With Health Care Reform, Income Swings May Mean Loss of Coverage

Up to 28 million Americans a year might have coverage disrupted at least once, study finds

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By Amanda Gardner
HealthDay Reporter

THURSDAY, Feb. 3 (HealthDay News) -- Under the new Affordable Care Act, the health reform package signed into law by President Barack Obama last March, millions of Americans whose income fluctuates during the year may lose health insurance for periods of time as their eligibility for different programs changes.

The authors of a new study appearing in the February issue of Health Affairs estimated that as many as 28 million U.S. adults might "churn" in and out of health insurance programs during the course of a year, sometimes losing coverage more than once.

"It's a critical issue," said Cathy Schoen, senior vice president of The Commonwealth Fund, who was not involved with the study. "You could get a raise or lose a week of work or gain a week, and move in and out of coverage."

The problem is a version of the "churning" in and out of Medicaid that has occurred for years, but with some improvements.

Under the traditional Medicaid system, people shifted between having coverage or not having coverage depending on how much they were making.

Under the Affordable Care Act, Americans can move between two programs: Medicaid, which will now be offered to all those whose income does not exceed 133 percent of the poverty level, and premium subsidies in state-run insurance exchanges, which will be available to people above that dividing line up to 400 percent of the federal poverty level.

But when their eligibility fluctuates, they're likely to lose coverage at least for a period of time.

"The good news with the Affordable Care Act is that, rather than falling off of public coverage into nothing, which is what happens now, there's the potential to have you picked up right away by the exchanges," Schoen said. "But unless you coordinate the plans that are being offered and the networks being offered, you could still have a lack of continuity."

"The [insurance exchanges] and Medicaid worlds don't exactly align so there may be one-to-two month gaps without coverage," added study co-author Dr. Benjamin D. Sommers, an assistant professor of health policy and economics at the Harvard School of Public Health in Boston. "The administrative costs are also huge. And even if there aren't gaps in coverage, Medicaid and the exchange plans could be very different in terms of networks. One month you're seeing a particular doctor, and the next month that person's not in your network."

By taking a look at U.S. Census data from the last five years, Sommers and a colleague estimated that in the first six months, 35 percent of families with incomes below 200 percent of the poverty level will change eligibility while half (28 million) would have crossed the threshold at least once during the first year.

An estimated one-quarter of beneficiaries will likely have their coverage disrupted by crossing the income dividing line at least twice in one year, and 39 percent will over the span of two years, the authors added.

Within four years, up to 38 percent will have their coverage disrupted four times or more, they predicted.

And the authors expressed the concern that some people will just get sick of the aggravation and paperwork, and opt to live without health insurance.

Because income changes are more common among younger, better educated adults, the insurance pool could be deprived of the healthy members it needs to stay financially solid.

There are several ways to remedy the problem, the authors stated, one being to set up a guaranteed minimal enrollment period, say, for 12 months, so people would only be reassessed once a year.

It would also help if there was overlap between the Medicaid and exchanges' programs so people moving from one to the other wouldn't have to change doctors or drug formularies, the authors added.

"It would be easier to fine-tune if it was a continuous program," Schoen said, and it would reduce costs.

More information

The U.S. Department of Health and Human Services has more on the Affordable Care Act.

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