In May 2018, we released a paper describing a comprehensive health insurance reform program called Healthy America. Healthy America (HA) is a hybrid reform approach that uses purchasing leverage to reduce health care prices while improving federal subsidies to provide reduced premium and cost-sharing options for many Americans. The combined reforms could bring the United States close to universal coverage while decreasing national health spending over time and are designed to limit health system disruption. This report updates our previous analysis of the coverage and health spending implications of HA and analyzes two additional options: one without an individual requirement and one that would lead to universal coverage for all legal residents of the US.
HA would build on the Affordable Care Act’s (ACA’s) foundation while making substantial changes to correct for its shortcomings under current law as identified by research and analysis over the last decade of experience:
- The premium tax credits and cost-sharing subsidies offered through the ACA’s marketplaces would be enhanced, lowering household premium contributions and reducing out-of-pocket costs when people access medical care.
- The federal government would develop a new public insurance option to be offered through the marketplaces nationwide, offering a lower-cost insurance option to consumers in less competitive insurer and provider markets. In addition, private insurers in the marketplaces would no longer have to pay the much higher rates charged by health care providers in noncompetitive (often rural) areas, which drive high premiums. Plus, additional prescription drug rebates would lower drug prices.
- The marketplaces and their improved financial assistance would be made available to more consumers, including workers who prefer subsidized marketplace coverage over their employer-provided insurance plans and nonelderly low-income people currently eligible for Medicaid. Folding people currently eligible for Medicaid (while preserving their current benefits) and some (mostly low-income) workers into the insurance pools would improve systemwide fairness while making the marketplaces larger and thus more attractive to private insurers. As the number of competing insurers increases, premiums tend to decrease.
- State health care spending would be reduced by shifting financial responsibility to the federal government for expenses related to elderly low-income people dually enrolled in Medicaid and Medicare. States would no longer pay for their acute care Medicaid programs for the nonelderly, and though they would have to contribute to the costs of the new program instead, the state contributions would grow more slowly than current Medicaid program costs, increasing state savings over time.
- Competition in the HA marketplaces would be structured more like that in the Medicare program (i.e., public insurance option and competing private insurers) than that in the ACA’s marketplaces. The premium subsidies would be tied to the premium for the public option, as is done in Medicare Advantage, not to the second-lowest silver premium, as is done in the ACA’s marketplaces. Consequently, more private insurers will likely participate in the marketplaces, increasing consumer plan choice and lowering premiums over time.