By MIKE DENISON
BALTIMORE (Feb. 12, 2014)—An IRS and Congressional ruling that led to a lack of federal subsidies for pediatric dental insurance may make coverage for already reluctant low-income Maryland families impossible to afford, analysts said.
“I don’t know that [Congress] really justified it,” said Evelyn Ireland, executive director of the National Association of Dental Plans. “They just used the benchmark plan language … and didn’t think about the reality of the situation.”
Pediatric dental care is an essential benefit that all health policies must offer under the federal Affordable Care Act—though, unlike health insurance, individuals without dental insurance don’t have to pay a fine.
But due to an IRS ruling, health care plans on state exchanges are not required to include dental coverage, as long as at least one provider offers stand-alone dental coverage, according to Colin Reusch, senior policy analyst at the Children’s Dental Health Project.
Currently, Maryland Health Connection has four providers offering stand-alone dental coverage: Dominion Dental Services, DentaQuest, United Concordia, and Delta Dental. Maryland also has health plans that include some dental coverage.
Only nine states and D.C. do not offer stand-alone dental coverage; dental coverage there is a required component of health plans.
Reusch said this ruling was intended to “not completely disrupt” the existing health care marketplace. Before the Affordable Care Act took effect, customers could—and frequently did—purchase dental insurance separately from medical insurance.
However, Reusch said the IRS decision led to “unintended consequences.”
According to a handout from the National Association of Dental Plans, the amount of health insurance premium assistance, in the form of tax credits, is determined by the less expensive of two options. Assistance will either equal the premium a customer will pay for a policy purchased through a state or federal exchange, or it will equal the difference between the state’s second-lowest-cost silver plan’s premium and the maximum percentage of household income a buyer is allowed to pay in premiums.
The handout also says that the latter option will almost always be less expensive, since each state’s second-cheapest silver plan, which is known as a benchmark plan, is not likely to include dental coverage. This means that if consumers want pediatric dental coverage, they will have to pay for it without the help of a subsidy.
Jon Seltenheim, senior vice president of business and government strategy for United Concordia, said that stand-alone dental coverage is often preferable because it typically has a separate, lower deductible than that of most health plans, which can reach up to $2,000.
According to Jeff Album, vice president of public and government affairs for Delta Dental, high deductibles would prevent most dental procedures from being covered at all.
“These kids are never going to get dental coverage, even though they have dental coverage,” he said. “Patients are going to come in and say “Doctor, I’m so excited, I finally have dental coverage through my ‘X brand’ health plan.” But after a routine teeth cleaning and cavity filling, the bill could be $500 to $600—which the patient will have to pay out of pocket.
For some low-income Marylanders, this may exacerbate an existing problem. A study published in the American Journal of Public Health found that even if uninsured Americans are given dental insurance, there is no guarantee that they would seek necessary dental care.
Richard Manski, professor at the University of Maryland School of Dentistry and the paper’s first author, said that before the Affordable Care Act took effect, between 30 million and 50 million Americans lacked medical insurance—but about 150 million lacked dental coverage. He said that while low-income families may have to make hard decisions with their budgets, dental care’s importance should not be forgotten.
“All you need to do is have a toothache and you know it’s important,” said Manski. “There are very few things that we experience in life that are as painful and difficult to experience as dental pain.”
But a lack of subsidies is making low-income consumers even more hesitant to purchase insurance that is effectively voluntary.
“We know consumers are extremely price-sensitive,” said Ireland.
Maryland Insurance Administration data says the average cost of one child’s coverage on a low dental plan is about $279 a year—for comparison, Ireland said Virginia’s average cost was $365 a year.
She added that while the premiums may not be expensive, any price difference has a significant psychological effect on the consumer.
“It’s not a ton of money, but for low-income people, everything is a ton of money,” said Album.
Furthermore, Album said Maryland Health Connection isn’t pulling its own weight.
“There is very little disclosure that happens on Maryland or any of the other web portals,” he said. “I don’t believe consumers...at all recognize when their dental plan is going to be subject to a high deductible.”
In order to push for change, dental industry leaders find themselves forced to rely on the IRS or the Department of Health and Human Services instead of Congress.
“Congress isn’t going to pass anything related to Obamacare,” said Album, although he added that 13 senators supported the National Association of Dental Plans’ proposal to allow stand-alone subsidies.
Maryland officials may wait a few years before making any significant policy changes, according to Joshua Sharfstein, secretary of the Department of Health & Mental Hygiene.
“We’re giving people the choice right now … at some point we’ll have enough data to take a look at it and be in a better position,” he said. “People make arguments about what’s better, but in the end we’ll be able to look and see.”
Those seeking dental insurance in Maryland do have the option to find a health insurance plan that includes dental coverage. Sharfstein said most of the health plans in Maryland include dental coverage—including benchmark health plans in at least two counties, Kent and Montgomery, according to Ireland.
However, Reusch said that medical providers tend to devote a relatively small portion of their coverage to dental insurance.
In Album’s words, with stand-alone dental coverage, patients do not need to “get hit by a bus” before their insurance provider starts to cover treatment.
Ireland said that while many low-income families could use Medicaid or the Children’s Health Insurance Program to cover dental insurance, many Maryland families would fall in an economic range—about $47,000 to $94,000 for a family of four, according to HHS—where they will have to rely on the state exchange for dental insurance instead.
The fact that many of the desired changes could come about easily frustrates many in the dental industry. Album said that the Treasury Department could tell the IRS or HHS to change its ruling “tomorrow...with minimal cost to American taxpayers.”
Album added that a dental-specific summary of benefits and coverage would go a long way toward eliminating the ambiguity and lack of disclosure that plagues dental plans. He said that these benefit summaries display medical plan data well, but they don’t display deductibles or other valuable information for dental plans.
Ireland is “fairly optimistic” that stand-alone subsidies will be in place nationwide by 2015 and that affected customers may be able to apply for retroactive tax credits.