While the government would have to pick up the tab for increased subsidies, it could be offset by a decrease in federal uncompensated care spending–with the right policy actions. (Credit: ShutterstockProfessional/Shutterstock.com)
Despite significant gains since the passage of the Affordable Care Act, millions of Americans remain uninsured.
"Evidence shows many uninsured people find the insurance coverage available to them too expensive to purchase, even though the ACA has lowered those costs for many and reduced other barriers to accessing coverage," according to a new report from The Urban Institute.
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"Some uninsured people may find premiums affordable but opt to remain uninsured because out-of-pocket costs are unaffordable. In other words, the premiums do not purchase coverage they can use."
Program participation among those eligible for free or almost free public insurance through Medicaid and the Children's Health Insurance Program is high, as is enrollment among those eligible for the most generous marketplace subsidies. However, the value of these subsidies declines with income, and subsidies are unavailable for those with incomes above 400% of the federal poverty level.
Policy experts and policymakers have proposed enhancing the generosity of marketplace subsidies and extending them to more people, such as those with incomes above 400% of the FPL. More-generous subsidies and expanded eligibility will reduce both the number of uninsured people and the financial burdens on enrollees. However, the greater the generosity of the subsidies and the more people eligible, the higher the cost to the government.
Researchers analyzed the coverage and health-care spending implications of five premium tax credit and cost-sharing subsidy options. Among their findings:
- Any of these approaches could reduce the number of uninsured Americans by more than four million people.
- The largest number of newly insured people would be those with modest incomes, 200 to 400% of the FPL, who are eligible for marketplace financial assistance today but for whom that assistance is limited.
- Under any of these approaches, almost one million of the newly insured would be people with middle incomes who currently are ineligible for any assistance at all.
- Accounting for potential offsets because of reduced demand for uncompensated care, an estimated $23 billion to $26 billion in additional spending in 2022 would be necessary to implement one of these options. This roughly equals $289 billion to $322 billion over 10 years, depending on the approach chosen.
However, federal uncompensated care spending would not fall automatically with the decrease in demand for such care when coverage expands. Fully realizing these federal savings requires policy action. The benefit of increased federal spending would be higher numbers of people insured and significantly reduced financial burdens for those already enrolled in nongroup insurance coverage, with savings averaging more than $1,000 per year per nongroup enrollee.
"These reforms can be implemented quickly (such as the 2022 plan year), because they would constitute only a change in computation of subsidies and eligibility; the structure in which they would be used is already in place," the report concluded. "Marketplace insurers would need to develop new cost-sharing reduction plans to correspond to the new subsidy schedule chosen. Enrollment would be expected to shift away from bronze and silver plans to gold plans."
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Alan Goforth
Alan Goforth is a freelance writer in suburban Kansas City. In addition to freelancing for several publications, he has written a dozen books about sports and other topics.
