Health reform reality: Forecast for uninsured includes familiar faces

Washington -- The health reform law is expected to reduce the uninsured population in the U.S. by more than half within the decade. But members of certain groups that have historically gone without coverage -- undocumented immigrants and young people, for example -- are expected to continue making up a sizeable portion of the uninsured that remain.

The law's coverage expansions will benefit some more than others. Many uninsured adults without kids likely will be part of the 16 million additional people expected to enroll in Medicaid when the program expands in 2014. Also, 24 million others with higher incomes will purchase coverage through new state health insurance exchanges, many with federal subsidies, according to a March 20 Congressional Budget Office analysis.

But what about the people who are expected to remain uninsured despite the coverage expansions? The CBO estimates that about 23 million people will still be without insurance by 2019, about 32 million fewer than there would have been without the health reform law.

Of those remaining uninsured, about a third will be illegal immigrants. Another significant bloc likely will be younger people who choose not to obtain coverage or can't afford it, said Peter Cunningham, PhD, a senior fellow at the Center for Studying Health System Change.

The impact of the law is difficult to predict, said John Sheils, vice president at the Lewin Group, an insurer-owned health care research firm. The law requires individuals to have a minimum level of insurance or pay a tax penalty, but it exempts people who would pay more than 8% of their income in premiums.

Also unclear is how many young adults will remain on their parents' insurance coverage until age 26, another policy expansion in the law. At least 30 states have adopted legislation extending dependents' insurance eligibility, according to the National Conference of State Legislatures. The federal law might cover up to an additional 5 million people, Sheils said.

Illegal immigrants will be largely on their own. They are not permitted to enroll in Medicaid or to buy health coverage in the insurance exchanges, said Jennifer Ng'andu, deputy director of the health policy project at the National Council of La Raza, a Hispanic civil rights and advocacy group. Still, studies show that up to half of illegal immigrants have employer-based insurance.

Worth the penalty

For years, uninsured Americans had a choice: Do they get by without care, seek charity care or pay out of pocket?

Starting in 2014, Americans will face a different dilemma: Do they buy a minimum level of insurance, or do they pay a penalty for not having it? Experts said the penalties probably aren't large enough to encourage everyone to buy coverage. Many families would have to pay several thousand dollars a year in premiums to avoid a cheaper penalty, Sheils said.

People without adequate coverage will pay a penalty of $95 or 1% of taxable income -- whichever is greater -- in 2014. That increases to $695 or 2.5% of taxable income in 2016. In later years, the annual penalty increases based on the cost of living but is capped at the annual premium level for an average exchange plan.

Exempted from the penalty are American Indians and people who demonstrate financial hardships, have religious objections, are incarcerated, are uninsured for less than three months, or don't earn enough to file a tax return.

Some key decisions during implementation will help determine the affordability of insurance and therefore will influence how many people decide to opt out of coverage and pay the penalty. One of the most significant is the level of coverage needed to satisfy the mandate, Cunningham said. The Health and Human Services secretary will finalize that standard by 2014.

If minimum coverage standards are high and premiums are costly, people are more likely to pay the penalty and wait until they get sick to get guaranteed coverage, Cunningham said. "The great concern there is that will drive up costs for everyone."

The Massachusetts health reform law -- the model for the national reform -- levies tax penalties against those without a minimum level of health insurance. About 45,000 residents were subject to a penalty in 2008, equal to half the cost of the least expensive health exchange plan, an amount ranging from $234 to $1,068. About 96% of residents had the minimum required coverage that year.

Effect on hospitals

The number of people who remain without coverage after the reforms take effect -- as well as the makeup of that population -- creates uncertain challenges for those who treat today's uninsured.

The health reform law will reduce federal funding for care of the indigent and uninsured at public hospitals by $14.1 billion, or 40%, by 2019, according to Lynne Fagnani, senior vice president at the National Assn. of Public Hospitals and Health Systems.

Even if the law does reduce the number of uninsured to 23 million, public hospitals still could be busy caring for new Medicaid enrollees and the newly insured in 2014, Fagnani said. "There are definitely capacity issues that will need to be looked at by 2014 to make sure people have access to care."

Three years after reform, most Massachusetts emergency departments were not less crowded, according to a survey of emergency physicians released in October 2009 by the American College of Emergency Physicians. Two thirds of respondents said volumes had increased or remained the same.