Editor's note: This article is part of a multi-page special report, 8 Ways to Fix the Affordable Care Act.
With Republicans’ efforts to repeal and replace the Affordable Care Act all but dead, both Democrats and some GOP lawmakers have acknowledged that now is the time to try to make changes that will help shore up the law’s individual marketplaces.
The most obvious step, which healthcare industry groups, policy experts, politicians and actuaries have all endorsed, is to continue funding cost-sharing reduction (CSR) payments. Though a recent appeals court decision allows state attorneys general to defend these subsidies’ legality, the Trump administration could still stop funding them, and insurers likely can’t count on receiving the payments as they file their rates for next year.
Congress could settle the issue by passing a bill to appropriate the funds, but that approach would likely face an uphill battle. And it may come too late to prevent major premium hikes and insurer exits next year.
Other viable steps to stabilize the individual marketplaces include:
Enforcing the individual mandate
As long as the ACA is the law of the land, its signature individual exchanges depend upon the “three-legged stool” comprised of the individual mandate (which requires all citizens to have health coverage or pay a fine), guaranteed issue (which bans insurers from denying coverage based on health status) and community rating (which bans insurers from charging higher premiums based on health status).
Knock out one of those legs, and the resulting adverse selection collapses the whole system, likely leading to the much-feared “death spiral.” Enforcing the individual mandate is simple: The Trump administration just has to direct the IRS to keep assessing tax penalties on the uninsured—politically unpopular as that may be.
Implementing a stabilization mechanism
The most popular option among policy experts seems to be the creation of a reinsurance program—or recreation, since the ACA implemented a temporary one. It works by issuing payments to insurers that have enrollees whose costs exceed a certain level, and its market-stabilization potential is already on display in Alaska, which recently got the go-ahead from CMS to extend its reinsurance program.
A popular idea among some conservatives, meanwhile, is to create a high-risk pool for individuals with pre-existing conditions. Pre-ACA, Maine did this successfully, but the secret ingredient to its program was adequate funding—a feature that did not characterize other states’ attempts.
Encouraging more young, healthy enrollees
Just like the individual exchanges depend upon having an individual mandate, they also require younger, lower risk individuals to purchase coverage to balance out the risk pool. But getting them to actually purchase coverage is a tough sell, requiring robust outreach efforts and the availability of affordable options—the latter made even tougher by premium spikes likely to result from uncertainty over CSRs.
One idea that policy experts might endorse—but nearly everyone else would hate—would be to nix the ACA’s provision that allows young adults to stay on a parent’s plan until age 26, effectively forcing those without job-based insurance into Medicaid or the individual markets.