Health insurance on Affordable Care Act (ACA) exchanges could be effectively free for families making less than $100,000 a year if state-level legislators were willing to “game the complex design” of Obamacare to create state-run health insurance companies, according to a progressive think tank.
Jon Walker, a health-care policy analyst and writer for the People’s Policy Project, last month outlined a six-step plan showing how state lawmakers could make the federal government pay for health insurance for most residents. It would involve creating a government-run health insurance company to sell insurance on ACA exchanges; requiring insurance be sold at one price for people of all ages (as is already required in New York and Vermont); driving private insurance companies off the state exchanges; and automatically enrolling people who qualify for tax credits into free coverage.
Republican-majority state legislatures have undermined the ACA over the past decade. Legislators have refused to expand Medicaid under the ACA—or have attacked aspects of the health-care law—leaving at least $32.1 billion in federal funds on the table. While Democratic-held legislatures have protected key parts of Obamacare amid a repeal effort by the Trump administration and congressional Republicans, Walker argues there are ways to exploit the “complex way the advance premium tax credits are calculated under the Affordable Care Act [which] has created several bizarre incentives and outcomes.”
The end result, Walker posits, would be a far more generous health-care program that eliminates premiums for people who qualify for Obamacare subsidies. The scheme to make Obamacare work for more people is possible largely because of conservative Democrats’ efforts to make the law more friendly to private insurance companies and President Trump’s “bungled attempt to sabotage the ACA by ending payment of the cost-sharing reductions,” or subsidies designed to reduce health-care costs for people with low incomes, Walker writes.
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Meanwhile, the uninsured rate in the United States has ticked up to 12.2 percent from an all-time low of 10.9 percent in 2016. That increase of 1.3 percentage points means 3.2 million more people were uninsured at the end of 2017 than at the end of 2016, according to Gallup.
Rewire.News interviewed Walker about his Obamacare proposal, its political viability, and the prospects for improving health-care policy in the United States.
Rewire.News: It may seem like a simple question, but why haven’t any Democratic-held legislatures tried what you’ve suggested in your piece? Is it a lack of political will, or simply that these proposals haven’t entered the political mainstream?
Jon Walker: Well, I haven’t spoken to enough state legislators to definitively say what they are collectively thinking, but I suspect it is primarily because it is not part of the political mainstream yet. I think the Democratic Party has been too ideologically committed to trying to make the Obamacare exchanges “work” like the broadly popular marketplaces Obama claimed they would be, instead of accepting the exchanges have mostly become a safety net of last resort. [Democrats] have been mistakenly focused on keeping official premiums low instead of working to reduce what most people actually pay.
How the ACA works is also very complicated, and I think very few state legislators even understand the weird incentives created by the subsidy structure. For example, simply requiring insurers to only sell one standardized silver plan (like California does) should really be a no-brainer for states. It would increase federal help to their low-income residents by millions at zero cost to the state, yet no other states have because of what I can only assume is pure ignorance of how the law works.
Rewire.News: Would going in this direction require Democratic lawmakers to embrace the sort of political norm–breaking that Republicans have embraced?
JW: Norms are a bit in the eye of the beholder, but the general idea that states should technically follow federal law but do it in the way that produces the best result for residents is pretty standard practice. In a world in which the Republicans are willing to clearly violate the spirit of the law with policies like Medicaid work requirements and declaring insurance plans that last for 364 days “short term,” it would be a tactical and moral mistake for Democrats to not use the law to expand coverage as much as possible.
Rewire.News: Some gubernatorial candidates have platforms that include universal health care. Do you know if any of those proposals use the strategies you’ve outlined?
JW: As far as I know, no candidate has adopted this plan nor would I really expect anyone to. “I have a highly complicated multiple step plan to take advantage of some poorly thought out design elements in the ACA to indirectly get some people free insurance,“ is probably not a great campaign slogan. I put it out knowing no one is likely to adopt it as is, but to try to start a paradigm shift in thinking about the ACA. Instead of trying to make their exchanges work as a marketplace, state politicians can try to work the exchanges to maximize federal subsidies for their residents. States are basically just leaving free money on the table. There are steps big and small states could take that would bring millions in federal help to their residents.
Rewire.News: Are there parts of your six-point plan that might be less realistic than other parts?
JW: Legally, every part of the plan should be perfectly realistic based on current law, which is what is so great about it. Step three, driving out all the private insurers, is the only potentially problematic step. It shouldn’t be a problem, but given the current ideological bent of this U.S. Supreme Court and their dismissive attitude to precedent, it is impossible to definitively say what they would do. That is why I gave multiple options of how to do step three. All should be allowed based on legal precedent, and if one fails, the state can always try another on the list. I just want states to realize they have much more power than they might think.
This interview has been condensed and lightly edited for clarity.