University of Arizona health policy expert Dr. Dan Derksen will talk about some of the basics of the Affordable Care Act, as enrollment in Health Care Marketplaces for those without insurance starts October 1.
Ted Simons: Enrollment in the Affordable Care Act will start soon for those without health insurance. Much has been said and written about the upcoming changes in health care. For an overview, we welcome Dr. Daniel Derksen from the University of Arizona's Center for Rural Health and the U of A's College of Public Health. Thank you so municipal for being here. We appreciate it.
Dr. Daniel Derksen: My pleasure.
Ted Simons: I'm going throw all sorts of questions. This is one of those things, we have done so many shows on this and we still haven't covered it enough. When does the Affordable Care Act start?
Dr. Daniel Derksen: Enrollment starts October 1st. Just around the corner. And then full coverage begins January 1st of 2014.
Ted Simons: This is for Arizona or for all states?
Dr. Daniel Derksen: For all states. Arizona is doing both Medicaid expansion, which not all states are doing. Arizona is. That starts October 1st as well as the Federally Facilitated Health Insurance Marketplace.
Ted Simons: Are other states more up and operational in terms of the marketplace, in terms of these changes in general?
Dr. Daniel Derksen: I think those states that are doing a Federally Facilitated Health Insurance Marketplace are all about the same place. Arizona, I think, is ahead of other states as far as Medicaid expansion. I think we are very well prepared and ready for Medicaid expansion come October 1st.
Ted Simons: Despite the political controversy and the fussing and fighting down there at the Capitol, other machines were in operation and we are ready to go?
Dr. Daniel Derksen: It's really time to put await partisan politics and move forward with the full operations.
Ted Simons: How many insurers will be at play in Arizona?
Dr. Daniel Derksen: I think we will see a variety of insurers. It looks like there's a number of the usual insurers that will be participating and offering qualified health plans on the new marketplace. The insurers that are also vendors for the Medicaid program will continue with the Medicaid expansion so I think we will have a very robust participation by the insurers.
Ted Simons: That's a good thing because I would imagine that the more insurers you have, the lower the prices are going to be.
Dr. Daniel Derksen: I think we want a lot of competition and a lot of choices for consumers.
Ted Simons: Have we seen reports -- I think we have seen reports in other states, CBO estimates of the general costs and insurance costs have actually come in low are than expected. Is that true?
Dr. Daniel Derksen: Well, there's mixed reviews. I would say some states, for example, California and New York, they are coming back at 30, sometimes 40 percent lower for an individual who would purchase one of these qualified health plans on the new marketplace. And then in other states that we are not seeing quite as much, such as Indiana, for example, is looking at it. It might be more expensive.
Ted Simons: Do we know why some are higher, some are lower?
Dr. Daniel Derksen: I think it varies by the degree of competition. If there's a single dominant insurer in the area and there's less competition and less choices, I think we are going to see higher prices. But in states like Arizona, where we have very intense competition between insurers, I think we are going to see the price go down.
Ted Simons: OK. So in Arizona, how many folks will be affected by the Affordable Care Act in general, Medicaid expansion in particular?
Dr. Daniel Derksen: Arizona has a total population of 6.5 million. Of that 6.5 million, 1.2 million are uninsured. We're about 18 percent. We have been in the bottom 10 states as far as percent of our population that's insure for the last three to five years. So in the first two years after open enrollment, I believe we will see about 600,000 people who are currently uninsured gain coverage. About half each, 300,000 each between Medicaid expansion and people who buy subsidized plans on the Federal marketplace.
Ted Simons: And again, it would sound, would stand to reason that the more people that sign up the better prices are going to be for everyone.
Dr. Daniel Derksen: That's right. This is the challenge, is you want as many people as possible to sign up to distribute that risk and distribute that cost. You can't really do health insurance and cover everyone. If people wait until they get sick, until they purchase their insurance. Just like automobile insurance. It's very similar. You can't wait until you have an accident to buy automobile insurance. It's the same thing with health insurance.
Ted Simons: It's basically the healthy have to help balance out the not so healthy.
Dr. Daniel Derksen: Right. You have to have a broad participation. And I think the other thing is that once you get more people covered, then that cost shifting that occurs that is eliminated.
Ted Simons: Those that don't have health insurance, are they generally more or less healthy?
Dr. Daniel Derksen: Well, many studies have been done that show people who don't have health insurance have much poorer health outcomes. There was a study published in the New England Journal of medicine that came out last summer that said that early expansion states, states that expanded Medicaid early, including Arizona, they studied Arizona in this as well. Had lower all-cause mortality when people were covered by Medicaid than when they were uninsured. So it's pretty clear there's many other studies that support that. Being uninsured is problematic for any health outcome to look at.
Ted Simons: But with that in mind with the healthy helping balance out the not so healthy, if most of those who aren't insured, what does that do to that equilibrium?
Dr. Daniel Derksen: You don't want just the folks who have chronic illnesses and preexisting conditions to sign up. You want to distribute that and get as many people participating as possible. There's a variety of reasons for that. But one of the things is you want to get people early on into prevention. I am a family physician. And I am a strong believer in prevention. You lose that opportunity when people don't have coverage. Because they can't afford to go in and see their family physician or their nurse practitioner to get preventive care.
Ted Simons: Who qualifies? In other words, whose life, whose health insurance life will change with the Affordable Care Act?
Dr. Daniel Derksen: Well, the largest change comes in that population that's less than 138 percent of the Federal poverty level. For a family of four, a family income of less than $32,000 if you are uninsured you would qualify for the Medicaid expansion. Between 138 percent of the Federal poverty limit and 400 percent of the federal poverty limit which is a range of $32,000 to $92,000 for a family of four those are the folks that will get a subsidized premium. It will be on a sliding scale. You will get more help the further down the scale you are. That helps you purchase a plan. The other part that happens is that for younger people, they may want to choose things where there's high deductibles. They aren't going to get ill. They are the young invincible. So they may chew those plans that are less costly to them overall, but they pay a little bit more out of pocket when they do visit the physician or go to the hospital.
Ted Simons: And all of those who will be choosing plans, how do they do it? Do they go to the doctor? Do they go to their computer? Do they both?
Dr. Daniel Derksen: All of the above. That's one of the multiple choice all of the above questions. I think the intent is to have an online ability just like you would purchase an airline ticket. We used to think, well that would be very clunky and hard and difficult and we wouldn't stand in lines at the airports. Now we wouldn't think to do that. We purchase everything on line it's going to be clunky and difficult at first for people to choose health insurance plans online but people will get used to it. And the system will continuously improve because it's competition between the insurers.
Ted Simons: Are insurers ready for this? A? And, B, will once this is implemented, are we going to see a major change in the health insurance landscape?
Dr. Daniel Derksen: We are seeing a major change in the health insurance landscape. We have had the lowest rate of increase of health costs over the last three years ever recorded in the last 50 years it's been recorded. Much of that people feel the experts feel, is related to the recession. But some of it is related to get go mosh people covered. Some of it's related to people can't be dropped when they get sick or exceed a certainly am limit or lifetime limit. We are starting to see a bending of that cost curve where we are controlling costs. Costs aren't going to go down. Our population is aging. Our population is increasing. Costs won't go down but if we can bend that curve so that it's closer to the rate of growth of our economy, we will be fine.
Ted Simons: All right. Well, we will see how exciting times. Aren't they?
Dr. Daniel Derksen: It's a great unprecedented opportunity for Arizona to make progress in health outcomes.
Ted Simons: Good to have you here. Thank you.
Dr. Daniel Derksen: My pleasure.
Dr. Dan Derksen: Health Policy Expert, UA