Report: ‘Family Glitch’ In Obamacare To Impact 1.9 Million Americans – Washington Free Beacon
Vague language within Obamacare will result in nearly 2 million Americans being unable to afford health insurance, according to a new report by the American Action Forum (AAF).
The so-called “family glitch” occurs when an individual is offered health insurance through their employer but the plan is not extended to the rest of their family. Due to the Internal Revenue Service’s (IRS) interpretation of the law, other immediate family members are not eligible to receive subsidies for insurance, even if their income is below the federal poverty level.
The AAF has estimated that 1.93 million Americans will be affected by the glitch, making it “practically impossible” for them to obtain affordable health care coverage.
“The ‘Family Glitch,’ as it has become known, is an odd and particularly problematic side-effect of the Affordable Care Act (ACA),” the report said. “Since several provisions of the law are rather ambiguous, they unfortunately combine to create a perfect storm where obtaining affordable health insurance is practically impossible.”
Under Obamacare, Americans below 138 percent of the poverty line are eligible for Medicaid coverage, and anyone up to 400 percent of the poverty level can also receive subsidies to help pay for insurance purchased through the health exchange.
However, this provision does not apply to families who have been offered employer-sponsored insurance (ESI), even if it is only offered to the individual employee.
“This provision of the law lacks clarity on the point of whether or not the coverage offered must be family coverage, or whether individual coverage is sufficient,” the AAF said. “The Internal Revenue Service (IRS), through rule making, has interpreted the statute as only requiring an employer to offer individual coverage, and pegged affordability at 9.5 percent of the employee’s household income. The glitch occurs when one (or both) spouses are offered affordable individual ESI under the IRS definition, but family coverage is either not offered or is unaffordable.”
“Spouses and children of an employee offered ESI could be unable to afford the employer plan, but because it is offered to one family member, the rest are made ineligible for subsidies in the Exchanges,” the report added.
Using census data from April 2013, AAF estimated 947,000 spouses and 984,000 children could fall into this category, and left uninsured. The glitch will affect up to 428,000 women and 519,000 adult men.
If Children’s Health Insurance Program (CHIP) funding expires, 2.28 million children would also be affected, according to AAF.
The provision could have unintended consequences for employees in the middle class, forcing them to not accept higher paying jobs out of fear of losing subsidy eligibility to pay for their family’s health insurance.
The AAF also said the glitch could result in families choosing to separate or divorce, in order to keep subsidies.
“The family glitch is just one of many problems that will inevitably arise from the ACA’s complete restructuring of the health care system,” the report concluded. “It is an unintended consequence that creates hardship and perverse incentives for American families struggling to obtain affordable health insurance. This year alone 1.93 million Americans will be impacted by this glitch and that number will likely increase as the employer mandate goes into effect.”
Lowest-Cost Insurer Drops From Minnesota Exchange – Yahoo News
The insurance company that grabbed the most customers on Minnesota’s health care exchange by offering the lowest rates told state officials Tuesday that it’s pulling out of MNsure, a major blow to the exchange as the next open enrollment period approaches.
The decision by Golden Valley-based PreferredOne may mean higher rates and again puts the troubled exchange front-and-center in Minnesota’s governor and House elections.
MNsure officials said the company’s exit won’t affect health coverage through the state-run exchange. The state will send out notices early next month to the nearly 30,000 people who enrolled in PreferredOne through MNsure to outline the next steps – customers can transition to another MNsure health plan or renew with PreferredOne, in which case they’ll no longer be eligible for government subsidies.
PreferredOne had a cumulative total of 59 percent of the private-plan market for MNsure enrollees through early August. Blue Cross and Blue Shield of Minnesota had 23 percent, HealthPartners 12, Medica 5 percent and UCare 1.
MNsure CEO Scott Leitz said he’s had no word any of the four remaining companies are mulling an exit. Open enrollment begins Nov. 15.
Despite a launch last year marred by technical problems and long call center waits, Democratic Gov. Mark Dayton’s administration has called MNsure a success because it helped reduce the ranks of uninsured Minnesotans by nearly 41 percent to a record low while offering some of the lowest premium rates in the country. More than 327,000 Minnesotans have enrolled through MNsure since it went live Oct. 1, including nearly 55,000 in private plans. Most enrollees are in the publicly run Medicaid and MinnesotaCare programs for lower-income people.
In a statement, Dayton cast the company’s exit as a result of its own low rates.
PreferredOne didn’t return calls from The Associated Press.
Company spokesman Steve Peterson told KSTP-TV, which first reported the decision, that staying on MNsure wasn’t financially or administratively sustainable. The membership they gained through MNsure was small, but was taking “a significant amount of our resources” to administer, Peterson said.
Republicans called it the latest sign of systemic problems in MNsure, an issue they plan to use to bolster their election-year pitch to take back control of the House and the defeat Dayton. Rep. Joe Hoppe, R-Chaska, said Tuesday’s news makes it clear Democrats have mismanaged the state’s health care overhaul.
“If you tell your average Minnesotan that we spent $160 million to develop a website and it doesn’t work, I think it makes a pretty strong argument for new management, not only in the state House, but in the governor’s office as well,” Hoppe said.
But Leitz and MNsure board chair Brian Beutner said it was proof the exchange is working as a competitive marketplace. Both officials acknowledged the exchange’s rocky rollout, but Beutner suggested PreferredOne’s low rates led to its exit.
“They offered the lowest rates and the broadest networks offered last year. I can understand how that might impact them,” Beutner said.
It’s unclear whether PreferredOne’s exit will affect premium rates for 2015, which were already expected to increase because health care costs have been rising. The state’s Department of Commerce is expected to release an early snapshot of rates in early October, with full details to follow when open enrollment begins. The department is still reviewing rates from the four remaining providers.
Rep. Joe Atkins, an Inver Grove Heights DFLer and the lead House sponsor of the legislation that created MNsure, said he expects premiums to stay low compared with the rest of the country. He laughed off the Republican criticism as election-season politics.
Atkins said he wasn’t surprised by the announcement because he expected some losses and some additions to the online marketplace for 2015. He pointed out that despite its large market share on MNsure, PreferredOne is one of the smaller carriers in the Minnesota health insurance market.
The Dayton administration opted to set up the state-run exchange rather than have Minnesota participate under the federal exchange created by the Obama administration’s Affordable Care Act.
Dayton’s GOP opponent, Jeff Johnson, blasted the governor and MNsure officials for PreferredOne’s withdrawal. If elected, Johnson said he’d sweep out the MNsure board and replace its top management.
Johnson said Dayton himself used PreferredOne’s “artificially low” rates to tout MNsure as having the lowest rates in the country.
“It was all a house of cards,” Johnson said. “Now 60 percent of policyholders are going to have to go through this whole nightmare again.”