Pension & Benefits News Health insurance reform could cost from $25.7 billion to $2.8 trillion
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Monday, October 28, 2019

Health insurance reform could cost from $25.7 billion to $2.8 trillion

By Pension and Benefits Editorial Staff

Since the passage of the Patient Protection and Affordable Care Act (ACA), members of Congress, researchers, and policy analysts have come up with proposals to address the remaining gaps in the health insurance system. The Urban Institute issued a report in which it analyzed how the proposals intended to address the current system’s shortcomings that affect health insurance coverage and spending by government, households, and employers.

ACA expansion proposals. The first proposal analyzed would include maintain the ACA but increase subsidies and reinsurance. Under this proposal, 4.6 million more people would have minimum essential coverage, which would increase federal government spending by $25.7 billion in 2020 due to the increased subsidies. State government spending would decrease due to decreased uncompensated care, household spending would decrease due to increased subsidies, and employer spending would decrease with the reduction in employer-sponsored spending.

The second proposal builds on the first proposal by adding reinstatement of the ACA’s individual mandate and reversal of expanded access to short-term, limited-duration plans (STLDs). Under this proposal, 6.3 million more people would have minimum essential coverage and federal government spending would increase by $24.5 billion.

The third proposal fills in the Medicaid eligibility gap to reach low-income people in states that did not adopt the ACA’s Medicaid expansion. Under this proposal, 10.4 million more people would have minimum essential coverage and federal government spending would increase by $81.3 billion. However, spending by state governments, households, employers, and providers would drop, meaning national aggregate spending on health care would increase by $39.6 billion.

The fourth proposal adds a public option into the nongroup market and/or caps all nongroup insurer provider payment rates at traditional Medicare levels. This proposal does not increase coverage substantially more than the other proposals, however the federal government spending on Marketplace subsidies would be $73.9 billion, which is substantially lower than $108.7 billion under the third proposal. It also lowers aggregate household spending by $17.6 billion, which is $7.2 billion more than under the third proposal.

Universal coverage proposals. The fifth proposal adds Continuous Autoenrollment with Retroactive Enforcement (CARE) and eliminates the employer-sponsored insurance offer “firewall.” This is the first proposal that would achieve universal coverage for all legal residents and reduce the number of people of uninsured people by 25.6 million. The only uninsured would be the 6.6 million people who are undocumented U.S. residents. Under this proposal, over 80 percent of the 46.3 million enrollees would receive federal financial insurance. Federal government health care spending would increase by $122.1 billion; however state, employer, household, and provider spending would drop, leading to a decrease in aggregate health spending by $22.6 billion.

The sixth proposal further increases the federal financial assistance through enhanced premium and cost-sharing subsidies. Total insurance coverage under this proposal is not significantly different from the fifth proposal, except that approximately 80,000 fewer people would be expected to enroll in employer-based coverage due to the enhanced nongroup market subsidies. The more general federal subsidies lead to increase federal government spending, making the total projected spending an additional $161.8 billion compared to current law and an additional $39.7 billion beyond the fifth proposal.

Single-payer proposals. The seventh proposal would create a “single-payer lite” plan with ACA essential benefits and a sliding-scale cost-sharing requirement. Under this proposal, all legally present U.S. residents would be covered by increasing the number of minimum essential coverage by 23.8 million. However, because private insurance would be eliminated, an estimated 4.2 million undocumented immigrants would lose health insurance bringing the total of uninsured people to 10.8 million. Net federal government health care spending would increase by $1.5 trillion under this proposal, however state government healthcare spending would decrease by $206.9 billion, household spending would decrease by $557.2 billion, employer spending would decrease by $948.7 billion.

The eight proposal is a true single-payer plan that builds on the seventh proposal but eliminates all cost-sharing requirements and adds enhanced benefits such as dental, vision, hearing, and LTSS. Under this plan all 331.5 million legally present and undocumented immigrants would be covered. Federal government spending would increase by $2.8 trillion in 2020, however state spending would decrease by $259.6 billion, employer spending would decrease by $954.7 billion, household spending would decrease by $886.5 billion and provider spending would decrease by $24.1 billion.

SOURCE: https://www.urban.org/sites/default/files/2019/10/15/from_incremental_to_comprehensive_health_insurance_reform-how_various_reform_options_compare_on_coverage_and_costs.pdf

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