The ACA as it should have been -- sort of, for a while at least

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Strictly speaking, by my my lights, "the ACA as it should have been" would be "Medicare for all who want it": a public plan paying Medicare rates to providers, accepted by all providers who accept Medicare, with competing private plans paying similar rates to providers and probably offering somewhat more generous coverage as a tradeoff for limitations in provider choice. These plans would be available to all, including those with access to employer-sponsored insurance. Oh, and add an OOP cap -- a cap on annual out-of-pocket costs -- to the public plan -- as we should do for traditional Medicare.

In the political universe we're bound by, however, "the ACA as it should have been" denotes the ACA more or less as is, but with subsidies generous enough to make coverage in the ACA marketplace truly affordable to most Americans who lack access to other insurance -- excluding (always, alas) undocumented immigrants.  

And that is about to happen! -- temporarily at least -- when Biden signs the American Rescue Plan Act of 2021 later this week (see Section 9661).   It's an eye-rubbing moment for progressives who've dreamed fruitlessly for a decade of an Affordable Care Act offering affordable coverage to almost all comers.

The inadequacy of ACA marketplace subsidies was immediately apparent to progressives as the ACA took shape in late 2009 and has been manifest ever since. Enrollment in the exchanges, totaling about 12 million at the end of Open Enrollment for 2012 is half of original CBO projections. According to Kaiser Family Foundation estimates, only about 47% of who are potentially eligible for marketplace coverage are enrolled, and about 52% of those who are subsidy eligible.*

The remedy included in the Covid relief legislation has a familiar shape. In August 2015, Urban Institute scholars Linda Blumberg and John Holahan put out a detailed proposal for subsidy enrichment that reduced the percentage of income paid for a benchmark plan at all income levels and removed income cap on subsidies, so that no one who lacked access to other insurance would pay more than 8.5% of income for a benchmark plan.  The proposal also raised the actuarial value of the benchmark plan to 80% from the current 70%. The Blumberg/Holahan subsidy scale became the template for multiple Democratic bills seeking to enhance the ACA, though recent iterations dropped the boosting of benchmark AV. 

The Covid-19 relief legislation that passed the Senate on a straight partisan vote on Saturday reduces the percentage of income required to buy a benchmark plan even more radically than the Blumberg/Holahan plan, albeit without raising benchmark plan AV, which remains high at incomes up to 200% FPL (94% or 87%) and low above that income threshold (73% or 70%) .  The new subsidy schedule is temporary, extending only through 2022 (i.e., as pandemic relief), laying a charge on the barely-Democratic Congress to extend it in subsequent legislation. 

Behold the change in the percentage of income required at different income levels to obtain a benchmark silver plan (the second cheapest silver plan in each rating area), as charted by CBO:

CBO charts the increase in subsidies at various income levels and ages, and Louise Norris at healthinsurance.org provides even more instructive examples, spotlighting the effects in states with relatively low, average, and high premiums. To grasp the sweep of it, consider the extremes of the income scale. 

At the high end, gone will be the horror stories of modestly affluent families -- say, a family of four with an income of $105,000 -- paying 20%, 30% or more of income for family coverage, often with punishing deductibles. Kaiser estimates that 3.4 million uninsured have incomes over 400% FPL, disqualifying them for subsidies under current law. 

At the low end, the strong Cost Sharing Reduction (CSR) subsidies that attach to silver plans at incomes up to 200% FPL will make coverage that's more comprehensive than the average employer-sponsored plan available for no more than about $40 per month (a much weaker is available at 200-250% FPL). In fact, high-AV silver plans will be free to a majority of prospective enrollees with incomes below the 200% FPL threshold (about $25,000/year for a single adult; $51,500 for a family of four). It's free to all enrollees at incomes up to 150% FPL, but because the benchmark is the second cheapest silver plan at every metal level, the cheapest silver plan can be free at higher incomes if it's priced significantly below the benchmark.  Setting the metal level filter to silver on this Tableau map from Duke's David Anderson shows the income threshold at which free silver plans are available in every county in the country. 

At all income levels, the legislation provides is a massive subsidy boost with the apparent potential, if it is made permanent, to raise marketplace enrollment to something approaching original CBO projections -- 24 million on-exchange enrollments.  Yet a new CBO forecast suggest that such a dramatic increase in enrollment is unlikely to happen. 

Again, these subsidy levels represent a dream long deferred for progressive healthcare policymakers and wonks. Yet CBO projects only modest enrollment increases by the end of the one full enrollment year, 2022, for which the current legislation provides this boost.  In 2022, CBO anticipates, marketplace enrollment will increase by 1.7 million, reducing the uninsured population by 1.3 million. Just 680,000 people currently ineligible for subsidies because their incomes are over 400% FPL will enroll, out of a current over-400% FPL potential market of 2 million-plus off-exchange enrollees and 3.4 million uninsured (Kaiser's estimate). That's a takeup rate of just 13% among the now-unsubsidized.  As for those with incomes under 400% FPL, CBO anticipates about a million new enrollees -- out of about 9 million uninsured who are subsidy eligible, again according to Kaiser.

Well...a year is just a year. And 2022 could be a big year for re-employment, if current economic projections hold -- not that there's evidence that many newly unemployment during the pandemic landed in marketplace coverage. (Far more found their way into Medicaid. In fact, if CBO's projections are on point, the pause in Medicaid disenrollments effected by the Families First Act last March will have had about four or five times the impact of the ACA subsidy boosts). What about enrollment in subsequent years, if Democrats manage to make the subsidy boosts permanent?

I posed the question to Kaiser's Cynthia Cox, coauthor of the brief cited above and Director of Kaiser's Program on the ACA.  Cox would not venture a hard forecast. But she said she "wouldn't be surprised if we end up with about 3 million new enrollees" over the next 3-4 years under the new subsidy schedule, if it's extended. That's in line with CBO 1-year projections. It's a bit more than a quarter of the currently uninsured who will be subsidy-eligible (adding about half of the 3.4 million uninsured over 400% FPL to Kaiser's estimate of 8.9 million current subsidy-eligible uninsured). Uy.

Takeup could be considerably higher. But that depends on an effective boost to marketing, outreach and enrollment assistance, and ultimately, perhaps, on a streamlined enrollment process. Cox's conservative quasi-estimate is grounded in long years of surveying the uninsured, which has meant plumbing the depths of ignorance in the general population about current marketplace offerings. 

Citing survey data, Cox notes,  "If you ask uninsured people why haven’t signed up, 75% will say it's because of cost. That can’t be, because 40% of them are eligible for free coverage [mostly zero-premium high-deductible bronze plans]. If you ask, have you shopped in last two years?...75% have not."

As one source of this ignorance, Cox points to news coverage that focuses on unsubsidized premiums, currently averaging $478 per month for benchmark silver for a 40 year-old. "People don't know that almost no one pays that," Cox says. And as several veteran enrollment assistors have told me, the toxic Republican vilification of marketplace coverage over many years still has its effect: throughout the red states, there are still many uninsured who won't touch "Obamacare."

The Trump administration cut federal funds dedicated to outreach and enrollment assistance for 36 states using the federal exchange (raised from user fees charged to insurers selling plans on the exchange) by 84%, and advertising by 90%. Kaiser has estimated that more than a billion dollars in such unused funds is available to the Biden administration. Navigator groups have been operating on spit and grit in the Trump years. Some navigator programs have disappeared; some have developed deep ties to nonprofits, medical facilities, houses of worship, and government entities that they may leverage effectively with a fresh infusion of federal funding. 

The persistent truth in the U.S. is that the uninsured are hard to reach, and ACA marketplace enrollment is all too often hard to execute. "So much will depend on assistance -- navigators, brokers, tax preparers," Cox says. She sees particular potential in the tax preparers, especially if the Open Enrollment season can be moved to tax season. That includes non-human "preparers." She envisions TurboTax and its ilk floating pop-up messages: "Uninsured? Pay zero dollars for this plan."

Getting enrollment assistance -- or simply enrollment marketing messages -- embedded in the tax filing process is a step toward another progressive dream: auto-enrollment, with opt-out. When coverage is affordable, it should be accessed. Today, by Kaiser's estimates, almost 7 million uninsured are eligible for Medicaid, which is free. High as that total is, it suggests a Medicaid takeup rate of more than 90%, compared to about 60% takeup of ACA-compliant plans if 3 million are added to current totals. 

One further point. The pending subsidy boosts do not touch the marketplace's metal level structure -- that is, the out-of-pocket costs in plans available. I have examined two means by which the Biden administration can boost the real actuarial value of plans offered at or below the cost of benchmark coverage: 1) mandate full "silver loading," which would make gold plans available below benchmark, and 2) change the AV formula by cutting the most expensive enrollees out of the calculation of the "average enrollee's annual costs." Even more urgently, the legislation does not touch the family glitch: employees for whom  an employer-sponsored single-person plan is deemed affordable by ACA standard, but for whom family coverage is unaffordable, are ineligible for subsidies. That too can be changed administratively -- and likely will be.  

All of these steps would further fulfill the "affordable care" promise. But affordability, again, does not guarantee enrollment.

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* As of January 2021, Kaiser estimates that 14.9 million uninsured are eligible for marketplace coverage, and 8.9 million of them are eligible for subsidies. Current effectuated enrollment through ACA exchanges is likely a bit above 11 million (as of the end of Open Enrollment, it was almost exactly 12 million), with about 9.5 million subsidized. In 2019, Kaiser estimated off-exchange enrollment in ACA-compliant plans at 2.1 million; I am guessing it's up slightly after 3 years of flat premiums and the spur of the pandemic.

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