Industry Voices: Practical steps to fix the Affordable Care Act's 'crazy system'

Bill Clinton did the unthinkable in American politics when he said the Affordable Care Act is a “crazy system” in which premiums doubled and coverage was cut in half. He told the truth. A recent survey sponsored by the American College of Emergency Physicians found that most Americans agree with the former president. The survey reported that 55 percent are paying more or much more for their care, while 81 percent said their coverage has stayed the same or gotten worse.

Let’s start by unpacking the health cost question.

The health reform law created new consumer protections, corrected market imbalances and reduced the number of uninsured Americans to historic lows. Yet these protections come with a price: Overreach by the ACA has also contributed to high and growing health insurance premiums, marked by average double digit price increases on exchange plans both this year and next.

The result is an unbalanced and expensive market that is driving away many of the healthy consumers the exchanges need to attract to hold coverage costs down over the long term.

No amount of shopping around for plans will correct this problem. In addition, while many who have subsidies get coverage, only 2 percent of the non-subsidy eligible population have enrolled in exchange coverage as of 2016. Subsidies mask costs by shifting them from individuals onto taxpayers; subsidies don’t lower costs for society or taxpayers. Increasing subsidies to make coverage more affordable is a highly ineffective long-term strategy to deal with rising health expenses.

So, while many Americans with significant health needs or lower incomes have greater access to coverage now, the reality is that for millions of others, health coverage is less affordable and more out of reach than when the ACA was enacted six years ago.

For example, in 2017, the average premium for the second-lowest-cost silver plan will increase 25 percent compared with 2016 for the 39 states using the Healthcare.gov platform. For a 27-year-old, the average monthly premium will be $302 per month, which is an increase of $60 a month or $720 a year. That’s no small change.

On top of premiums, individuals and families are faced with daunting deductibles, co-pays and coinsurance that make them reluctant to access care or go to the doctor or hospital. For example, in 2016, the average silver plan had a $3,000-plus deductible, reflecting an increase of almost 20 percent over 2015. Average copays, deductibles and out-of-pocket limits remain considerably higher under bronze and silver plans than under employer plans.

These hefty out-of-pocket costs are having a real impact on patients. In fact, almost a quarter of ACEP survey respondents delayed or went without medical care due to unexpected costs not covered by health insurance. That reinforces a survey from the Kaiser Family Foundation that found families are struggling to meet these obligations. Only about half of households have enough liquid financial assets to meet higher range deductibles ($2,500 for an individual and $5,000 for a family). If people skip or put off medical care because the cost of treatment is not in their budget, health costs will increase as manageable problems progress to serious ones.

Access to care and coverage is also decreasing.

As premiums and deductibles have gone up, coverage has gone down. Major health insurers have withdrawn from all but a handful of states, leaving many Americans with just one insurance carrier to choose from. In addition, many health insurance plans have narrowed their provider networks to compete on price. This has forced some patients to switch providers or pay more out-of-pocket to see their preferred provider. In fact, almost a quarter of ACEP survey respondents lost access to a doctor because of network changes.

These are real problems, faced by real Americans. So, what can be done?

Comprehensive reform is urgently needed to address skyrocketing premiums and dwindling choices before markets deteriorate further. When Congress returns on Nov. 14, it has an incredible opportunity to consider and enact common-sense solutions that will ultimately lead to lower health care costs for all Americans. As a first step, Congress should:

  • Implement prospective verification and streamline the use of special enrollment periods, which were supposed to be for life-changing events or special circumstances, but have been used to game the system and worsen risk pools in many instances.
  • Reform grace periods for non-payment of premiums, which currently allow consumers to continue using health coverage services for up to three months without paying their premiums.
  • Repeal the ACA’s 3:1 age rating provision to lower premium costs for younger adults.
  • Allow consumers to take their subsidies off the exchange monopoly to buy plans. This will foster plan competition to drive down costs.

Over the long term, Congress should consider:

  • Repealing the individual mandate and replacing it with late enrollment penalty.
  • Enticing younger enrollees with a new “copper” level of coverage. Copper would be a lower premium plan that would pay 50 percent of covered expenses.
  • Lowering medical costs. The requirement that plans pay 80 to 85 percent of premium dollars in medical costs puts a bull’s eye on what is driving many premium increases. Congress should encourage less waste and greater safety in bloated hospital payments and other medical services.
  • Better access to value-based insurance designs and health savings accounts that engage consumers and encourage access to high-value and appropriate care.

This isn’t about fixing the ACA. It is about creating workable, free markets that foster competition while protecting consumer access to affordable, quality care. The ACEP survey shows what people intuitively know: Bill Clinton is right; the ACA is a crazy system.

That doesn’t mean we need to live with it, and it shouldn’t mean Congress just watches it burn.

Joel White is president of the Council for Affordable Health Coverage.