Five Relatively Cheap Ways To Expand The ACA

They Would Cost $50 Billion A Year Versus Trillions For Single Payer
By Bob Hertz

It is not wise for Democrats to spend all their energy debating single payer healthcare solutions.

None of their single-payer plans has much chance to pass in 2020.

Instead, here are six practical programs to improve the Affordable Care Act.

Taken all together they should not cost more than $50 billion a year. This is a tiny fraction of the new taxes that would be needed for full single payer. This is at least negotiable, especially if Democrats can take the White House and the Senate.

Program No. 1 –  Kill the Subsidy Cliff

If your annual income as a single taxpayer is under $48,560, you currently get a subsidy when purchasing a qualified plan. But if your annual income is $ 49,000 or more, you get no subsidy whatsoever.

The solution is to guarantee that no one, of any income, has to pay more than 9.5% of their income for insurance. The person earning  $49,000 would get virtually the same subsidy as the person earning $1,000 less.This could impact 2 to 3 million persons, many of them over age 50. Right now they are either getting crushed by unsubsidized premiums, or staying uninsured, or buying risky short-term coverage.

The annual cost of these greater subsidies should be in the range of $8-$15 billion a year.

Program No. 2 – Kill the Family Glitch

Due to the ‘family glitch” in the ACA, families are not eligible for premium subsidies in the exchange if the employee could get employer-sponsored coverage just for him or herself, for less than 9.86% of the household’s income. 

It doesn’t matter how much the employee would have to pay to purchase family coverage. The family members are not eligible for exchange subsidies.

Somewhere between three to six  million people are impacted by the family glitch. They are disproportionately middle income, because higher-income workers are more likely to work for companies that heavily subsidize coverage for dependents.

 The cost of new subsidies could be $20 billion a year. 

Program No. 3 – Improve Existing ACA Coverage

We must address the high deductibles and out-of-pocket limits now found in most ACA insurance contracts. Here are several reforms we can impose immediately:

  • Emergency care must be exempt from the deductible. (Co-pays up to $250 are acceptable. Co-insurance for emergency care is not acceptable.)
  • Drugs must have their own deductible, versus the overall plan deductible. In other words, drug coverage must start after perhaps $250 in drug expenses, and not wait until the full plan  deductible is met.
  • Out of network care must count toward out of pocket maximums. The plan deductible must also count against out of pocket maximums.

The higher subsidies  should result in $7 to $10 billion of extra federal spending.

Program No. 4 – Extend Medicare’s Consumer Protections to All Americans

We might not be able to give Medicare benefits to all, due to the taxes required.

However, we can extend Medicare’s protections to all, including:

  • Protection from balance billing. In general, providers cannot charge seniors more than 115% of the approved Medicare amount. Surprise bills and chargemaster bills simply do not exist in Medicare.
  • If a Medicare claim is denied – and actually this happens a lot – the patient is not automatically liable for the bill.

Progam No. 5 – Medical Debt Assistance

  • Outlaw high deductibles for emergency care and prescription drugs. (See Program No. 3 , above)
  • Lower the out-of-pocket maximums (see Program No. 3, above)
  • Wipe out patient liability if a claim is denied (see Program No. 4 , above)
  • Let the uninsured pay Medicare rates for hospital care. They might still have medical debt, but much less of it . Chargemaster billing would be outlawed.
  • All debts in excess of 20% of household income should be forgiven.  The federal government could pay hospitals perhaps twenty cents on the dollar for their largest patient debts. Bills will be recalculated based on the Medicare rate at the time.
  • All debts over seven years old should be forgiven. (and never, ever, sold to collection agencies)
  • Surprise medical bills must be forgiven.

Program No. 6  – Enforce Consumer Laws That Already Exist

1. Out-of-network medical bills are already illegal. Insurers sell policies by claiming that certain hospitals are in their network. Hospitals then boost their admissions by convincing patients they are in the insurer’s network. Hoewever, when the unwary patient gets surprised at billing time, it turns out these claims weren’t exactly true. The Federal Trade Commission could punish these offenses right now.

2. Chargemaster bills to emergency patients are already illegal.

When an actual contract cannot be formed – as in medical emergencies – the courts have a long history of constructive intervention. The doctrine of quasi-contract would limit charges to the amounts that are actually and customarily paid to and accepted by hospitals.

3.  Predatory pricing for drugs could already be subject to antitrust enforcement. In hesitating to use antitrust against excessive pricing drugs, the United States is an international outlier. Foreign governments are using their antitrust laws to rein in excessive drug pricing as an abuse of dominance.

 

Bob Hertz is a retired insurance broker. A version of this article originally appeared at The Health Care Blog.