Today’s Policy Update: Obamacare ‘Funding Cliffs’ Loom for Some Programs

by Callie Gable

Contraceptives are not actually free for insurers.

Today at the New York Times’ Upshot, Austin Frakt looked into one element of the Burwell v Hobby Lobby opinion, the assertion that that covering contraception is cost-neutral for insurers:

Studies the departments cited are suggestive, but far from definitive. A fuller review of the literature on the cost and cost offsets of contraceptive coverage by Daniel Liebman, a colleague, finds that the evidence is thin that, from an insurer’s perspective, contraceptive coverage pays for itself in the long term. Moreover, it almost certainly does not in the short. The cost of contraceptive coverage is immediate, and the possible offsets (reduced pregnancies) are downstream, often years in the future.

Even the most expensive birth-control options cost much less than the cost of delivering and caring for a child, so how could birth control be a bad deal for insurers? Because the HHS mandate, for the most part, simply shifts costs of contraceptives from women who previously bought contraceptives on their own to their insurers, and the same amount of pregnancies are prevented. The only difference is insurers pick up the tab. As I wrote about here, there is little evidence that free contraceptives will even reduce the rate of unintended pregnancies in general. It turns out that the popular argument that contraceptives save everyone money may fall short.

667 million dollars later, people still don’t understand how to use 

Researchers at the University of Pennsylvania discovered that even highly educated young adults had a hard time navigating the federal government’s lavishly funded health-care exchange. They report on a study they conducted

Participants were challenged by poor understanding of health insurance terms that were inadequately explained. Although participants expressed their preferential benefits (for example, preventative care and dental coverage), they had difficulty matching plans with their preferences, partially because they perceived that the amount of information was overwhelming. Young adults qualifying for affordability provisions were confused by discount applications that made more-comprehensive plans (such as silver) cheaper than less comprehensive plans (such as catastrophic).

The website’s problems were numerous: The health-insurance terminology it used was too complicated, it wasn’t clear about what benefits plans would cover, and it didn’t properly explain how subsidies affect plans’ prices. Obamacare may have more or less reached its projected enrollment numbers, but Penn’s study suggests that almost anyone would have trouble buying a plan through the exchange. Unless the site becomes more user-friendly, the “navigators” hired to help sign people up for the exchanges may become a permanent fixture in the U.S. health-care system, in some sense replacing what private insurance brokers used to do.  While they may have helped make the exchanges functional, navigators are both expensive and sometimes problematic, as NRO’s Jillian Kay Melchior wrote about here.

Some of the subsidies crucial to making Obamacare work are expiring next year — will they be extended?

The Affordable Care Act has all kinds of federal subsidies in it, but some of them — to raise Medicaid payment rates, fund community health clinics, and insure children on CHIP to increase health-care access for low-income individuals — were designed as temporary measures to help boost access to care. As Jed Graham reports for Investor’s Business Daily, the subsidies are scheduled to shrink rapidly over the next couple years, with no replacement funds in sight:

Jed writes:

These funding cliffs weren’t driven by policy but by politics: Provide short-term funding to get ObamaCare off the ground, then cut it off — at least on paper — to make the budget forecasts look better over 10 years.

Now, with the money set to dry up next year, a push has begun to save funding for all three programs at an annual cost approaching $13 billion.

Time will tell whether Congress decides to plug the gaps, and increase Obamacare’s price tag.