Five outside-the-box ideas for fixing the individual insurance market

With Republican efforts to “repeal and replace” the Affordable Care Act stalled, tentative bipartisan initiatives are in the works to shore up the fragile individual insurance market that serves roughly 17 million Americans.

The Senate Health, Education, Labor and Pensions Committee launches hearings the week Congress returns in September on “stabilizing premiums in the individual insurance market” that will feature state governors and insurance commissioners. A bipartisan group in the House is also working to come up with compromise proposals.

Both before and after implementation of the federal health law, this market – serving people who don’t get coverage through work or the government – has proved problematic. Before the law, many people with preexisting health conditions could not get insurance at any price. Now, consumers in the individual market often face higher out-of-pocket costs and fewer choices of health care providers and insurers than in past years. More than 12 million people buy that insurance through the ACA’s marketplaces, while another 5 million buy it outside of the exchanges.

Policy makers generally agree on what immediate efforts to stabilize the market might include. At the top of most lists is ensuring federal payment of subsidies to insurers to pay the out-of-pocket expenses – such as deductibles and copayments – to protect customers with the lowest incomes. Insurers also want the federal government to continue enforcing the requirement that most Americans either have insurance or pay a tax penalty, and continuing efforts to get uninsured people to sign up for coverage during the upcoming open enrollment period, from Nov. 1 to Dec. 15. Those efforts are essential, insurers say, to help keep healthy customers in their risk pools to defray the costs of beneficiaries with medical needs.

But what about ideas that go beyond the oft-repeated ones? Here are five proposals that are more controversial but generating buzz.
 

1. Allow people into Medicare starting at age 55.

Getting slightly younger people into Medicare, the federal program for the disabled and Americans 65 and older, is a longtime goal of Democrats. It dates at least to the Clinton administration and was nearly included in the Affordable Care Act in 2010. A Medicare buy-in is not exactly the same as a “public option,” which many Democrats, including former President Barack Obama, have embraced. A true public option would offer government coverage to those of any age.

Lowering the age for Medicare eligibility (whether by allowing people to purchase coverage early or letting them join on the same terms as those aged 65) is controversial. Some Democrats support it as a first step toward a single-payer, Medicare-for-all system. Most Republicans oppose it on those same grounds – as a step toward government-run health care.

But proponents argue it would help the current individual market by excluding the oldest people, thereby lowering the average age of the risk pool. Since older patients, on average, cost more to insure, the change could lower premiums for everyone left in the ACA market. That’s the stated goal of a Medicare buy-in bill introduced earlier this month by Sen. Debbie Stabenow (D-Mich.) and seven other Democratic senators. That bill would allow Obamacare market customers ages 55-64 to purchase Medicare coverage instead, but would also let them use ACA tax credits if they are eligible for those. The cost of such policies, however, has not been worked out.

“The way we’ve structured it actually both helps Medicare by having younger people in that pool, and it helps private insurance by taking higher-cost individuals out of their pool,” Sen. Stabenow told The Detroit News.

Conservative health analysts don’t buy that, though. “This is just a way of saying we’re going to take these people out of the exchanges and put them where there are bigger subsidies,” said Joseph Antos of the conservative-leaning American Enterprise Institute (AEI).
 

2. Allow people to ‘buy in’ to Medicaid.

An alternative to letting people buy in to Medicare is letting them buy in to Medicaid, the joint federal-state program for those with low incomes.

Medicaid buy-ins already exist – for example, in 2005 Congress passed the Family Opportunity Act, which allows families earning up to three times the poverty level to purchase Medicaid coverage for their disabled children who aren’t otherwise eligible. Medicaid has typically provided richer benefits for those with disabilities than private health insurance.

Earlier this year, Gov. Brian Sandoval (R-Nev.) vetoed a bill that would have allowed Nevada residents to buy Medicaid coverage through the state’s insurance exchange.

Now Sen. Brian Schatz (D-Hawaii) is pushing a federal Medicaid buy-in plan, which he described to Vox.com last week. It would give states the option to allow people with incomes over current Medicaid eligibility thresholds to pay a premium to join the program. Like the Medicare buy-in bill, it would allow those who qualify for federal tax credits to use them to pay the premiums.

The proposal would also raise the amounts Medicaid pays to doctors, hospitals and other health care providers to the same level as it pays for Medicare patients. Traditionally, low Medicaid payment rates have kept many doctors, particularly specialists, from taking Medicaid.

As with the Medicare expansion, the idea of a further Medicaid expansion does not sit well with conservative policy analysts. “It’s completely unworkable,” Avik Roy of the Foundation for Research on Equal Opportunity, told Vox. He predicted it would raise Medicaid spending by $2 trillion over 10 years.