Although I have often disagreed with Sen. Lamar Alexander, I’ve long respected him as a high-minded person. And I’ve admired his ability to work across the aisle to achieve bipartisan solutions to intractable problems, such as crafting a long-overdue successor to the defective No Child Left Behind Act.
So while I don’t share his belief that the Affordable Care Act is fundamentally flawed and needs to be replaced, I was heartened when he convened a hearing of the Senate health committee that he chairs to address ways to fix what are undeniably broken features. “I think of it as a collapsing bridge,” he said. “You send in a rescue team and you go to work to repair it and you start to build a new bridge, and only when that new bridge is completed and people can drive safely across it do you close the old bridge.”
What’s most in need of repair is the exchanges that the ACA established to make health insurance accessible and affordable to all, with subsidies for lower-income people and a prohibition against denying coverage because of a preexisting condition. Another, more controversial mandate was that everyone would have to get insured so that premiums from younger, healthier people coming on the exchange would counterbalance the higher cost of insuring older, sicker people.
But it hasn’t worked out that way. The latter have signed up in much larger proportions, driving up premiums and causing many insurers to flee the exchange after incurring losses. The prospect of ACA repeal has caused further fright and flight, creating the specter that many sections of the country could be left without any insurers on the exchange. Such an exodus would undermine the construct for infusing the tax credits and other subsidies that have kept coverage affordable to an adversely selected risk pool.
The Knoxville area happens to be the worst-case place in the country at the moment.
The lone insurer offering exchange coverage here in 2017 has announced it’s pulling out at year-end, leaving lower-income Knoxvillians with no way to get affordable health insurance in 2018. (For the very poor with incomes below the federal poverty line, federally funded Medicaid expansion was intended to provide the coverage, but the state of Tennessee has disgracefully failed to do so.)
Witnesses at Alexander’s committee hearing in early February, including Tennessee Insurance Commissioner Julie Mix McPeak, recommended a variety of ways in which Congress could shore up the exchanges that could well gain bipartisan support. But so far Alexander hasn’t announced any plans to pursue any of these measures to induce more insurers to participate or at least prevent a void.
Far from it—instead of working to repair the exchanges, he’s introduced a bill that anticipates and could contribute to their demise. The bill would provide a way for people to get tax credits to help pay for health insurance purchased off the exchange in a much less structured way. This recourse would only be available in locations where no exchange plans remain. And if Alexander’s bill provided a meaningful way for lower-income Knoxvillians to get affordable insurance, perhaps they should be grateful to him. But it doesn’t.
With a lot of supporting infrastructure, the ACA provides for tax credits on exchange plans to be paid to insurers by the Internal Revenue Service on a monthly basis in advance. For those with incomes below 250 percent of FPL, it further provides for monthly cost-sharing subsidies that go toward offsetting their deductibles and co-payments.
By contrast, to qualify for tax credits under Alexander’s bill, people would have to pay a full year’s worth of premiums out-of-pocket, then submit documentation of same with their tax returns in order to get a refundable credit per the ACA’s complex formula for its calculation. There is no provision for effecting the yet more complex cost-sharing subsidies, and the bottom line is that health insurance would be anything but affordable to lower-income people.
As it happens, there are three carriers presently offering individual health insurance off the exchange in Tennessee: Aetna, Freedom, and the Tennessee Farm Bureau Federation. The only one I succeeded in contacting, Farm Bureau, says its main reason for staying off the exchange is to avoid the administrative burdens of participation. But a bigger reason is probably that unsubsidized off-exchange health plans attract more affluent buyers who are likely to be healthier and thus a better risk than uninsured poor folks who have been unable to afford much health care.
Making matters worse, due to a quirky Tennessee law, Farm Bureau is not deemed to be an insurance company that has to comply with the ACA. This means it can offer insurance that doesn’t include the act’s Essential Health Benefits, excludes people with preexisting conditions, discriminates by gender, and the list goes on. This makes for lower-cost insurance for the fortunate than ACA-compliant health plans. But it sure as hell doesn’t justify federal subsidies for non-compliant plans, which the Alexander bill would afford.
Beyond that, in any locale where it applies, the bill would abrogate the ACA’s individual mandate, which needs to be fortified instead if the exchanges are to survive.
In sum, the Alexander bill is a sham unworthy of the senator’s good name. He has labeled it the “Health Care Options Act of 2017.” A better name might be the “Tennessee Farm Bureau Benevolence Act.”
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