Arkansas Center for Health Improvement (ACHI) Health Policy Director J. Craig Wilson said despite the state’s role as a leader in implementation of the Affordable Care Act (ACA), “something is amiss.”
Wilson made the comments in a presentation promoting the governor’s Healthy Active Arkansas initiative at the Fort Smith Regional Chamber of Commerce First Friday Breakfast on Sept. 8.
During his address, Wilson noted the state’s “private option” using federal funds to bring private plans into the state’s health insurance marketplace. He praised the state’s lower than national average premium increases and its national leadership in reducing the number of uninsured persons. But despite the results, “we have the tenth highest average subsidy to help folks get coverage, yet also have the tenth highest number of people paying the penalty for not having coverage.”
Wilson said there are only “about 60,000 people covered through the marketplace right now, and we anticipated that there would be about 225,000. So there are a number of people who are not taking advantage of that, and part of it has to do with the structure of the plans and the cost sharing associated with the plans.”
“The penalty under the Affordable Care Act, frankly, was not strong enough. Why am I going to pay a $695 penalty when the other option is to pay $5,000 a year for a healthcare plan? I’m going to save my money, and then when I get sick, I’m going to get coverage. And that has clearly resulted in what we see here,” Wilson said.
Elaborating on the plan’s weaknesses to Talk Business & Politics after the meeting, Wilson said the law lacked protections for middle class individuals and families who earn too much for subsidies but are seeing large gains in medical inflation.
“The Affordable Care Act was unable to fill the gap there,” Wilson said. “There’s really an economic cliff at that 400% of the federal poverty level, which is roughly $44,000 for an individual, and about $90,000 for a family of four.”
Wilson said employer-sponsored plans were going up significantly as well, noting coverage provisions had “tailed off by about 10% over the last five years.” Wilson said this is “in part” due to the increasing costs
“Employer-sponsored coverage came about in a very awkward way. Employers started offering coverage because of wage freezes during World War II when it was very low cost, and all you really had was penicillin if you needed something for it,” Wilson said, adding the current system has costs that are outpacing medical inflation “and certainly regular standard inflation.”
Wilson continued: “It’s starting to depress wages so much because that’s a bigger portion of what employers and employees are having to pay. So I see at some point that break happen. Employers are going to stop offering health insurance coverage. They’re going to raise wages, and almost everyone is going to be in the individual market. But what’s being discussed at the federal level is hopefully some funding and some reinsurance programs to offset some of the increases over time to help both the federal government out from the increasing costs that they have to pay for folks who are subsidized, but also for folks who are having to bear the brunt of those increases.”
Not helping future cost prospects are exploding obesity rates, nationally and statewide. The number of obese persons in Arkansas as measured by the BMI Index has increased from 17% to 34.5% from 1994 to the present. These “upstream issues affect downstream costs,” Wilson said, observing a $1,018 annual healthcare plan cost differential between a non-obese person ($3,270 per person) versus an obese person ($4,288 per person).
“If we can reduce our state’s BMI by 5%, it will save the state $2 billion over 10 years, and it will prevent all those associated conditions” like diabetes and cardiac disease, Wilson said. “We’ve got to address these other areas — our health behaviors, our societal factors, improved education, improved employment opportunities, community safety, the ability to walk in your community, our physical environment.”
“We can’t rely on our healthcare system to fix this,” Wilson added.