What If Democrats Fail to Enhance the ACA?

Hey, this is a copy and paste article by Andrew Sprung at Xpostfactoid. He does a nice job of explaining the technical aspects of expanding the ACA and making it more liberal in providing greater Commercial Healthcare Insurance benefits to more US citizens. He also discusses what could happen if we make Biden’s healthcare extensions permanent and how more people have healthcare coverage as a result of it.

I do not know what you are thinking. It angers me, two supposed Democrats can hold healthcare hostage while they could afford coverage without federal government coverage and are covered by the federal government. Manchin and Sinema need to be told their opposition is just plain unacceptable.

Sinema did not like being followed into the ladies room by other women so now the police are getting involved in what is an effort to call her to the table and explain her support of the pharmaceutical industry and the subsequent denial of healthcare coverage.

The state of West Virginia ranks near the bottom in providing help to its citizens and Manchin is worried about entitlement. Go figure!

Anyway, this post is a good read.

If Democrats fail to enhance the ACA or remove the coverage gap, what can the Biden administration do?, Xpostfactoid, Andrew Sprung

As the extent to which Senators Manchin, Sinema, and other corporate Democrats will eviscerate the original outline of the Build Back Better bill sinks in, it’s time to consider the once-unthinkable: what if Democrats fail to extend the enhanced ACA marketplace subsidies enacted in the American Rescue Plan Act (ARPA) in March?  And what if — which was always uncertain — they fail to plug the coverage gap in states that have refused to expand Medicaid?

ARPA removed the income cap on eligibility for subsidies (formerly 400% of the Federal Poverty Level) and reduced the percentage of income required to pay for a benchmark silver plan at every income level. Under ARPA, benchmark silver coverage enhanced with strong Cost Sharing Reduction (CSR) is free at incomes up to 150% FPL and capped at 8.5% of income (with no CSR) at incomes over 400% FPL. High-CSR coverage is also free to anyone who received any unemployment insurance income in 2021. 

The enhanced subsidies turbo-charged a huge enrollment surge of 2.8 million during an emergency Special Enrollment Period running from February 15 – August 15 this year. Marketplace enrollment in August 2021 was 15% higher than in August 2020 and 22% higher than the previous August high, in 2016. The Congressional Budget Office (CBO) projects  making the ARPA subsidies permanent will further increase marketplace enrollment by 3.4 million.

The Build Back Better bill would make the ARPA subsidy scale permanent, extend the unemployment benefit for four years, and provide free coverage to those in the ACA’s “coverage gap”: the failure to offer subsidized insurance of any kind to people with incomes below 100% FPL in the twelve states (including Florida and Texas) that have refused to enact the ACA Medicaid expansion (which the Supreme Court made optional for states in a 2012 decision). BBB would first offer free marketplace coverage to people in the gap, and then, beginning in 2025, stand up a federal Medicaid-like program to cover them.

The Congressional Budget Office estimates that extending the ARPA subsidy scale would cost $209 billion over 10 years; extending the unemployment benefit for four years would cost $10 billion; and closing the coverage gap would cost $323 billion.

That’s a lot of money, and Democrats are currently struggling to halve the $3.5 trillion in planned spending over 10 years outlined in the BBB framework. Closing the coverage gap is a huge moral imperative for Democrats. It’s also very expensive. As for the ARPA subsidy enhancements: they brought the ACA marketplace much closer to providing the “affordable” coverage promised in the ACA’s name. But the marketplace was at least minimally functional (and stable) pre-ARPA, and Democrats have to carve a lot of pounds of flesh out of their original plans.

In recent online chat, friends and I speculated that Democrats almost have to preserve ARPA’s extension of ACA premium subsidies beyond the former 400% FPL income ceiling. That helps wealthier people, but it would seem to be a political imperative. Besides the sub-100% FPL coverage gap, the enormous individual market premiums to which people with incomes above 400% FPL were subject was the ACA’s most egregious flaw, and those high premiums were Republicans’ most effective bludgeon in their demonization of the law. Almost two thirds of the coverage gains anticipated by CBO if ARPA subsidies are extended would be among people with incomes above 200% FPL. As for the rest of the ARPA enhancements . . . there’s going to be a lot of pain in BBB cuts, possibly including here.

Suppose, bleakly, that Democrats do shrink legislative enhancement of the ACA to killing the “subsidy cliff” (capping benchmark silver premiums as a percentage of income at all income levels) and nothing more — no subsidy boosts at lower income levels, no program for those in the coverage gap. The Biden administration, if willing to act aggressively, could mitigate some of damage, taking various measures to reduce uninsurance and underinsurance. They very likely won’t, but they could. Below are three measures that would have substantial impact.

1. Use communication to shrink the coverage gap. This is the biggie.

The coverage gap constitutes the kind of logical and moral travesty we might shake our heads over when reading about, say, the tax practices of the Ancien Régime. The ACA stipulated that people with incomes between 138-400% FPL who lacked access to other insurance would be eligible for marketplace subsidies; people with income below the 138% FPL mark would be eligible for Medicaid. The Supreme Court ruled that requiring states to offer Medicaid to all adults* under 138% FPL was unconstitutional. As of 2014, about 25 states refused to do so; at present, 12 still refuse. 

By a happy drafting accident, the ACA also stipulates that subsidy eligibility in the marketplace begins at 100% FPL, rather than the 138% FPL Medicaid threshold. Some two million enrollees in nonexpansion states have incomes in the 100-138% FPL range (and under ARPA, get high-CSR silver coverage for free). According to KFF estimates, however, as of 2019, 2.2 million people with incomes below 100% FPL in those states were uninsured.

2. Mandate strict silver loading, so that all enrollees can obtain a plan with an actuarial value of at least 80% at a premium at or below benchmark.

What is “silver loading”? In October 2017, Trump cut off the direct reimbursement of insurers for providing Cost Sharing Reduction (CSR) subsidies to low income ACA enrollees who select silver plans. (CSR reimbursement was required by statute but never funded by a Republican Congress.) Through 2017, insurers had priced silver plans as if their actuarial value were always the baseline 70%, although CSR raised the AV to 94%, 87% and 73% at different incomes. Beginning in 2018, regulators allowed or instructed them to price CSR into silver plans only. Since income-adjusted premium subsidies are set to a silver benchmark, increasing silver premiums increased subsidies and created discounts in bronze and gold plans. 

3. Change the actuarial value formula. “Actuarial value” refers to the percentage of the average enrollee’s annual medical costs purportedly paid by the plan.

It’s calculated according to a formula promulgated by a unit of CMS. At present, AV scores are misleading to a lay customer, in that the average is skewed by a small percentage of enrollees with very high medical costs, much as the average income in a bar is skewed when Jeff Bezos walks in. Thus a bronze HSA plan with a deductible and out-of-pocket maximum of $7,000, which pays for nothing but preventive care until the enrollee hits the deductible, and perhaps 50% of costs for most services thereafter, may have an AV of 60% because a small percentage of enrollees require care costing tens or hundreds of thousands of dollars, with all costs above the $7000 OOP max paid by the plan.