Dec. 16, 2010
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Enrolling these apparently healthy uninsured people is likely to be challenging but essential to avoiding adverse selection, or enrolling sicker-than-average people, in the exchanges, according to the study funded by the Robert Wood Johnson Foundation. Otherwise, health insurance costs in the exchanges could be higher than expected.
However, contrary to popular perception, many of these healthy and low-cost uninsured people view themselves as risk-averse, the study found, which could motivate them to gain coverage in the absence of health or access problems. And, most uninsured people believe they need health coverage, although fewer believe that health insurance is currently worth the cost, a situation that could change for many once premium subsidies are available in 2014.
“The findings suggest that many of the young and healthy uninsured do not feel as invincible as is commonly assumed and—given affordable premiums—they would be willing to pay for coverage they don’t immediately need to avoid catastrophic costs down the road,” said HSC Senior Researcher Peter J. Cunningham, Ph.D., the study author.
The study describes the population that will be eligible to receive premium subsidies through the new insurance exchanges—gross family incomes between 138 percent and 400 percent of poverty—focusing on the uninsured who currently have no access to employer-sponsored coverage and who will be ineligible for expanded Medicaid coverage.
Along with the creation of state-based insurance exchanges and health insurance tax credits for people ineligible for employer-sponsored or public coverage, the Patient Protection and Affordable Care Act of 2010 includes an individual mandate for most people to obtain coverage. A federal judge earlier this week ruled the individual mandate was unconstitutional, setting the stage for the U.S. Supreme Court to decide the matter ultimately.
However, even with the individual mandate as currently structured, the penalty for not obtaining insurance would cost less than the after-subsidy premium many uninsured people would pay for a low-cost exchange plan.
“Regardless of the fate of the individual mandate, people’s decision to enroll likely will depend on whether they believe coverage is affordable and the expected benefits outweigh the cost,” Cunningham said.
Based on nationally representative household surveys, the study’s findings are detailed in a new HSC Research Brief—Who Are the Uninsured Eligible for Premium Subsidies in the Health Insurance Exchanges?—available online at www.hschange.org/CONTENT/1170/.
Many uninsured people eligible to receive subsidies on the exchanges will be motivated to enroll either because of their high need for medical care or because they recently experienced problems accessing care or paying medical bills.
Overall, about 40 percent of uninsured people eligible to receive subsidies through the exchanges had chronic conditions or reported their health as fair or poor. Many of these individuals also reported not getting or delaying needed medical care in the past year (65.7%) or problems paying medical bills (53.6%), providing additional motivation to enroll in health insurance They also on average spent almost $1,000 out of pocket on medical care in the year prior to the survey, according to the study.
An additional 28.2 percent of uninsured people eligible for subsidies reported excellent or good health and no chronic conditions but did report problems getting needed medical care or problems paying medical bills in the past year. Although the survey data do not indicate the reasons or medical conditions related to their access and medical bill problems, they spent almost $1,400 out of pocket on medical care in the past year, the study found.
The Center for Studying Health System Change is a nonpartisan policy research organization committed to providing objective and timely research on the nations changing health system to help inform policy makers and contribute to better health care policy. HSC, based in Washington, D.C., is funded in part by the Robert Wood Johnson Foundation and is affiliated with Mathematica Policy Research.