How to Build on the Affordable Care Act OCTOBER 8, 2019 — DAVID NEXON The Century Foundation | tcf.org How to Build on the Affordable Care Act OCTOBER 8, 2019 — DAVID NEXON Executive Summary The standards for large employer-provided health insurance The Affordable Care Act (ACA) was a giant step forward are weaker than those for care in the individual market. toward the true goal of universal health care: to make health These standards neither guarantee coverage of essential care a right for all, not a privilege based on ability to pay. The benefits, nor ensure that coverage is affordable. A special ACA dramatically reduced the number of the uninsured, problem is the so-called family glitch, which defines it defined a basic set of essential health benefits to which affordable employer-provided coverage in terms of the cost all Americans were entitled, and it protected low-income of individual coverage rather than family coverage. While Americans against excessive out-of-pocket costs. Pre- employer coverage in practice is generally good, there are existing exclusions in insurance were banned, and yearly and some outliers providing substandard coverage. Moreover, life-time limits on benefits were eliminated. Out-of-pocket many employer plans have excessively high deductibles, costs for covered services were capped in all insurance and the cost of care and premiums can be too high for low- policies. Studies have demonstrated improved access to income workers even when it is reasonable for most workers. health care and better health outcomes among the newly insured. But while the ACA was a giant achievement, it has Fourteen states have not expanded Medicaid coverage still fallen short of the ultimate goal of universal health care. as envisioned by the ACA, leaving millions of the poorest Americans without any coverage. There are some gaps Despite the ACA, 25 million Americans remain uninsured. in Medicaid coverage even for those who have it, and at The Trump administration has taken a number of steps that least one major important health service—adult dental have undermined the program. Health insurance premiums coverage—is omitted from the ten essential benefits defined remain unaffordable or unduly burdensome for millions by the ACA. of Americans. Excessive cost-sharing—especially high deductibles and high caps on out-of-pocket spending— The first step in any health care reform is obvious: undo the means that many insured individuals and families still face damage caused by the Trump administration’s attempts to major financial barriers to care or unaffordable costs. undermine the ACA and Medicaid by a whole series of This report can be found online at: https://tcf.org/content/report/pathway-universal-health-care-building-affordable-care-act/ The Century Foundation | tcf.org 1 administrative actions. But after that, a program building to workers or to employers as a pass-through on the ACA could address the problems above and to workers. ensure that affordable health care is indeed a right for all Americans. Enacting such a program would be challenging • Expand Medicaid in all states through attrition or but achievable—if it becomes a priority for progressives and additional incentives and penalties or by federal the health policy community. The key components of such assumption of responsibility for the expansion a program are: population in states that have failed to expand coverage. • Assure the affordability of premiums and care. • Expand essential health benefits to cover adult o Enrich the current premium subsidies for those dental care, make key optional Medicaid benefits below 400 percent of poverty and cap the mandatory, and provide a mechanism for expanding premium obligation as a percent of income for required benefits as needed. those over this threshold. • Move closer to universality of coverage by restoring o Reduce cost-sharing obligations by eliminating the financial penalty for being uninsured or provide high deductible plans, reducing out-of-pocket for opt-out rather than opt-in coverage. caps, expanding cost-sharing subsidies above 250 percent of poverty, and linking subsidies to This program could be adopted in steps, or as a single a plan that pays more of the cost of covered legislative action. Enactment of the program will be services than the current silver plan. challenging, but it is an incremental improvement to the ACA rather than establishment of a whole new structure. o Eliminate indexing of the percent of income As such, enactment should be less difficult than the original used to cap premium and cost-sharing passage of the ACA. obligations. It is time to finish the job the ACA started. Every American • Expand employer requirements to assure affordable deserves affordable, quality health care. It is time to assure and comprehensive coverage for workers. that, once and for all, health care is a right, not a privilege. o For all workers: require coverage of the essential Introduction benefits, limit high deductible plans, improve the required proportion of costs covered by the The Affordable Care Act (ACA) was a great step forward employer plans, eliminate the “family glitch,” toward the goal of a true program of universal health care. and lower the affordability threshold required As the result of the ACA, more than 20 million previously of employers to parallel the revised individual uninsured Americans have gained coverage.1 The proportion market standard. of the uninsured nonelderly population dropped from almost 17 percent in 2012, just before the bulk of the ACA went o For low- and moderate-income workers: into effect, to slightly above 10 percent in 2017.2 Insurance improve premium and cost-sharing to parallel policies are required to cover an expansive set of essential the protection in exchange plans. The cost of health benefits, and low-income Americans are protected these improved protections could be achieved against excessive out-of-pocket costs.3 The ACA banned either by requirements on employers or by pre-existing exclusions in insurance and eliminated yearly subsidies through the tax system either directly and lifetime limits on benefits. It capped out-of-pocket costs for covered services. The Century Foundation | tcf.org 2 Studies have demonstrated improved access to health care 4. Continuing Medicaid expansion. The failure to and better health outcomes among many of the newly expand Medicaid in fourteen states leaves millions covered. of very-low-income families and individuals without the protection they need. But while the ACA was a giant achievement, it has still fallen short of the ultimate goal of universal health care: making In addition, ways to bring insurance coverage closer to health care a basic human right for all, not a privilege based universality beyond assuring that coverage is affordable are on ability to pay. Approximately 25 million Americans remain briefly discussed. uninsured.4 Furthermore, even among those with coverage, many do not have affordable access to the care they need This report analyzes the gaps in the ACA in these four areas because of excessive cost-sharing or failure of their insurance and outlines the improvements that are necessary for it to to cover needed benefits. truly achieve universal health care for all. These areas overlap a bit, of course. For example, the problems with employer- What is needed is a plan that achieves the goal of universal provided care involve both affordability and benefits, so health care by building on the ACA. Specifically, the plan some issues are referred to in more than one section. outlined in this report addresses four key gaps in the ACA: Enacting these improvements will be challenging, but not 1. Improving the affordability of coverage and impossible if they become a priority for progressives and the care. Currently, under the ACA, the insurance health policy community. The report also contains a section options available to many Americans come with with some thoughts on the political feasibility of enacting unaffordable premiums that price coverage out such a plan. of the reach of some families and create excessive financial burdens even for those with coverage. When the ACA was originally proposed, it included a public Because of inappropriately high cost-sharing, option. In this original proposal, the public option was simply especially in the form of high deductibles and a government-operated insurance program offered through high out-of-pocket limits, many insured families the exchanges. The plans offered and the requirements for go without needed care, delay needed care, or are those plans, including actuarial value, premium, and cost- faced with crippling bills for the care they receive. sharing subsidies, would be the same as the exchange plans offered by private insurers. Several new versions of a public 2. Eliminating gaps in essential benefits, including option have recently been proposed, such as, for example, those provided through Medicaid. There are by presidential candidate Joe Biden5 and by experts at the still important health care services not adequately Urban Institute.6 As with the plan outlined in this report, these covered under the ACA’s requirements nor under proposals for a public option provide for the improvement Medicaid’s benefits. of premium and cost-sharing subsidies in exchange plans. These proposals, like the original ACA proposal, would 3. Eliminating problems in employer-provided establish a public plan option offered through the exchanges; coverage. The ACA currently has an employer unlike the original ACA plan, these two proposals would loophole, which leaves some workers without access allow anyone to enroll in the public option, even people with to affordable insurance, enrolled in substandard employment-based coverage. These proposals for a public coverage, or without the financial protections option could provide a way of addressing the problems of provided in exchange plans. inadequate employment-based plans that might be an alternative to the approach advanced in this report.