Subsidies safe in Alabama …
Alabama uses Healthcare.gov – rather than operating a state-run exchange – which means that the outcome of the King v. Burwell lawsuit was crucial for the state. Subsidies would have disappeared for 132,000 people in Alabama if the Supreme Court had ruled that subsidies could only be provided through state-run exchanges.
Fortunately for the residents, insurance carriers, and medical providers of Alabama, the Supreme Court ruled on June 25 that subsidies are legal in every state, regardless of whether the exchange is state- or federally-run. Not only will subsidies remain available, but the entire individual market will be significantly more stable than it would have been if subsidies had been eliminated. Had that happened, the Urban Institute estimated that premiums in the individual market – for people NOT currently receiving subsidies – would have climbed by 55 percent (in addition to regular annual rate hikes), and the total number of people with individual health insurance would have plummeted by about 70 percent.
But many state leaders disappointed by ruling
Despite the actuarial predictions of the market collapse that would have happened if subsidies had been eliminated, along with the direct impact on the people of Alabama who would have lost their health insurance, many of the state’s leaders – including the Governor – expressed dismay that the subsidies were upheld by the Supreme Court. U.S. Congresswoman Terri Sewell (D, 7th District) was pleased with the Court’s opinion, but most of her colleagues mentioned after the ruling that they will continue to push for repeal of the ACA.
Alabama is one of just five states that doesn’t conduct a state-based review of proposed rate changes. In Alabama, HHS is responsible for reviewing proposed rates. Healthcare.gov has a rate review page that shows proposed rates in excess of 10 percent, but they don’t show proposed rate increases of less than 10 percent. For 2016, the only rate increase proposals that have been published so far are for Blue Cross Blue Shield, and they range from about 11 percent to over 70 percent, depending on the plan. These rates have not been finalized yet, and proposed rate increases for Humana and United Healthcare are presumably under ten percent.
2015 enrollment numbers
171,641 Alabamians signed up for qualified health plans (QHPs) through HealthCare.gov during 2015 open enrollment, according to the U.S. Department of Health and Human Services (HHS). That was a significant increase over the 97,870 residents who enrolled during the 2014 open enrollment period.
Of the Alabama residents who purchased 2015 plans in the exchange, 89 percent qualified for premium subsidies. Those subsidies reduced the average monthly premium from $360 to $92.
In addition to premium subsidies, a significant portion of Alabama exchange enrollees are also receiving cost-sharing subsidies. Cost-sharing subsidies, which lower the out-of-pocket amounts that insureds must pay when they receive care, are only available for people with household incomes up to 250 percent of poverty, and only available when the enrollee selects a Silver plan. Cost-sharing subsidies are strongest for enrollees with incomes up to 200 percent of poverty, and for those with incomes under 151 percent of poverty, the cost-sharing subsidies effectively result in coverage that’s even better than a regular Platinum plan.
Andrew Sprung has been analyzing cost-sharing subsidies in each state, and he notes that Alabama’s exchange has a cost-sharing subsidy utilization rate nearly equal to Connecticut and New York, both of which have state-run exchanges (overall, a higher percentage of eligible Alabama enrollees have cost-sharing subsidies than in Connecticut, but it appears likely that Connecticut has a slightly higher cost-sharing subsidy uptake rate for enrollees under 200 percent of the poverty level).
Of the 171,641 people who enrolled in the Alabama exchange during open enrollment, 85 percent (146,482 enrollees) have household incomes under 251 percent of poverty, and were thus eligible for cost-sharing subsidies. And 84 percent of those enrollees (122,624 people) selected silver plans and obtained the cost-sharing subsidies. It’s important to note that bronze plans are less expensive than silver plan, and that sometimes leads lower-income enrollees to select bronze instead. But the bronze plans come with much higher out-of-pocket costs that can be prohibitively expensive when medical care is needed, and silver plans with built-in cost sharing subsidies generally present a much better value for eligible enrollees.
Still some chances to enroll
The 2015 open enrollment period ended Feb. 15. However, you may still be eligible to enroll.
- Did you experience a qualifying life event? If so, you are entitled to a special enrollment period to select a health plan.
- Are you a Native American? If so, you can sign up for a QHP at any time.
- Do you qualify for Medicaid? Enrollment is accepted year-round.
Otherwise, the next open enrollment period begins November 1, for coverage effective January 1, 2016.
Penalties rise for 2015
The individual mandate, which says you must have health insurance or pay a penalty, is one of the least popular features of Obamacare. However, just 1.4 percent of people will pay a penalty, according to the Congressional Budget Office.
For those who do have to pay, penalties increase for 2015. Those who don’t qualify for an exemption will have to pay the greater of:
- 2% of annual household income. The maximum penalty under this calculation method is the national average premium for a bronze plan, which is just over $3,000 according to Exhibit 1 in this Commonwealth Fund analysis.
- $325 per adult or $162.50 per child under 18. The maximum penalty per family using this method is $975.
Use the healthinsurance.org penalty calculator to see how much you may owe.
Coverage for small businesses
Through the federal Small Business Health Options Program (SHOP) exchange, small businesses with 50 or fewer employers can now shop online for health insurance coverage. Small employers and non-profit organizations can shop on their own or work through a broker or agent. After the employer defines the plan to offer, employees enroll online through the SHOP.
There is no defined open enrollment period for the SHOP marketplace. Small employers can set up a plan anytime of the year.
Nearly 125,000 found coverage in 2014
Nearly 98,000 Alabama residents signed up for qualified health plans (QHPs) during 2014 open enrollment. That was about 21 percent of estimated 464,000 people eligible to use the marketplace, according to the Kaiser Family Foundation. Nationally, about 28 percent of eligible people enrolled in a health plan through the ACA marketplaces. In addition, Kaiser also reported 22,564 Alabamans qualified for either Medicaid or the Children’s Health Insurance Program (CHIP) under existing eligibility criteria.
Alabama’s uninsured rate dropped 3.2 percentage points from 2013 to 2014, falling to 14.5 percent according to the Gallup-Healthways Well-Being Index.
How Alabama is handling health care reform
The federal government operates the health insurance marketplace in Alabama, based on Gov. Robert Bentley’s November 2012 decision against a state-run marketplace. Bentley cited annual operating costs of up to $50 million as his reason for opting for a federally operated exchange.
The decision against a state-run exchange came somewhat as a surprise. While the Republican governor consistently opposed many provisions of the Affordable Care Act, he repeatedly expressed support for a state health insurance exchange. He supported exchanges during his campaign for governor, and as governor, he used an executive order to establish the Alabama Health Insurance Exchange Study Commission. In November 2011, that commission unanimously recommended Alabama implement a state-run exchange. However, bills to establish a state-run exchange failed to pass in both the 2011 and 2012 sessions.
Alabama residents had more choices and slightly higher prices during the 2015 open enrollment period. Historically, Alabama’s health insurance market has been considered one of the least competitive in the nation.
Humana and Blue Cross and Blue Shield of Alabama, which dominates the health insurance market in the state, sold individual health insurance through the federal marketplace in Alabama for 2014. UnitedHealthcare joined the exchange for 2015, and its plans are now available through the marketplace in all 67 Alabama counties. Previously, United policies were available only outside the marketplace.
A study by the Commonwealth Fund shows Alabama premiums increased just 3 percent from 2014 to 2015, which is much less than the increases seen in the years leading up to the passage of the Affordable Care Act. Rates for individual health insurance increased about 10 percent each year between 2008 and 2010.
Alabama has not expanded Medicaid. Gov. Bentley opposed Medicaid expansion, and his position became the subject of campaign ads, editorials, billboards, and websites during 2014. Late in 2014, Bentley reintroduced a discussion on Medicaid expansion. Bentley said his administration will explore options to obtain federal Medicaid funding for a state-designed solution with a work requirement for recipients. Conservative groups promptly accused Bentley of flip-flopping.
An August 2014 study published by the Urban Institute shows the impacts of not expanding Medicaid. In Alabama, about 254,000 people will not qualify for Medicaid coverage through 2016. In terms of financial impact, the authors calculated that while Alabama would spend $1.08 billion to expand Medicaid over a ten-year period, the state is losing out on $14.4 billion in federal spending and state hospitals are losing $7.0 billion in reimbursement over the same period.
Alabama health insurance exchange links
Alabama Department of Insurance – Health Insurance Reform Information Center
State Exchange Profile: Alabama
The Henry J. Kaiser Family Foundation overview of Alabama’s progress toward creating a state health insurance exchange.