With subsidies rescued from the brink by last week's landmark SCOTUS decision, some are now turning to the question of how much subsidies are truly contributing to the push toward affordable healthcare.
Clearly, the impact is immense given that of the 7 million people participating in the federal health insurance marketplace, 87% are utilizing subsidies that cover about three-fourths of the price of the average premium. In that sense, subsidies are indeed serving their intended goal of drawing in health insurance enrollees—particularly many who are relatively young and healthy—and making their premiums more manageable.
Affordability suspect
However, as critics point out, that's only the beginning of the story. Among concerns are that even with affordable premiums, many people face such high deductibles and other out of pocket costs that they wonder whether it's worth maintaining a policy and may continue to forego care. It remains to be seen whether subsidies will provide sufficient relief to convince people to continually re-enroll, especially as premiums are expected to climb.
So, even though more people can afford "coverage," can more people really afford healthcare?
Among those concerned is former Congressman and National Association of Insurance Commissioners Chair Earl Pomeroy, now Senior Counsel at Alston & Bird.
During a media conference call provided by Alston & Bird attorneys, Pomeroy told Healthcare Dive, "There's going to be a debate in the future about whether or not there's adequacy of coverage, or people are still going bankrupt even though they had a policy because they had this out of pocket exposure.
"I think that's a debate that's inevitably going to come, but given that most of the people participating in the exchange coverage—some several million of them—are doing so through the benefit of the premium subsidy, I'd say it's working for a good many."
System fluctuations
Additional concerns revolve around the complexity of subsidies. Some note that it can be difficult for people, particularly those who are low-income and have fluctuation in their work, to accurately predict their future earnings in order to secure an appropriate subsidy. Those who do not match their predictions can end up having to return money to the government.
According to Alston & Bird partner Colin Roskey, government oversight of subsidies has shown "many instances" in which they have been applied for and been delivered, but later deemed too excessive, requiring individuals to pay them back.
"The system by which individuals whose income may fluctuate and who apply for a subsidy and then subsequently have to reconcile that against a future change in their income creates oversight problems for the Internal Revenue Service that I think probably need more streamlining going forward," he said during the firm's conference call. He adds that Congress often looks at subsidy recaptures as a way to potentially finance other healthcare priorities.
Additionally, as Modern Healthcare notes, a recent OIG report finds that the CMS has ineffectively managed subsidies and cost-sharing reductions, leading to potential errors in the billions being paid.
"I think it's acknowledged that the system isn't perfect," Roskey says, but he echoes the view that it is an essential element in the goal of the Affordable Care Act and of universal coverage.