The Affordable Care Act did a lot to help uninsured consumers get health coverage, but it did not entirely resolve the very real problems with insurance affordability for low- and moderate-income consumers. These consumers often struggle to meet other living costs and, even once they have health insurance, may not be able to get the health care they need because they have trouble paying for costs associated with their premiums, office visits, and other types of health care. Increasingly, states and some members of Congress have been working on implementing solutions to overcome three major barriers to affordability of health insurance.
Three persistent barriers prevent even insured individuals from being able to afford getting health care
- Premiums are still too high for some consumers.
- High deductibles and cost-sharing amounts (such as copayments for doctor visits) can make health care unaffordable.
- Individuals whose employers offer them family health coverage that they cannot afford are not eligible to receive tax credits to help family members buy health coverage in the marketplace (known as “the family glitch”).
Forward-thinking state solutions to tackling the health insurance affordability problem
- Expanding state Medicaid coverage to individuals with incomes higher than 138 percent of federal poverty guidelines: The federal government pays virtually all of the costs of expanding Medicaid to people under age 65 with incomes up to 138 percent of poverty. In addition to this, states have the option to provide Medicaid coverage to residents with incomes above that level, while receiving some federal funding (the same federal match rate that the state receives for non-expansion populations). And some states are doing just that.
For example, District of Columbia is among states that use Medicaid to cover adults at a higher income level—covering parents with incomes up to 216 percent of the federal poverty level and other adults with incomes up to 200 percent of poverty. States that previously had to use 1115 waivers for an expansion can now do so through a simpler state plan amendment.
- Using Basic Health Programs to expand health coverage and improve affordability: Under the Affordable Care Act’s Basic Health Program option, states can repurpose 95 percent of the money that the federal government allocates to pay for marketplace premium assistance and cost-sharing reductions (for individuals with incomes at or below 200 percent of poverty) to then create an alternate public health coverage program for those residents.
The plans participating in a Basic Health Program must provide comparable benefits to marketplace plans and include a coordinated care element, but the Basic Health Program can provide consumers with lower premiums and cost-sharing amounts than marketplace plans.
We’re seeing states that are going even further with Basic Health Programs—enhancing health coverage or lowering insurance premiums by adding state funding or negotiating with health care providers for more favorable rates. Minnesota is implementing the Basic Health Program option (download the PDF here) and will soon submit its Blueprint for Basic Health to HHS. And New York recently passed a budget act that provides for the establishment of a Basic Health Program.
- States are providing “wrap-around” assistance to help cover gaps in the affordability of health plans: Several states are helping residents pay for premiums or cost-sharing in marketplace plans. They have used a variety of federal and state financing sources to do this. Prior to the Affordable Care Act, some states (Connecticut, Massachusetts, New York, and Vermont among them) had Medicaid waiver programs or CHIP programs that served residents at income levels higher than 138 percent of poverty. After the Affordable Care Act was implemented, these states then used a combination of state and federal funds to keep that assistance intact, in effect “wrapping” that help around the assistance that the new health law provides.
In Massachusetts, for example, consumers who are ineligible for Medicaid, and who have incomes of up to 300 percent of poverty, can enroll in the state’s special marketplace ConnectorCare health plans. These plans have no deductibles, feature low copayments, and offer premiums which are lower than the marketplace’s benchmark silver plans.
- More ambitious health care system reforms: Vermont continues working towards a unified health system, called Green Mountain Care. As envisioned, it would provide publicly financed universal health care to Vermonters beginning in about 2017.
Health care reform at the federal level
Senator Franken is among members of Congress working on the next steps to build on and improve upon the Affordable Care Act. In June, he introduced the Family Coverage Act, which would ensure that individuals whose employers offer them health coverage that is not affordable for their family can receive tax credits to help buy that health coverage.
Currently, the IRS interprets the ACA to say that if an employer’s offer of individual coverage is deemed affordable (costs less than 9.5 percent of the employee’s income), and if that employer also offers the employee’s family members coverage in its plan, the family can’t receive financial help to pay for premiums through the marketplace, even if the employer’s family coverage is unaffordable. The Family Coverage Act would fix that “family glitch” and allow family members to get premium credits if the cost of their coverage is unaffordable.
While we do not expect health reform efforts to gain much traction in the near future, the introduction of consumer-friendly bills is a good sign. Why? Because these bills help health care advocates and policy makers to define the policy ideas that can move forward when there are either legislative or administrative opportunities.
What’s next for health care reform at the state level?
As next year’s legislative season approaches, we anticipate an uptick in the number of states that planning enhancements to health coverage, particularly around the Basic Health Program (the Basic Health regulations are new, so this is the first year states can pursue that program).
Data will soon be available to help federal and state lawmakers evaluate residents’ progress in obtaining coverage and health care. In particular, policymakers should examine marketplace enrollment and retention data by income, and examine national and state survey data about access to care in 2014. Consumers, and the people who assist them in navigating the health care system, can use that data to inform policymakers of what remaining problems with insurance affordability they should address.
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