Closing the Coverage Gap

Health and Wellness

How Medicaid Expansion Could Lower Your Health Insurance Premiums

It’s safe to assume that most consumers appreciate, and even demand, pricing transparency for goods and services they acquire. Understanding all of the fees and taxes that comprise the total cost of a product is an important piece of information to know before making a purchasing decision. So, what would you do if you found out the price of a product you regularly purchase had been inflated with hidden taxes and fees by the manufacturer in an effort to recoup corporate costs they are losing in other parts of the business? This practice would seem absurd, right?

Health insurance companies (or “payers”) are utilizing a similar practice to cover the cost of uncompensated care for uninsured individuals. Payers increase the cost of private health insurance by embedding a hidden health tax in a family or individual’s annual premiums. According to a study conducted by Families USA, the annual impact of the hidden health tax on a family is approximately $1,000; and for an individual is approximately $350.[1]

The Hidden Health Tax and the Uninsured

You may be asking yourself, “what is this hidden health tax, and why am I paying it?” So, let’s unpack the issue. Many residents across the state are uninsured, which could be occurring for multiple reasons:

  • They don’t receive employed-sponsored health coverage;
  • They don’t earn enough money to qualify to purchase coverage through the marketplace exchange;
  • They earn too much money to qualify for government subsidized programs such as TennCare or Medicaid.

Currently in Tennessee, over 300,000 people are in the coverage gap created by the circumstances listed above and do not have access to health insurance. People in the coverage gap include service industry workers, single parents, the working poor, and veterans, among others. So, when these people get sick or injured, they are forced to seek health care they cannot afford. These uninsured citizens will try to pay a portion of their medical expenses, but usually cannot pay the entire bill, which means part of their cost of care goes uncompensated.

In order to mitigate these uncompensated care costs, health systems, hospitals and physicians charge payers more for the services provided to patients that have health insurance coverage. In turn, payers pass this increased cost of services onto the consumers in the form of higher premiums, which represents the hidden health tax.

Closing the Coverage Gap and Decreasing Health Insurance Premiums

A study published by in-house researchers at the Department of Health and Human Services showed a comparison between states where Medicaid was expanded and states that had not expanded the program. The finding was that insurance in the marketplace for middle-income people cost less in states that had expanded Medicaid.[2] Additionally, a separate study concluded that marketplace premiums were 7% lower in expansion states compared to non-expansion states.[3]

By closing the coverage gap in Tennessee and providing access to Medicaid for the 300,000 residents currently living without health insurance, all Tennesseans could experience an economic incentive. Beyond the economic benefits, the overall health of our state’s population would likely improve due to expanded access to cost-effective preventive care, which means fewer unnecessary trips to the emergency room and less uncompensated care.

Closing the coverage gap through Medicaid expansion represents a win-win situation for our state. We would be able to expand coverage to those people who desperately need access to health care services, while lowering the insurance premiums of those Tennesseans who are already covered.

To learn more about how closing the coverage gap in our state could positively affect all Tennesseans, please visit: www.tnjustice.org/bring-it-home-tennessee/.

[1] http://familiesusa.org/sites/default/files/product_documents/hidden-health-tax.pdf

[2] https://www.kff.org/medicaid/issue-brief/the-effects-of-medicaid-expansion-under-the-aca-updated-findings-from-a-literature-review-march-2018/

[3] https://aspe.hhs.gov/pdf-report/effect-medicaid-expansion-marketplace-premiums

 

 

Published on August 14, 2018 3:37pm

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Brittany Witt

Brittany Witt has more than 10 years of professional experience, and throughout her career has held multiple dynamic roles enabling her to hone a diverse and unique skill set. In her most recent role as Consultant with the Advisory Board, Brittany was involved in a variety of initiatives across the firm’s physician services and value-based care terrains, emphasizing client service, subject-matter expertise and data-driven solutions to address Advisory Board members’ most pressing healthcare challenges.

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