Travels In Hyperreality: What If Bipartisan ACA Fixes Were Possible?

Since enactment of the Affordable Care Act in March 2010, a strange, relatively unnoticed phenomenon has occurred: Congress has passed bipartisan changes to it. These amendments were generally to such esoteric components of the law that they dodged the political block-aid that otherwise surrounds it. But what would happen if things were different? If Congress could act to change the ACA in a meaningful way, what would it do? Here we briefly review the previous sub rosa changes to launch into a broader examination of macro ACA reforms that have a fighting chance of enactment in the not too distant future. Tinkering. Most recently, in the Medicare “doc fix” in March, both parties acted to repeal the section of the ACA that capped deductibles for small group health plans. That legislation also delayed, again, implementation of the ACA’s Medicaid cuts to disproportionate share hospitals. Prior to that, Congress twice expanded the IRS’s ability to recoup overpayment of ACA premium subsidies, which can arise when a household’s income exceeds what was estimated at the beginning of the year. ACA provisions restricting physician-owned hospitals have been softened and funding from the law for prevention and public health programs has been reduced. Earlier still, Congress repealed the dreaded 1099 filing requirement, which would have significantly expanded paperwork responsibilities for small businesses and vendors alike But, clearly, these changes reflect nibbles around the edges of the ACA. The “bones” of the law are the same as when the ink on President Obama’s signature dried over four years ago. But many Democrats — including the President — have acknowledged it could use some fixing. I think I’ve heard Republicans raise a few concerns as well… So far, however, the highly toxic politics of the ACA have precluded any meaningful bipartisan efforts to revisit its key provisions. Someday, though, that could change. Whether for political realignment, a settling of the harsher controversies around the law, or other unforeseeable developments, it’s conceivable that Congress may one day act (and a President will agree) to make big changes to the ACA. So, as my three year-old son likes to say, let’s pretend. Luckily, some stouter-hearted members of both parties have given us insight into where they’d like to take the law, if given the opportunity. While none of them purport to speak for anyone else, they offer important roadmaps to where some common ground could be found. Senate Democrats Weigh In. Late last month, for example, a half dozen moderate Democratic Senators penned an op-ed in Politico outlining changes they’d like to see, some of which have already attracted Republican interest. Their proposals included adding a “Copper” plan to the metallic tiers of plan options in the Exchanges. The Copper plans would provide a lower-premium option through plans that increase enrollee out-of-pocket contributions. But, despite some “sticker shock” around Exchange plan premiums, arguably the bigger shock is going to come when enrollees get billed for their copays and other out-of-pocket responsibilities under the existing options. Furthermore, as CBO recently noted, Exchange plan premiums have actually come in lower than expected. Catastrophic coverage plans are also already available to younger Exchange shoppers. On the other hand, some consumers may prefer this lower cost option to protect themselves from catastrophic healthcare costs and comply with the individual mandate. If more consumers downgrade from existing plans to this one than sign up anew, the change would reduce Federal subsidies and thus score as a “saver,” the most important quality a provision can have to gain advancement. The squad of Democratic Senators also urges changes for small businesses, arguably the constituency that is least pleased, shall we say, with the ACA. They would expand the exemption from the “employer mandate” to businesses with fewer than 100 employees and loosen eligibility for the small business tax credit. In trying to limit the costs associated with the credit, ACA authors put such restrictions on it that it has failed to gain real traction in the business community. Few would likely argue with either of these proposals on their face, but both would increase Federal outlays and thus likely require spending cuts or revenue increases elsewhere to fund them. That part’s never easy. Two additional recommendations — of the deregulatory ilk — have substantial bipartisan support, though opinions regarding their impact continue to vary. First, these Senators would ask state insurance commissioners to propose means of selling plans across state lines, a staple of Republican health reform proposals. They stop short of endorsing the change, though, citing this as a means of evaluating whether such a policy would increase consumer choice and improve competition among plans. Second, they would institutionalize and facilitate the use of extra-Exchange channels for enrolling in commercial coverage. Among the more contentious aspects of the ACA was how it diminished the role of agents and brokers in the health insurance marketplace, though it and subsequent regulatory action by the Administration have sustained their participation. This proposal would reduce barriers to direct enrollment with insurers outside of Healthcare.gov or the related state-based websites, including use of agents and brokers.Republicans Tip Their Hand. About a month before the Democrats posted their op-ed, Republican Senators Burr, Coburn and Hatch released a blueprint for replacing the ACA. While it opens with the familiar battle cry to repeal Obamacare, the subsequent proposals shed light on where they might improve the law if given a bona fide opportunity. One proposal that has attracted some bipartisan interest would be to relax the band the ACA set on age rating from 3:1 to 5:1, with states permitted to opt for more or less restrictive approaches by enacting their own standard. The rating band has the effect of increasing premiums for younger enrollees and decreasing them for older ones. Insurers and some others have suggested that broader variability would improve enrollment and could better stabilize the market. Another proposal tweaks an existing ACA consumer protection in a way that, these Senators suggest, would obviate the need for the individual mandate, which has never relinquished its crown as the most loathed policy in Obamacare-dom. Rather than have guaranteed issue and a ban on pre-existing condition exclusions per se, they would apply these protections to consumers who maintain continuous coverage. A one-time only enrollment period would be permitted for the previously uninsured (better get the website working for that!). Previously uninsured folks who miss the boat would lose these protections, as would others who drop coverage without enrolling in a new plan shortly thereafter. A separate proposal that would diminish the need for the individual mandate is the group’s idea to allow default enrollment of individuals who are eligible for tax credits but do not pick a plan. Default enrollment has been proven to significantly expand participation, so this concept would improve coverage and help balance risk pools. More analysis is probably needed to consider the viability of these options, especially since the train has left the station with the ACA consumer protections and enrollment processes. But if there’s a viable path to abandoning the individual mandate without turning the reformed marketplace upside down, nary a Democrat will object. With regard to small businesses, in addition to jettisoning the employer mandate entirely, these Republicans would allow employees to purchase their own insurance, an option they currently lack if their employer offers coverage. Interestingly, the Democrats’ op-ed acknowledges and endorses the probability that more small business employees will get access to individual plans if their companies take advantage of the mandate exemption they propose. But they stop short of allowing those employees to qualify for their own tax credits if their employer continues to offer coverage. In another area of potential alignment, the Republican proposal includes a modified version of the interstate purchasing model, with states permitted to form compacts that would merge their insurance markets. A related version of this policy is in the ACA, but so far there have been no takers. Am I imagining it, or are some streams crossing here? Another interesting proposal from the Senate Republicans’ plan would make Medicaid-eligible individuals also qualify for tax credits to purchase commercial coverage. This harkens to ACA authors’ contemplation of giving households in the 100-133 percent of poverty range access to either Medicaid or tax credits for commercial Exchange plans. The concept of offering this choice was dropped due to the CBO score; from a Federal perspective, even with the enhanced ACA match, Medicaid coverage is cheaper. But, an unresolved issue that will heat up next year could bring this concept to the fore. Authorization of the Children’s Health Insurance Program (CHIP) was temporarily extended by the ACA to September 30, 2015, but its fate after that is up for debate. Some favor giving beneficiaries of this program access to subsidized commercial coverage, while others prefer maintaining this government-managed program, at least for a while longer. So the opportunity could be ripe for revisiting and potentially realigning the availability of different coverage options for different income groups, perhaps with the goal of simplifying the landscape and limiting disruptive transitions between programs. Looking Ahead. There are other chapters that could be written here, many of which warrant separate posts. Price transparency, the group market “family glitch,” delivery reforms, addressing tax preferences for employer-sponsored insurance, various sector-specific taxes, and the Independent Payment Advisory Board (better call Ms. Palin to lead a thoughtful roundtable on that) — all could get traction in the mythical constructive, bipartisan atmosphere that continues to elude Washington. The dam has already been breached, so it’s time to start thinking about what’s to come. But change will have to wait until after the 2014 elections and, likely, 2016’s as well. For now, we’ll have to keep pretending.