Hazard: Coverage Gaps

Patient Billing, Bad Debt and Collections

Hazard: Coverage Gaps

In May of 2009, Consumer Reports conducted an investigation into health insurance coverage gaps. They discovered a problem of such enormous proportions that they called it “hazardous” in an article entitled, “Hazardous Health Plans; Coverage Gaps can Leave You in Big Trouble
Since that time the Affordable Care Act (ACA) was enacted into law, so coverage gaps are no longer an issue, right? Wrong. Here we are six years later and Reuters (news service), Forbes and others are publishing articles on the substandard policies purchased by people who find themselves in the ACA coverage gap. Reuters, “Despite Obamacare, Gap Health Insurance Market Explodes” and Forbes, “Filling The ACA’s Coverage Gap–With Non-Qualified Health Plans”, explore the inaccessibility to the promises of the ACA and the punishing medical debt that can occur as a result of the gap.
We find ourselves in the land of “The more things change, the more they stay the same.”

Point Number One: Lack of coverage still exists

Lack of coverage is lack of coverage, regardless of the terminology used to describe it. In 2009 it was “loopholes and exclusions” that prevented medical expenses from being covered. In 2015 “high deductibles” mean medical expenses aren’t covered until patients pay large portions of the bill. Same problem, different day.

From Consumer Reports 2009:
“Many people who believe they have adequate health insurance actually have coverage so riddled with loopholes, limits, exclusions, and gotchas that it won’t come close to covering their expenses if they fall seriously ill.

From Forbes 2015:
“The strong regulatory and political focus (of the ACA) on keeping premiums from increasing “too much” forced insurers to increase deductibles, to the point that most people with ACA plans will not be able to collect benefits, even after paying all the premiums.

Point Number Two: Bad policies mean when you get sick, you pay
Bad insurance policies mean you pay when you get sick. In 2009 the problem was “affordable premiums with skimpy coverage”. In 2015, the problem is short term policies without ACA protections that can deny coverage “if applicants have pre-existing conditions”. Both have the same result- despite paying monthly insurance premiums, if you become critically ill, you are on the hook for thousands of dollars of medical bills.

From Consumers Reports 2009:
The lack of effective consumer protections in most states allows insurers to sell plans with “affordable” premiums whose skimpy coverage can leave people who get very sick with the added burden of ruinous medical debt.

From Reuters 2015:
Short-term plans provide low-cost coverage for major medical events like hospital stays, with high deductibles and out-of-pocket costs, and are subject to denial if applicants have pre-existing conditions. They do not offer the protections of Obamacare for preventive care or maternity coverage, for example.
Last but not least,
Point Three: Modest means can mean less coverage
People of modest means continue to the bear the brunt of coverage inadequacies. In 2009 the issue was the lack of good options at low cost. In 2015 the issue is two-fold;

  1.  low cost policies come with high deductibles,
  2. the refusal by some states to expand Medicaid eligibility has left thousands of people without coverage

From Consumer Reports 2009:
People of modest means in many states might have no good options for individual coverage.

From Kaiser Family Foundation 2015: In states that do not expand Medicaid, many adults will fall into a “coverage gap” of having incomes above Medicaid eligibility limits but below the lower limit for Marketplace premium tax credits.

All points lead to the intersection of the ACA and the individual states. The intention of the ACA was to expand Medicaid eligibility nationally in order to extend insurance coverage to low-income individuals. That expansion would have eliminated a coverage gap. However, in June of 2012 a Supreme Court ruling essentially made Medicaid expansion optional for states. Approximately 22 states, 11 of them in the South, chose not to expand Medicaid. As a result, nearly four million poor uninsured adults fall into the “coverage gap”. Their income is above current Medicaid eligibility but below the lower limit for Marketplace premium tax credits.

Gap-driven to short term coverage

Here’s the deal. The ACA requires every American to have insurance coverage. If a person misses an enrollment deadline, or believes that premiums are too high, the law still requires them to have coverage. As a result, many are purchasing “short term coverage”.

Here’s the catch. The majority of the short term coverage policies do not meet the requirements of the ACA. As Reuters reported, “This type of insurance is not “qualified” coverage under the ACA, which means that people who enroll in it still have to pay the federal penalty for being “uninsured” – in addition to the premium for the non-qualified health insurance.”

The cheaper premium of short term policies, despite shortcomings in coverage, has driven scores of people to purchase them. According to Reuters “the number of people applying for non-compliant, short-term health insurance policies was up more than 100 percent in 2014.” Brokers surveyed by Reuters say that the majority of people fall into two age groups, “…retirees who are looking for a low-cost plan to tide them over until Medicare kicks in at 65” and “…young, healthy people seeking low-cost catastrophic coverage- those aged 18 to 34.”

The Gap is not a pretty picture

The Kaiser Family Foundation has studied the coverage gap in detail. What they found is a sad commentary on the plight of low-income individuals in America. “The characteristics of the population that falls into the coverage gap largely mirror those of poor uninsured adults.” It is an embarrassing failure in the care of Americans in need. Here is part of the profile of those who fall into the coverage gap.

Living in the Southern states: 89% of people in the coverage gap reside in the South

  • 11 of the 22 states that have opted not to expand Medicaid eligibility are in the South.
  • 25% in Texas
  • 18% in Florida
  • 10% in North Carolina
  • 8% in Georgia

Aged over 35:

  • Over half of the people in the gap are classified either as “middle aged”- 35 to 54 or “nearly elderly” -55 to 64.
  • These are the ages of increasing health needs. “Research has demonstrated that uninsured people in this age range may leave health needs untreated until they become eligible for Medicare at age 65.”

Non-disabled adults:

  • These adults without dependent children are ineligible for Medicaid coverage in most states that have not expanded Medicaid, regardless of their income.
  • They represent 75% of the coverage gap.

Poor Parents:

  • Nearly a quarter- 24%- of people in the coverage gap are poor parents.
  • Their income places them above Medicaid eligibility levels.

Working Americans:

  • Two-thirds- 66%- are in a family with a worker
  • 54% are working themselves.
  • 52% of workers in the coverage gap work for small firms of less than 50 employees. These firms are not being subject to ACA penalties for not offering coverage.
  • A majority of workers work in industries with historically low insurance rates, such as the agriculture and service industries.

 The Elephant in the Room is Medical Debt

 If you read a selection of reports on the ACA coverage gap, you will see only a passing mention of medical debt. This is hard to believe. Medical debt is the leading cause of bankruptcy in the US. Surveys conducted on the issue regularly find that Americans can barely afford their ACA premiums, let alone covering the high deductibles of most plans. The average American family says it has about $3,000 available to cover medical costs. Yet, the deductible for a family of four is capped at $12,700.

It’s time to address the elephant in the room, and tell it that we will ignore it no longer. Affordable care is the goal. Reducing American’s crushing medical debt should be its key objective. We should not stand for the perpetuation of low-income disadvantage, nor should we accept sub-standard health care in one of the most highly developed nations in the world. Collecting medical debt that is rising to ruinous levels from people who cannot afford high deductibles in the first place in an unsustainable and unacceptable paradigm.





Filling the ACA’s Coverage Gap–With Non-Qualified Health Plans Robert Book

REUTERS http://www.reuters.com/article/2015/06/03/us-usa-health-gapinsurance-idUSKBN0OJ1G220150603

Personal Finance | Wed Jun 3, 2015 7:49am EDT Related: HEALTH, MONEY


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