Wednesday, April 21, 2021

ACA 2.0 -- how's it going so far?

Subscribe to xpostfactoid

On a temporary basis, the health insurance-related provisions of the American Rescue Plan Act (ARPA) signed into law on March 11 moved the Affordable Care Act much closer to living up to its name. Major boosts to premium subsidies effective through 2022 at every income level -- including an absolute cap on premiums for a benchmark plan as a percentage of income for every legally present person who lacks affordable access to other insurance -- credibly put coverage within financial reach of everyone motivated to seek it, albeit with more complexity of process and exposure to out-of-pocket costs than a truly universal system would require. That's a BFD, as a former vice president might say.

The changes became effective immediately and retroactively --  three months after the end of Open Enrollment for 2021 and with an emergency Special Enrollment Period still in progress. So, almost six weeks in, how's it going? A few notes below on implementation, benefit design, and future prospects.

  • Fixing a plane in mid-flight (as the emergency SEP is effectively an Open Enrollment period), federal and sometimes state governments have moved with impressive swiftness. While subsidy boosts for those already enrolled were retroactive to Jan. 1, and would be credited eventually by the IRS, got the new subsidy schedule loaded on April 1, enabling enrollees to update their applications and get the increase subsidies applied to their monthly payments as of May 1. Most of the 15 state-based marketplaces have followed suit, or set a date by which it will be done (see Charles Gaba's chart at point #2 here). On April 9, the IRS issued guidance enabling 2020 enrollees who underestimated their income and so owed back excess tax credits to take advantage of an ARPA provision forgiving that payback, announcing that the form that details tax credits paid out does not have to be filed at all, and that the IRS will credit back excess APTC already paid back without any further action from the tax filer. 

  • Historically, only about half of prospective ACA marketplace enrollees who are eligible for subsidies have enrolled.  While it's never been clear to what extent the weak takeup is due to ignorance (actively fostered in red states) as opposed to informed rejection of subsidized coverage as too expensive, veteran navigators attest that ignorance remains rife. To address that, HHS just announced that's its putting $80 million into enrollment assistance and outreach for 2022, well above the $63 million allotted at the Obama administration's peak  and eight times the amount last allocated by the Trump administration (though just a small slice of the $1.2 billion in unspent marketplace user fees charged to insurers that KFF estimates accumulated during the Trump years). 

  • As to reducing friction in the enrollment process, today Axios' Caitlin Owens notes today that "Maryland, Colorado and Virginia have passed 'easy enrollment' laws, which let residents opt into sharing their tax information with their state's exchange. The exchange can then determine whether they're eligible for free or low-cost coverage." The vast expansion of the availability of free coverage, first by silver loading (starting in 2018) and now by the subsidy boosts in ARPA, makes this quasi-autoenrollment more feasible.  (Well more than half the uninsured are eligible either for Medicaid or free marketplace coverage, Stan Dorn of Families USA points out to Axios' Owens, citing KFF.  ARPA makes free silver coverage with relatively low out-of-pocket costs available to enrollees with incomes up to 150% of the Federal Poverty Level.)  A major step in this direction would be to move Open Enrollment to tax season and encourage tax preparers and tax prep software to point clients toward insurance options.

  • The ARPA subsidy boosts do not address high out-of-pocket costs, though pending legislation to make permanent changes reportedly will -- most likely raising the benchmark plan against which subsidies are set from silver (70% actuarial value) to gold (80% AV) and increasing Cost Sharing Reduction subsidies that further boost AV.  Administrative alternatives include changing the AV formula so it more accurately reflects what most people would understand by "the average enrollee's annual costs" (which could complement a statutory boost to AV) or strictly requiring insurers to price plans at each metal level in accord with the average AV obtained by enrollees at that metal level. Since CSR attaches only to silver plans, average AV for silver plans is (counterintuitively) well above that of gold. Gold plan premiums should therefore be lower than silver, but that's rarely the case at present.  

  • Prospects are poorer for another linchpin of candidate Biden's healthcare plan: introduction into the ACA marketplace of a "public health insurance option like Medicare" -- let alone making that option available on a subsidized basis to all who want it, including those with access to employer-sponsored insurance (ESI).  Creating such a plan -- paying Medicare rates to providers, or rates at least comparable -- is in IMO the key to controlling healthcare costs, and for that very reason it's not going to happen, as all healthcare industries are allied against it. A strong public option within the confines of the ACA marketplace -- not available to those with  access to "affordable ESI" -- would be a start, as access could be expanded by degrees. Democrats would need much larger majorities to buck healthcare providers by establishing a public option with any teeth, i.e. one paying something close to Medicare rates and accepted by all providers who accept Medicare. Perhaps a few years of paying for marketplace subsidies at levels high enough to attract most of the eligible will make the need for this core cost control measure acute.

  • For perspective, it's worth keeping in mind that the ACA Medicaid expansion to date has had far more impact on the national uninsured rate than has the marketplace, and Medicaid enrollment  has increased by perhaps 10 million during the pandemic, while average monthly enrollment in the marketplace increased by less than a million. At ARPA subsidy levels, however, if extended in subsequent legislation, the marketplace may have the capacity to absorb more of the currently uninsured than does Medicaid. 

1 comment:

  1. As always, thanks Andrew for an informative blog post.

    In my quest to point out every defect in the current ACA that prevents this country from having a universal system of health insurance like the rest of the developed world has, let me report exceptions to your statement in paragraph 1 upon detailed analysis:

    "[The American Rescue Plan Act includes (for 2 years at this point)] an absolute cap on premiums for a benchmark plan as a percentage of income for every legally present person who lacks affordable access to other insurance."

    The issue is regarding "who lacks affordable access to other insurance".

    Because of these:

    1)The "family glitch" leaves many families without affordable insurance and without that absolute (8.5% of income) cap. (You know about the issue, and have posted on it, e.g. within

    2)Non-expansion states: Below 100% of the Federal Poverty Level, the subsidies capping premiums at 8.5% of income are not permitted by ACA rules. (There are no subsidies for those people. They can get full-price on exchange if they can afford it.)

    3)12 or more Medicaid expansion states (including blue MA, NJ, and MD) that estate recover ACA expanded Medicaid and other non-long-term-care ordinary-medical Medicaids for people 55-64 (or maintain the option to do so retroactively). One option a state has is to estate recover all medical bills paid out. This "your estate has to pay the bills back" is not insurance, and it is not what the rest of the developed does to anyone in their universal systems.

    You've covered this as well in the blog. I am just fixing the logic of your statement, as some readers of your post may not catch the lapse. (For example, here: from you, augmented with my comments and those of others.)

    Otherwise, good logic on not omitting the sometimes-unaffordable copays, which you caught in this post.

    God is in the details!


    Incidentally, stumbling into a number of ACA problems that I didn't know about in 2019, I actually tried to insert a catalog of things needing to be fixed in the ACA (section "Problems") into the Wikipedia article on the ACA.

    This is it from archive:

    It's not in the Wikipedia article on the ACA any more.

    No one ever found any mistakes, but about 2 months after I inserted it, another editor (presumably a "protector" at Wikipedia) acted by veto power on calculations (no matter how simple) to remove all of the numbers showing things like some people having to allow 41% of income for premiums + out-of-pocket expenses under the ACA.

    Then, 4 months before the last Presidential election, a second editor joined in with the first to vote against me and remove the whole section.

    The editors may have been trying just to do a good job, but it certainly seems possible that their intent was information control: keeping the ACA looking as good as possible to those who don't know the substantial defects.

    (As I've commented before, this mass-manipulation angle seems likely at some of the mainstream news sources as well, such as the Washington Post and NY Times, where as far as I can tell, the latter has NEVER covered the issue of Medicaid estate recovery on ACA expanded Medicaid.)