Small businesses are struggling to cover the high costs of healthcare for their employees after a year of COVID-19, according to a new poll sponsored by the Small Business Majority and patient advocacy group Families USA.
More than one in three small businesses owners said it’s a challenge getting coverage for themselves and their workers. That pain is particularly acute among Black, Asian American and Latino businesses, which have fewer resources than their White counterparts, SBMfound.
As a result, small businesses want policymakers to expand coverage access and lower medical costs, beyond the temporary fixes included in the sweeping $1.9 trillion American Rescue Plan passed by Congress earlier this month.
Providing health insurance can be pricey for small employers, a challenge that’s been exacerbated by the pandemic and its subsequent economic downturn.
Accessing health insurance has been a major barrier over the course of COVID-19, the national survey of 500 businesses with 100 employees or fewer in November found. The poll, conducted by Lake Research Partners for SBM and Families USA, found many such businesses have had to slash benefits during the pandemic. Among small business owners that have reduced insurance benefits, 36% have trimmed their employer contribution for medical premiums and 56% switched to a plan with a lower premium.
Additionally, one in five small business owners say they plan to change or lower coverage in the next few months, while only about a quarter have been able to maintain coverage for temporarily furloughed employees.
The situation is bleaker for minority-owned small businesses. Overall, 34% say accessing health insurance has been a top barrier during COVID-19, but that figure rises to 50%, 44% and 43% for Black, Asian American and Latino business respondents, SBM, which represents some 80,000 small businesses nationwide, said.
That’s in line with past SBM polling finding non-white entrepreneurs are more likely to face temporary or permanent closure in the next few months than their white counterparts, and are also more likely to struggle with rent, mortgage or debt repayments.
Washington did allocate a significant amount of financial aid for small businesses last year, and the ARP includes numerous provisions including increased subsidies for health insurance premiums for two years, and extended COBRA coverage for laid off employees through September.
But respondents to this latest polling urged for more long-term support.
The most popular policy proposal was bringing down the cost of prescription drugs, with 90% of businesses saying they supported the measure and 54% saying they were in strong support. Protecting coverage for people with pre-existing conditions was also popular, with 87% of small business owners in total support and 51% strongly supporting.
Three-fourths of small business owners strongly support a public health insurance option, while 73% support expanding Medicaid eligibility in all states and 66% support letting people buy into Medicare starting at age 55.
A survey of large to mid-size employers from the National Alliance of Healthcare Purchaser Coalitions published Wednesday found at least three-fourths of employers support drug price regulation, surprise billing regulation, hospital price transparency and hospital rate regulation.
The Affordable Care Act (ACA) made historic strides in expanding access to health insurance coverage by covering an additional 20 million Americans.President Joe Biden ran on a platform of building upon the ACA and filling in its gaps. With Democratic majority in the Senate, aspects of his health care plan could move from idea into reality.
The administration’s main focus is on uninsurance, which President Biden proposes to tackle in three main ways: providing an accessible and affordable public option, increasing tax credits to help lower monthly premiums, and indexing marketplace tax credits to gold rather than silver plans.
However, underinsurance remains a problem. Besides the nearly 29 million remaining uninsured Americans, over 40% of working age adults are underinsured, meaning their out-of-pocket cost-sharing, excluding premiums, are 5-10% of household income or more, depending on income level.
High cost-sharing obligations—especially high deductibles—means insurance might provide little financial protection against medical costs beneath the deductible. Bills for several thousand dollars could financially devastate a family, with the insurer owing nothing at all. Recent trends in health insurance enrollment suggest that uninsurance should not be the only issue to address.
A high demand for low premiums
Enrollment in high deductible health plans (HDHP) has been on a meteoric rise over the past 15 years, from approximately 4% of people with employer-sponsored insurance in 2006 to nearly 30% in 2019, leading to growing concern about underinsurance. “Qualified” HDHPs, which come with additional tax benefits, generally have lower monthly premiums, but high minimum deductibles. As of 2020, the Internal Revenue Service defines HDHPs as plans with minimum deductibles of at least $1,400 for an individual ($2,800 for families), although average annual deductibles are $2,583 for an individual ($5,335 for families).
A common prescription has been to expand access to Health Savings Accounts (HSAs), with employer and individual contributions offsetting higher upfront cost-sharing. Employers often contribute on behalf of their employees to HSAs, but for individuals in lower wage jobs without such benefits or without extra income to contribute themselves, the account itself may sit empty, rendering it useless.
A recent article in Health Affairs found that HDHP enrollment increased from 2007 to 2018 across all racial, ethnic, and income groups, but also revealed that low-income, Black, and Hispanic enrollees were significantly less likely to have an HSA, with disparities growing over time. For instance, by 2018, they found that among HDHP enrollees under 200% of the federal poverty level (FPL), only 21% had an HSA, while 52% of those over 400% FPL had an HSA. In short, the people who could most likely benefit from an HSA were also least likely to have one.
If trends in HDHP enrollment and HSA access continue, it could result in even more Americans who are covered on paper, yet potentially unable to afford care.
Addressing uninsurance could also begin to address underinsurance
President Biden’s health care proposal primarily addresses uninsurance by making it more affordable and accessible. This can also tangentially tackle underinsurance.
To make individual market insurance more affordable, Biden proposes expanding the tax credits established under the ACA. His plan calls for removing the 400% FPL cap on financial assistance in the marketplaces and lowering the limit on health insurance premiums to 8.5% of income. Americans would now be able to opt out of their employer plan if there is a better deal on HealthCare.gov or their state Marketplace. Previously, most individuals who had an offer of employer coverage were ineligible for premium subsidies—important for individuals whose only option might have been an employer-sponsored HDHP.
Biden also proposes to index the tax credits that subsidize premiums to gold plans, rather than silver plans as currently done.This would increase the size of these tax credits, making it easier for Americans to afford more generous plans with lower deductibles and out-of-pocket costs, substantially reducing underinsurance.
The most ambitious of Biden’s proposed health policies is a public option, which would create a Medicare-esque offering on marketplaces, available to anyone. As conceived in Biden’s proposal, such a plan would eliminate premiums and having minimal-to-no cost-sharing for low-income enrollees; especially meaningful for under- and uninsured people in states yet to expand Medicaid.
Moving forward: A need to directly address underinsurance
More extensive efforts are necessary to meaningfully address underinsurance and related inequities. For instance, the majority of persons with HDHPs receive coverage through an employer, where the employer shares in paying premiums, yet cost-sharing does not adjust with income as it can in the marketplace. Possible solutions range from employer incentives to expanding the scope of deductible-exempt services, which could also address some of the underlying disparities that affect access to and use of health care.
The burden of high cost-sharing often falls on those who cannot afford it, while benefiting employers, healthy employees, or those who can afford large deductibles. Instead of encouraging HSAs, offering greater pre-tax incentives that encourage employers to reabsorb some of the costs that they have shifted on their lower-income employees could prevent the income inequity gap from widening further.
Under the ACA, most health insurance plans are required to cover certain preventative services without patient cost-sharing. Many health plans also exempt other types of services from the deductible – from generic drugs to certain types of specialist visits – although these exemptions vary widely across plans. Expanding deductible-exempt services to include follow-up care or other high-value services could improve access to important services or even medication adherence without high patient cost burden. Better educating employees about what services are exempt would make sure that patients aren’t forgoing care that should be fully covered.
Health insurance is complicated. Choosing a plan is only the start. More affordable choices are helpful only if these choices are fully understood, e.g., the tradeoff between an HDHP’s lower monthly premium and the large upfront out-of-pocket cost when using care. Investing in well-trained, diverse navigators to help people understand how their options work with their budget and health care needs can make a big difference, given that low health insurance literacy is related to higher avoidance of care.
The ACA helped expand coverage, but now it’s time to make sure the coverage provided is more than an unused insurance card. The Biden administration has the opportunity and responsibility to make progress not only on reducing the uninsured rate, but also in reducing disparities in access and patient affordability.
With nearly 30% of workers now having a high deductible health plan and a typical family being responsible for on average the first $8,000 of costs, consumers are increasingly weighing care versus cost. Historically, with a small copay, you would conveniently take care of an ailment without shopping around, but with the average person now bearing the brunt of the initial costs, wouldn’t you want to know how much a service costs and what other providers are charging before you “buy” the service?
CMS believes“consumers should be able to know, long before they open a medical bill, roughly how much a hospital will charge for items and services it provides.” Cue the hospital price transparency rule that just went into effect January 1, 2021. Hospitals are now required to post their standard charges, including the rates they negotiate with insurers, and the discounted price a hospital is willing to accept directly from a patient if paid in cash. As a consumer, the intent is to make it “easier to shop and compare prices across hospitals and estimate the cost of care before going to the hospital.”
There are a few different angles to analyze here:
Are hospitals following the rules?
Each hospital must post online a comprehensive machine readable file with all items and services, including gross charges, actual negotiated prices with insurers, and the cash price for patients who are uninsured. Additionally, hospitals must post the costs for 300 common “shoppable” services in a “consumer-friendly format.” Some hospitals and health systems have done a good job at posting these prices in a digestible format, like the Cleveland Clinic or Sutter Health, but others have posted complicated spreadsheets, relied on online cost estimator tools, or simply not posted them at all. An analysis from consulting firm ADVI of the top 20 largest hospitals in the U.S. found that not all of them appeared to completely comply with this mandate. In some instances, data was not able to be downloaded in a useable format, others did not post the DRG or service codes, and the variability in the terms/categories used simply created difficulty in comparing pricing information across hospitals. CMS has stated that a failure to comply with the rules could result in a fine of up to $300 per day. As with most new rules, there are growing pains, and hospitals will likely get better at this over time, assuming the data is being used for its original intent.
Is this helpful to consumers?
Consumers will able to see the variation in prices for the exact same service or procedure between hospitals and get an estimate of what they will be charged before getting the care. But how likely is the average person to go to their hospital’s website, look at a price, and change their decision about where to get care? In addition, awareness of these price transparency tools is still low among consumers. Frankly, it is competitors and insurers that have been first in line to review the data. Looking through a number of hospital websites, and even certain state agency sites that have done a good job at summarizing the costs, like Florida Health Price Finder, the price transparency tools are helpful, but appear to be much more suited for relatively standardized services that can be scheduled in advance, like a knee replacement. It’s highly unlikely you will be telling your ambulance driver what hospital to go to based on cost while in cardiac arrest…Plus, it’s all still confusing – even physicians have shared their bewilderment, when trying to decipher and compare pricing. Conceptually, price transparency should be beneficial to consumers, but it will take time; and it will need to involve not just the hospitals posting rates, but the outpatient care facilities as well. Knowing what you will pay before you decide to go to a physician’s office or a clinic or an urgent care or an ED will hopefully help drive consumers to make more educated decisions in the future.
Will this ultimately drive down costs?
I sure hope so. Revealing actual negotiated prices between hospitals and insurers should push the more expensive hospitals in the area to reduce prices, especially if consumers start using the other hospitals, instead. However, it could also have an inverse effect, with lower cost hospitals insisting on a payment increase from insurers; thereby driving up costs. In the end, as has historically been the case, the market power of certain providers will likely dictate the direction of costs in a given region. That is, until both price AND quality become fully transparent and the consumer is armed with the tools to shop for the best care at the lowest cost – consumerism here we come.
A growing body of research keeps undermining a key tenet of health economics, Axios’ Sam Baker writes — the belief that requiring patients to pay more out of their own pockets will make them smarter consumers, forcing the health care system to deliver value.
Driving the news:Even a seemingly modest increase in out-of-pocket costs will cause many patients to stop taking drugs they need, according to a new working paper from Harvard economist Amitabh Chandra.
Raising Medicare recipients’ out-of-pocket costs by just $10 per prescription led to a 23% drop in overall drug consumption, and to a 33% increase in mortality.
And seniors weren’t simply ditching “low-value” drugs. People at high risk for heart attacks or strokes cut back on statins and blood-pressure medications even more than lower-risk patients.
Between the lines: This research focuses on Medicare’s drug benefit, but higher cost-sharing is all the rage throughout the system, and there’s little evidence that it has generated “smarter shoppers.”
Patients with high-deductible plans — increasingly common in the employer market — don’t shop around for the best deal, which is all but impossible to do in many cases even if you wanted to try.
In swing states from Georgia to Arizona, the Affordable Care Act — and concerns over protecting preexisting conditions — loom over key races for Congress and the presidency.
“I can’t even believe it’s in jeopardy,” says Noshin Rafieei, a 36-year-old from Phoenix. “The people that are trying to eliminate the protection for individuals such as myself with preexisting conditions, they must not understand what it’s like.”
In 2016, Rafieei was diagnosed with colon cancer. A year later, her doctor discovered it had spread to her liver.
“I was taking oral chemo, morning and night — just imagine that’s your breakfast, essentially, and your dinner,” Rafieei says.
In February, she underwent a liver transplant.
Rafieei does have health insurance now through her employer, but she fears whether her medical history could disqualify her from getting care in the future.
“I had to pray that my insurance would approve of my transplant just in the nick of time,” she says. “I had that Stage 4 label attached to my name and that has dollar signs. Who wants to invest in someone with Stage 4?”
“That is no way to feel,” she adds.
After doing her research, Rafieei says she intends to vote for Joe Biden, who helped get the ACA passed in this first place.
“Health care for me is just the driving factor,” she says.
Even 10 years after the Affordable Care Act locked in a health care protection that Americans now overwhelmingly support — guarantees that insurers cannot deny coverage or charge more based on preexisting medical conditions — voters once again face contradicting campaign promises over which candidate will preserve the law’s legacy.
A majority of Democrats, independents and Republicans say they want their new president to preserve the ACA’s provision that protects as many as 135 million people from potentially being unable to get health care because of their medical history.
President Trump has pledged to keep this in place, even as his administration heads to the U.S Supreme Court the week after Election Day to argue the entire law should be struck down.
“We’ll always protect people with preexisting,” Trump said in the most recent debate. “I’d like to terminate Obamacare, come up with a brand new, beautiful health care.”
And yet the Trump administration has not unveiled a health care plan or identified any specific components it might include. In 2017, the administration joined with congressional Republicans to dismantle the Affordable Care Act, but none of the GOP-backed replacement plans could summon enough votes. The Republicans’ final attempt, a limited “skinny repeal” of parts of the ACA, failed in the Senate because of resistance within their own party.
In an attempt to reassure wary voters, Trump recently signed an executive order that asserts protections for preexisting conditions will stay in place, but legal experts say this has no teeth.
“It’s basically a pinky promise, but it doesn’t have teeth,” says Swapna Reddy, a clinical assistant professor at Arizona State University’s College of Health Solutions. “What is the enforceability? The order really doesn’t have any effect because it can’t regulate the insurance industry.”
Since the 2017 repeal and replace efforts, the health care law has continued to gain popularity.
Public approval is now at an all-time high, but polling shows many Republicans still don’t view the ACA as synonymous with its most popular provision — protections for preexisting conditions.
Democrats hope to change that.
“If you have a preexisting condition — heart disease, diabetes, breast cancer — they are coming for you,” said Biden’s running mate, California Sen. Kamala Harris, during her recent debate with Vice President Pence.
Voters support maintaining ACA’s legal protections
In key swing states, many voters say protecting preexisting conditions is their top health concern.
Rafieei, the Phoenix woman with colon cancer, still often has problems getting her treatments covered. Her insurance has denied medications that help quell the painful side effects of chemotherapy or complications related to her transplant.
“During those chemo days, I’d think, wow, I’m really sick, and I just got off the phone with my pharmacy and they’re denying me something that could possibly help me,” she says.
Because of her transplant, she will be on medication for the rest of her life, and sometimes she even has nightmares about being away and running out of it.
“I will have these panic attacks like, ‘Where’s my medicine? Oh my god, I have to get back to get my medicine?'”
Election season and talk of eliminating the ACA has not given Rafieei much reassurance, though.
“I cannot stomach politics. I am beyond terrified,” she says.
And yet she plans to head to the polls — in person — despite having a compromised immune system.
“It might be a long day. But you know what? I want to fix whatever I can,” she says.
A few days after she votes, she’ll get a coronavirus test and go in for another round of surgery.
A key health issue in political swing states
Rafieei’s home state of Arizona is emblematic of the political contradictions around the health care law.
The Republican-led state reaped the benefits of the ACA. Arizona’s uninsured rate dropped considerably since 2010, in part because it expanded Medicaid.
But the state’s governor also embraced the Republican effort to repeal and replace the law in 2017, and now Arizona’s attorney general is part of the lawsuit that will be heard by the Supreme Court on Nov. 10 that could topple the entire law.
Depending on how the Supreme Court rules, ASU’s Reddy says any meaningful replacement for preexisting conditions would involve Congress and the next president.
“At the moment, we have absolutely no national replacement plan,” she says.
Meanwhile, some states have passed their own laws to maintain protections for preexisting conditions, in the event the ACA is struck down. But Reddy says those vary considerably from state to state.
For example, Arizona’s law, passed just earlier this year, only prevents insurers from outright denying coverage — consumers with preexisting conditions can be charged more.
“We are in this season of chaos around the Affordable Care Act,” says Reddy. “From a consumer perspective, it’s really hard to decipher all these details.”
As in the congressional midterm election of 2018, Democrats are hammering away at Republican’s track record on preexisting conditions and the ACA.
In Arizona, Mark Kelly, the Democratic candidate running for Senate, has run ads and used every opportunity to remind voters of Republican Sen. Martha McSally’s votes to repeal the law.
In Georgia, Democratic challenger Jon Ossoff has taken a similar approach.
“Can you look down the camera and tell the people of this state why you voted four times to allow insurance companies to deny us health care coverage because we may suffer from diabetes or heart disease or have cancer in remission?” Ossoff said during a debate with his opponent, Republican Sen. David Purdue.
Republicans have often tried to skirt health care as a major issue this election cycle because there isn’t the same political advantage to pushing the repeal and replace argument, says Mark Peterson, a professor of public policy, political science and law at UCLA.
“It’s political suicide, there doesn’t seem to be any real political advantage anymore,” says Peterson.
But the timing of the Supreme Court case — exactly a week after election day — has somewhat obscured the issue for voters.
Republicans have chipped away at the health care law by reducing the individual mandate — the provision requiring consumers to purchase insurance — to zero dollars.
The premise of the Supreme Court case is that the ACA no longer qualifies as a tax because of this change in the penalty.
“It is an extraordinary stretch, even among many conservative legal scholars, to say that the entire law is predicated on the existence of an enforced individual mandate,” says Peterson.
The court could rule in a very limited way that does not disrupt the entire law or protections for preexisting conditions, he says.
Like many issues this election, Peterson says there is a big disconnect between what voters in the two parties believe is at stake with the ACA.
“Not everybody, particularly Republicans, associates the ACA with protecting preexisting conditions,” he says. “But it is pretty striking that overwhelmingly Democrats and Independents do — and a number of Republicans — that’s enough to give a significant national supermajority.”