In 2010, Congress passed the Affordable Care Act, a sweeping reform of the American health care system. Among the many changes instituted by the ACA—also commonly known as Obamacare—was a massive expansion of the federal health insurance program for the poor, Medicaid, and the creation of regional health insurance marketplaces that offered subsidized health plans for individuals and families. As a result of these changes, almost 20 million more Americans were able to obtain health coverage; more than 12 million Americans get health insurance from the Obamacare exchanges, while 5 million obtain their Obamacare health plans from independent insurance brokers.
However, Obamacare has struggled to overcome some serious problems. Among the most pressing of these issues is making sure that all Americans have some form of access to health care. Although Obamacare raised the number of covered to 92 percent of the U.S. population, millions more remain uninsured and are likely to experience more health issues and a shortened lifespan.
Another highly publicized problem with the ACA is the rising premiums on many of the health plans found on the exchanges. This is primarily caused by limited competition in many regions where insurers are opting out or responding to uncertainty in the business environment. A couple of states like Arizona and Alaska have seen triple-digit premium hikes, and many more have experienced double-digit price increases.
While some of these problems are massive in scope, others may require only modest changes to the existing laws. Congress has tried to introduce major legislation that would fix some of these issues, but after repeated failures, they could employ the following strategies:
1. Expand Medicare
—Originally created in 1966, this federal insurance program for Americans aged 65 or older now offers health coverage to 55 million. On average, Medicare pays for about 50 percent of health care expenses of those covered. In 2010, Medicare spent $523 billion, but this is expected to grow to $1 trillion by 2022.
One of the potential fixes that Congress could enact is lowering the age of enrollment from 65 to as low as 55. Fifty-five is the beginning of the period in life when more health problems appear for most Americans, so lowering the eligibility age would help millions of Americans treat emerging health conditions without jeopardizing their finances. For many people in this age group without insurance and unable to pay medical bills, this would help avoid a major financial burden on health care providers.
More importantly, it would also remove the oldest and sickest people from the individual insurance markets, lowering the cost to insurers. This would entice many insurers to participate in the ACA exchanges again, and help lower premiums for almost everyone.
2. Disallow young people from remaining on their parents’ insurance
—One of the features of the ACA was that young adults could remain on their parents’ health plans until age 26 as a way of insuring this low-risk population that often refuses to get insured. Unfortunately, this prevented this key demographic from participating in the Obamacare marketplaces, leaving primarily older and sicker enrollees.
With only higher cost enrollees in the insurance pool, this unexpectedly high expense drove many insurers out of the private markets. However, if young people were not able to remain on their parents’ plans, many would get coverage through the private insurance exchanges, lowering the costs for all enrollees.
3. Allow people to use Health Savings Accounts to pay premiums
—one of the unfortunate effects of less people buying insurance policies off the exchanges as premiums rise, is the greater financial burden on the remaining enrollees. A way to keep people participating in the Obamacare exchanges is to help them pay for premiums using funds from Health Savings Accounts.
HSAs are tax-deferred savings accounts that many American workers set up through their employer or independently to help pay for out-of-pocket health care expenses. Currently they can only be applied to medical bills, but that could be changed so that more Americans could afford health insurance premiums for private policies.
4. Compel insurers who participate in federal insurance programs to also offer health plans on the exchanges
—Many of the insurers like UnitedHealth Group and Humana that have already exited or plan to leave the Obamacare exchanges benefit from many other federal insurance programs like Medicare or Medicaid. These companies often reap billions of dollars from taxpayers and the federal government by administering Medicare Advantage and similar plans. It has been proposed that if they wish to continue receiving this windfall, they should be required to participate in at least some of the regional marketplaces.
5. Federal government must pay obligations
—One of the primary reasons why premiums are rising so rapidly is the bluster from President Donald Trump. On multiple occasions, Trump has threatened to cut off cost-reduction subsidies that help pay for low-cost Obamacare health plans. Without these subsidies, premiums would rise even faster than they already are, but the threat alone is enough to spook insurers. Because they can’t be certain that the Trump administration will continue making payments, insurers are raising premiums in an effort to hedge their expenses.
Although these subsidies were a legal obligation originally in the Affordable Care Act, the U.S. Supreme Court struck down this provision. Since that decision, the federal government—even under Donald Trump—has continued to pay the cost sharing subsidies, but on a voluntary basis. Many in Congress—both Democrats and Republicans—are already planning to enact legislation that would make it a legal obligation for the government to pay these subsidies. If passed, this new law would help drop premium hikes by ten percent or more.
If you would like to learn more about Obamacare health plans for you and your family, or how upcoming changes to the Affordable Care Act could affect your current policy, please visit Boost Health Insurance.