As Uninsured Rates Increase, What Are Some Policy Options?

The marked gains in health insurance coverage made since the passage of the Affordable Care Act (ACA) in 2010 are beginning to reverse, according to new findings from the latest Commonwealth Fund ACA Tracking Survey. The coverage declines are likely the result of two major factors: 1) lack of federal legislative actions to improve specific weaknesses in the ACA and 2) actions by the current administration that have exacerbated those weaknesses.

These actions include the administration’s deep cuts in advertising and outreach during the marketplace open-enrollment periods, a shorter open enrollment period, and other actions that collectively may have left people with a general sense of confusion about the status of the law. Signs point to further erosion of insurance coverage in 2019: the repeal of the individual mandate penalty included in the 2017 tax law, recent actions to increase the availability of insurance policies that don’t comply with ACA minimum benefit standards and support for Medicaid work requirements.

The Survey Says

The uninsured rate among working-age people — that is, those who are between 19 and 64 — is at 15.5 percent, up from 12.7 percent in 2016, meaning an estimated 4 million people lost coverage. Rates were up significantly compared with 2016 among adults with lower incomes — those living in households earning less than 250 percent of poverty (about $30,000 for an individual and $61,000 for a family of four).

The December 2017 tax bill repealed the penalty people currently owe on their income taxes if they do not have health insurance, effective in 2019. About 60 percent of all adults were aware that the tax bill had included a repeal of the penalty. Among adults with insurance coverage, 9 percent of those who got their insurance through the individual market, 5 percent of those with employer coverage and 5 percent of those with Medicaid said they intended to drop insurance because of the change.

If bipartisan agreement regarding the ACA were possible in Congress, there are several policy options available that have the potential to increase health insurance coverage, including:

  • Providing financial support for advertising to improve awareness of coverage options in all states.
  • Improving health plan affordability in the individual market.
  • Ensuring each market has a participating insurer.

Policy Possibilities

A bill has been introduced to provide reinsurance for the marketplaces is one such example. Another bill that would enhance marketplace premium and cost-sharing subsidies and require private insurers that participate in Medicare and Medicaid to offer plans in the marketplace. RAND has modeled six incremental options to reduce individual market premiums and increase coverage, including extending premium tax credits to those above the income eligibility threshold and creating a federal reinsurance program. Each policy the researchers modeled increased coverage and affordability with either a minor cost to the deficit or, in the case of reinsurance, significant deficit savings.

Other policymakers have introduced legislation that would cover more people through Medicare, including a Medicare plan open to people under age 65 be offered through the marketplaces. Another bill goes further by also allowing fully insured employers to offer a Medicare plan to their employees, enhancing marketplace subsidies and lowering out-of-pocket costs for current Medicare beneficiaries. Legislation introduced last year that would establish a state public plan option through the Medicaid program.

In the absence of bipartisan support for federal action, states have taken action that Iowa might emulate. Eight states have received, or are currently applying for, for federal approval to establish reinsurance programs in their states. Others may ultimately join Massachusetts in establishing a state individual mandate. Massachusetts and Vermont are providing additional subsidies for people in marketplace plans. At least one state, New Mexico, is exploring options to allow residents to buy into Medicaid.

The shift to states carries risks, as well as potential benefits, for consumers. Both Iowa and Idaho are pursuing changes in their individual markets that might make insurance cheaper for some people, but leave them exposed to potentially high out-of-pocket costs if they become seriously ill or injured. These changes also will increase premiums for those who buy comprehensive plans.

Similarly, experiments with Medicaid work requirements in at least 12 states are expected to depress enrollment. More broadly, leaving policy innovation to states will ultimately lead to a patchwork quilt of coverage and access to health care across the country, a dynamic that will fuel inequity in overall health, productivity and well-being.