Uninsured Rate at Record Low

By August 30, 2014 Uncategorized No Comments

The uninsured rates are finally down according to recent studies. The New York Times reported that more people want to and are signing up for health insurance through their employers than anticipated and it is costing big businesses like Walmart millions of dollars, which means less profits for the company. While this news is not good for the company’s shareholders, it does improve the lives of their lower income employees and their families, who previously did not have health insurance. Although companies like Walmart have always offered some type of health insurance to their full-time workers, many employees opted not to sign up for insurance and have the extra cost of the shared premium amount deducted from their paychecks until now.

Now that there is a penalty for not complying with the Affordable Care Act’s requirement that every individual have health insurance, there is a trend for many workers to sign up for health insurance through their employer’s group healthcare policy to share the costs of the premiums instead of going through the federal or state health insurance marketplace websites.

The effect of the Affordable Care Act on the health insurance industry is that people who were locked out of insurance previously due to their medical history, a pre-existing condition, their financial situation or some other factor can now sign up for all types of plans whether through  an employer or the health insurance exchange.

A recent Gallup Poll from May 2014 indicated that of the 14,700 Americans interviewed for the poll from April 1st to 30th, in 2014, 13.4 percent indicated that they were presently uninsured. The Gallup Poll indicated that when they interviewed people in the previous month of March, 15 percent of the sample group indicated that they were uninsured. The original deadline to enroll during the 2014 enrollment period was March 31, 2014; however the deadline was extended to April 15, 2014 for people who qualified for a Special Enrollment Period or who had technical difficulties and could not complete their application by March 31st.  The poll results from April 2014 reflects the lowest monthly uninsurable rate that has been recorded since Gallup and Healthways began tracking the uninsured rates in the United States, which was in January of 2008.

Before Gallup recorded April’s uninsured rate of 13.4 percent, the previous record was held in September 2008 when the data collected from interviews at that time indicated that the uninsured rate was 13.9 percent.

Before the individual mandate went into effect in 2014, insider’s best guess was that there were approximately 44 million people who were uninsured in the United States. Keeping in mind that the pool of people interviewed for this Gallup Poll was only a fraction of the total number of estimated uninsured Americans in the United States, the results are promising.

Current Downward Trend for Uninsured Rates

One of President Obama’s original speeches about healthcare reform said that although the administration knew that the uninsured rate in America was too high, it was not immediately clear how to get people to sign up for health insurance if they did not have to. The solution to this problem was the individual mandate, which is referred to in the actual language of the Affordable Care Act as the shared responsibility payment. The individual mandate provision of the ACA is designed to encourage Americans to sign up for health insurance or face a tax penalty for not complying with the law.

According to the Gallup Poll’s records, the uninsured rate in March 2010, which is when the Affordable Care Act was signed into law, was approximately 16.4 percent. The data shows that the uninsured rate held at this percentage for all of 2010 and even dipped slightly at the start of 2011 until it began to increase during the second quarter of 2011. The uninsured rate in the first quarter of 2012 started at 17.5 percent and slowly decreased over the year to 16.8 percent until it eventually increased and peaked at 18 percent in the third quarter of 2013, which runs from July to September 2013.

It was not until open enrollment for the 2014 calendar year commenced in October 2013 that the uninsured rate began to plummet. The downward trend following the enactment of the Affordable Care Act shows that people needed incentives and lower cost health insurance policies in order to get on board with health insurance.

 

Where Did the Uninsured Rate Fall the Most

The uninsured rate was lower in April than in the fourth quarter of 2013 in almost every demographic. The rate dropped more among African Americans than all other demographic groups when it decreased 7.1 percentage points to 13.8 percent. While Hispanics were expected to benefit the most from the Affordable Care Act because they are a group with the highest uninsured rate, their uninsured rate only went from 33 percent to 26.5 percent. This is still the highest uninsured rate for the demographic groups.

Since the fourth quarter of 2013, the uninsured rate for lower-income Americans or those with an annual household income of less than $36,000 also dropped another 5.5 points to 25.2 percent. This is what President Obama was hoping for when he originally proposed health reform.

Young Americans were another key demographic to the success of the Affordable Care Act. The 18-34 year old demographic was very important to the vitality of the Affordable Care Act because young Americans would pay in more for health insurance than they would take out for medical claims, which helps to cover the increased cost of medical claims made by older Americans, who are less healthy. Older demographics typically pay in less than they take out for medical claims. From the fourth quarter of 2013, the uninsured rate between 18 and 25-year-olds fell 4.5 points to just 19 percent.

One of the lowest rates is among 35- to 64-year-olds. The rate fell 4.5 points since the ACA was enacted. Now the rate is at 13.2 percent. The uninsured rate among those age 26 to 34 also decreased but this was not as rapid as the other demographics.

 

What are the Implications of New Uninsured Rates

The uninsured rate was 2.2 points lower in April than the first quarter of 2014. This indicates the mass surge of people signing up for healthcare to meet the March deadline. A large percentage of adults now have healthcare for the first time because of the Affordable Care Act and those numbers are likely to grow with the next open enrollment period for 2015.

There are actually a few different reasons why the uninsured rate will decline, go up or neutralize in the next few months. Factors that may push this rate down including the fact that some states are choosing to expand Medicaid eligibility after all. The ACA provision requiring all states to expand Medicaid eligibility from those who made under 100% of the Federal Poverty Level to 133% of the Federal Poverty Level or fear losing all federal funding towards the program was deemed Unconstitutional by the United States Supreme Court in June 2012 and was stricken from the law. This meant that it was up to the states to voluntarily expand the Medicaid eligibility requirements if they wanted to.  Originally, multiple states did not want to expand Medicaid because they disagreed with the Affordable Care Act.

Other states expanded Medicaid to allow those who made less than 133 percent of the federal poverty level to receive health insurance through the Medicaid program.

Gallup research also shows that the uninsured rate on average has dipped more recently in states that did elect to expand Medicaid and also run their own health insurance exchanges while it hasn’t in states that did not.

Other Americans have bought insurance to avoid the penalty increases that will occur yearly. The tax penalty established by the individual mandate was supposedly included to help with the costs of the new health reform law. The Gallup reports also found that higher fines would prompt Americans to sign up more in the future. Currently the Affordable Care Act stipulates that the penalty will continue to increase year by year. Currently, the amount is $95 per uninsured adult or 1 percent of household income minus the first $10,150 for a single person or $20,300 for a married couple who files jointly according to the Huffington Post. If you have children who are not insured, the penalty is $47.50 per child. These penalties go up every year.

In 2015, the penalty will increase to 2 percent of your income or $325 per uninsured adult. In 2016, it’s 2.5% of income or $695 per uninsured adult. After 2016 the penalty will be adjusted for inflation. If you are uninsured for just part of the year, 1/12th of the yearly penalty applies to each month you’re uninsured. However, if you are uninsured less than 3 months, you will not be assessed any tax penalty because you fall under one of the ACA’s exemptions. People who are assessed a tax penalty for not complying with the law will have the tax penalty either deducted from their federal income tax refund or added to the amount that they owe the IRS for that calendar year’s federal income tax return.

 

Risks of Forcing Americans to Sign Up with Individual Mandate

One risk of making Americans sign up for health insurance plans to avoid the individual mandate is that they won’t be able to pay the premiums or will just choose not pay their premiums. Under the ACA, after a person fails to make the monthly premium for a 90 days, the health insurance carrier can drop the person from their plan, which means that the person is uninsured again and will be penalized for not complying with the law if they do not get new insurance in three months or less.

It’s possible that the uninsured rate may stay the same until early 2015 when the open enrollment period closes once more and those who are without insurance currently start their new policies.

Other provisions of the healthcare law have yet to go into effect. For example, employers will have to provide health insurance to all their employees by 2015. These provisions may also affect the numbers of uninsured.

 

How the ACA Decreased Uninsured Rates

While the ACA may cost employers money, the new uninsured rates illustrate how the Affordable Care Act is building on the country’s existing insurance system rather than trying to start new with something different. The law did not create new public insurance programs, but it did produce incentives to encourage people to enroll in health coverage.

Even though the ACA’s most widely known and disliked provision is the individual mandate, it’s one of the reasons that more people are signing up for health insurance who didn’t have it before. The individual mandate states that you must pay a tax penalty for each month you do not have health insurance after failing to sign up during an enrollment period.

The ACA also encourages more workers who were offered health insurance in the past to take the offer. In addition, the ACA also encouraged employers to offer coverage to workers. Many other Americans signed up for insurance on their own because they were finally able to afford a health insurance plan and knew they wouldn’t be denied coverage.

Many predict that 2015 will see a higher number of uninsured Americans finding health insurance plans as the reality of the tax penalties sets in. It’s still unclear whether changes will be made to the enrollment period so that it is more in line with tax season. Many people may choose the tax penalty over getting insurance because they think it’s the cheaper option, but how cheap is it to go without insurance especially if you have to pay the fee?

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