Friday, November 10, 2017

Hey, Republicans: Auto-enrollment is within reach

Put it in Chapter 1 of the Annals of Unintended (though not un-forecast) Consequences: Trump's cutoff of federal funds to reimburse health insurers for Cost Sharing Reduction (CSR) subsidies has made free bronze plans widely available to subsidized buyers in the ACA marketplace*.

So available, in fact, that the Kaiser Family Foundation has calculated that more than half of the 10.7 million people who are uninsured and eligible for marketplace coverage can find free bronze plans in the ACA marketplace, and 70% can access bronze plans for less than the cost of paying the penalty for going without coverage.

That paradoxical effect of cutting off funding for a subsidy suggests a political deal -- a second paradoxical effect.  Recall that ever since Democrats included the individual mandate in the various bills that became the ACA, Republicans have cast the mandate as a mortal threat to freedom -- and seek to this day to repeal (and maybe replace) it.

As a substitute for the mandate, several Republican bills and plan outlines included auto-enrollment of the uninsured in a catastrophic plan that would cost the enrollee nothing, since its premium would equal whatever subsidy the enrollee was eligible for.

Bronze plans under the ACA are effectively catastrophic plans. Bronze deductibles average over $6,000 for a single person. The deductible generally matches or comes close to matching the per-person out-of--pocket maximum, which can be as high as $7,350 in 2018.

Auto-enrollment has always posed formidable logistical challenges. But suddenly, with silver plan premiums inflated by Trump's spite, it's within financial reach without radical rejiggering of ACA subsidy structure.

Republicans could repeal the individual mandate and replace it with an auto-enrollment scheme.

Of course, doing so would counteract their chief motives, acknowledged and unacknowledged, for repealing the mandate: destabilizing the ACA marketplace, uninsuring people, and thereby "saving" money to be used for tax cuts that go mainly to the wealthy. So, never mind.

A state could use an ACA innovation waiver, however to try an auto-enrollment scheme -- especially a state in which a particularly higher percentage of the uninsured had incomes below 250% FPL.  For people below that threshold, according to Kaiser, employer offers of insurance are generally deemed unaffordable by ACA standards. A majority of the uninsured nationwide, roughly two thirds, have incomes below 250% FPL (though many are eligible for Medicaid or ineligible for any help because they're undocumented).

Mandate repeal would probably have ill effects even with autoenrollment. As CBO reports emphasize, Medicaid enrollment would drop without the mandate, especially when paired with Republican administrative measures designed to make Medicaid enrollment more onerous. Enrollment in employer-sponsored plans would also drop somewhat.

Still, if Republicans in office resembled the handful of conservative healthcare wonks who really would like to reduce the ranks of the uninsured (though not the underinsured), autoenrollment as a mandate substitute might be worth thinking about.

Update: this followup post (11/16/17) notes that 80% of those who paid the mandate penalty in 2016 had incomes below $50,000.

*In brief: with insurers forced to price in CSR, most states instructed or allowed them to concentrate the extra cost in silver plans, since CSR is available only with silver plans. That raised premium subsidies (set to a silver benchmark) and made bronze and gold plans available at a discount. See this post for a look at how the bronze-vs.-silver choice changed in 2018 in 5 counties with the highest ACA marketplace enrollment.

** Those 10.7 million represent only 39% of the uninsured. Of the other roughly 17 million uninsured, according to Kaiser, almost 7 million are eligible for Medicaid; another 2.4 million are in the "coverage gap" -- that is, have incomes below the poverty line but live in states that refused the ACA Medicaid expansion; and 3.7 million are ineligible because they have an employer's offer of insurance deemed 'affordable" by ACA metrics.

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