Improving Affordability in the Exchanges
We dodged a bullet in the Senate; there is now a moment and opportunity for constructive bipartisan problem solving, so let’s start improving the Affordable Care Act. Here are a few ideas worth considering on how to dramatically improve affordability of coverage and accessibility of care in the Exchanges under the Affordable Care Act (ACA).
First, an enhanced bronze: this would parallel the enhanced silver, but at actuarial values of 10% less. Thus if the enhanced silver would pay 94% of an individual’s expected medical expenses, the enhanced bronze would pay 84%. Bronze plans cover only 60% of expected medial costs; this means individuals and families choosing the bronze plans must pay 40% of their medical costs – very high deductibles and other forms of cost sharing which serve as a real barrier to care. An enhanced bronze would allow those families and individuals with lower incomes who have chosen the bronze for the affordability of the premiums to get much better access to care for their choice of the bronze level of coverage.
Second, link the ACA premium assistance subsidies to the second lowest cost gold plan, rather than the second lowest cost silver. Gold plans pay 80% of expected medical costs – i.e. 20% cost sharing; whereas silver plans have 30% cost sharing. Gold is the typical level of coverage in employer plans; this would put the Exchange plans on par with employer plans. Linking the premium assistance subsidies to the second lowest cost gold plan would both improve premium affordability and improve access to care for those who then select the gold level of coverage. This could be paired with cost sharing reductions for all choosing bronze, silver or gold levels of coverage.
Third, expand premium assistance to those with higher incomes. The House version of premium assistance could be married to the existing ACA premium assistance. This would assure that many more individuals would qualify for premium assistance in the individual markets through the Exchanges. It would reach more young individuals and their families as well as older individuals with incomes above the 400% of poverty threshold where ACA’s premium assistance ends. This would also improve the risk profile of those enrolling in Exchanges.
Fourth, auto enrollment at time of tax filing. Auto enrollment would assure that many Americans who are confused and lacking adequate information about the ACA would have the option of coverage. Timing it to tax filing would assure that individuals would clearly see the financial benefits and detriments of enrolling or not.
Fifth, create parallel eligibility for cost sharing reductions (now 250% of federal poverty level) and premium assistance (400% of FPL). This would assure that all of those who face financial challenges affording coverage would also qualify for lower cost sharing so they can afford the care that is now covered.
Lastly, how do we pay for any or all of the above? It’s time, indeed way past the time to put a stop to the raid on our pocketbooks by the nation’s pharmaceutical industry. Allow Medicare to directly negotiate contracts with the pharmaceutical industry and the medical device manufacturers.
Prepared by: Lucien Wulsin