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Is patching ACA the best approach for now?

Next Steps for the Affordable Care Act

By Linda J. Blumberg, John Holahan
Urban Institute, August 12, 2015

While the ACA has already had some very important successes, simply put, there has never been enough funding, given how ambitious the goals of the law were—for example, substantially reducing the number of uninsured, ending discrimination against those with health conditions, and controlling health care costs.

Every effort was made to keep the costs of the law under a trillion dollars over 10 years, which amounted to about 0.7 percent of GDP. This amount was simply not adequate, given the problems the nation faced in the health care sector. In order to allow the ACA to meet and exceed its long-term objectives, additional investments should be made to improve affordable access to care and bolster administrative capacity.

Affordability concerns

Under the ACA, significant strides have been made in increasing the affordability of coverage and reducing the number of uninsured by 15 million people. This was done in an environment with surprisingly moderate premiums in the private nongroup insurance market and prohibitions on discrimination against those with health problems. However, despite these achievements, affordability remains the most often stated reason for remaining uninsured.

  • As it now stands, premium and cost-sharing subsidies are not generous enough to make coverage affordable for large numbers of low-income Americans.
  • Low-income families are often unable to obtain subsidized coverage if one worker in the family receives an offer of affordable single coverage through an employer.
  • Following the Supreme Court decision in 2012, which essentially left Medicaid expansion up to individual states, 21 states still have not expanded eligibility for that program. That leaves a significant gap between those Medicaid eligible prior to the ACA and those eligible for federal subsidies through the marketplaces.

Administrative concerns

In addition to these affordability issues, the significant reforms in the ACA require serious attention to administration. Much of the need for administrative effort is a consequence of building a system around competing private insurers. This requires a complex and flexible IT apparatus, continuing strategies and structures for broad-based education, outreach and enrollment assistance, and effective approaches for oversight and enforcement of insurance regulation.

  • Experience with IT systems has been decidedly mixed, with some state marketplaces working effectively, some moving to the federal HealthCare.gov system, and some moving to well-functioning systems developed for other states. But the most promising systems, including HealthCare.gov, require more funding than they have thus far received.
  • Education, outreach, and enrollment assistance needs are not diminishing, although the current funding approach appears to treat it that way.
  • Regulatory oversight and enforcement resources have yet to be allocated sufficiently.

Our solutions

All of these issues can only be addressed with additional funding, and the amount that is needed is trivial as a share of the economy. We propose the following:

  • Make reductions in the premiums and cost-sharing (deductibles, co-payments, coinsurance) that low-income people pay to purchase coverage through the nongroup marketplaces.
  • Make it possible for families to receive financial assistance for the purchase of marketplace coverage even if a family member has an affordable offer of single coverage through an employer.
  • Make it an option for states to expand Medicaid to those at or below only 100 percent of the federal poverty level to induce more states to step forward.
  • Make permanent a significant federal contribution to administrative costs. This includes IT systems, but also the human support that is needed, like call centers and a permanent cadre of personnel to help individuals get enrolled both during open enrollment and during special enrollment periods. Plus, make a federal investment in ensuring appropriate oversight and enforcement of insurance regulations.

How much these solutions cost

We estimate that our proposed reforms could be done for about 0.2-0.24 percent of GDP. There are many ways to pay for this, including applying rebates used in the Medicaid program to certain Medicare enrollees as well, increasing cigarette and alcohol taxes, and replacing the “Cadillac tax” with a cap on the exclusion of employer contributions to health insurance.

The changes that we propose are not trivial. We recognize that they are not politically feasible in the near term, but we also believe that what is politically feasible at this moment will not do the job that is necessary to make the ACA solve all the problems it is intended to address.

The ACA marks a large step forward for the US health care system, but no country solves its health care problems with one piece of legislation. There is more to do, and doing it is achievable with additional investments that are extremely small relative to our economy and our total level of health care spending.

http://www.urban.org/urban-wire/next-steps-aca

Full report (60 pages): http://www.urban.org/research/publication/after-king-v-burwell-next-step...

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Comment:

By Don McCanne, MD

This report is ideal for those who say that we should forget single payer and instead move forward with fixing what we have - the Affordable Care Act. The authors list some of the more obvious problems and provide suggested solutions. Although their contribution to the reform dialogue is commendable, there are two major problems with their approach.

The most important concern is that their recommendations are limited to deficiencies in ACA, but ACA was merely a series of patches to our highly dysfunctional, inequitable, inadequate, overpriced system uniquely characterized by profound administrative inefficiencies. The fundamentally flawed system would remain intact. Though the ACA patches were beneficial, they did not begin to address the profusion of other problems in our system.

The authors are merely proposing patches to the patches. We will still be left with millions without insurance, millions who are underinsured, profound administrative waste, and little means to control our high health care costs. In fact, the authors recommend increasing our spending on health care - additional spending that is appropriate only if you accept the fact that we reject the comprehensive reform that we really need.

The other problem is political. They acknowledge that their proposals “are not politically feasible in the near term.” But isn’t that what people say about single payer? Is single payer really that much less feasible than patches to the patches? Look at the current political campaigns. One of the most outspoken advocates of single payer Medicare for all is filling stadiums with passionate supporters of his messages. Yet other candidates who advocate for repeal of Obamacare and reducing our spending on Medicare and Medicaid are drawing ridicule from those outside of their narrow camp.

If we are going to work on changing political feasibility, wouldn’t it be far better to join the rising tide in support of replacing bad policy with good policy through single payer, instead of merely trying to patch the bad policies of our highly dysfunctional post-ACA non-system?