The voices of Urban Institute's researchers and staff
August 12, 2015

Next steps for the ACA

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In our new paper, After King v. Burwell: Next Steps for the Affordable Care Act (ACA), we propose several policy changes to address problems with the law in its current configuration.

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.

A family nurse practitioner Terrance James, right, examines Kamiyan Cooper, 1, as his mother Kesha Wilson holds him at the Multnomah County's Mid County Health Center, in Portland, Ore. Photo by Rick Bowmer/AP

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