Following his failure to legislatively repeal the Affordable Care Act (ACA), President Donald Trump and his administration have waged a campaign to undermine and sabotage the landmark health care law. The administration has employed numerous strategies, including expanding access to short-term junk plans; eliminating cost-saving reinsurance programs; and cutting enrollment outreach funding. The Center for American Progress Action Fund (CAPAF) has been tracking these efforts to undermine enrollment, force coverage loses, and increase the cost of care for millions of Americans.
The Trump administration and congressional Republicans delivered a blow to the ACA in its repeal of the act’s individual coverage mandate, which was included in the 2017 Tax Cuts and Jobs Act. With that provision of the law repealed, Texas Attorney General Ken Paxton, along with 19 other Republican state attorneys general, sued the federal government, arguing that the remainder of the law would now be unconstitutional. In 2018, a federal district court judge sided with the plaintiffs, ruling the ACA unconstitutional in a decision that is now being appealed to the 5th U.S. Circuit Court of Appeals. The fate of the ACA remains uncertain the near future, as the case is likely to reach the U.S. Supreme Court regardless of the 5th Circuit’s decision.
In the face of this blatant and insidious sabotage, many states have enacted laws to bolster and protect the provisions incorporated within the ACA. For the past year, CAP has been following three types of state actions: the implementation of state individual mandates, reinsurance programs, and limits to short-term plans.
There are several other critical actions that states have taken to increase coverage for their residents. This column highlights several such actions and argues that other states should follow suit, instituting these successful reforms to secure insurance coverage for their residents in the face of the intense federal ACA sabotage.
State-funded premium subsidy increases
Millions of low- and middle-income Americans now receive federal premium subsidies—a landmark feature of the ACA—to lower the cost of health coverage. Specifically, the ACA created a tax credit to lower the premiums for individuals with family incomes between 100 percent of the federal poverty level (FPL)—about $25,000 per year for a family of four—and 400 percent of the FPL who purchase insurance in the ACA’s marketplaces. The law caps the amount an individual must pay for premiums as a percentage of their income, and the government subsidizes the remainder. The Trump administration, after attempting to limit these subsidies through ACA repeal legislation, has made regulatory changes that will raise enrollees’ marketplace premiums while also increasing the ACA’s limits on out-of-pocket expenses.
However, several states—most notably California—are fighting back. Effective January 1, 2020, California will become the first state to offer premium subsidies for marketplace enrollees with family incomes between 400 percent and 600 percent of the FPL, a segment of the middle-class population that is ineligible for federal premium assistance under the ACA. The California budget office estimates that the average subsidy for enrollees within this income range will be $119 per month. In addition, California will increase subsidies for individuals with incomes between 200 percent and 400 percent of the FPL.
These changes reflect an additional step California has taken to increase the accessibility of comprehensive health insurance among its lower- and middle-income residents. The state leadership had already adopted of a state individual mandate and banned short-term junk insurance plans, which the Trump administration sought to promote. By promoting enrollment through these subsidies, the state anticipates not only lower health care costs but also a more stable insurance market.
Easy enrollment plan
Maryland recently passed bipartisan legislation to implement a unique strategy to simplify health insurance enrollment; if successful, this strategy could be adopted by other state legislatures. This so-called easy enrollment plan lays out a multipronged strategy to encourage enrollment following repeal of the individual mandate.
The program uses income tax filings to facilitate fast-track enrollment. Simply by checking a box on the filing, a resident can immediately request the state to determine their eligibility for Medicaid, the Children’s Health Insurance Program (CHIP), and premium tax credits. If the individual qualifies for Medicaid or CHIP, the state marketplace automatically sends them an invitation to pick from among the Medicaid/CHIP managed care plans. If the individual does not choose a plan by that date, the exchange will enroll them in the default Medicaid plan. Uninsured filers who do not qualify for Medicaid or CHIP—and are therefore deemed reasonably able to afford coverage—will automatically become eligible for a special enrollment period for purchasing insurance in the individual marketplace.
This plan targets the logistical, rather than financial, barriers that can prevent individuals from purchasing health insurance coverage. In doing so, it has great potential for success. And although it may be several years until the state is technologically and logistically equipped to execute the full plan, the new program provides an innovative pathway toward the goal of increasing insurance coverage for the uninsured. As the Trump administration’s actions continue to undermine coverage by raising the barriers to enrollment, states should adopt plans such as Maryland’s in order to bolster the number of individuals who can easily access health insurance plans.
Year-round enrollment periods
Massachusetts has long been a national leader in progressive health care reform and as such has achieved the highest insured rate of any state. One such reform is the state’s unique long-standing policy that allows all Massachusetts residents living at or below 300 percent of the FPL to enroll in the health care marketplace year-round instead of restricting them to an open enrollment period.
Open enrollment periods are a period each calendar year when any individual can enroll in health insurance plans. Open enrollment periods are intended to prevent healthy people from waiting until they are sick to sign up for coverage. One way the Trump administration has sought to undermine ACA enrollment has been by cutting the open enrollment period from a previous 12-week span to the current six-week span. If individuals want to purchase coverage outside of this period, they must qualify for a special enrollment period (SEP) due to a life-altering event such as the loss of employer coverage or the birth of a child.
However, due to the complicated documentation process, simply proving that an individual qualifies for an SEP can be a barrier to insurance access—even for those who do qualify for SEPs. Additionally, there are many important reasons why individuals may want to purchase insurance after an open enrollment period that do not qualify for SEPs such as reentry into the job market. For individuals earning less than 300 percent of the FPL, Massachusetts’ policy eliminates these barriers to enrollment. A Center on Budget and Policy Priorities (CBPP) analysis found that this policy was a significant contributing factor to decreasing the number of uninsured individuals in the state. Importantly, this decrease came without any noticeable increases in adverse selection—that is, the increased enrollment of the sickest consumers in the individual market.
The CBPP study also found that because of this policy, the state has also seen a unique trend in its insured rates: Unlike in almost every other state, Massachusetts’ uninsured rate decreases as the year progresses. In doing so, the plan combats the harmful effects that President Trump’s cut to the open enrollment period has had on the number of people insured by the marketplace.
State public option
Perhaps the most ambitious state-level attempt at increasing access to affordable insurance coverage occurred in Washington. Gov. Jay Inslee (D-WA) recently signed into law a piece of legislation that creates a public health insurance option for Washington residents by 2021. This law will make Washington the first state to offer a public option, requiring the Washington State Health Care Authority to offer a lower-cost plan through the marketplace. In doing so, the state aims to provide a lower-cost coverage option for residents who purchase health insurance in the marketplace. The state government estimates that the public option will provide enrollees in the public option with overall health care savings of approximately 5 percent to 10 percent. By contracting with a private insurer to administer the plan, Washington eliminates the need for the state itself to run the plans. By including a private insurer, this approach also has the potential to mitigate corporate distaste for public option plans.
To achieve lower costs, the public option would institute a cap on the rates paid to health care providers equal to 160 percent of Medicare rates, with a floor for primary care providers at 135 percent of Medicare rates. While higher than initially proposed, rates were chosen to ensure that providers, especially those in rural areas, would be willing to accept the plan, while still allowing for savings.
As the Trump administration continues its assault on the ACA, several states have taken innovative steps to ensure the accessibility of quality health care for their residents through Medicaid and the marketplaces. These strategies include increased state-funded premium subsidies, an easy enrollment plan, year-round open enrollment periods, and the creation of state public option plans. Each of these reforms builds off the work already done by various states to institute statewide individual mandates, reinsurance programs, and limits to short-term plans to achieve a shared goal of providing care for residents in need. Other state governments should follow their lead by implementing similar reforms, fulfilling the promises they have made to protect health care for their residents.
Jesse Nadel is an intern for Health Policy at the Center for American Progress.