Fixing health care: Take down the family firewall
Note to Joe Biden from the Commonwealth Fund: You gotta take down the Obamacare firewall.
That’s the message from a study of family health care coverage by the progressive think tank. It may seem a bit treasonous to ask Biden to undo anything President Barack Obama did, especially when it comes to his legacy act, the Affordable Care Act (ACA).
But the Commonwealth Fund says thousands of families are suffering unnecessarily due to an unanticipated side effect of language outlining employer health insurance obligations.
When Obamacare was constructed, its creators wanted to make sure employers offered their workers health insurance that met the ACA’s basic coverage tenets. Those that failed to do so had to pay a tax. But a second part of the strategy allowed individual plan members to refuse substandard company coverage and obtain insurance through the exchange network, where they were eligible for premium subsidies.
Related: Nearly 8 million workers lost employer-sponsored insurance during pandemic
But families of plan members did not have the same option. That saddled thousands of family members with essentially useless health insurance. This block to the exchange became known as the “firewall.”
“Allowing workers with employer coverage to buy marketplace plans and qualify for premium subsidies … could provide substantial financial relief to many families with lower incomes. Moreover, an estimated 20% of Black and Latino workers with employer coverage could benefit from the change,” says the Fund in its report, “Making Health Care More Affordable by Removing the “Firewall” Between Employer Insurance and Marketplace Coverage.”
The Fund argues that the family coverage firewall hits the economically disadvantaged and people of color disproportionately hard.
“This so-called family coverage glitch has left millions of low- and middle-income families with expensive family plans unable to qualify for marketplace subsidies. The Urban Institute has estimated that more than 6 million people may be negatively impacted by this coverage glitch,” the Fund states.
The Fund noted that “between 6%and 13% of people in nonelderly households covered by employer insurance could pay lower premiums through a marketplace plan if the firewall were lifted. The vast majority of those benefiting would be low- or middle-income families.”
The Fund’s report acknowledges that simply eliminating the family firewall won’t instantly translate into better health coverage at a lower cost for families. Other policy revisions will be required to ensure that these families will, in fact, have access to decent plans at a lower overall cost.
But firewall removal is the first big step that needs to be taken.
“This analysis indicates that removing the firewall between employer plans and subsidized marketplace plans could provide financial relief to many low- and middle-income employees facing premium costs that are high relative to their incomes. If the pandemic-related recession continues to slow income growth, more people in employer plans may be eligible. Removing the firewall also would eliminate the well-documented ‘family glitch’ that currently blocks millions of people from accessing subsidies.”
Once the wall comes down, Congress can then take the next steps to offer families the type of health insurance the ACA envisioned for them.
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