Repealing ACA: Pushing thousands of Iowans to the brink Likely turmoil in insurance market, higher premiums, and harm to the economy ByPeterFisher

RepealingtheAffordableCareAct(ACA)withoutanadequatereplacement,asCongressandtheincomingTrumpadministrationappearpoisedtodo,jeopardizesthehealthcarecoverageandeconomicwell-beingofthemostvulnerableIowans.About230,000fewerIowanswouldhavehealthcoveragein2019ifthelawisrepealed,including25,000children.Thousandsofadultsworkinginlow-wagejobs—suchasthosewaitingtables,workingonconstructionsites,bagginggroceries,orprovidingcaretochildren,thesick,andtheelderly—wouldlosecoverageiftheMedicaidexpansionisrepealed.Forfamiliesunabletoaffordhealthcoverageontheindividualmarketpriortohealthreform,coveragesubsidizedbytaxcreditscoulddisappear,and42,000individualswouldlosetheirinsurance.Morepeoplewouldturntohospitalsandotherhealthprovidersforuncompensatedcare,whichwouldlikelybeprovidedinemergencyrooms,leavingthosewhoareinsuredtopaythebillthroughtheirownpremiums,orforhealth-careproviderstoswallowthecost.Iowa’seconomywouldsufferas$446millioninfederalfundswouldbewithdrawnfromthestate,reducingemploymentandspendinginlocalbusinesses.Theinsurancemarketwouldbethrownintoimmediatedisarray,raisingpremiumsandreducinginsuranceoptions.SucharetheprospectsforIowaasdecisionsloominWashingtonontheACA.The Affordable Care Act dramatically expanded health insurance coverage in Iowa

ThenumberofIowanswithouthealthinsurancedeclinedbyalmost93,000between2013(priortoimplementationoftheAffordableCareAct)and2015,thesecondyearinwhichtheACAandtheinsuranceexchangewerefullyimplementedinIowa.Thisrepresentsa37percentdeclineinthenumberofuninsured.Statewide,thepercentofpersonswithoutinsurancedeclinedfrom8.1percentto5percent.Increasedcoveragecameintwoways:(1)about47,000moreindividualspurchasedprivateinsurancedirectly,withsubsidiesavailabletomostofthosethroughtheACA,and(2)about70,000moreIowansobtainedhealthinsurancefromMedicaid.

The Iowa Policy Project Child & Family Policy Center www.iowapolicyproject.org www.cfpciowa.org

POLICY BRIEF

January 19, 2017 www.iowafiscal.org

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Atthesametimethatoptionsexpandedforpeopletoaccesspubliclyfundedorsubsidizedcoverage,thenumberofIowansobtaininghealthinsurancethroughtheiremployeractuallyincreasedby28,000overthetwo-yearperiod.TheACA,inotherwords,doesnotappeartohavecausedemployerstoeliminatehealthinsuranceandpushemployeesontopublicplans.Themostdramaticdecreaseinthenumberofuninsuredoccurredfornon-HispanicwhiteIowans,amongwhomthenumberdroppedby85,000,accountingfor92percentofthedecreasestatewide.Theuninsuredrateforthispopulationdeclinedfrom7percenttoabout4percent.TheACAhadmuchlessdramaticeffectinreducingtheuninsuranceratesamongHispanics,AfricanAmericansandothernon-whiteIowans,wheretheuninsuredshareremainedat12percentorhigher.Thepercentofthepopulationthatwasuninsureddroppedinnineofthe10mostpopulouscountiesinIowa,inmostcasesbyasubstantialamount.Theuninsuredrateinthemoreruralremainderofthestatealsodeclineddramatically,from9.2percentto5.3percent.Alltold,about41,000fewerIowansinthe10largestcountieswereuninsuredin2015,while52,000fewerIowansintheremainderofthestatehadcoverage.

Figure 1. Large Drops in Iowa Uninsured Population with ACA Percent of population uninsured in Iowa’s largest counties, 2013 and 2015

Source: American Community Survey, 1-year estimates, 2013 and 2015

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Table 3. Two-year Progress in Health Coverage Across the State Under the Affordable Care Act Health insurance coverage in larger counties and remainder of Iowa, 2013 and 2015

Source: American Community Survey, 1-year estimates, 2013 and 2015

Repeal would increase the number of uninsured Iowans

TheACAhasmadegood-qualityhealthinsuranceavailabletothousandsoflow-incomeindividualsandfamiliesinIowawhootherwisecouldnotaffordcoverage.About55,000Iowanspurchasedinsuranceontheexchangeduringthe2016enrollmentperiod,and85percentofthemqualifiedforthepremiumtaxcredit.1Theaveragemonthlypremiumforthosepurchasinginsuranceontheexchangewas$425,with$303,or71percentofthiscost,coveredbythecredit.TheACAsubsidythatisnowindangerreducedtheaveragecosttoACAenrolleesto$122permonth.Nearly28,000peopleinthisgroupalsoreceivedcost-sharingreductions(CSRs),whichlowereddeductiblesandotherout-of-pocketcostsforthembyroughly$28millionthatyear.TheUrbanInstitutehasestimatedthatiftheACAisrepealed,230,000fewerIowanswillhavehealthinsurancecoveragein2019thanifthelawisleftasis.2Ofthese,42,000areindividualswhowillreceivetaxcreditsforthepurchaseofhealthinsuranceiftheACAcontinues,creditsworthonaverage$4,281perrecipientperyear.Thecreditcoversovertwo-thirdsofthecostofhealthinsuranceonaverage.Fewpeoplecouldaffordtokeeptheircoverageiftheylosethatsubsidy.Asaresultoftheselossesincoverage,theUrbanInstituteprojectsthatACArepealwouldincreasethenumberofuninsuredinIowafrom153,000to383,000,a150percentincrease.3Thisincludesanincreaseof25,000inthenumberofuninsuredchildren,aswellas68,000moreuninsuredparents.4ThepercentageofIowachildrenwithouthealthinsurancewouldmorethandouble,from3percentto6.2percent.TakingMedicaidcoverageawayfromthousandsofadultswouldlikelyleadtoanincreaseinthenumberofuninsuredchildren.ThisisbecauseadultswhoareuninsuredarelesslikelytoenrolltheirchildreninMedicaidorhawk-I.5FormanychildreninIowa,thiswillmeannotjustpoorerhealth,butpoorerlong-termprospectsoverall.Researchhasshownthatbetterhealthcareasachildisassociatedwithgreatereducationalattainmentandhigherearningsasanadult.6

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Repeal of the Medicaid expansion would cut eligibility below pre-ACA levels

In2014IowacreateditsownversionoftheMedicaidexpansion,calledtheIowaHealthandWellnessPlan.About146,000peoplewereenrolledintheWellnessPlaninFY2016.AllofthoseindividualsnowintheWellnessPlanareatriskoflosinghealthinsuranceiftheMedicaidexpansionportionoftheACAisrepealed.PriortotheACA,IowahadcreatedaMedicaidwaiverprogramcalledIowaCarethatextendedMedicaidbenefitstomanyadultsnoteligibleundertraditionalMedicaid.7Therewere69,000peopleenrolledinIowaCareinFY2013.8WiththeadventoftheACAin2014,thoseenrolledinIowaCarewereautomaticallyshiftedtotheIowaWellnessProgram,andIowaCareceasedtoexist.IfCongressrepealstheMedicaidexpansion,allthoseintheWellnessProgramwouldbeatriskoflosingcoverage.PeoplelosingcoveragewouldincludethoseformerlyinIowaCare,unlessthestatere-createdsuchaprogramunderawaiverrequestonceagainandgotapprovalforthatwaiverfromthefederalgovernment.Thisisunlikely.ThustherepealoftheACAcouldleavetensofthousandsofadultsuninsuredwhoactuallywereinsuredpriortotheACA,orwhocouldhavebeencoveredifIowaCarestillexisted.Thiswouldleavelow-incomeIowansworseoffthantheywerein2013,priortohealthreformtakingeffect.Working Iowans would be hurt by Medicaid expansion repeal Themajorityofthenon-elderlyadultsreceivingMedicaidareworkingIowans.In2015,61percentofMedicaidrecipientsage18to64wereworkingatleastparttime.Athirdofthosewereworkingfulltimeatlow-wagejobsthatleftthemearningnearthepovertyline.ManyoftheseadultsgettheirhealthcoveragethroughtheIowaWellnessProgramandarethusatriskofbecominguninsurediftheMedicaidexpansionisrepealed.

Figure 2. Coverage through ACA subsidies and Medicaid Expansion at Stake Enrollment in public insurance programs in Iowa before and after the ACA

Source: Iowa Department of Human Services; U.S. Department of Health and Human Services, ASPE Issue Brief, March 11, 2016. Health Insurance Marketplaces 2016 Open Enrollment Period: Final Enrollment Report For the period: Nov. 1, 2015- Feb. 1, 2016.

Table 4. Majority of Medicaid recipients are workers Work Status of Iowa Medicaid Recipients Age 18 to 64, 2015

Source: American Community Survey, 1-year estimates, 2015

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AmongtheadultMedicaidrecipientsinIowawhoareworking,about45percentworkin10industries.Theyarewaitingtables,workingonconstruction,bagginggroceries,orservingchildren,thesick,andtheelderly.Theyareworkinginjobsthatpaylittleandprovidefewifanybenefits. Uncompensated care would rise with repeal TheACAexpandedinsurancecoveragetothousandsofIowanswhowouldotherwisehavesoughtemergencyroomorothercarethattheycouldnotpayfor,butwhichhospitalsanddoctorsnonethelessareobligatedtoprovide.This“uncompensatedcare”wasgreatlyreducedbytheACA.Withrepealandthelossofinsurancecoveragefor230,000Iowans,itisestimatedthattotaluncompensatedcareinIowain2019(assumedtobethefirstyearinwhichrepealisfullyineffect)wouldmorethantriple,from$345millionto$1.2billion.9Overa10-yearperiod,a$10billionriseinuncompensatedcareinIowaisanticipated.AllIowanswouldfeeltheeffects,ashospitalfeesandinsurancerateswouldrisetomakeupforthesecosts,andashospitalsretrench.ThedeclineinhealthinsurancecoverageandtheriseinuncompensatedcarecouldbeespeciallychallengingforIowa’sruralhospitals.RuralhospitalsaremorelikelytobeinaprecariousfinancialsituationiftheyareinastatethatdidnotexpandMedicaid,andrepealwouldthrowallIowahospitalsintothatsituation.Since2010,80ruralhospitalsacrossthecountryhaveclosed,themajorityinnon-expansionstates.Repealing the ACA would cause immediate harm RepealoftheACAwouldlikelyfollowtheprovisionsoftherepealbillpassedbyCongresslastyear.Thiswouldeliminateimmediatelytheindividualmandatetopurchaseinsuranceorpayapenalty,whileretainingpopularprovisionssuchastherequirementthatinsurancecompaniesnotdenycoveragebecauseofpre-existingconditions.Theresultisthatmanyhealthyindividualswoulddroptheircoverage.Insurancecompanieswouldbeleftwiththesickestandmostexpensivecustomers,whichwouldpromptsometoleavethestate’sindividualinsurancemarketortoraiseratesforremainingcustomersiftheystayed.Thehealthinsurancemarketwouldthusbedevastatedquickly,eventhoughfullrepealofthesubsidiesandotherprovisionsofACAwouldbedelayed,possiblyuntil2019.RepealwouldalsoendangersomeoftheACA’smostimportantconsumerprotections.No“replacement”planhasbeenproposed,butitislikelythatthequalityofinsurancepoliciesintheindividualmarketwoulddeteriorate,withrisingdeductibles,thereturnoflimitsonhowmuchinsurerswillpayoutinbenefitseachyearoroveraperson’slifetime,andfailuretocoversuchthingsasmaternitycare,mentalhealth,orprescriptiondrugs.Withrepealoftheindividualmandateandthesubsidies,itwouldbeuntenabletomaintaintheACA’sprotectionsforpeoplewithpre-existinghealthconditions.InIowa,thenumberofadultswithpre-existingconditionsthatwouldhaveledtodenialofinsurancecoveragepriortotheACA

Table 5. Where Iowa Medicaid recipients work Top 10 industries for adults age 18 to 64, 2015

Source: American Community Survey, Public Use Microdata

Sample,1-year estimates, 2015, from IPUMS

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hasbeenconservativelyestimatedat448,000,orabout24percentofnon-elderlyadultsinthestate.10Ensuringtheindividualinsurancemarketisaccessibleandaffordableforthisgroup,shouldtheyneedtopurchasecoveragethere,hasbeenamajorachievementoftheACA,butonemadepossibleonlybecauseofthemandateandthemarketplacesubsidies,whichbroadenedthepoolofindividualstheinsurancecompanieswerecoveringtoincludemanyhealthieradults.Withoutthebroaderpool,insurancecompanieswillnotcontinuetoofferquality,affordablepolicies,tothedetrimentofallthosebuyinghealthinsuranceinIowa.ContrarytowhatsomeinCongresshavebeensaying,theexchangesarenotinadeathspiral—higherpremiumscausinghealthyindividualstoforgoinsurance,leavingtheinsurancecompanieswithamorecostlypool,leadingtohigherpremiums,etc.Enrollmentthroughtheexchangeshasincreasedeachyearsinceinceptionin2014,and2017enrollmentisaheadoflastyear’s.Thereisevidencethatthepremiumincreasesthisyearareaone-timecorrectionforunderpricinginpreviousyears,notthebeginningofatrend.11Infactitisrepeal,notcontinuation,oftheACAthatwouldpushtheexchangesintoadeathspiral.Repeal would shower benefits on the wealthy RepealofthetaxesfinancingtheACAwouldlavishtaxcutsonthehighest-incomehouseholdsinthecountry.TheMedicaretaxesimposedbytheACAfallonlyonindividualswithincomesabove$200,000orcoupleswithincomesabove$250,000.The400richesthouseholdsinthecountrywouldreceivea$2.8billionwindfallin2017ifthesetaxeswereended,foranaveragetaxcutofabout$7millionayearforeachhousehold.12WithouttherevenuefromtheseandothertaxesimposedbytheACA,itwouldbedifficultorimpossibletofinanceareplacement. Repeal would harm Iowa’s economy

TherepealoftheACAwouldhaveasubstantialimpactontheIowaeconomy,cuttingoffbillionsinfederalmoneyflowingintothestate,andreducingincomeandemployment,notjustinthehealthcareindustry,butthroughouttheeconomy.RepealoftheACAwouldresultinthelossof$446millioninfederalfundsin2019,andatotalof$5.4billionfrom2019-2028.13Thatwouldreducepaymentstohealthcareprovidersthroughoutthestate,whointurnwouldreducepurchasesfromvendorsandcutemployment.Rippleeffectswouldfollow:vendorswouldcutpayroll,andthereducedspendingbyemployeesbothofthehealthcareprovidersandofthevendorswouldmeanreducedpurchasesofgoodsandservicesinIowa,andreducedstatetaxes.Nationalestimatesindicatethatrepealwouldcost2.6millionjobs,aboutathirdofthoseinthehealthcaresector,buttwo-thirdsinothersectorssuchasconstruction,retail,finance,andservices.14

1 U.S. Department of Health and Human Services, ASPE Issue Brief, March 11, 2016. Health Insurance Marketplaces 2016 Open Enrollment Period: Final Enrollment Report For the period: November 1, 2015 – February 1, 2016. 2 Linda J. Blumberg, Matthew Buettgens, and John Holahan. Implications of Partial Repeal of the ACA through Reconciliation. Washington, DC: The Urban Institute, December 2016. Available online at http://www.urban.org/research/publication/implications-partial-repeal-aca-through-reconciliation 3 Linda J. Blumberg, Matthew Buettgens, and John Holahan. Implications of Partial Repeal of the ACA through Reconciliation. Washington, DC: The Urban Institute, December 2016. Available at http://www.urban.org/research/publication/implications-partial-repeal-aca-through-reconciliation

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4 Matthew Buettgens, Genevieve Kenney, and Clare Pan. Partial Repeal of the ACA through Reconciliation: Coverage Implications for Parents and Children. Washington, DC: The Urban Institute, December 21, 2016. Available at: http://www.urban.org/research/publication/partial-repeal-aca-through-reconciliation-coverage-implications-parents-and-children. 5Government Accountability Office. Medicaid and CHIP: Given the Association between Parent and Child Insurance Status, New Expansion May Benefit Families. February 2011. Available at: http://www.gao.gov/new.items/d11264.pdf .Georgetown Center for Children and Families, Medicaid Expansion: Good for Parents and Children. January 2014. Available at: http://ccf.georgetown.edu/wp-content/uploads/2013/12/Expanding-Coverage-for-Parents-Helps-Children-2013.pdf 6Medicaid’s Long-Term Earnings and Health Benefits. Center on Budget and Policy Priorities, May 12, 2015. Available at: http://www.cbpp.org/blog/medicaids-long-term-earnings-and-health-benefits Medicaid at 50: Covering Children Has Long-term Educational Benefits. Center on Budget and Policy Priorities, July 7, 2015. Available at: http://www.cbpp.org/blog/medicaid-at-50-covering-children-has-long-term-educational-benefits 7Traditional Medicaid covers low-income individuals who are aged, blind, disabled, pregnant women, children, or parents of children on Medicaid.8 https://dhs.iowa.gov/sites/default/files/IowaCare_Narrative.pdf 9 Matthew Buettgens, Linda J. Blumberg, and John Holahan. The Impact on Health Care Providers of Partial ACA Repeal through Reconciliation. The Robert Wood Johnson Foundation and the Urban Institute, January 2017. http://www.urban.org/sites/default/files/publication/86916/2001046-the-impact-on-health-care-providers-of-partial-aca-repeal-through-reconciliation_0.pdf 10Gary Claxton, Cynthia Cox, Anthony Damico, Larry Levitt, and Karen Pollitz.Pre-existing Conditions and Medical Underwriting in the Individual Insurance Market Prior to the ACA. Kaiser Family Foundation, December 12, 2016. Available at: http://kff.org/health-reform/issue-brief/pre-existing-conditions-and-medical-underwriting-in-the-individual-insurance-market-prior-to-the-aca/ 11Sarah Lueck. “Commentary: Even as Insurance Market Improves, GOP’s ACA Repeal Would Kill It.” Center on Budget and Policy Priorities, January 17, 2017. Available at: http://www.cbpp.org/health/commentary-even-as-insurance-market-improves-gops-aca-repeal-would-kill-it 12Brandon DeBot, Chye-Ching Huang, and Chuck Marr ACA Repeal Would Lavish Medicare Tax Cuts on 400 Highest-Income Households. Center on Budget and Policy Priorities, January 12, 2017 Available at: http://www.cbpp.org/research/federal-tax/aca-repeal-would-lavish-medicare-tax-cuts-on-400-highest-income-households 13 Linda J. Blumberg, Matthew Buettgens, and John Holahan. Implications of Partial Repeal of the ACA through Reconciliation. Washington, DC: The Urban Institute, December 2016. Available online at http://www.urban.org/research/publication/implications-partial-repeal-aca-through-reconciliation 14 Leighton Ku, Erika Steinmetz, Erin Brantley, and Brian Bruen. Repealing Federal Health Reform: Economic and Employment Consequences for States. The Commonwealth Fund. January 5, 2017. http://www.commonwealthfund.org/publications/issue-briefs/2017/jan/repealing-federal-health-reform Peter S. Fisher is Research Director for the Iowa Policy Project. He holds a Ph.D. in economics from the University of Wisconsin-Madison and is professor emeritus of Urban and Regional Planning at the University of Iowa. A national expert on public finance, Fisher is frequently quoted in the Iowa and national media on issues involving tax policy and economic development strategies. His critiques of various state business climate rankings are posted on a website, Grading the States, at www.gradingstates.org.

Iowa Fiscal Partnership The Iowa Fiscal Partnership (IFP) is a joint budget and tax policy analysis initiative of two nonpartisan, Iowa-based organizations, the Iowa Policy Project in Iowa City and the Child & Family Policy Center in Des Moines. IFP is part of the State Priorities Partnership, http://statepriorities.org, a network of nonpartisan organizations in 41 states and the District of Columbia that share a commitment to rigorous policy analysis, responsible budget and tax policies, and a particular focus on the needs of low- and moderate-income families. Iowa Fiscal Partnership reports are available to the public at http://www.iowafiscal.org.