CFPB Proposes Prohibiting Inclusion of Medical Debt on Consumer’s Credit Reports
On August 10, 2023, CCLP celebrated our 25th anniversary, bringing friends new and old to the Carriage House at the Governor's Residence.
Katie Wallat, CCLP’s Senior Attorney, provided testimony at the August 11, 2023, meeting of the Medical Services Board.
HB23-1126 provides first-in-the-nation protections for Coloradans with medical debt.
Are we getting our money’s worth from the ACA?
Signed into law in 2010, the Affordable Care Act (ACA) was designed to make affordable, quality health care available to all. Since the passage of the ACA, the legislation has made a measurable, positive difference in Colorado.
According to recent data, almost half a million Coloradans have gained health insurance coverage, dropping the percentage of uninsured to 6.7 percent in 2015, and the coverage they get is comprehensive, including preventive care, emergency care, behavioral health care, reproductive health care, and more. Colorado had the third-largest gains in coverage for kids among all states, according to one report. On top of that, a Colorado Health Foundation study found that the ACA’s Medicaid expansion has led to economic benefits and the creation of more than 31,000 new jobs.
Unfortunately, this good news is being drowned out by news about the high cost of health insurance plans offered on Exchanges nationally. On average, current premium costs for insurance products offered by Connect for Health Colorado will increase a staggering 24 percent in 2017 for those renewing plans. The Colorado Commission on Affordable Health Care continues to investigate the basis for these increases, which includes pricing increases for hospital services and, to a lesser degree, prescription drugs. While these numbers sound daunting, many Coloradans could be paying substantially less by taking better advantage of programs that lower premiums and reduce cost-sharing.
Alarmingly, Coloradans are less likely than residents of virtually every other state in the U.S. to take the opportunity provided by the ACA to pay less and get better coverage. Tens of thousands of Coloradans are leaving money on the table – either by forgoing insurance altogether because they aren’t aware of the help they could get, paying more than what’s necessary, or ending up with plans that are too expensive to use. Sadly, some who don’t get the help they need will drop coverage when they can’t pay their premiums.
How can qualifying for assistance make a difference? Coloradans who earn up to 400 percent of the federal poverty level (FPL) may be eligible for premium tax credits (PTC), which can either lower monthly premium costs or be deferred and reduce what is owed later in taxes. The cost differential this year can be enormous, based on figures released by the Colorado Division of Insurance in the 2016 Wakely Report, and can result in some customers paying less for coverage in 2017 than they did in 2016. Premium figures below show dramatic differences in cost.
|Metal Tier||2017 Monthly premium before subsidy (auto-renew)||% Change over 2016 for premium before subsidy||2017 Monthly premium after subsidy||% Change over 2016 for premium after subsidy|
|Gold||$443||+ 23%||$270||+ 4%|
|Silver||$403||+ 22%||$136||– 5%|
|Bronze||$378||+ 25%||$100||– 22%|
|Total||$385||+ 24%||$126||– 11%|
*Catastrophic plans are not eligible for federal subsidies.
What about help with those high deductibles and copays? According to the preliminary 2016 Wakely Report produced by the Division of Insurance and Wakely Consulting, almost 20,000 Coloradans who purchased insurance through Connect for Health in 2016 could have gotten cost-sharing reductions (CSR), but didn’t. So although they got covered, they may have felt that out-of-pocket costs made their coverage unusable.
CSRs are only available for silver plans, but the reductions can make silver plans as affordable as bronze or catastrophic plans (or even more so). CSR lowers enrollees’ out-of-pocket maximums and deductibles, or the amount they pay out of pocket before coverage kicks in for most services. In addition, CSR cuts copays or coinsurance that an enrollee pays, whether for prescription drugs, office visits, hospitalizations or other procedures.
If an enrollee’s income is under 250 percent of the FPL (meaning about $30,000 for a single person or slightly over $60,000 for a family of four) she can qualify for CSR. That program could make a big difference in the costs associated with a silver plan. Figures below from the Kaiser Family Foundation show average savings in federal marketplace plans in 2016 for a single person with income between 151 and 200 percent of the federal poverty level.
|Average out of pocket maximum, medical and prescription drugs combined||Average deductible in plans with combined medical and drug deductible||Average office copay, primary care||Average office copay, specialty care||Average copay for hospital facilities, per day|
Clearly, CRSs can make a significant difference. A Commonwealth Fund study released this week notes that an individual who made $18,000 annually, roughly 150 percent of the FPL, would typically have to pay over a third of that annual income before they hit their out-of-pocket limit, but CSR would lower that amount to an average of $1,102 a year.
Why aren’t Coloradans getting this assistance? Colorado is ranked last or close to last nationally in uptake of premium assistance and cost-sharing reductions. Our independent sensibilities are not likely to be the cause, since residents of our neighboring states have overwhelmingly chosen to use these resources to get better, more affordable coverage. Fellow Medicaid expansion states North Dakota, New Mexico and Nevada have rates of CSR uptake that are at least 60 percent higher than Colorado’s, and rates of PTC uptake that are between 11 percent and 44 percent higher.
One feature that distinguishes Colorado from nearly all other states and may depress uptake rates is that up to 45 percent of enrollees purchase insurance on the exchange without checking whether they qualify for assistance. Some of those purchasers may in fact be eligible for assistance, judging by a recent study finding that many who purchase off-exchange have incomes that would entitle them to tax credits. On the federal marketplaces, in contrast, over 92 percent of buyers provide household and income information to allow screening for eligibility
In Colorado, some customers may be deterred from checking eligibility because of concerns about errors and delay, since eligibility is determined not by Connect for Health Colorado, but by the state’s unwieldy Colorado Benefit Management System (CBMS). While the non-eligibility path should continue to be available for those who are clearly over-income, or who prefer to defer their tax credits to the end of the year, it makes sense to devote the lion’s share of available resources to making coverage affordable for those with lower incomes.
While the appeal of the non-eligibility path may result in some consumers losing out, the larger problem may be consumer confusion. Some Coloradans may purchase products outside the exchange because they think they don’t qualify for assistance. Others who take the step of providing their financial information and getting the premium tax credit are not aware of the substantial benefit of buying a silver plan and getting cost-sharing reductions. An additional group is Coloradans who lose Medicaid or CHP+ coverage, but don’t shift to the Exchange to purchase insurance, either because notices are inscrutable or coverage appears to be unaffordable. As many as 150,000 such Coloradans who are “eligible but not enrolled” failed to make that transition during a two-year period.
What can we do about this? Anyone who purchases insurance on Connect for Health Colorado would be wise to check eligibility for assistance and, if found eligible for cost-sharing reductions, should always purchase a silver plan.
We need to make it easier for customers to see if they qualify for assistance, and to understand how premium subsidies and cost-sharing can turn an unaffordable plan into coverage that can be maintained and used without breaking the bank. A new tool developed by Connect and CIVHC tailors plans to a customer’s expected health care use, but should be enhanced in the to show the benefits of CSR for eligible enrollees.
Concerted efforts need to be made now by policymakers and stakeholders, while Connect for Health Colorado is engaged in strategic planning, to ensure that the application and eligibility-determination processes are more user-friendly and less error-prone, and don’t trip up customers and those who assist them.
Much has been said about rising health insurance premiums, yet Coloradans who seek and qualify for assistance might be pleasantly surprised to find affordable options within their budget. And while the premium hikes have revived scrutiny of the ACA in making health care more affordable, policymakers should address how to maximize the benefits available to Coloradans, while taking a closer look at the factors driving up costs.
– Bethany Pray