Fred Blavin [00:00:02]:

I mean, I think politically it’s a compelling story to tell and most agree that, you know, it’s important to root out fraud and abuse and, you know, on the Medicaid side, try to incentivize people to get back to work. I think that is a popular story to tell. And if this bill just targeted potential fraud and abuse, I think you wouldn’t see all the massive coverage declines that are projected by us and the Congressional Budget Office.

Narrator [00:00:34]:

Welcome to Hospitals in Focus from the Federation of American Hospitals. Here’s your host, Chip Kahn.

Chip Kahn [00:00:43]:

In America has been dealt a series of blows over the last five years. COVID 19 workforce shortages, inflation and new challenges loom with the passage of the One Big Beautiful Bill Act policymakers have enacted the sweeping changes to Medicaid and the insurance marketplaces that will leave millions uncovered and significantly reduce resources available to fund needed care. The OBBBA did not address the renewal of the marketplace enhanced premium tax credits, which expire at the end of the year. Without action, premiums will rise dramatically for millions of Americans and As many as 5 million could lose from coverage altogether. What does this mean for the millions who depend on the marketplace for health coverage? For those who stay, what happens to the affordability of their coverage? To help us break it down, I’m joined today by Fredric Blavin, senior fellow in the Health Policy Division at the Urban Institute. Fred brings his expertise in analyzing coverage policy and its consequences at the state and local levels. Fred, thank you so much for joining us today.

Fred Blavin [00:01:55]:

Thank you, Chip. I’m glad to be here.

Chip Kahn [00:01:57]:

Great. Well, let’s just start out with you providing some background on your work at Urban Institute and the expertise that you have in this area of healthcare coverage.

Fred Blavin [00:02:09]:

Sure. I’m a health economist and the lead for the Low Income Coverage Access and Affordability Practice area here at the Health Policy Division of the Urban Institute. And my research generally focuses on the evaluation of state and federal policies related to healthcare reform, medical debt, Medicaid income and benefit policy, and health information technology. I also work on quite a few topics related to hospital healthcare pricing and hospital finances, as well as market power and consolidation. I’ve been working closely with the Urban Institute’s Health Insurance Policy Simulation Model, also known as HPSIM and the Micro Simulation team here at Urban on analyzing the likely effects of OBBBA and the expiration of enhanced premium tax credits on health insurance coverage spending and provider revenue and uncompensated care demand sought by the newly uninsured population. Just a little Bit of Background the Micro Simulation HPSUM is a detailed model of the US Healthcare system and it’s designed for quick turnaround policy analyses of proposals, including this one, as well as the Affordable Care act and others. And overall, in the past, the results from the simulation model have been favorably compared with the actual policy outcomes and with forecasts from other respective micro simulation models.

Chip Kahn [00:03:32]:

Fred, that background obviously is going to be so helpful for our little conversation today here. Let’s first, before we get into the tax credit and its importance and things, the implications of its potential expiration, let’s talk a bit about the OBBA that just passed. And can you to set a context for where we are right now with coverage and healthcare funding, give us some sense of what you think the impact of the Medicaid and the Medicaid provisions, as well as those provisions in the new law that are aimed at program integrity for the exchange marketplaces where Americans buy their individual health care coverage.

Fred Blavin [00:04:21]:

A little bit of context. There are many provisions within the bill that are related to Medicaid and the Affordable Care Acts health insurance marketplaces that will ultimately impact health insurance coverage in the country. The Congressional Budget Office projected that the bill would increase the number of uninsured by around 12 million individuals in the country, around 8 million of which come from provisions specific to Medicaid and an additional 4 million from provisions related to the marketplace. This increase, combined with the additional 4 million increase that’s projected to occur with the expiration of the enhanced premium tax credits, represents a 50% increase in the number of uninsured in the U.S. so that gives a little bit of context on what the likely impact of this bill would be. Now, on the Medicaid side, I think that the key provision that is going to have an adverse effect on coverage would be the new work requirements. That’s specific to the ACA Medicaid expansion population. In fact, the CBO projects that nearly 5 million people would become uninsured from this provision alone.

Fred Blavin [00:05:30]:

A little bit details about the provision you’ll be getting in no longer than December 2026. Medicaid enrollment for the expansion population would be conditional upon working or participating in a work program, community service, or enrollment in an educational program. And unlike previous state work requirement programs, this bill would require people to comply with the work requirements up to three months before actually enrolling within Medicaid and one or more months between renewals. Of course, there are also there are exceptions to the work requirement component. You know, pregnant women and postpartum women are exempt. The medically frail and disabled are exempt. Parents, guardians or care Caretakers of dependent children 13 and under or and individuals with disabilities are just some of the groups that would be exempt from these requirements. But there are requirements for states to use data matching where possible to verify if an individual meets the requirement or qualifies for an exemption.

Fred Blavin [00:06:37]:

And given the timing these a pretty fast requirement. This would involve significant challenge for states to implement based on previous work requirements that were implemented in states such as Arkansas or Georgia. Some other provisions on the Medicaid side would significantly increase the administrative burden on enrollment in Medicaid which could adversely affect coverage. These include increases in eligibility redetermination to at least two times per year among the ACA Medicaid expansion population and significantly delaying or up to until 2034 CMS rules that were aimed to streamline Medicaid renewal policies and transitions between Medicaid and the subsidized marketplace coverage. There are also major provisions that would freeze provider taxes and state directed and limit state directed payments. The law would prohibit states from establishing any new provider tax or increasing rates of existing taxes and also impose a ceiling on the amount of tax in ACA provider tax in ACA Medicaid expansion states by lowering what’s known as the Safe harbor limit from 6% to 3.5% and incrementally from 2028 through 2034. The bill also includes cost sharing for up to $35 per services for the ACA Medicaid expansion population, lowering the retroactive eligibility period in which which where Medicaid would provide coverage for qualified expenses incurred prior to the date of the application and several restrictions on enrollment for certain immigrant immigrant populations, including limits on federal matching payments to emergency Medicaid for certain populations. And in addition, the law also includes a removal of a federal financial incentive for the remaining 10 states that have not expanded Medicaid to do so.

Fred Blavin [00:08:36]:

So it lowers the federal matching rate for the expansion population if those states were to expand.

Chip Kahn [00:08:42]:

That’s so helpful, Fred, to sort of lay the groundwork. The foundation for our discussion now focusing on this enhanced premium tax credit that’s made so much of a difference. You know, I think right now we’re probably at the high watermark of coverage in the United States at least since the 2009, 2010 congressional action enacting a ACA that set up the current framework that we have. What is going to be the impact on those millions And I think we’re like 24 million covered by Marketplace coverage right now. What’s going to be the impact if this premium tax credit that we’ve had for a number of years does expire in 25, and we’re back in a sense in 26 to the original foundations of the marketplaces and the financial incentives for coverage in the marketplaces.

Fred Blavin [00:09:49]:

A great question. Both the researchers here at Urban and the Congressional Budget Office project that around 4 million people would become uninsured if the enhanced premium tax credits were to expire. And this is on top of the coverage losses that would occur in the bill. So the marketplace components of the legislation would result in around 4 million individuals losing health insurance coverage. An additional 4 million would lose coverage with the expiration of the HANS premium tax credit. So in total, you’re looking at a decline of around 8 million individuals who previously had marketplace coverage who are becoming uninsured.

Chip Kahn [00:10:34]:

So is this a mixture of with some of these new rules that CMS has put in place on program integrity and then the program integrity provisions in the OBBBBA as well as the tax credits? I guess there’s a mix here. What kind of people are we talking about who are going to lose coverage? What are the either the demographics or at least your assumptions about who they are and why they’re losing coverage.

Fred Blavin [00:11:01]:

Right. So with the expiration of the enhanced premium tax credits, you’re going to get a lot of, in general, lower income individuals who had more heavily subsidized insurance coverage. So for example, under current law with the enhanced premium tax credits, individuals with income between 100 and 150% of the federal poverty level pay $0 in premiums for benchmark silver plants. Those individuals will now, with the expiration of the premium tax credits, they will now face a non zero premium dollar. So I think you’ll see a lot of middle lower income individuals losing coverage, but you’ll also see individuals, higher income individuals who have also have enhanced subsidies losing coverage. These declines would be more pronounced in states that have not yet expanded Medicaid, which are predominantly in communities in the south and within rural communities. And they would be on top of the coverage losses that would occur under the obbba. So the coverage losses that would occur under the bill would affect both obviously expansion and non expansion states.

Fred Blavin [00:12:16]:

And they would increase the administrative burdens of enrolling within a Medicaid plan. So they make it very much more difficult by eliminating automatic re enrollment for individuals with advanced premium tax credits, which right now, you know, 10.8 million people relied on that automatic enrollment in 2025. There’ll be additional limits on the special enrollment periods. There’ll be more several provisions related to pre-enrollment, verification of eligibility, eligibility requirements in order to receive the advanced premium tax credits, and there’s also some additional restrictions on subsidized coverage for certain immigrant populations.

Chip Kahn [00:12:56]:

So taking both these I’ll call them the new obstacles to gaining coverage inside the Exchanges as well as the potential expiration of the tax credits. Let’s name names. Which which states do you think will be most affected by the coverage losses?

Fred Blavin [00:13:19]:

Good question. So overall we have done some work on projecting the spending changes associated with the bill as combined with the expiration of the enhanced premium tax credits and we also provided estimates separately for both. So we know what the coverage and spending losses look like with the bill as well as the losses associated with the expiration of the enhanced BTCs overall at the national level, I think it’s important to provide a context. At the national level, we project that the 16 million combined increase in the number of uninsured will likely will lead to a $1.06 trillion decline in healthcare spending between 2025 and 2034 and that includes just from the coverage declines in the reconciliation bill and the expiration of the enhanced PTCs. Most of this decline, or 40% of it, would be attributable to hospitals and most of the decline, most of the overall decline, about 800 billion over 10 years is from the bill alone and approximately 262 billion in the decline in healthcare spending would occur through the the expiration of the enhanced premium tax credits over this 10 year period. Overall all states are going to feel the effects of the bill and the expiration of the enhanced PTCs. And in general declines will be large will be more concentrated in some of these larger states. The reason for this is that the Medicaid provisions do primarily target the Medicaid expansion population and states that have expanded Medicaid.

Fred Blavin [00:15:02]:

However, the marketplace provisions and the expiration of the enhanced premium tax credits are going to have larger effects on individuals in states that have not expanded Medicaid. And this is largely because the 100 to 138% of the federal poverty level population, the low-income individuals in non-expansion states are eligible for enhanced subsidies, but they’re not eligible for Medicaid. So, when you take away the enhanced subsidies for this group and you make it more difficult for them enroll, you’re going to see larger declines in coverage due to the marketplace provisions in non-expansion states. Overall, we’re finding that the largest declines in healthcare spending are going to occur in California, Texas, New York and Florida. So overall more than 1/3 of the total projected decline, like of the total projected decline in spending associated just with the reconciliation bill would occur in those four states. And then you also see spending declines of more than $20 billion in nine additional states and that includes Arizona, Georgia, Illinois, Indiana, North Carolina, Ohio, Oregon, Pennsylvania and Washington.

Chip Kahn [00:16:21]:

Well, it sounds like it’s gonna be tough on a lot of people. Just so that our audience understands, be helpful. Can you give us a sense for the range? You said 100. You mentioned 100% up to 138%. What are the dollar amounts of that income? I know they vary somewhat, but just sort of generally sort of. What’s your benchmarks there so that the audience can get an understanding of what we’re talking about in terms of what defines low lower income.

Fred Blavin [00:16:50]:

Right. So the Medicaid expansion population that includes individuals with incomes up to 138% of the federal poverty level in terms of dollars for a single person, this is around somebody making $20,000 per year. So those are, that’s the population that would be eligible for Medicaid and expansion states. In non-expansion states, those between 100 and 138% of the federal poverty level are eligible for those enhanced premium tax credits and the regular premium tax credits as well. So we’re talking about a very low income population that is targeted by these cuts in Medicaid and the marketplace.

Chip Kahn [00:17:33]:

So you mentioned, when we talked about Medicaid and now about the exchanges you mentioned, we talked about coverage and you begin to lay out some of the dollar impacts. Also we’ve got a lot of facilities, community health centers, hospitals, skilled nursing facilities, all kinds of facilities that will be treating these patients. What do you think the impact’s going to be once this, the OBBB A is implemented? And then on top of that, if by 26, we don’t see a renewal of the retain the tax credits?

Fred Blavin [00:18:14]:

So what you’re going to see is, and I think you’ll see this very quickly with the expiration of the enhanced PTCs. I think some of the Medicaid provisions are phased out, are phased in a little bit more over time, but you’ll see individuals will lose their health insurance coverage. And typically when individuals lose health insurance coverage, they’re less likely to utilize health care. Research also indicates that as individuals become uninsured, it’s going to impact providers through this decline in health care revenue from the newly uninsured population. And those who actually do use health care are going to be more reliant on uncompensated care. And so that would potentially place an additional financial burden on hospitals, office-based physicians and other healthcare providers that serve predominantly lower income populations have previously had Medicaid or subsidized marketplace coverage and this could put an additional strain on them as well as, you know, state and local governments who finance uncompensated care. And you know, in the analysis that I discussed before with the spending declines, we also find that around, there’ll be around a $300 billion increase in the amount of uncompensated care that the newly uninsured population will be seeking over this 10 year period.

Chip Kahn [00:19:40]:

So this is a big effect and it’s going to the numbers you just provided are going to have to be met. So somehow hospitals, community health centers, other kinds of providers are going to have to figure out how to make ends meet because their mission is to provide the care. And it sounds like a lot of care will now be uncompensated that, you know, prior to this year was covered by by for those individuals. Let, let me ask one more question before we cycle out one of the justifications both for the intensive changes, both regulatory and legislative, in the exchanges. The program integrity changes were put in place because of allegations of fraud and abuse of the system. And I think some policymakers and some opinion leaders even see the, the enhanced tax credits as something that’s abusive or there are people that are using them that shouldn’t qualify because of their income level. Can you give us some sense of your view of these concerns with the marketplaces as they’ve been constituted over the last few years with the tax credits in play, these higher tax credits in place?

Fred Blavin [00:21:14]:

Yeah, I mean, I think politically it’s a compelling story to tell and most agree that it’s important to root out fraud and abuse on the Medicaid side, try to incentivize people to get back to work. I think that is a popular story to tell. And if this bill just targeted potential fraud and abuse, I think you wouldn’t see all the massive coverage declines that are projected by us and the Congressional Budget Office. I think it’s clear that these provisions extend well beyond just fraud detection. And the fact that lawmakers needed to get significant savings from the cuts in the bill in order to reach budgetary targets indicate that these coverage declines extend well beyond those who are potentially abusing the system. And in reality, I think that what it looks like to me is that the goal of the bill is to make slashes to Medicaid in the ACA marketplaces without explicitly repealing the affordable Care Act. And I think there are a lot of examples here. If you look in the data on the Medicaid side, particularly on the work on the Medicaid work requirement side, where a lot of the claims being made are overstated.

Fred Blavin [00:22:34]:

Same on the marketplace side with the potential for fraud and abuse within the marketplace. I think it’s true that there is, you know, there are likely people gaming the system in terms of getting their subsidized marketplace coverage. But I wouldn’t call it improper or even fraudulent since this is just people seeking coverage in the health insurance exchanges. And by law they’re required to project their income over the upcoming year. In a lot of instances they can anticipate that it’ll be greater than that of the previous year or less than that. And I think especially with these lower income populations, income is still volatile. You’re talking about that’s to people who aren’t even who could be, who aren’t salaried workers trying to forecast what their income is going to be like in the next year. You’re going to have, you know, it’s not a perfect system.

Fred Blavin [00:23:24]:

You’re going to have some instances where people will be under potentially underestimating their income to get a more a larger subsidy within the marketplace. It’s also important on the data piece that I think a lot of the assumptions and the data that are out there just are kind of based on faulty data and have bias due to some methodological concerns within the data, especially given the difficulty measuring income, the income volatility and the measures that are used to kind of define that kind of CMS. And some researchers have used to look at what enrollment in the 100 to 138% FBL group, for example, compared to what they look like in survey data. They’re not necessarily looking at apples to apples comparisons.

Chip Kahn [00:24:13]:

Yeah, Just to put an exclamation point on this, of those covered in the exchanges, let’s say in 25 or 24, whichever is the year you would have data, how many fall in that 100% of poverty to 138 or in sort of that range, what proportion are we talking about who really in most cases probably can’t afford to pay hardly anything for a premium.

Fred Blavin [00:24:40]:

Right. So in the work that we had previously done, you know, I can’t speak right now off the top of my head. What I just don’t know off the top of my head what share fall within that 100 to 138% FPL group. I can certainly follow up after the, after this conversation. Okay, but I mean it is, you know, you know, it is a relatively small group you’re talking about. I mean it is a large group, but you’re talking about a population, the subsidized population. You know, the subsidies, the enhanced subsidies now go up to above 400% of the federal poverty level. The most generous subsidies are at that lowest income group.

Chip Kahn [00:25:20]:

So you do have, and to go beyond that, I mean we’re talking about the non-expansion states where people can’t qualify for Medicaid up to 138%. Where this is really, really important, it’s critical path for them. Right?

Fred Blavin [00:25:35]:

That’s correct. And I’d also, you know, we’d like to kind of touch on what’s being said on the Medicaid work requirements as well in terms of, you know, potential, not necessarily fraud within Medicaid, but you know, this claim that’s out there that people who are enrolled in the Medicaid expansion population aren’t working or they’re getting coverage, but they’re not actually incentivized to work. So I, you know, we’ve done some work here at Urban Institute. I have some colleagues, Michael Cartman, Genevieve Kenney and some others who’ve estimated that, you know, imposing work requirements would lead to about 6 million Medicaid expansion adults to lose health insurance coverage. And most of those people at risk of losing coverage are actually working or engaged in work related activities or meet the exemption criteria themselves. So in fact they find that around 9 in 10 expansion adults are participating in qualifying activities, whether it’s work or attending school, or have other characteristics that would make them exempt from the requirements such as know, being parents or caregivers for a disabled house member, you know, and individuals who are, you know, in fair or poor health or have a functional limitation.

Chip Kahn [00:26:54]:

I mean, I think what you’re getting at now is there’s a cost benefit here to having policies that are designed according to their authors to root out fraud and abuse or inappropriate use of, of funds in whatever way. And the, the fact is when you go at that, you end up affecting a lot of people who would otherwise be eligible. But the, the new structure makes it so difficult for them to stay signed up. Right?

Fred Blavin [00:27:28]:

Yeah, I mean they are creating policies that have adverse effects for the entire, the entire expansion population. And you know, disenrollment, you know, a lot of what occurs is related in behavioral economics which shows that, you know, certain policies like, you know, like on the marketplace side, like automatic or default enrollment can have Significant implications on whether or not an individual will stay enrolled in health insurance coverage and policies like work requirements which involve individuals potentially having to prove, provide documentation that they’re working or that they’re exempt from the work requirements. That just creates an additional burden on everybody and it’ll disincentivize individuals from enrolling in Medicaid who otherwise would be enrolled even though they’re not necessarily subject to the work requirement. I think especially now there’s, there’s going to be a lot of work on trying to automate that process, but not everyone will have automated data to determine if their work requirements, it’s going to involve still a significant burden on individuals to comply with the program.

Chip Kahn [00:28:43]:

Well, hopefully over time mitigation will be applied here and we’ll lose some people, but hopefully find ways over time to get them picked back up. And, and clearly it’s our objective to see the enhanced premium tax credit renewed. And seems to me that’s a minimal critical path to making sure we don’t lose too much ground here in the exchanges. I mean, I think it’s important to say that in terms of good comprehensive healthcare coverage, the exchanges really provide the only marketplace for individual coverage. And if the assistance isn’t sufficient there and if the signup process is too difficult, then people are going to fall through the cracks, I think.

Fred Blavin [00:29:42]:

Yeah, and that’s what CBO projects and what we project. I mean, when you make it so that people have to, can’t automatically, you know, enroll every year and they have to provide additional documentation to prove their income, that could lead delays into when they can actually receive their premium tax credits. Fewer people are going to enroll in that policy and you know, you’re going to see this compounded with less generous subsidies. So when those enhanced premium tax credits go away, people are going to face significant increases in their out of pocket expenses and their premiums for coverage. And so that’s how you get to around approximately 8 million people losing, potentially losing marketplace coverage.

Chip Kahn [00:30:29]:

Well, Fred, this was just such a helpful discussion and I hope our audience has learned something today about coverage, about these public policies that are so critical to coverage and about changes that are taking place right in front of our eyes here, real time. So with that, I just want to express my appreciation for you coming today.

Fred Blavin [00:30:52]:

No, thank you. It’s great to be able to talk to you about these issues. Don’t hesitate to reach out if you have any other, any other questions or if you want to chat again.

Chip Kahn [00:31:01]:

Great, thanks a lot. The passage of the OBBA and the looming expiration of the enhanced premium tax credits create a dangerous moment for health care access in this nation. Millions stand to lose coverage not because they’re ineligible, but because policies are making it harder to stay enrolled. Hospitals are already stretched thin. Patients are already struggling to access care. The last thing our healthcare system needs is another self-inflicted wound. Congress must act to prevent further damage by extending enhanced tax credits and preserving their coverage gains. The time to protect patients and strengthen care is now.

Narrator [00:31:56]:

Thanks for listening to Hospitals in Focus from the Federation of American Hospitals. Learn more at fah.org. Follow the federation on social media @FAHHospitals and follow Chip @ChipKahn. Please rate, review and subscribe to Hospitals in Focus. Join us next time for more in depth conversations with healthcare leaders.

Note: Transcripts are auto-generated and may contain spelling or other errors. 

Dr. Fred Blavin is a Senior Fellow and leads the Low-Income Coverage, Access, and Affordability Practice Area in the Urban Institute’s Health Policy Division, where he specializes in health economics and policy research. He has extensive experience leading the design and the evaluation of state and federal policies related to medical debt, health care reform, Medicaid, income and benefits, and health information technology. His research incorporates diverse topics including medical debt and affordability, hospital finances, provider consolidation, health care spending and prices, and how public policy choices affect consumers, providers, and health insurance markets. He is an author of over 80 policy reports and 30 peer-reviewed articles in a variety of economic, policy, and medical journals. Dr. Blavin’s research has been featured in numerous local and national media outlets, such as the New York Times, USA Today, Wall Street Journal, Washington Post, Marketplace, Forbes, CBS News, and Kaiser Health News.