Putting the "Affordable" in the Affordable Care Act: A role for the IRS

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 After the boost to ACA marketplace subsidies enacted as part of the American Rescue Plan Act (ARPA), the largest remaining bar to affordable coverage for all but undocumented Americans (who are barred from any government help for coverage) may be the affordability threshold for employer-sponsored insurance. It's ridiculously high. The IRS can provide some relief now, without portentous rulemaking.

The ACA defines employer-sponsored insurance (ESI) as affordable if a plan providing Minimum Essential Coverage (MEC) as defined by the ACA costs less than 9.5% of income. That baseline is adjusted annually to account for inflation in premiums in excess of inflation in the consumer price index and currently stands at 9.83% of income.  MEC is equivalent to bronze-level coverage in the ACA marketplace, which typically means a single-person deductible in the $7,000 range. Those for whom an employer's offer of insurance is deemed affordable are ineligible for ACA marketplace subsidies (though not ineligible for Medicaid). KFF estimates that 3.5 million uninsured people are in this category.

New Jersey bill aims to block Trump admin's proposed rule for Association Health Plans

New Jersey is relatively well defended against the Trump administration efforts to fragment the individual and small group health insurance markets by allowing short-term plans to be sold for year-long terms and easing the path for association health plans (AHPs) to be deemed employers in their own right and so gain large group status.

New Jersey bans short-term plans outright, and tightly regulates association plans (the main species of  multiple employer welfare arrangements, or MEWAs, that is, plans that cover the employees of two or more unrelated employers). In Jersey, MEWAs are regulated as small group plans,even if they're self-funded. (While self-funded plans generally are subject to federal oversight under ERISA, which preempts state law, there has long been an exception enabling states to exert all but full  regulatory control over MEWAs.)

As small group plans, MEWAs in New Jersey are subject to the full suite of ACA coverage rules, including Essential Health Benefits. Small group plans are not available to self-employed individuals, or to small businesses that have no employees other than owner and spouse.. Under the Department of Labor's proposed rule for AHPs, these self-employed individuals and small business owners would be eligible to enroll in AHPs that gain large group status.

Does the proposed rule threaten New Jersey's current regulation of AHPs? That's not clear. On the one hand, "The proposed rules also would not modify the States’ authority to regulate health insurance issuers or the insurance policies they sell to AHPs" (p. 42). At the same time, Kevin Lucia, a professor in Georgetown University's Health Policy Institute, cites concern among experts "that this is potentially going to have to be litigated. If you're an association and you set up in Oklahoma, if you read these regulations, you think, well I can sell everywhere -- and yet, California tells me I can't come in?"

Bottom line for Lucia: "It's a big question whether states will be able to maintain their authority to regulate MEWAs."

That uncertainty likely drives a provision addressing MEWAs in a bill introduced in the New Jersey legislature, S-1877, that would establish a state individual mandate to replace the federal mandate effectively repealed by the Republican Congress.

Affordable health insurance vs. affordable health care

One of the flaws of the Affordable Care Act is that it partially (not entirely!) confuses affordable insurance with affordable health care.

On the plus side, for insurance purchase purposes, the ACA benchmarks affordability to silver-level plans and calibrates the out-of-pocket costs these plans impose on buyers to income, via Cost Sharing Reduction (CSR) subsidies, which raise the plans' actuarial value to 94% for buyers with incomes under 150% of the Federal Poverty Level and to 87% for buyers under 200% FPL.

On the minus side, CSR fades to near-insignificance at 201% FPL; silver plan premiums slope toward unaffordability for a lot of buyers somewhere over 150% FPL; and the ACA dangles cheaper bronze plans with deductibles north of $5,000 in front of low-income buyers, for many of whom many of those plans will do very little good.

Also on the downside, for the purposes of determining whether a person or family has access to "affordable" insurance (and so whether they are subject to the mandate to purchase it), the ACA benchmarks affordability to the cheapest available bronze plan -- which, again, is likely to have a per-person deductible and out-of-pocket maximum in the $5000-6,600 range. Some bronze plans offer some services, such as low-copay doctor visits or generic drugs, before the deductible is reached, but many (my spot-checks make me suspect most) do not. They do offer mandated free preventive services, but those are a patchwork.

The ACA is killing off a college plague: junk student insurance

One type of junk health insurance that the ACA is doing away with is the kind of crappy policy that many colleges used to push on their students. (There is one loophole extended to Jan. 1, 2015, explained below.)  BusinessWeek exposed this scam in 2008:

More than half of the insurance plans recommended by colleges offer benefits of $30,000 or less, according to a survey published in March by the General Accounting Office, an arm of Congress. Many plans have further limits that prevent payout of even modest maximums. While two-thirds of the country's more than 17 million college students have coverage from a parent's employer or their own job, many of the rest may be vulnerable if they suffer a serious illness or accident. With premiums and restrictions increasing under employer-provided plans, a growing number of parents are shifting children to college-sponsored coverage. But "when a student gets gravely sick, $30,000 in benefits is unrealistically low," says Alan Sager, a professor at Boston University's School of Public Health.