To make individual market premiums more affordable,
policymakers should adjust tax policies and remove financial barriers to
coverage.
By Jessica Kent
March 08, 2019 - Policymakers
should revise current tax policies and work to eliminate financial barriers to
health insurance in order to reduce individual market premiums, says a
new brief from the Blue Cross Blue Shield
Association (BCBSA).
Over 14 million
people buy health insurance in the individual market, BCBSA noted, including
individuals without job-based insurance, workers who aren’t eligible for
employer-sponsored health plans, or retirees who aren’t eligible for Medicare.
Some of these patients have conditions that require comprehensive care, but
purchasing coverage in the individual market can be costly.
“Unfortunately,
individual market premiums are often unaffordable for people who do not qualify
for financial assistance, and coverage options for these people remain limited,”
BCBSA said in the brief.
“For many, the cost
of coverage and care is out of reach, with many purchasers required to pay more
than 15 percent of their income for health insurance so they can obtain the
medical care they need.”
To reduce premiums in the individual
market, BCBSA is recommending that policymakers adjust federal assistance,
including tax credits to make coverage more affordable and accessible for
younger people.
“The current tax credit
provides substantial financial assistance for older consumers who are more
likely to need medical care and thus more likely to purchase coverage, while
providing more limited assistance for younger people,” BCBSA said.
“Increasing the
participation of younger and healthier people while also maintaining financial
assistance for older consumers will help provide a better enrollment balance
and help bring premiums down.”
BCBSA also suggested
that policymakers adjust the tax credit structure so that individuals who
aren’t eligible can still afford coverage. Under the ACA tax credit structure, those purchasing
coverage on their own receive no financial assistance if their income is 400
percent above the federal poverty level, BCBSA said.
“Today, the average
premium for a silver plan for a family of four exceeds $20,000 annually, and
individuals who are ineligible for tax credits pay the full price. As a result,
many forgo coverage because it is too expensive,” the brief said.
“The existing tax
credit structure should be adjusted so that no one purchasing coverage in the
individual market would be required to pay more than 12 percent of income for
health insurance.”
Moreover, BCBSA
recommended that Congress improve cost-sharing protections and increase
the availability of medical care for lower-income individuals.
“The cost-sharing
reduction (CSR) program provides significant assistance to help lower-income
individuals by reducing or eliminating out-of-pocket costs such as deductibles and
copayments when they access medical care,” BCBSA wrote in the brief.
“However, people with
incomes between 200-300 percent of the federal poverty level are required to
pay significant out-of-pocket costs that may serve as a barrier to accessing
care.”
The association
suggested that policymakers expand cost-sharing protections to cover 80 percent
of total costs for those between 200 and 300 percent of the federal poverty
level, which would ensure that these individuals can
afford the care they need.
In addition to
adjusting federal assistance policies, BCBSA is recommending that Congress pass
laws to lower costs and eliminate financial barriers to increase patients’
access to care.
The association
called for policymakers to establish a sustained federal funding system to help
support rising costs of care for those with significant medical needs.
“A sustained federal
funding mechanism which states could draw on to support the cost of caring for
those with serious health conditions is essential to make premiums more
affordable for everyone, especially those who do not qualify for a tax credit,”
BCBSA said.
“Creating a premium
affordability program to support the cost of care for those with serious
medical conditions (those with claims in excess of $65,000) would reduce
premiums by about 15 percent and cost the federal government less than $3
billion.”
BCBSA also
recommended that Congress eliminate the ACA health insurance tax, which would reduce
premiums by 2 to 3 percent, and that lawmakers modernize health plans that are
associated with health savings accounts (HSAs).
“Currently,
high-deductible health plans that are linked to HSAs are prohibited from
offering services other than preventive care on a pre-deductible basis. This
can create cost barriers to care for patients with chronic illnesses,” the
brief stated.
“To provide better
management of chronic disease, Congress should permit HSA-qualified health
plans to cover high value services before the deductible.”
Finally, BCBSA
advised policymakers to increase outreach efforts to ensure
people obtain and keep their health coverage, including enabling consumers to
automatically renew their health insurance.
“Allowing consumers
to auto-renew helps ensure continued enrollment and should be maintained,”
BCBSA said. “State efforts to provide incentives for individuals to maintain
health insurance coverage also should be supported.”
The association
advised that health insurance exchanges provide information on coverage and
enrollment status.
“States should have
access to aggregated information on health insurance enrollment and income
status to determine who is potentially eligible for government assistance in
subsidized, qualified health plans, as well as in the Medicaid and CHIP
programs,” the brief stated.
“At the same time,
Congress should work to simplify the eligibility rules for tax credits to make
it easier for people to know whether they qualify for financial assistance to
help them purchase coverage.”
With these actions,
BCBSA expects that the individual market will become more accessible for those
who need it.
“The individual
market is a critical source of coverage for people from all walks of life, and
it should be strengthened to make coverage more affordable while protecting
those with pre-existing conditions,” the brief concluded.
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