On March 24, 2016, the Congressional Budget Office and Joint Committee on Taxation (collectively referred to here as the CBO) released their annual baseline budget projections regarding Federal Subsidies for Health Insurance Coverage for People Under Age 65, this one covering the years 2016 to 2026. This report is different from earlier baseline insurance coverage reports in that it encompasses the total picture of federal subsidies for health insurance coverage—including employer coverage—rather than focusing more narrowly on public programs. Federal subsidies for employer coverage, which largely benefit middle and upper income Americans, are anticipated to cost almost as much as Medicaid over the next ten years and far more than the subsidies made available to lower-income Americans through the health insurance marketplaces.
The report is also the last that the CBO intends to provide that attempts to estimate separately the cost of the Affordable Care Act’s health coverage provisions to the federal government. Too much has changed in the six years since the ACA’s adoption to make further estimates feasible, although the CBO will attempt to estimate the cost of legislation to amend or repeal the ACA if it is called upon to do so. In the future the CBO will simply present its projections of overall insurance coverage levels and related subsidies, penalties, and taxes under current law.
Coverage
The CBO estimates that about 244 million non-institutionalized residents of the United States under age 65 have health insurance in any given month in 2016. About two-thirds of them, 155 million, have employment-based coverage. Another quarter are covered through Medicaid (62 million) and CHIP (6 million).
Approximately 22 million people under age 65 are covered in the nongroup market. 12 million are covered through the marketplaces (of whom 10 million receive subsidized coverage) and 1 million through the Basic Health Program. The 12 million figure for the marketplaces is down from the CBO’s projections in January that 13 million would receive marketplace coverage in 2016; the CBO had projected in March 2015 that 21 million would obtain marketplace coverage in 2016. The change is in part due to more employers continuing to offer coverage than CBO anticipated.
Nine million people under age 65 are covered through Medicare disability coverage and 5 to 6 million have coverage from other sources.
On average, 27 million individuals remain uninsured, 10 percent of the population. The CBO expects this number to remain more or less stable through 2026. At that time, 35 percent of the uninsured would be unlawful immigrants, 10 percent would be eligible for Medicaid if their state adopted the ACA expansion, 20 percent would be eligible for Medicaid and not enrolled, and 35 percent would be individuals who do not purchase coverage through their employer or in the nongroup market. The CBO estimates that the number of uninsured in 2016 is 22 million fewer because of insurance coverage changes under the ACA and by 2026 will be 24 million fewer.
Employer-Based Coverage
The CBO expects the number of persons covered through their employer to decline from the current level of 155 million to about 152 million by 2019 and then to stay at that level through 2026. Employer coverage is expected to decline because of its steadily rising cost and because some employers will decline to offer coverage or some employees decline coverage offers because of the Medicaid and marketplace options made available through the ACA. The CBO expects a net loss of 9 million individuals from employer coverage by 2026 compared to what employer coverage would have been without the ACA, resulting in an increase in taxable income that will in turn result in a $239 billion reduction in the federal budget deficit during the 2017 to 2026 period.
Medicaid And CHIP
The number of persons covered by Medicaid is expected to grow from 62 million in 2016 to 68 million by 2026, including an average of 15 million who will be covered because of the ACA. Coverage under CHIP is uncertain since current funding expires in 2017. The CBO expects that some additional states will expand Medicaid and that by 2026 about 80 percent of people who meet the expanded eligibility criteria will live in states that expand Medicaid.
Marketplaces
The CBO expects 12 million to be covered by the marketplaces for 2016, growing to 15 million in 2017 and then stabilizing at 18 to 19 million between 2018 and 2026, when from 14 to 16 million will receive subsidized coverage. Growth in marketplace enrollment will be driven by more people gaining experience with the marketplaces, increased penalties for being uninsured, the end to transitional plans, employers dropping coverage, and a possible end to the CHIP program. The CBO had projected last March that 22 million Americans would have marketplace coverage in 2025.
Nongroup Coverage Outside The Marketplaces
The CBO expects nongroup coverage outside the marketplace to drop from 9 million covered in 2016 to 7 million by 2026. The CBO also projects 1 million enrollees in the Basic Health Program from 2016 to 226.
Spending
The federal government is expected to provide a net subsidy for health insurance coverage for under-65 individuals of $660 billion (3.6 percent of the GDP) in 2016 and of $8.9 trillion during the 2017-2026 period.
Employer-Based Coverage
Employer-based coverage has for over sixty years been subsidized through income and payroll tax exclusions. Federal subsidies for employer coverage will amount to $3.6 trillion over the 2017-2026 period; these will cost $266 billion in 2016, over $1,700 per covered individual, and will grow to $460 billion by 2026.
Medicaid And CHIP
Federal spending for Medicaid and CHIP over the projection period is expected to amount to $3.8 trillion, including $1 trillion for people made eligible under the ACA. Medicare benefits for those under 65 will amount to $1 trillion. In 2016, Medicaid and CHIP will cost $279 billion, a little more than employer coverage subsidies.
Marketplaces And Other Nongroup Coverage
Subsidies for coverage in the nongroup market, including the Basic Health Program, will amount to $866 billion from 2017 through 2026. These costs will be offset by $441 billion in taxes and penalties imposed under the individual and employer responsibility sections of the ACA, the high-cost employer plan excise tax, and other taxes and fees imposed under the ACA. Premium tax credits on the marketplaces will cost $27 billion in subsidies and $5 billion in reduced revenues in 2016, while the cost-sharing reduction payments will amount to $7 billion and the Basic Health Program $3 billion, about $4,240 per subsidized individual. Premium tax credits, cost sharing reduction payments, and the Basic Health Program are expected to cost a total of $107 billion by 2026.
The Affordable Care Act
The ACA excise tax on the high-premium employer plans (aka the Cadillac tax) is expected to yield $18 billion between 2017 and 2026 (if it stays in force), the individual mandate penalty $38 billion, the tax on health insurance providers $156 billion, and the employer responsibility penalty $228 billion.
The CBO projects that the net cost of the health insurance coverage provisions of the ACA to the federal government will be $110 billion in 2016 and $1.4 trillion over the 2017 to 2026 period. The gross cost of the subsidies for coverage will be $1.9 trillion, but this will be offset by $0.5 trillion in net receipts from taxes and penalties. This estimate does not, of course, consider other taxes or reductions in expenditures in Medicare or elsewhere imposed by the ACA.
Changes in ACA cost estimates. The CBO estimate of the cost of coverage for the 2016 to 2025 period is $1.344 trillion, $136 billion more than the last year’s $1.207 trillion estimate. The cost estimate has been driven up by significantly higher Medicaid and employer coverage than was previously expected, which more than offsets lower than projected subsidized marketplace enrollments. The increase is also driven by a projection that over the next decade earnings for lower-income individuals will increase more slowly than anticipated last year, making more individuals eligible for Medicaid and subsidies. Income for higher-income individuals is expected to increase more rapidly than earlier projected.
The projected cost of the ACA is still dramatically less than was originally projected. In 2010, the CBO projected that the ACA coverage provisions would cost $623 billion from 2016 to 2019. They are now projected to cost $466 billion. The reduction in cost is due to slower than expected growth of subsidized coverage, reduced health care inflation, and other factors, such as the Supreme Court decision giving states a choice whether to expand Medicaid.
GAO Weighs In Again On Marketplace IT System Implementation
It is not surprising that six years into the implementation of the ACA and two years into the implementation of the 2014 reforms, we should see a spate of reviews of its implementation. Given a Congress controlled by opponents of the ACA, the frequent appearance of congressionally requested Government Accountability Office (GAO) reports on the ACA is to be expected. Whatever the motivation of those who request these reports, however, they are important as they do reveal problems in implementation and opportunities for improvement.
On March 23, 2016 (the sixth anniversary of the ACA), the GAO released Actions Needed to Enhance Information Security and Privacy Controls. This report is the last of a series of reports in which the GAO has reviewed the implementation of the health insurance marketplaces’ IT systems. The report recites the findings of the four earlier reports and notes that CMS has concurred in the GAO’s previous recommendations and has taken steps to address the weaknesses it identified. The most recent report specifically discusses security-related incidents that have affected HealthCare.gov between October 2013 and March 2015, weaknesses in technical controls governing the federal data services hub, and weaknesses in controls at three state-based marketplaces that it examined. The review focuses on compliance with a host of federal laws, regulations, and standards governing data privacy and security.
HealthCare.gov
The GAO reports that between October 6, 2013 and March 8, 2015, CMS reported 316 information security incidents affecting HealthCare.gov or key supporting systems. An information security incident is a “violation or imminent threat of violation of computer security policies, acceptable use policies, or standard security practices.” The largest category of these incidents, over 60 percent, involved activities that sought to access or identify a computer for later exploit but which did not result in a compromise of data or denial of service. The second largest category, 17 percent, involved unauthorized access incidents, such as physical mail including personally identifiable information (PII) being sent to the wrong address or unencrypted PII being sent by email.
Only one of the incidents involved a hacker gaining access to a HealthCare.gov-related server (to install malware on a server that did not contain PII) and none of the incidents include evidence that an attacker actually compromised sensitive data, including PII. Almost all of the incidents were categorized as having moderate or limited impact, and only one incident, where CMS employee IDs, including passwords and phone numbers, were sent over an unencrypted email, was categorized as having a significant or large impact.
The Data Services Hub
The report next addresses security weaknesses associated with the federal data services hub, which is the single portal used for exchanging information between the federally facilitated marketplaces and CMS’s external partners, including other federal agencies, state-based marketplaces, other state agencies, other CMS systems, and insurers. The data hub is used for real-time eligibility queries, transfer of application and taxpayer information, exchange and monitoring of enrollment information with insurers, and submission of health plan applications. Data hub connections are encrypted and no data are stored on the data hub itself. It is not a repository of PII.
Although the GAO recognizes efforts by CMS to protect the security of the data hub, it makes further recommendations for security protection, including further restricting administrative privileges to use the system so that users only have access necessary to perform their duties; ensuring consistent and timely implementation of newly released security patches, service packs, and hot fixes; and securely configuring the data hub’s administrative network in accordance with National Institute of Standards and Technology (NIST) standards.
State Marketplaces
The GAO’s strongest criticisms are reserved for the security controls in the three state marketplaces it reviewed and CMS’ general oversight of state marketplace security. The GAO reports that numerous significant security weaknesses have been identified in the state-based marketplaces. The three public recommendations of the GAO report all relate to CMS state marketplace oversight, including better defined procedures for day-to-day oversight, better defined tools for reviewing information provided by the State Based Marketplace Annual Reporting Tool (SMART) including specific follow-up timelines and identification of corrective tools; and continuous monitoring of privacy and security controls over state-based marketplaces.
As with earlier GAO reports, CMS concurred in all of the GAO’s recommendations and provided information as to specific steps it has undertaken to address the issues GAO identified.
from Health Affairs Blog http://ift.tt/1oaVWNf
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