The voices of Urban Institute's researchers and staff
December 16, 2015

The critical fixes for the ACA

December 16, 2015

Tuesday’s health insurance enrollment deadline—since extended to Thursday—revealed unprecedented demand for health care offered through the Affordable Care Act (ACA), but a panel of health policy experts that convened at Urban Institute on Tuesday questioned whether the increased enrollment or the ACA itself are sustainable in the long term and offered suggestions on how to better accommodate Americans seeking health insurance.

To kick off Tuesday’s discussion, researchers from Urban and The Century Foundation presented papers that laid out proposed next steps for the ACA. Both papers lauded the ACA for substantially decreasing the number of uninsured Americans and other accomplishments, but found that there are critical fixes needed to ensure the law continues to work.

Both papers, for example, raised the concern that some relatively healthy Americans enrolled in marketplace insurance plans may not see the value of maintaining their coverage, particularly given the high premiums and out-of-pocket costs. If those consumers eventually decide insurance is not worth it, it will decrease the size of the marketplaces and increase the average health care costs of those who remain in them, increasing financial burdens for consumers obtaining insurance. To address the issue, Urban’s paper, which was released in August, proposes improving the premium tax credits and cost-sharing reductions to make coverage more affordable, tying tax credits to higher value policies, and eliminating the indexing of credits that erode their value over time. It also suggests fixing the “family glitch,” which currently prevents some families from receiving marketplace tax credits due to one adult having access to affordable worker-only employer coverage.

The authors also suggest allowing states to expand Medicaid for those with incomes up to 100 percent of the federal poverty level (instead of the current 138 percent) as an incentive for more states to adopt, and they would provide federal grants to improve IT systems, outreach and enrollment assistance, and oversight and enforcement of insurance regulations. The Century Foundation’s report, newly released Tuesday, echoed the call to fix the family glitch and also advised increasing marketplace financial assistance as well as possibly adding in fixed dollar age-adjusted credits. They propose reducing the complexity of the tax credit program and fully federally financing the Medicaid expansion. They also recommend allowing people to use employer-based health reimbursement accounts to purchase marketplace insurance as well as an array of regulatory reforms.

Panelists, including the reports’ authors as well as other health policy experts, agreed that reducing financial disincentives to enrollment is critical. Yet, there was discussion about whether there is the political will—and the money—to make these needed changes. John Holahan, a fellow at the Urban Institute, presented data demonstrating that health care spending has been lower than predicted, and suggested that the unexpected savings could be used to make some of the proposed improvements to the ACA. But Robert Reischauer, president emeritus of the Urban Institute, pointed out that the savings don’t have to be spent on health care—and fixing the ACA might not be the foremost issue on politicians’ minds.

“For the foreseeable future, the challenge really is to think about dialing back this long list into a handful of the most important initiatives,” Reischauer said.

The panelists had different views as to what the most important initiatives might be. When asked to pick just one policy they would want to push forward, several experts picked reducing cost-sharing or expanding premium tax credits. But Harold Pollack, a fellow at The Century Foundation, said he thought people were the most important investment: he wanted to see more human help to get Americans enrolled in the right insurance plans for their needs. And Linda Blumberg, a senior fellow at Urban, singled out the Medicaid gap, which prevents adults with incomes below the poverty line from receiving affordable health insurance in states that have not yet expanded Medicaid eligibility. Holahan argued for making the premium and cost-sharing subsidies the highest priority, given that the financial incentives are already strong for states to expand Medicaid.

While the panelists were reluctant to give up hope that all their proposed changes could be made, they acknowledged that it will be a long road ahead.

“We realize this isn’t politically feasible right now, but we think this is what’s necessary,” Holahan said, later adding, “This law could fail unless it is improved.”

Chan Lai Ly has his feet examined as part of a regular check-up related to his diabetes, by Honghue Duong, a physician's assistant, Friday, March 1, 2013 at International Community Health Services in Seattle. Photo by Ted S. Warren/AP

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