Health Insurance For Self Employed Contractors Continues To Shrink Coverage Due To Private Equity

Research Shows High Patient Costs & Less Access to Care

EndTheInsuranceGap.org

Main Takeaways from the Report

1. Healthcare insurance plans available in exchange markets have grown increasingly narrow, restricting patient access to care.
2. Overall costs for insurance premiums, deductibles, and out-of-pocket costs are increasing faster in exchange markets.
3. Insurers are increasing profit margins while doctor salaries remain consistent.
4. Federal and state network adequacy rules are not protecting patients from paying more for less.

Key Stats

• In 2022, 79% of healthcare plans in the exchange market offered restrictive networks, compared with 67% in 2017.
• Average ACA exchange market premiums increased 22% from 2017 to 2022.
• Plans covered between 44% – 73% fewer providers than other markets.
• Almost 90% of enrollees in ACA exchange plans had deductibles above $1,300, the IRS definition of a high deductible plan.
• Several top insurance companies saw profit margins in Q1 for 2022 that were the highest in a decade, and all six of the largest insurance companies paid their CEOs over $18 million in 2022.

If you are an independent contractor, you most likely purchase your health insurance through the federal Marketplace.

In many ways, the Affordable Care Act (ACA) has improved access to medical care. Many people pay lower premiums than they would have before ACA, and ACA has helped curb discrimination against people with pre-existing conditions.

Nevertheless, ACA has been limited in what it has been able to accomplish. In fact, you have probably run into these limitations personally by now with your self-employed insurance.

One particular problem that affects self-employed workers is the influence of private equity.

This post will explain how private equity has resulted in unaffordable out-of-network charges for consumers.

The Problem With Private Equity and Surprise Medical Bills

Has this happened to you? Maybe you found yourself needing to rush to the ER. During that time, you received emergency treatments. Perhaps you were not even conscious during all of them. Later, you received the bills, and were shocked. Even though you went to a facility that was in network for your insurance, there are out-of-network charges.

Sometimes, these surprise out-of-network charges can total thousands, tens of thousands, or even hundreds of thousands of dollars.

What is happening in these situations is a result of the activities of private equity funds:

1. Private equity funds buy out medical practices, and then consolidate them through staffing firms.

2. Not by coincidence, many of the practices that the equity firms purchase specialize in emergency treatments.

3. Also not by coincidence, the firms make sure that they do not exceed certain dollar amounts when they make these purchases. That way, antitrust regulators will not receive reports about their transactions.

4. By using out-of-network specialists through these large staffing agencies, hospitals are able to reduce their own costs to operate.

5. Alas, patients’ insurance is not going to cover the out-of-network costs. That means that the buck gets passed right back to the patient when all is said and done.

How pervasive is this problem? Practically ubiquitous. The American Prospect reports, “In an April 2019 survey, 41 percent of Americans reported they or a family member received an unexpected medical bill, with half of them attributing that bill to out-of-network charges.”

The site adds, “In a review of 12.6 million ER visits by insured patients between 2010 and 2016, Stanford University researchers found that by 2016, 42.8 percent of all ER trips resulted in a surprise medical bill.”

What is the No Surprises Act?

At the time the linked post above was written, many states were attempting to intervene through legislation. But as of January 1, 2022, federal protection arrived in the form of the No Surprises Act (NSA).

The NSA applies to both individual and group insurance plans. The Consumer Financial Protection Bureau explains that it bans the following:

• “Surprise bills for emergency services from an out-of-network provider or facility and without prior authorization
• Out-of-network cost-sharing, like out-of-network coinsurance or copayments, for all emergency and some non-emergency services
• Out-of-network charges and balance bills for supplemental care, like radiology or anesthesiology, by out-of-network providers that work at an in-network facility”

Both insured and uninsured patients receive protection through the No Surprises Act. The act provides for an appeals process for insured patients. For those who are self-paying, “After you get the care, if you are billed for an amount more than $400 over the good faith estimate and you got the bill within the last 120 calendar days, you can use the new dispute resolution process to determine the final payment amount.”

What Types of Health Insurance Do Self-Employed People Get?

If you are just launching your business, you may be in the process of trying to decide what type of health insurance to get.

As a self-employed person, here are the most common options:

• An ACA plan going through the state or federal Marketplace.

• Medicare or Medicaid (you would need to qualify based on your age or income level).

• TRICARE (for military/veterans).

• Limited benefit plans such as catastrophic health insurance or indemnity plans.

• Short-term medical plans.

You will be delighted to know you may qualify to take a hefty deduction when you purchase health insurance as a self-employed person. Talk to a tax expert for details.

Does the No Surprises Act Protect You if You are Self-Employed?

Broadly speaking, yes, the No Surprises Act does protect you if you are self-employed.

Healthinsurance.org explains, “The law is applicable to plan or policy years that start on or after January 1, 2022. Most health plans, including all plans sold in the ACA-compliant individual market and the majority of employer-sponsored plans, renew on January 1.” The site goes on to explain that there may be some exceptions based on timing, and also, “The No Surprises Act doesn’t apply to plans that aren’t considered minimum essential coverage, such as short-term health plans, fixed indemnity plans, or health care sharing ministry plans.”

So, if you are on a short-term health plan, indemnity plan, or other plan that does not fall into the umbrella of “minimum essential coverage,” that is something you need to be aware of.

Offering some more clarification on this point, Harris County Medical Society explains, “Patients with short-term insurance are also considered uninsured.”

Remember, uninsured patients can still fall back on dispute resolution through the No Surprises Act.

Other Problems Causing Coverage to Shrink for Self-Employed Workers

The new out-of-network billing laws do go a long way toward protecting those with self-employed insurance from facing unexpected costs. But the reality is that healthcare for the self-employed is still quite unaffordable in many respects.

For starters, there are still plenty of non-emergency out-of-network charges that may be hard to avoid—especially for self-employed contractors in rural areas who have limited access to in-network care.

Also consider the following:

• In 2022, 79% of healthcare plans in the exchange market offered restrictive networks, compared with 67% in 2017.
• Average ACA exchange market premiums increased 22% from 2017 to 2022.
• Plans covered between 44% – 73% fewer providers than other markets.
• Almost 90% of enrollees in ACA exchange plans had deductibles above $1,300, the IRS definition of a high deductible plan.
• Several top insurance companies saw profit margins in Q1 for 2022 that were the highest in a decade, and all six of the largest insurance companies paid their CEOs over $18 million in 2022.

The more restrictive your network is with your self-employed insurance, the more likely it is you will be forced to rely on out-of-network providers for some services. You can see how this contributes to the problem with the private equity firms. The out-of-network fees you are forced to pay may not be “surprises” when you do not have an emergency, but they may still be unaffordable.

That high deductible issue mentioned above is also a major obstacle in the way of affordable care for self-employed contractors.

A lot of Marketplace plans stipulate that the deductible applies to all diagnostics (outside of some really basic ones used in routine preventative care).

That means every time you need a blood test, every time you need an MRI, every time you need an X-ray, every time you need a CT scan, every time you need a scope, etc., you will have to pay out of pocket.

With deductibles as high as those on the ACA plans, most people simply will not meet them during the course of a typical year.

As a result, a lot of patients ask themselves, “Okay, how can I save on diagnostics?” The answer they end up coming up with is to pay entirely out of pocket and skip going through their insurance altogether. Sometimes it is possible to qualify for discounts this way when going through third party labs.

Of course, this is not always an option. Regardless, a patient with a high deductible is going to find that they have less money available to help them pay surprise medical bills when they do come up, because they have already likely been spending all their money just trying to afford basic diagnostics during the year.

General Tips for Affordable Healthcare When You Have Self-Employed Insurance

To wrap things up, here are some basic recommendations for keeping your healthcare as affordable as possible when you are self-employed.

• Think carefully about your needs. You will need to make difficult decisions when choosing between high premiums and high deductibles.

• Work with a great insurance agent. Your agent can help you dig into different plans to figure out which will be most affordable for your individual scenario.

• Know your rights. Remember, you can fall back on the No Surprises Act in some situations to save money.

• Shop around for low costs when you have the opportunity. If it is not an emergency, a few phones calls can make a big difference.

• Always check with your insurance if a provider is in-network. Do not just ask the front desk staff at the provider’s office.

• Consider using third-party labs. If you are on a high-deductible insurance plan, you may find discounts as high as 70-80% on tests if you are willing to self-pay instead.

• Schedule care strategically. If you know you need expensive tests and it is not an emergency, consider doing them at the start of a new year rather than right at the end of the previous year.

The reality is that in 2023, many of us are better off than we would have been two decades ago with health insurance, but healthcare is still not very affordable.

If you want healthcare to be more affordable for yourself and others, don’t be passive about it. Write your politicians and vote for candidates who will support policies that will increase your access to care as a self-employed person.