Friday, August 29, 2014

Fighting 'churn': The less-noticed way that Obamacare reduces the uninsured rate

Mercy Cabrera; Amparo Gonzalez/Getty Images News

Attempts to quantify Obamacare's effect on health coverage have focused on how many new Obamacare enrollees were previously uninsured. But that misses a big part of the story. In addition to making insurance more affordable and accessible to those who didn't have coverage before, Obamacare should reduce the number of people who become uninsured in the first place, after losing a job and benefits, for example.

Insurance status changes like this all of the time, a phenomenon known by health wonks as "churn". Between 2004 and 2005, for example, the insurance rate stayed roughly the same.

But that also masks a change in health insurance status for lots and lots of people. About 10 million people became uninsured from 2004 to 2005, John A. Graves, a professor of health policy at Vanderbilt University, found. That was mostly offset by people who were uninsured finding sources of coverage during the same year.

This type of churning out of insurance coverage is likely to happen less under health reform. New rules preventing insurers from refusing to cover people with pre-existing conditions, subsidized coverage on the insurance exchanges, and the Medicaid expansion — in states that chose to expand — all make insurance more accessible to people when they lose coverage they had.

People will still move between types of insurance, but fewer people should become uninsured, which will play a part in reducing the uninsured rate over time.

"There was churn everywhere in the health system," says Larry Levitt, a vice president at the Kaiser Family Foundation. "Some of that will still happen, but I think it will be minimized."

This is a more subtle effect of Obamacare, and it'll take longer to suss out the full extent of the law's effect.

"It's too early to know how successful the ACA is going to be at reducing churn, because it depends a lot on people's behavior," Levitt said. "But there's the potential to change the culture of health insurance. It's possible that once we get people into the insurance system, they'll be less likely to leave when their circumstances change."

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