Health care experts from the Commonwealth Fund, the American Action Forum, and the Galen Institute recently provided testimony regarding some common sense solutions to improve the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). The experts testified before the House Energy and Commerce Committee’s Subcommittee on Health on proposed legislation regarding: (1) the grace period for non-payment of premiums, (2) verification for eligibility for enrollment during special enrollment periods (SEPs), (3) the adjustment of the age-rating ratios for health care pricing, (4) allowing enrollment in stand-alone dental plans outside of exchanges, and (5) an audit process requiring states with failed exchanges to return grant money given to them to establish state exchanges.
The bills can be summarized as follows:
- Grace periods. This proposed bill would align grace periods with the 30-day time period a state uses for patients in their individual market, instead of the 90 days allowed under section 1412 of the ACA. This change is designed to encourage patients to be engaged in their care and incentivized to stay covered. It is also hoped that it would decrease gaming by individuals that do not pay for their care and reenroll after the open enrollment period.
- Special enrollment periods. This proposed bill would require individuals enrolling in exchanges outside of the standard open enrollment period to verify that they are eligible for an SEP allowed by section 2702 of the ACA. Since the exchanges enroll individuals, they would also be responsible for the verification process.
- Age rating restrictions. This proposed bill would adjust the age-rating ratio for health care pricing from 3:1 to 5:1. This would increase the amount that insurance carriers could charge older adults from three times to five times that of younger people. Many observers believe the more stringent 3:1 ratio has damaged the stability of risk pools and priced young, healthy patients out of the insurance market.
- Stand-alone dental plans. Under the ACA, individuals and families are not able to buy stand-alone dental plans outside of exchanges. This bill (H.R. 3463) would allow these dental plans to be purchased both on and off exchanges.
- Accountability for terminated state exchange grants. This bill (H.R. 4262) would establish an audit process for failed state exchanges. Any unallocated or misspent federal grant dollars would be returned to the U.S. Department of Treasury.
The Commonwealth Fund. Sara R. Collins, Ph.D., Vice President of Health Care Coverage and Access at The Commonwealth Fund, discussed the legislation on the adjustment of age-rating ratios, SEP verification, and the grace period. According to Collins, "while more—mostly younger—people would become insured under 5:1 ratio, it would come with a price tag of $9.3 billion in additional federal spending and a loss of insurance coverage for 400,000 older people. The researchers estimate that the higher limits would increase annual premiums for the average benchmark silver plan for a 64-year-old from about $8,500 under current limits to $10,600 under the 5:1 rate bands, while lowering those for a 21-year-old from $2,800 to $2,100."
Collins also suggested that tighter verification standards on SEPs might lead to lower enrollment through SEPs. In addition, she speculated that the people with the greatest need for health care might enroll, leading to less healthy risk pools.
Collins further testified that a bill that reduces the grace period for enrollees from 90 days to 30 days "could mean a loss of enrollment in the marketplaces among enrollees of modest means and an increase in the number of people who are uninsured or have gaps in their coverage." Again, she felt that this "policy change would seem to favor those who are most motivated to retain their coverage—those in poorer health."
American Action Forum. Douglas Holtz-Eakin, President of the American Action Forum, testified in favor of the bills, addressing the shorter grace period, better SEP verification, the age rating restriction, and the accountability for the return of federal grants for terminated state exchanges. He made the following points:
- Aligning grace periods for policyholders in the individual market on and off the exchange within a state will create equity among consumers. Further, reducing the 90-day grace period could significantly reduce the risk of losses for insurers and providers, which in turn will provide greater stability in the market and reduce the additional cost that unfairly burdens other consumers and taxpayers.
- Requiring a formal process for eligibility verification, and requiring proper documentation supporting such claims, will go a long way in reducing the number of individuals unjustly taking advantage of the current system.
- Repealing the 3:1 age variation ratio should allow for premiums to decline and remove at least some of the financial disincentive preventing the younger population from enrolling in exchange plans.
- Of the $900 million provided to states that failed to accomplish successful exchanges, only $21.5 million (23.8 percent) was returned to the federal government. Taxpayers deserve to know their dollars are being spent wisely. The federal government should be doing more to ensure that the states that have failed to meet their obligations are held accountable and return those funds in a timely manner.
Galen Institute. Grace-Marie Turner, President of the Galen Institute, agreed with Holtz-Eakin’s analysis, without formally supporting the bills. With regard to the stand-alone dental plan legislation, she indicated that the bill would allow individuals and families to purchase dental coverage, including pediatric benefits, through a stand-alone dental plan offered outside an ACA exchange. According to Turner, these stand-alone plans are currently allowed only for coverage offered inside an exchange. She stated that the bill would level the playing field by applying the same rules to exchange plans and off-exchange plans.
Companies: Galen Institute; American Action Forum; The Commonwealth Fund
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