Health Scare: A Post-Election Rx for the Affordable Care Act

In Perspectives by Joe Sullivanleave a COMMENT

What’s most distressing to me about Donald Trump’s election is his vow to repeal the Affordable Care Act that has brought health care coverage to more than 20 million Americans who were previously uninsured.

Republican majorities in Congress have already shown a bent to do so by voting for vetoed legislation to eliminate funding for the two main sources of this coverage: Medicaid expansion for those below or near the federal poverty line and subsidies to help those with incomes up to 400 percent of FPL to buy insurance on the ACA exchanges. 

These budgetary cuts can be accomplished with simple majority votes and would eviscerate the principle that every American is entitled to accessible and affordable health insurance. (Trump’s talk about making health insurance premiums or contributions to health savings accounts tax deductible is meaningless, or a cruel hoax, for those who can’t afford them to begin with.)

On the other hand, it will take 60 votes in the Senate to do away with the foundation on which that principle is based: namely, a prohibition against denying anyone coverage or charging them more for it because of preexisting conditions. I find it hard to believe that many Republicans, let alone any Democrats, will vote to repeal it. Fortunately, following the election, Trump has done an about-face and says he now favors retention of this prohibition.

As it’s turned out, that foundation is having to bear more weight than was foreseen because the people signing up for coverage on the Obamacare exchanges are turning out to be older and sicker than originally supposed. As a result of losses incurred, the number of insurers offering coverage on the exchanges has gone down and premiums have gone up—by a national average of 22 percent for 2017.

Because of the premium subsidies in the form of tax credits, the actual cost to most of the upwards of 10 million individuals covered on the exchanges hasn’t gone up by anything like that much. But erosion of insurer participation, a narrowing of physician networks on the part of those that remain, and the overall cost escalation clearly call for remedial action.

It was thoroughly predictable from the outset that a venture as massive and complex as the ACA would call for hundreds if not thousands of course corrections derived from experience with its workings. But partisan governmental gridlock has thwarted them up to now.

I’m not talking about fundamental changes such as a resort to the single payer or “Medicare for All” approach advocated in the presidential campaign by Bernie Sanders. Voters in Colorado overwhelmingly rejected this approach in a referendum on the November ballot. Nor is there any traction for the “public option” approach advocated by Hillary Clinton and many other Democrats that would create a government-run insurance company to compete with private ones on the exchanges.

Short of that, however, there are myriad possibilities for alleviating the problems that the exchanges have encountered that are worthy of consideration. To those who may say “why bother” if the exchanges are going to go away, bear in mind that this year’s defunding legislation wouldn’t have taken effect for two years in order to allow the Republicans time to come up with something to fulfill the second part of their “repeal and replace” mantra. 

The following list only scratches the surface of the possibilities:

• Clinton has proposed a “Medicare for More” approach that would allow people in the 55 to 64 age bracket to electively “buy in” to that program in advance of their mandatory enrollment at age 65. This would encompass the very set of people with mounting health-care needs who are disproportionately weighting the risk pools on the exchanges that many younger, healthier people have shunned. Formulating a sound basis for a Medicare expansion so that it lessens rather than worsens the burdens on the exchanges will take a lot of doing, but it deserves to be considered.

As a more modest step, the list of disabilities that qualify people below age 65 for Medicare could be expanded to include more “dread diseases.” (End-stage kidney failure and ALS are the only two at present.)

• Coming at the problem from the other end of the age spectrum, there probably need to be more carrots and sticks for getting more healthy millennials to enroll on the exchanges. Granted, Trump and his fellow Republicans will be out to get rid of the ACA’s individual mandate to buy insurance or pay a penalty; but this, too, will take 60 votes in the Senate. The present penalty of the greater of $695 or 2.5 percent of income for remaining uninsured has not proven to be enough of an inducement to get a great many of these ”young invincibles” to start paying premiums instead. Also, people in their 20s are presently allowed to avoid the penalty by buying catastrophic risk coverage that can’t even be offered on the exchanges, and this is an anomaly. 

• There is also a need to curb gaming of the system on the part of people who enroll temporarily in order to get costly treatment and then drop their coverage or just stop paying their premiums. One form of gaming, as described in a report on “Opportunities to Grow and Stabilize the Market” by the consulting firm Avalere Health, involves the use of grace periods. According to Avalere, “Grace periods allow for subsidized individuals, after paying the first month’s premium to continue to be enrolled for 90 days after failing to make a premium payment….The grace period provision may be particularly prone to abuse as it can allow individuals to pay nine months of premiums and maintain coverage for twelve months, enrolling again in coverage during the next (annual enrollment period).”

Often overlooked amid the clamor over difficulties encountered by the ACA exchanges for covering individuals is the fact that the ACA’s implementation for the vastly larger market for employer-based health insurance has gone remarkably well.

Employers with more than 50 workers must now provide coverage with the same essential benefits as individual plans. And more than 150 million Americans continue to get their benefits this way with only a 3 percent premium increase in 2016, according to a recent Kaiser Family Foundation survey. Predictions of widespread dislocations on the part of employers or workers have proved unfounded.

It’s well nigh impossible to compare the cost of employer-based coverage and individual coverage on the exchanges because their respective benefits and out-of-pockets vary so widely. But if all of the ACA’s mandates can be implemented for the employer market without inflation or dislocation, it stands to reason that the individual market can be stabilized as well.

This coming year’s premium increases alone may prove sufficient to sustain those insurers that remain on the exchanges. But restoration of more robust competition and choice is going to require a healthier mix of enrollees that starts with an all out effort to get more young people to sign up during the enrollment period for 2017 that’s now underway. 

Joe Sullivan is the former owner and publisher of Metro Pulse (1992-2003) as well as a longtime columnist covering local politics, education, development, business, and tennis. His new column, Perspectives, covers much of the same terrain.

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