“People bought what they could afford and healthcare centers are in effect subsidizing these policies,” said José Camacho, executive director of the Texas Association of Community Health Centers.
There had been uncertainty about whether community health centers, which receive federal funding and serve 22 million Americans at 9,000 sites around the country, were allowed to offer sliding-scale fees to patients with private insurance plans. On Monday, HHS released a guidance clarifying that the centers can offer these reduced fees to patients with incomes under 200% of the federal poverty level.
Of the 7.3 million people who purchased and paid for coverage on the federal and states exchanges for 2014, about 20% selected bronze-tier plans, which feature deductibles as high as $5,500 a person. Those plans lack a key affordability feature of silver plans, which generally have higher premiums. Under the Patient Protection and Affordable Care Act, people with incomes of up to 250% of the federal poverty level who buy silver plans qualify for cost-sharing subsidies that reduce their out-of-pocket costs for care. Purchasers of bronze plans do not qualify for those subsidies.
While all health plans that comply with Obamacare standards must cover a range of primary-care and preventive services on a first-dollar basis, deductibles and coinsurance apply when patients are diagnosed and treated for sickness, injuries or chronic illness.
“With the Affordable Care Act, while the number of uninsured may be dropping, there's a new challenge in that there is now a huge cadre of underinsured people,” said Sara Rosenbaum, chair of the health policy department at George Washington University.
When the ACA was enacted, leaders of community health centers were excited about the prospect of their previously uninsured patients getting coverage and having their levels of uncompensated care drop. But they were surprised when many of their lower-income patients bought bronze plans with high cost-sharing and started coming in seeking treatment on a sliding-scale fee basis. Previously, sliding-scale fees were used mostly by uninsured people who had to pay their own bills.
The centers say this has had a negative impact of their finances. “The use of the sliding fee scale due to the inability to pay required co-pays impacts the community health centers' uncompensated-care costs, which are not declining as rapidly as contemplated by some policymakers,” said Mary Leath, CEO of Community Health Centers of Arkansas.
The squeeze is being felt even in states that have expanded Medicaid to adults with incomes up to 138% of poverty, which has provided community health centers in those states with more paying patients. Deb Polun, director of government affairs at the Community Health Center Association of Connecticut, said the lowest deductibles for bronze plans in her state are about $4,000, which is not affordable for lower-income patients.
“So some people with these plans are reluctant to get healthcare at all,” Polun said. “Those who do go to a federally qualified health center are typically still in their deductible window, and therefore they are essentially uninsured as far as the (community health center) is concerned.”
Even if a community health center gets a flood of new Medicaid patients, uncompensated cost could remain steady or even worsen. That's because the center is then subsidizing both the bronze plan patients who need sliding-scale fees and the Medicaid patients whose coverage pays low rates, said Eva Turbiner, CEO of Zufall Health Center in Morristown, N.J.
People who buy silver-tier plans qualify for cost-sharing subsidies that cover up to an average of 94% of all costs. Navigators and other enrollment helpers have tried to steer people to silver rather than bronze plans for that reason, explaining that the higher premiums are offset by the subsidies and resulting lower out-of-pocket costs when people actually seek care.
But because many lower-income people still bought bronze plans with high cost-sharing, they “are going to safety net clinics or community health centers and pretending they don't have insurance, and trying to get free or reduced cost care,” said Katherine Hempstead, health insurance policy director at the Robert Wood Johnson Foundation.
During the upcoming 2015 open-enrollment period starting Nov. 15, more work needs to be done to raise awareness among lower-income consumers that there are serious downsides to picking a plan just because it has the lowest premium, said Stephen Davidson, professor of health policy and management at the Boston University School of Management.
“Many people do not understand the cost-sharing element of their policy and are surprised the first time they go for services and find they are not covered because the deductible has not been met,” Davidson said. “Something to watch in the new benefit year is the extent to which those folks switch plans.”
Follow Virgil Dickson on Twitter: @MHVDickson