an enormous cost shift requiring the state to spend millions more and cut services. Meanwhile, ‘choice’ for thousands of Iowans would be stark: go without health insurance that had become unaffordable, or go without basic necessities such as food.”

The report focuses on the impact of ending the expansion of Medicaid to low-income adults and placing a “per capita” cap on benefits in the regular Medicaid program.

In addition, the House bill would:

  • Permit states to undermine current protections for patients with pre-existing conditions;
  • Shift federal Medicaid funding to a per-capita formula that does not reflect actual costs, particularly in difficult economic times or epidemics, or for patients needing higher-cost care.
  • Ignore coming higher costs in aging states, like Iowa, for coverage of the senior population.

As Fisher notes in the report, the Medicaid expansion “greatly increased access to health coverage in Iowa’s rural areas, where the percent of non-elderly residents who were uninsured was cut nearly in half between 2013 and 2015.”

These are the kinds of gains threatened by the American Health Care Act (AHCA) and the similar legislation emerging in the Senate.

“President Trump was happy with his crowd of 6,000 last night in Cedar Rapids, but many times more Iowans could lose health care under the House-passed American Health Care Act,” said Mike Owen, executive director of IPP.

“Today, we are learning of the plan that was hatched behind closed doors in the Senate. That proposal needs to be judged not against the low bar set by the House plan for the health coverage in our national safety net, but against the expanded role for Medicaid that provides coverage for 150,000 Iowans under Obamacare.

“Any legislation that takes Iowa backwards — by shifting federal Medicaid costs to the states, ending the Medicaid expansion, placing kids, seniors, and people with disabilities who depend on Medicaid at risk, and increasing out-of-pocket costs for low-income Iowans — is unacceptable.”

Fisher’s report includes estimates by the Urban Institute that 191,100 Iowans could lose Medicaid coverage under the House plan — or 38 percent of non-adult enrollees now served. Only 11 states have a greater share of their Medicaid enrollees in jeopardy of losing coverage.

A principal reason many of the enrollees have gained coverage is the Medicaid expansion, in which expanded federal subsidies to states encouraged 31 states and Washington, D.C., to offer Medicaid eligibility to more residents. The AHCA — and the emerging Senate proposal — would dramatically phase down the amount of federal dollars that states receive to cover new enrollees, including people who come off Medicaid and need to go back.

To maintain the expansion, Iowa would have to spend an additional $192 million in 2021, nearly tripling what the state spends now on that population.

The higher state cost would come from the state making up the difference between the subsidy under current law — 90 percent federal share of the cost — and the regular Medicaid reimbursement of 58.5 percent for Iowa. Expansion states like Iowa would have to determine whether to pay the additional cost and cut other programs (and/or raise taxes), or reduce Medicaid services to keep their budgets in balance.

“By 2023, the state’s additional cost would be $335.8 million, a 288 percent increase over current spending on the expansion population. It is highly doubtful that the state would find that much more in its budget for Medicaid,” Fisher wrote.

Owen noted Census data have shown Iowa uninsurance dropped from 8.1 percent in 2013 to 5 percent in 2015, largely due to the Medicaid expansion.

“Not only would changes proposed in the AHCA reverse these gains, but they would end Medicaid as we know it,” Owen said. “These changes would virtually guarantee gaping holes in the nation’s safety net for vulnerable Americans in many states, and push enormous new costs onto state budgets already stretched thin.”

The Iowa Fiscal Partnership (IFP) is a joint initiative of the Iowa Policy Project and another nonpartisan organization, the Child & Family Policy Center in Des Moines. Iowa Fiscal Partnership reports are at www.iowafiscal.org.

 

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AHCA would hit Iowa hard

Coverage losses in House AHCA sets low bar for Senate, White House;

AHCA would impose dramatically higher costs for Iowa and Iowa residents

Basic RGB

 

News release

By Peter Fisher

The American Health Care Act (AHCA) passed by the House of Representatives would cut health insurance for nearly 200,000 Iowans in order to provide billions in tax cuts to wealthy individuals, drug companies, and insurance companies. Moreover, instead of fixing the problems with Iowa’s health insurance exchange, it would make those problems worse. As the Senate uses this legislation as the basis for its own proposal, supporters’ promises of more state flexibility and individual choice ring hollow. So-called “flexibility” means an enormous cost shift requiring the state to spend millions more and cut services. Meanwhile, “choice” for thousands of Iowans would be stark: go without health insurance that had become unaffordable, or go without basic necessities such as food.

The AHCA would fundamentally change Medicaid in two ways. First, it eventually would end the Affordable Care Act — or Obamacare — expansion of Medicaid, through which 150,000 low-income Iowans have gained coverage. Second, the AHCA would cut federal funding for the overall Medicaid program, which would force Iowa to find an estimated $336 million more in the state budget for 2023 in order to maintain current eligibility. Given Iowa’s chronic budget shortfalls, this is very unlikely to happen. As a result, the state would likely be forced to restrict Medicaid eligibility and cut benefits to children, the elderly and the disabled.

Altogether, some 191,100 Iowans — 38.1 percent of the nonelderly adult enrollees now served — could lose Medicaid under the House plan, according to new analysis by the Urban Institute.[1] This would make Iowa one of the biggest losers nationally, as only 11 states have greater shares of their Medicaid enrollees in jeopardy of losing coverage. Nationally, the loss is set at 1 in 4 enrollees.

The AHCA hits rural and elderly Iowans the hardest, both from the cuts in insurance subsidies and the cuts in Medicaid. In Iowa’s 78 counties outside metropolitan areas, a family of four with $40,000 income would face an average net increase in premiums (after subsidies) of $7,607 per year; their cost would about double. For an elderly couple with the same income, the increase would average $14,582. The likely loss of the Medicaid expansion would disproportionately harm rural Iowans, who are more likely to have health issues and difficulty paying for health care.

One of the most disingenuous claims by AHCA architects is that Americans with pre-existing medical conditions — now protected by the ACA — would keep that protection under AHCA. In fact, AHCA creates a state option to let insurance companies charge higher premiums and scale back coverage of now-required “essential health benefits.” The requirement that insurance companies cannot deny coverage is a hollow one, if they can simply price people out of it, or drop benefits they do not want to cover. And the fig-leaf funding provided by the bill would not nearly compensate for the costs to the millions facing these higher prices, including 1.3 million persons in Iowa with pre-existing conditions.

AHCA problems do not end there. The quality of health insurance policies is sure to decline as states choose to waive requirements for essential health coverage. By allowing states to eliminate the federal “essential health benefits,” the AHCA would permit employer plans to reinstate annual or lifetime benefit limits, and to stop capping out-of-pocket maximum for certain coverage. This would put millions again at risk of catastrophic costs and medical bankruptcy.

The AHCA Would End Medicaid as We Know It

The AHCA makes two very significant changes to Medicaid. It alters the way states are reimbursed for the Medicaid expansion population, and it changes the way the overall Medicaid program is financed.

Traditional Medicaid consists primarily of health insurance for low-income children, some parents of those children, low-income seniors, and the disabled. About 3 in 8 children in Iowa, 286,000 in total, get health care through Medicaid. One in 4 Iowans with a disability receive Medicaid, about 90,000 individuals. And about 46,000 seniors receive Medicaid to pay for nursing home care, or in-home care that allows them to remain in their homes.

Currently, the federal government pays about 58.5 percent of the cost of traditional Medicaid in Iowa. When recession hits, or an epidemic of flue or opioid addiction strikes Iowans, the federal government automatically matches any needed additional Medicaid payments. Under the ACA, a significant expansion of Medicaid brought health coverage to an additional 150,000 low-income adults in Iowa, with the federal government covering 90 percent of the cost.

AHCA Would Likely Force an End to Iowa’s Medicaid Expansion

The ACA extended Medicaid eligibility to adults with incomes up to 138 percent of the poverty level (about $16,600 a year for an individual) in states that agreed to take part. The majority of those adults are working, most likely at low-wage jobs without meaningful or affordable health insurance, if health insurance is offered at all. In Iowa, nearly 9 in 10 adult Medicaid recipients are in working families, and 7 in 10 are working themselves.[2] Nationally, the majority of working Medicaid recipients were in full-time jobs; of those not working, most were in school, were caretakers for a relative, reported an illness or disability that prevented them from working, or were unable to find work.

In Iowa, about 150,000 adults gained health insurance through this expansion as of 2016.  That number is expected to grow to 177,000 by 2019.[3] Some were previously covered by Iowa Care, a program with limited benefits that ceased to exist when those individuals were moved to the full Medicaid expansion program, known as the Iowa Health and Wellness Plan. The expansion has been a major success. In the 31 states that adopted the Medicaid expansion the percent of non-elderly adults without insurance was cut in half — from 18 percent to 9 percent. [4]

Some proponents of the AHCA have stated that “no one will be thrown off Medicaid.” This is not accurate. Under the ACA, the federal government paid the entire cost of covering those enrolled in the Medicaid expansion through 2016, and at least 90 percent going forward. Beginning in 2020, the AHCA would repeal that high match rate for any new enrollee, including anyone currently in the program who does not maintain continuous enrollment.[5] In practice, most recipients use Medicaid for relatively short spells, due to unemployment or other financial setbacks. As Medicaid recipients cycle on and off the program, within just a few years, the vast majority of those now covered by the Medicaid expansion will no longer be eligible for the enhanced federal match. The nonpartisan Congressional Budget Office estimates that in just five years, fewer than 5 percent of those in the expansion would remain on Medicaid.[6]

This means that under the AHCA, Iowa would have to come up with 41.5 percent, instead of 10 percent, of the cost of the Medicaid expansion, because the federal match would fall from 90 percent to the state’s regular rate of 58.5 percent.[7] To maintain current eligibility with the lower match, Iowa would have to dip into its own revenue to come up with an additional $192.5 million in 2021, an increase of 191 percent.[8]  By 2023, the state’s additional cost would be $335.8 million, a 288 percent increase over current spending on the expansion population. It is highly doubtful that the state would find that much more in its budget for Medicaid.

Per Capita ‘Cap’ Funding Would Shift Costs to States

The second major cut to Medicaid under the AHCA is a dramatic shift in how the overall Medicaid program is funded. Currently the federal government pays 58.5 percent of total Medicaid costs in Iowa, regardless of how those costs rise due to a recession, rising health costs or new health care crises. Under the AHCA the federal contribution will be set at a flat per capita amount. The Medicaid population will be segmented into five groups based on eligibility: those with a disability, the elderly, non-disabled children, non-disabled non-elderly adults, and the non-elderly adults in the Medicaid expansion group. Caps would start with federal Medicaid spending in 2016 and then rise each year, at a slower rate than Medicaid per beneficiary spending is currently projected to rise.

As a result, the federal government would save billions of dollars through the shift to per capita funding, with the amount growing substantially over time. The projected federal savings will come at the expense of state budgets and the low-income individuals served by Medicaid. It is unlikely that state spending will rise to fully offset the loss in federal funds. The state would then have to cut benefits, eliminate optional Medicaid programs, or restrict eligibility.

There are several reasons why the disparity between actual per capita costs and the per capita reimbursement will widen over time. First of all, the annual growth rate in Medicaid costs is expected to exceed the inflation factor that will be applied to the per capita cap. Second, within each eligibility group, there are likely to be demographic shifts toward higher-cost individuals, particularly the elderly. Actual health costs will also be driven up by such factors as:

  • New medical procedures or devices that are more effective, but more costly
  • Medical emergencies, such as an outbreak of the flu, or the Zika virus
  • Health care crises such as the epidemic of opioid addiction.

Probably the most important danger with the AHCA per-capita cap is the “demographic time bomb.” The population is aging, in Iowa and throughout the country. As the Baby Boomer bubble works its way through the elderly population, seniors will become older on average. The share of Iowa’s seniors who are age 75 or older is expected to rise from 42.6 percent in 2020 to 47.3 percent by 2030, and then 55.7 percent by 2040.[9] This is significant because Medicaid spending per capita is much higher for the “old old” than for the “young old.” Average Medicaid spending per recipient for those age 85 or older is 2.5 times the amount spent per recipient age 65 to 74.[10]

Growth in the per capita Medicaid reimbursement for the elderly population will be based forever on Iowa’s level of spending for all seniors as of 2016, before the boom in Medicaid’s aging population. The rising cost of Medicaid for seniors, as they become on average older and sicker, will not be matched by the federal government. That will stick the state of Iowa with higher costs, cause cuts in benefits to seniors, or both. One program that could very well end up on the chopping block is in-home health care, an important program that allows seniors to receive needed services while remaining at home, rather than in a nursing home, which is more expensive.

None of this is a fluke, or an unintended consequence of the AHCA. To the proponents, it is a measure of the success of that legislation — to shift costs and risk from the federal government to the states, health-care providers, and to the low-income populations served by Medicaid. The states will have to make the hard choices — who gets served, who gets cut. The elderly and the sick will suffer the consequences.

In the long term, a shift to per capita caps could be even more detrimental because they present a clear target for federal budget cuts. This potential is evidenced by President Trump’s recently released budget. Even before the AHCA is introduced in the Senate, the President has proposed to reduce the growth rate for the per capita caps in future years, below the rate in the House bill.[11]

The Cuts to Medicaid Would Hurt Rural Iowa the Most

The Medicaid expansion greatly increased access to health coverage in Iowa’s rural areas, where the percent of non-elderly residents who were uninsured was cut nearly in half between 2013 and 2015.[12] Those historic gains in coverage are threatened by the AHCA. Rural residents are more likely than urban residents to have a disability or other health issue, to be unemployed, or to be poor. In other words, the need for Medicaid is greater.

Private Insurance Would be More Costly to Millions, Leaving Many Uninsured under AHCA

The Affordable Care Act (“Obamacare”) barred insurance companies from a number of harmful practices that used to be common in the individual market. Insurers used to be able to leave out benefits, such as prescription drugs and maternity care, but now must cover a comprehensive set of 10 “essential health benefits” and cap the amount of deductibles and other out-of-pocket costs each person can be required to pay each year under their plan. Insurers also used to be able to impose limits on benefits that they would pay out each year or over a person’s lifetime, leaving people exposed to catastrophic costs even though they had coverage. Insurers also must issue insurance to anyone, regardless of pre-existing conditions, and cannot vary premiums only by gender or health status. People in their 60s cannot be charged more than three times the premium of people in their twenties for the same plan; older people used to have to pay far more. To make these protections possible, the ACA required people to purchase insurance or pay a penalty. Without that requirement, healthy individuals would wait until they got sick to purchase insurance, and without healthy individuals in the pool, the insurance market would not be viable. ACA subsidies help low- and moderate-income people pay their premiums; cost-sharing subsidies help reduce deductibles and other out-of-pocket costs for low-income people.

The House-passed AHCA would immediately repeal the requirement for individuals to have coverage or pay a penalty, causing an estimated 20 percent increase in individual-market premiums in 2018, all else equal.[13]  The bill would also drastically reduce the help that modest-income people get with paying their premiums, deductibles, and other costs. Insurers would still have to issue plans to everyone, regardless of health status, but they would have be given other tools to reduce their coverage of people with medical needs. The bill would allow insurers to offer only high-deductible plans, and not plans with lower deductibles that are now required in the marketplaces. The bill would allow insurers to charge older people up to five times more than younger people for the same plan — far greater than the current ratio of three to one.

In addition, the AHCA creates state waivers that would allow insurers to further roll back consumer protections — waivers that about half the states, including possibly Iowa, would be expected to take.[14] All told, the individual insurance market would look much like it did prior to the ACA, with far fewer people covered and people with pre-existing conditions blocked from getting affordable coverage that meets their needs.

The AHCA Allows States to Lower Insurance Standards

States could apply for three important waivers under the AHCA:

  • Starting in 2018, states can allow insurers to charge older people even more than five times what younger people pay, further raising premiums for seniors purchasing coverage individual market.
  • Starting in 2019, states can allow insurers to charge to effectively end the pre-existing condition provisions of Obamacare; states could allow insurers to charge higher premiums to people based on their health conditions.
  • Starting in 2020, states can eliminate the requirement that insurers must cover 10 categories of essential health benefits in individual and small group insurance plans.

About 1.3 million Iowans had pre-existing conditions that could have disqualified them from health insurance in 2009, according to the U.S. Department of Health and Human Services.[15] Of those, 174,000 are children, and 319,000 are age 55 to 64,[16] the group facing the highest premiums on the private market under the House-passed AHCA. Iowa could, of course, keep the ACA pre-existing condition protections in place to protect those with pre-existing conditions, who represent about half of the entire population under age 65. However, the state would be under heavy pressure to seek one or more waivers to permit insurers to sell lower-premium, skimpier coverage that might attract healthier people — even tough the House bill would remove the penalty for being uninsured and people would get far less help paying their premiums.

Protections against Catastrophic Costs Could Disappear

While the Obamacare prohibition on lifetime or annual limits on benefits would technically remain in place under the AHCA, this applies only to coverage of the 10 essential health benefits. States could obtain a waiver to remove some or all of those essential benefits from the required list. This would allow insurance companies to impose annual or lifetime limits on payments for benefits no longer defined as essential. Similarly, the Obamacare requirement that policies limit maximum spending by individuals on deductibles and other out-of-pocket costs each year protects people from catastrophic costs, but this provision again applies only to the essential health benefits.

To see how this could work in practice, suppose a state receives a waiver to remove maternity care from the list of essential health benefits for policies issued in that state. Insurance companies might still offer policies that include maternity care. But those policies could now limit what they will pay when an enrollee has a baby, and they could exclude maternity services from the plan’s out-of-pocket maximum. This in turn puts the enrollees at risk of catastrophic costs, which could lead to medical bankruptcy. For example, a child birth that requires a C section, or a few days of care in the neonatal intensive care unit, could easily cost over $200,000. A person with maternity coverage might find herself to be responsible for most of that cost, because there is no out-of-pocket maximum for the insured, but there is a limit on what the insurance company will pay.

Even people with employer coverage could find weakened protections against high cost sharing under the AHCA. That is because the ACA prohibition against annual and lifetime limits, as well as the cap on yearly cost-sharing amounts, applies to virtually all private insurance plans. About 1.1 million Iowans would have a policy with a lifetime benefit limit were in not for the ACA.[17]

The AHCA Drastically Changes Insurance Premium Subsidies

Under current law, premium credits are available to people with low or moderate incomes, to help make it affordable to buy a plan. The credits are based on enrollees’ incomes as well as the actual cost of the premium for a plan in the place the person lives. The ACA also provides cost-sharing reductions (CSRs) that lower deductibles and co-payments that people with low incomes pay under their marketplace plans. In 2016, the average Iowan purchasing insurance on the exchange who was eligible for the credit had to pay only 29 percent of the premium, the rest being covered by the credit.

The AHCA would substitute a flat tax credit that is the same regardless of income, and regardless of whether someone lives in an area with high premiums or low premiums. The size of the credit varies only by age, from $2,000 for persons under 30 to $4,000 for those age 60 or older. For the average Iowan purchasing insurance with subsidies, the effect of the AHCA is to increase overall costs by $3,900 per year. Premiums would increase nearly $300, the tax credits would decline by $2,685, and cost sharing in the amount of $926 would be lost.[18]

For older Iowans, who face much higher health insurance premiums to start with, the AHCA would cause a staggering increase in costs. A 60-year-old pays on average just $1,183 in net premiums, after credits, under the ACA. But under the House bill, that net premium would jump to $9,614, an $8,431 increase.[19]

These averages conceal wide variation across counties in Iowa, with rural counties generally hit the hardest:

  • For a family of four with $40,000 income, the increase in the family’s costs under the AHCA varies from $1,100 to $10,050. In 63 of Iowa’s 99 counties, the loss of premium subsidies would exceed $8,400, and all but six of those are rural counties. (See map below.)
  • For an elderly couple with no children at home and with the same $40,000 income, the AHCA would cause them to lose premium assistance ranging from $5,940 to $17,830. In 63 counties the premium credit loss would exceed $15,700, and once again, all but six of those counties are rural.

If we focus instead on the 20 counties where the credit loss would be the smallest, both for the family of four and for the senior couple, we find 12 of those 20 counties are in metropolitan areas.

In the map below, the lighter-shaded counties, with black lettering, are those where the tax-credit losses in 2020 are projected under AHCA to be above $8,000 for four-person families with $40,000 income, and above $15,000 for 60-year-old couples with $40,000 income. The light-yellow counties are in metro areas; the light-green counties non-metro areas.

170621-ahca-metroSource: Henry J. Kaiser Family Foundation

The average premium increase in Iowa’s 21 metro counties (those within one of the nine Census-designated metropolitan areas) is $3,517 for the family of four, $9,150 for the senior couple.  For the 78 non-metro counties, the average premium increases would be $7,607 for the family of four (about double), and $14,582 for the senior couple.[20]

The AHCA Provides a Windfall for Corporations and the Wealthy

The ACA is financed in large part by two Medicare taxes that fall only on individuals with incomes above $200,000 or couples with incomes above $250,000. The AHCA would repeal these taxes.  Millionaires would get 79 percent of the benefit if these taxes were ended.[21] The 400 richest households in the country would receive a $2.8 billion windfall, for an average tax cut of about $7 million a year for each household. The AHCA also repeals taxes on insurance companies, pharmaceutical companies, and other corporations.

The AHCA Would Not Fix Iowa’s Insurance Exchange Problems

Iowa’s insurance exchange is in trouble as insurers exit the market. The principal reason is that too few young, healthy individuals purchased insurance on the exchange. While this has been something of a problem nationally, it is more severe in Iowa. Few Iowans eligible to purchase plans through the exchange actually did so: In 2016, only 20 percent of eligible marketplace enrollees actually purchased insurance, compared to a national average of 40 percent.[22] This is due in part to poor outreach by the state to inform consumers about the benefits of enrollment — and the state even turned down federal funds for this purpose in 2013.

In addition, the ACA was designed to eliminate poor-quality health insurance plans that covered too few health benefits, capped insurance company payouts, or had no limits on a patient’s out-of-pocket expense. But individuals could seek a waiver that would allow them to retain their old policies — plans that did not meet new standards for benefits or pre-existing conditions — Iowa’s insurance regulators were very generous in allowing such waivers.[23] As a result, many young, healthy people kept their old plans because they were cheap. Without those people in the exchanges, the insurance companies offering ACA plans were left with a pool of people who were sicker, older and cost more to cover. Compounding the issue in Iowa, the state’s largest insurer, Wellmark, opted to continue covering tens of thousands of individual-market customers on their old plans and also decided not to offer coverage through the exchange for the first three years. This likely contributed to the relatively low portion of Iowans moving to ACA coverage through the exchanges. In recent years, Wellmark has had more enrollees in its pre-ACA plans than the total number of all exchange enrollees, splitting up the state’s individual market.[24]

There has been speculation about the impact on the Iowa exchange because of one very expensive patient, whose health bills exceed $1 million per month. That person was insured by Wellmark, and when Wellmark pulled out of the exchange after only one year, other insurers may have feared they would have to insure that person, a deterrent to their market participation.[25]

One potential solution to this problem is a reinsurance pool, and though one exists under the ACA, it will not kick in until 2018. The uncertainty surrounding the future of the ACA only adds to the risk that insurers see if they remain in the market. The AHCA solution is to put the high-cost individuals in a state high risk pool. The AHCA, however, provides only about a third to a fifth of what is needed to fund insurance for all who need it; the result would be very high premiums for those in the pool, or millions left out of coverage.[26]

Meanwhile, the Iowa Insurance Commissioner has filed a plan to salvage the Iowa exchange by requesting a waiver under the Affordable Care Act.[27] There would be a single insurance plan available throughout the state, similar to the mid-level or “silver” plan now available on the ACA marketplace. The plan would cover the ACA’s 10 essential health benefits, and retain protections for pre-existing conditions without any annual or lifetime benefit caps. The proposal also incorporates an element of the AHCA, raising the age ratio, so that premiums for older Iowans would increase more. Premiums would rise for all age levels, as would the credit, which would be based on income just as it is under the ACA. The net premiums would be higher; for example, a family of four at 200 percent to 250 percent of the poverty level would pay $212 more per month, a 53 percent increase, while a couple in their late 50s would pay $236 more per month, an 82 percent increase. The state’s largest insurer, Wellmark, has said it would offer the plan in all 99 counties if the proposal is approved in a timely fashion.[28]

Conclusion

The Iowa experience should serve as a warning to other states about what will happen if the AHCA becomes law. That’s because the AHCA would allow all states to waive requirements about essential health benefits, and if they do so that will bring back cheap policies with poor coverage, caps on benefits, and no ceiling on out-of-pocket costs. In other words, states will be free to abandon the principle of one large pool of insured, and instead segment the market, encouraging the young and healthy to buy these cheap policies allowed under the waiver. This would leave the older and sicker on the better policies that remain compliant with the ACA. That in turn may cause insurance companies to abandon such compliant policies, leaving the states back where they were before health care reform.


[1] John Holahan, Linda J. Blumberg, Matthew Buettgens and Clare Pan. Impact of the AHCA on Federal and State Medicaid Spending and Medicaid Coverage: An Update. Urban Institute. June 2017. This analysis assumes that states drop their ACA low-income adult Medicaid expansion population and cut Medicaid enrollment among other non-elderly adults to fully compensate for federal Medicaid funding cuts due to reduction in expansion matching rate and to per capita cap. http://www.rwjf.org/content/dam/farm/reports/issue_briefs/2017/rwjf438186

[2] Rachel Garfield, Robin Rudowitz, and Anthony Damico. Understanding the Intersection of Medicaid and Work. Issue Brief. Kaiser Family Foundation, February 2017. http://www.kff.org/medicaid/issue-brief/understanding-the-intersection-of-medicaid-and-work/

[3] John Holahan et al. The Impact of Per Capita Caps on Federal and State Medicaid Spending.The Urban Institute. March 2017. www.urban.org/sites/default/files/publication/89061/2001186-the_imapct-of-per-capita-caps-on-federal-spending-and-state-medicaid-spending_2.pdf

[4] Matt Broaddus and Edwin Park. House Republican Health Bill Would Effectively End ACA Medicaid Expansion. Center on Budget and Policy Priorities. June 6, 2017.

[5] Anyone who has not been enrolled in Medicaid for two months is considered a new enrollee under the AHCA.

[6] Of those enrolled in the Medicaid expansion at the end of 2019, when the federal 90 percent match is scheduled to end, fewer than five percent would still be on Medicaid by the end of 2024. Congressional Budget Office, “American Health Care Act,” March 13, 2017. https://www.cbo.gov/system/files/115th-congress-2017-2018/costestimate/americanhealthcareact.pdf

[7] The matching rate, or FMAP, for fiscal year 2018 is 58.5 percent. http://www.kff.org/medicaid/state-indicator/federal-matching-rate-and-multiplier/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D

[8] Matt Broaddus and Edwin Park. House Republican Health Bill Would Effectively End ACA Medicaid Expansion. Center on Budget and Policy Priorities. June 6, 2017.

[9] University of Virginia, Weldon Cooper Center for Public Service, Demographics Research Group. http://demographics.coopercenter.org/national-population-projections/?q=demographics/national-population-projections

[10] Matt Broaddus. Population’s Aging Would Deepen House Health Bill’s Medicaid Cuts for States. March 24, 2017. Center on Budget and Policy Priorities. http://www.cbpp.org/blog/populations-aging-would-deepen-house-health-bills-medicaid-cuts-for-states

[11] Edwin Park. “Trump Budget Cuts Medicaid Even More than House Health Bill, Showing Danger of Per Capita Cap.” Center on Budget and Policy Priorities, May 23, 2017. http://www.cbpp.org/blog/trump-budget-cuts-medicaid-even-more-than-house-health-bill-showing-danger-of-per-capita-cap

[12] Kaiser Family Foundation. Changes in Insurance Coverage in Rural Areas under the ACA: A Focus on Medicaid Expansion States. May 4, 2017. http://www.kff.org/medicaid/fact-sheet/changes-in-insurance-coverage-in-rural-areas-under-the-aca-a-focus-on-medicaid-expansion-states/

[13] Edwin Park, “New CBO Estimates: 23 Million More Uninsured under House-Passed Republican Health Bill,” Center on Budget and Policy Priorities, May 24, 2017.

[14] Park, op cit.

[15] https://aspe.hhs.gov/compilation-state-data-affordable-care-act

[16] Emikly Gee. Number of Americans with Pre-Existing COnditions by Congressional District. Center for American Progress, April 5, 2017. https://www.americanprogress.org/issues/healthcare/news/2017/04/05/430059/number-americans-pre-existing-conditions-congressional-district/

[17] Loren Adler and Paul B. Ginsburg. Health Insurance as Assurance: The Importance of Keeping the ACA’s Limits on Enrollee Health Costs. The Brookings Institution, January 17, 2017. https://www.brookings.edu/blog/up-front/2017/01/17/health-insurance-as-assurance-the-importance-of-keeping-the-acas-limits-on-enrollee-health-costs/

[18] Aviva Aron-Dine and Tara Straw. House GOP Health Bill Still Cuts Tax Credits, Raises costs by Thousands of Dollars for Millions of People. Center on Budget and Policy Priorities, March 22, 2017.

[19] Aviva Aron-Dine and Tara Straw. House GOP Health Bill Still Cuts Tax Credits, Raises costs by Thousands of Dollars for Millions of People. Center on Budget and Policy Priorities, March 22, 2017.

[20] These are population-weighted averages, computed by weighting the premium increase for a county by its share of the total population in the metro or non-metro counties as of 2016.

[21] Chye-Ching Huang, Chuck Marr and Emily Horton. House GOP Health Plan Eliminates Two Medicare Taxes, Giving Very Large Tax Cuts to the Wealthy. Center on Budget and Policy Priorities, March 20, 2017. http://www.cbpp.org/research/federal-tax/house-gop-health-plan-eliminates-two-medicare-taxes-giving-very-large-tax-cuts

[22] The Henry J. Kaiser Family Foundation. Marketplace Enrollment as a Share of the Potential Marketplace Population.

March 31, 2016.

[23] Catherine Rampell. “Want to know what Trumpcare would do to the country? Look at the implosion in Iowa.” The Washington Post, May 22, 2017.

[24] Andrew Sprung. “Why insurers thrive (or dive) in ACA marketplaces. healthinsurance.org. April 28, 2016. https://www.healthinsurance.org/blog/2016/04/28/why-insurers-thrive-or-dive-in-aca-marketplaces/

[25] Tony Leys. “Iowa teen’s $1 million-per-month illness is no longer a secret.” Des Moines Register, May 31, 2017. http://www.desmoinesregister.com/story/news/health/2017/05/31/hemophilia-patient-costing-iowa-insurer-1-million-per-month/356179001/

[26] Linda J. Blumberg, Matthew Buettgens, and John Holahan. High-Risk Pools Under the AHCA: How Much Could Coverage Cost Enrollees and the Federal Government? Robert Wood Johnson Foundation and the Urban Institute, May 2017. http://www.rwjf.org/en/library/research/2017/05/high-risk-pools-under-the-ahca.html

[27] Iowa Insurance Division. The State of Iowa’s Proposed Stopgap Measure for the Individual Health Insurance Market. June 12, 2017. https://iid.iowa.gov/sites/default/files/state_of_iowa_proposed_stopgap_measure_6.12.2017.pdf

[28] Ed Tibbets. “Iowa floats plan for insurance markets.” Quad-City Times. June 12, 2017. http://qctimes.com/news/local/government-and-politics/iowa-floats-plan-for-insurance-markets/article_27ed8402-ff25-5651-94b2-af42ec5e18ef.html#utm_source=qctimes.com&utm_campaign=%2Femail-updates%2Fbreaking%2F&utm_medium=email&utm_content=A610FFEAA69F54B0BB4F3A1FAD0FDDDEB0B2C7DF

pfisher240200Peter Fisher is Research Director of the Iowa Policy Project, part of the Iowa Fiscal Partnerhsip (IFP). IFP is a joint public policy analysis initiative of two nonpartisan, nonprofit organizations based in Iowa: the Iowa Policy Project in Iowa City, and the Child & Family Policy Center in Des Moines.

Privatizing Medicaid: ‘Why?’ ‘What?’ ‘How?’ not yet answered

Posted November 3rd, 2015 to Blog

060426-capitol-swwWhy do we have Medicaid? It’s a simple question with a simple answer. We have Medicaid because if we don’t, there are millions of Americans, and nearly 600,000 Iowans, who will not be able to get health care. Private industry will not provide it.

Why, we must ask, would we turn over to private industry a critical part of our public safety net to business interests that operate with a principal purpose of making money?

How do we assure that services are provided, that our responsibilities are met, if the people running the operation are not answerable to us?

As the legislative Health Policy Oversight Committee meets today about the Governor’s privatization edict on Medicaid, we need to remind ourselves of these basic questions.

When the Governor cannot detail the purported savings and our common sense tells us otherwise, we need an assurance that data will be available — and publicly available — to monitor what is happening with a service that has been accountable and efficient in expanding health-care access to Iowans who need it. We need to know Iowa is not setting itself to repeat problems that have been demonstrated in other states.

What will pass for public oversight after we’ve turned over the keys to private industry?

Over three dozen people and organizations filed comments (available here) with the oversight committee for today’s meeting at the Statehouse. Many have a firsthand understanding of the purpose and practice of Medicaid as we know it, and serious questions of their own about the uncertain world where the Governor is taking us, on his own.

Clearly, many fundamental questions have not been fully vetted through the legislative process, nor given a hearing before the decision was made within the Governor’s Office.

How we assure health care access to low-income Iowans needs to be the central issue here, not an afterthought.

Owen-2013-57Posted by Mike Owen, Executive Director, Iowa Policy Project
mikeowen@iowapolicyproject.org

Iowa’s decline in job-based health insurance

Posted April 11th, 2013 to Blog

The Cedar Rapids Gazette today offered an interesting look at the question of where Iowans get their insurance. It’s less and less something that comes through employment. And when the costs of insurance keep rising, that makes it tougher on the household budget — or results in people not having insurance.

This is a trend we’ve been watching and reporting on at the Iowa Policy Project for many years, as have several good research organizations such as the Economic Policy Institute.

The Affordable Care Act offers at least a partial remedy. As health insurance exchanges are developed, affordable insurance should be more readily available. Tax credits for employers providing insurance will provide a targeted incentive to offer employees a better option than what employees might find on the individual insurance market.

Colin Gordon

Colin Gordon

Our State of Working Iowa report for 2012 offers another good look at this issue. As author Colin Gordon observes, wage stagnation, erosion of good jobs and recession have combined to batter workers, at the same time non-wage forms of compensation, health and pension benefits, also have declined. This has eroded both job quality and family financial security, and increased the need for public insurance. In Chapter 3, “The Bigger Picture,” Gordon writes that Iowa is one of 15 states, including five in the Midwest, to lose more than 10 percent of job-based coverage in a decade. He continues:

These losses reflect two overlapping trends. The first of these is costs. Health spending has slowed in recent years, but still runs well ahead of general inflation. Both premium costs … and the employee’s share of premiums have risen sharply — especially for family coverage — while wages have stagnated.

In 1999, a full-time median-wage worker in Iowa needed to work for about 10 weeks in order to pay an annual family premium; by 2011, this had swollen to nearly 25 weeks. Steep cost increases have pressed employers to drop or cut back coverage, or employees to decline it when offered. High costs may also encourage more employees to elect single coverage — counting on spousal coverage from another source and kids’ coverage through public programs. The second factor here is the shift in sectoral employment outlined above: Job losses are heaviest in sectors that have historically offered group health coverage; and job gains (or projected job gains) are strongest in sectors that don’t offer coverage.

This graph looks at the rate of employer-sponsored coverage, by industry sector, from 2002 to 2012.

job-based coverage comparison, Iowa 2002-2012

An interactive version of that graph in the online report allows the reader to toggle between those two years; the colored balloons sink on the graph in moving from 2002 to 2012, as if they all are losing air — the result of declining rates of coverage.

Good public policy could help to fill them again.

2010-mo-blogthumbPosted by Mike Owen, Assistant Director

 


Does Iowa have the will to govern itself?

Posted November 13th, 2012 to Blog

Does Iowa have the will to govern itself?

How ironic that we have reason to ask that question, a week after a presidential election that capped three-plus years of courting of Iowa voters, and a few days before a potential 2016 candidate visits to start all of it brewing again.

Yet the question is unavoidable. Consider two pieces in today’s Des Moines Register.

First, the Register reports, the federal Environmental Protection Agency may take over water quality enforcement in Iowa due to weak efforts by Iowa’s state Department of Natural Resources (DNR).

As IPP’s David Osterberg recently told EPA officials to hold DNR more accountable because the state is underfunding water protection.

“EPA should help the agency in bargaining with a legislature that has shown itself to be less concerned with water quality protection than tax cuts. … There is no question that if EPA simply accepts the agency’s agreement to try to do better, water quality will not improve in this state.”

If the EPA admonishment of Iowa’s lax environmental enforcement were not enough, we also are waiting for the state to offer its long-overdue decision on how to proceed on health reform. The 2012 election affirms the Affordable Care Act will not be repealed, so the state’s dragging its heels on creating a health insurance exchange no longer makes sense — if it ever did.

Yet, we now have a real question of whether it’s a good idea for the state to move ahead on its own with an exchange, where Iowans can shop for affordable insurance and not be denied coverage, or having the federal government do it for us. As the Register opined in an editorial today, “It is too important for this state to mess up.” Citing problems implementing temporary high-risk pools, and political dealings in previous legislative attempts to create an exchange, the Register noted:

“Iowans need the coming insurance marketplace to work for them in years to come. But state leaders have shown they are not the ones to design it.”

Can we govern ourselves? Apparently national candidates will come calling in Iowa without worrying about that. So maybe we should answer if for ourselves.

Posted by Mike Owen, Assistant Director


The policy effects of Supreme Court ruling — beyond politics, legal arguments

Posted June 28th, 2012 to Blog

Andrew Cannon

While many are focusing on the political and judicial ramifications of today’s Supreme Court ruling affirming the constitutionality of the Affordable Care Act (ACA), it’s important to focus on how the law will affect health coverage.

ACA provisions at the heart of the Supreme Court decision are the personal responsibility requirement (or individual mandate) and the Medicaid expansion. Both provisions are not scheduled to take effect until January 1, 2014.

However, a number of provisions have been in effect since 2010 — shortly after the law’s passage, and have helped make insurance coverage accessible and more affordable for millions of Americans. Today’s ruling upholding the law means that millions of Americans will retain that coverage and those benefits.

Among the provisions currently in effect:

  • Young adult coverage — Uninsured persons age 18 through 25 may continue to be insured as a dependent on their parents’ health coverage. This provision has extended health care coverage to an estimated 6.6 million young Americans.[1]
  • Protections against pre-existing condition exclusions for children — The ACA prevents insurers from denying coverage to sick children. In Iowa, there are up to 51,000 children who have pre-existing conditions.[2]
  • The end of lifetime and annual benefit limits — Consumers with serious health conditions and treatment expenses no longer need to worry about bumping against maximum amounts an insurer will pay.
  • The elimination of the Medicare “doughnut hole” — Under existing Medicare law, seniors with high prescription costs had to pay for prescriptions entirely out-of-pocket. The ACA gradually eliminates this “doughnut hole,” providing seniors a 50 percent discounts on name-brand drugs and a 7 percent discount on generic drugs.
  • Tax credits for small businesses — Small businesses that meet specified qualifications may presently receive a tax credit if they offer their employees coverage and cover at least half of the premium cost.[3] Estimates of the number of eligible businesses vary, from about 2.6 million to about 4 million.[4] Take-up has been limited, partially due to lack of awareness.

Provisions that will take effect in 2014:

  • Expanding Medicaid coverage — Under the ACA, uninsured individuals with earnings at or below 133 percent of the federal poverty level ($30,657 for a family of four in 2012) will qualify for enrollment in Medicaid.  If Iowa fully participates in the Medicaid expansion, as many as 114,700 Iowans may receive coverage.[5]
  • Creation of new insurance marketplaces, or “exchanges” — The ACA instructs states to construct new insurance marketplaces, accessible by Internet, in which those who don’t receive insurance through their employer may shop for insurance coverage. Individuals who don’t qualify for Medicaid coverage will receive tax credits to help them cover the cost of their heath premium. This is the group affected by the individual mandate. According to estimates, as many as 250,000 Iowans could find their health coverage through the new insurance marketplace, or exchange.[6]

While legal scholars and political pundits will undoubtedly have much to say for months on today’s decision, the central purpose of the law should not be lost in the discussion: to expand health insurance coverage and help create a health system that works for everyone.

Posted by Andrew Cannon, Research Associate


[1] Sara R. Collins, Ruth Robertson, Tracy Garber and Michelle M. Doty, “Young, Uninsured, and in Debt: Why Young Adults Lack Health Insurance and How the Affordable Care Act is Helping,” the Commonwealth Fund. June 2012. <http://www.commonwealthfund.org/~/media/Files/Publications/Issue%20Brief/2012/Jun/1604_collins_young_uninsured_in_debt_v4.pdf>.

[2] Christine Sebastian, Kim Bailey, and Kathleen Stoll, “Health Reform: A Closer Look. Help for Iowans with Pre-Existing

Conditions,” Families USA. May 2010. <http://www.familiesusa.org/assets/pdfs/health-reform/pre-existingconditions/iowa.pdf>.

[3] See “Right Balance for Small Business in Health Reform,” Iowa Fiscal Partnership, July 22, 2010. <http://www.iowafiscal.org/2010docs/100722-IFP-HCR-credits.pdf>.

[4] “Small Employer Health Tax Credit: Factors Contributing to Low Use and Complexity” (GAO-12-549), Government Accountability Office, May 2012. <http://gao.gov/assets/600/590832.pdf>.

[5] John Holahan and Irene Headen, “Medicaid Coverage and Spending in Health Reform: National and State-by-State Results for Adults at or Below 133% FPL,” Kaiser Commission on Medicaid and the Uninsured, May 2010. <http://www.kff.org/healthreform/upload/medicaid-coverage-and-spending-in-health-reform-national-and-state-by-state-results-for-adults-at-or-below-133-fpl.pdf>.

[6] Matthew Buettgens, John Hollahan, and Caitlin Carroll, “Health Reform Across States: Increased Insurance Coverage and Federal Spending on the Exchanges and Medicaid,” Urban Institute, March 2012. <http://www.urban.org/uploadedpdf/412310-Health-Reform-Across-the-States.pdf>.


Health Reform: Right balance for small business

Posted July 10th, 2010 to Health, Work Supports

In Iowa, Targeted Tax Credits Offer Business Benefits, Employees Health Access

PDF
News Release

By Andrew Cannon

A largely silent but very active movement within state and federal agencies is preparing for the full implementation of the Patient Protection and Affordable Care Act (PPACA). Though the new health reform law does not fully go into effect until 2014, dozens of agencies within the federal government are complying with the law’s provisions to ensure that the law’s implementation has the maximum impact of making insurance affordable to all.

One provision that takes immediate effect helps small businesses provide health insurance to their employees. The PPACA provides small businesses that pay at least half of their employees’ health insurance premium with tax credits of up to 35 percent of the premium cost.

Background

Small businesses and their employees have been disproportionately hurt by the rapid increase in health insurance premiums. Larger firms are able to spread the risk of insuring their employees across a larger pool. In addition, their size affords them bargaining power that smaller businesses lack.

A 2006 study found that the smallest firms pay considerably higher health insurance premiums than large firms. Premiums for firms with nine or fewer employees are 18 percent higher than those of large firms (those with 1,000 or more employees), and firms with 10 to 24 employees pay 10 percent more in premiums than large firms. [1]

In addition, premiums have risen significantly for all firms over the past 10 years. In 2000, Iowa companies reported an average premium of $6,487 for a family health insurance plan. By 2008, the average family health insurance plan in Iowa had risen by more than $4,400. [2]

Rising premiums have made health insurance a benefit that many smaller employers can simply no longer afford to offer employees. While larger firms have continued to offer health insurance to employees at an unchanged rate since 2000, the percentage of smaller firms offering health insurance benefits has declined. From 2000 to 2008, there was a drop of three to four percentage points in firms with 100 or fewer employees that offered health insurance. [3]

As a result, employees of small firms are less likely to get their health insurance through an employer. In 2008, about two-thirds of Iowa firms with between 10 and 24 employees offered health insurance to employees and only a third of Iowa firms with 10 or fewer employees offered health insurance. [4] By comparison, more than 91 percent of Iowa firms with 25 or more employees offered health insurance to their employees. [5]

Health Insurance, Small Businesses and the PPACA

The PPACA aims to reduce this disparity between 2010 and 2013 by offering highly targeted tax credits to small businesses that pay for at least half of their employees’ health insurance premiums.

Eligibility for the full credit of 35 percent of an employer’s contribution to employee health insurance is limited by both the number of full-time equivalent employees and the average taxable wages the employer pays.* Firms with 10 or fewer full-time equivalent employees with an average wage per employee of $25,000 or less are eligible for the full credit. Firms with more than 10 employees or average wages higher than $25,000 are eligible for tax credits on a declining scale. At 25 employees, or an average wage of $50,000, credit eligibility disappears. Table 1 shows the eligibility scale for the small business tax credits.

Table 1-HCR credits For example, if a small business that qualifies for the maximum credit offers its employees an individual health insurance plan with an average premium of $4,500, and pays $2,500 of the cost, the employer would receive a tax credit of $875 per full-time employee.

A firm with eight full-time employees and eight part-time employees who work 20 hours a week, for instance, would not be eligible for the full 35 percent credit, even if the average wage was $25,000 or less. Under the PPACA tax credit guidelines, the example firm has the equivalent of 12 full-time employees. Such a firm would be eligible for a 30 percent credit. [6]

In 2014, when full implementation begins with the creation of state-based health insurance exchanges, or marketplaces for individuals and small businesses to purchase insurance, small businesses will be eligible for a maximum credit of 50 percent of the employer’s contribution to the premium.**

Iowa Small Businesses

Firms with 20 or fewer employees account for over 85 percent of Iowa’s private establishments. [7] Over 56,400 small businesses in Iowa have 20 or fewer employees. Depending on the average wage within the firm, these businesses may be eligible for the PPACA health insurance tax credit.

These targeted tax credits will provide a significant benefit to Iowa’s qualifying small businesses that already pay the majority of costs for health coverage for their workers. There also may be some impact upon firms that have not been able to provide employees with health insurance because of its cost and now decide to do so. Even with the federal incentive, however, health insurance costs are likely to weigh against many small employers picking up coverage they do not now provide. The experience with state small business insurance incentive programs is that they generally serve a very small share of the businesses that are potentially eligible, with particular challenges to reaching those predominantly employing lower-wage employees.

Still, employers that do offer health coverage may benefit not only from the federal funding, but also from having a more stable workforce. Nearly three-quarters of workers in a national survey stated that employer-sponsored health insurance was a major factor in their decision to take a job. [8] Similarly, about 80 percent business executives in one national survey described the provision of health insurance benefits as “extremely” or “very important” in job retention. [9]

Overall, the provision of this credit will make health insurance provision by employers less costly. Some additional small business employees, as a result of the tax credit, may have health insurance offered by their employers, and small businesses currently offering coverage will be less likely to drop that coverage. Nearly 60 percent of Iowa’s uninsured population is employed,[10] so the credit will have some impact on the number of uninsured workers within Iowa.

Iowa’s small businesses and their employees stand to gain in obtaining affordable health insurance through this and other provisions in PPACA. Though the major provisions of health reform do not take effect until 2014, premium tax credits already have taken effect.

* Nonprofit organizations that meet the payroll and employee requirements will receive a 25 percent non-refundable credit, which can be used to reduce the organizations’ income and Medicare tax withholdings.
** Beginning in 2014, nonprofit organizations meeting the payroll and employee requirements will receive a 35 percent nonrefundable tax credit, again reducing the organizations’ income and Medicare tax withholdings.
 
Andrew Cannon is a research associate for the Iowa Policy Project (IPP), focusing on fiscal policy and economic opportunity issues including health reform. The Iowa Fiscal Partnership is a joint initiative of IPP and the Child & Family Policy Center, two nonprofit, nonpartisan Iowa-based organizations that cooperate in analysis of tax policy and budget issues facing Iowans. Find Iowa Fiscal Partnership reports at www.iowafiscal.org.
[1] Jon Gable, Roland McDevitt, Laura Gandolfo, et. al. “Generosity and Adjusted Premiums in Job-Based Insurance: Hawaii is Up, Wyoming is Down,” Health Affairs. May/June 2006.
[2] Agency for Healthcare Research and Quality. Average total family premium in dollars per enrolled employee at private-sector establishments that offer health insurance by firm size and state  (Table II.D.1), years 1996-2008. Medical Expenditure Panel Survey Insurance Component Tables. Generated using MEPSnet/IC. Accessed June 15, 2010. <http://www.meps.ahrq.gov/mepsweb/data_stats/MEPSnetIC.jsp>.
[3] AHRQ. Percent of private-sector establishments that offer health insurance by firm size and selected characteristics (Table I.A.2), years 1996-2008.
[4] AHRQ. Percent of private-sector establishments that offer health insurance by firm size and state (Table II.A.2), years 1996-2008.
[5] AHRQ MEPS, Table II.A.2.
[6] Chris L. Peterson and Hinda Chaikind, “Summary of Small Business Health Insurance Tax Credit Under PPACA (P.L. 111-148). Congressional Research Service. April 5, 2010.
[7] Small Business Administration, Office of Advocacy. Employer Firms, Establishments, Employment, Annual Payroll and Estimated Receipts by Firm Size, and State, 2007. <http://www.sba.gov/advo/research/st_07.pdf>.
[8] Ellen O’Brien, “Employers’ Benefits from Workers’ Health Insurance,” the Milbank Quarterly, Vol. 81, No. 1 (2003).
[9] Rachel Christensen, Paul Fronstin, Karl Polzer, and Ray Werntz, “Employer Attitudes Affecting and Practices Affecting Health Benefits and the Uninsured: Issue Brief No. 250.” Employee Benefits Research Institute. October 2002. <http://www.ebri.org/pdf/briefspdf/1002ib.pdf>.
[10] Steven Ruggles, J. Trent Alexander, Katie Genadek, Ronald Goeken, Matthew B. Schroeder, and Matthew Sobek. Integrated Public Use Microdata Series: Version 5.0 [Machine-readable database]. Minneapolis: University of Minnesota, 2010.