Five outside-the-box ideas for fixing the individual insurance market
3. Get younger adults off their parents’ insurance and back into the individual market.
Allowing young adults up to age 26 to stay on their parents’ health plans is unquestionably one of the most popular ACA provisions. Democrats have touted it proudly while Republicans have dared not touch it in almost any of their overhaul proposals.
Yet what has been a boon to 3 million young adults (and a relief to their parents) has come at a cost to the individual marketplace itself, where only an estimated 28% of those buying coverage in state exchanges were ages 18-34 in 2016. That is well below the 40% most analysts said was necessary to keep the market stable.
“Frankly, it was really stupid,” to keep those young people out of the individual market, said Mr. Antos of AEI. The result has been a lack of people in the risk pool who are “young, healthy and whose parents will pay their premiums.”
But rolling back that piece of the law might be nearly impossible, said Mr. Antos, because “this is a middle-class giveaway.”
4. Require insurers who participate in other government programs to offer marketplace coverage.
One clear shortcoming of the individual marketplace is a lack of insurer competition, particularly in rural areas. While there appear to be no counties left with no company offering coverage for the coming year, the percentage of counties with only one insurer seems certain to rise from 2017’s 33%.
In an effort to more strongly encourage private companies to step up and offer coverage, several analysts have suggested tying access to participation in other government programs to a willingness to offer individual ACA policies as well.
For example, some have suggested insurers be required to provide policies in the marketplaces as a condition of being able to offer coverage to federal workers. Others have suggested that private insurers who offer profitable Medicare Advantage plans could also be required to offer individual exchange coverage, although the same rural areas with a lack of private individual market insurers also tend to lack Medicare Advantage coverage.
5. Let people use HSA contributions to pay health insurance premiums.
A little-noticed provision in one of the versions of the Senate GOP health bill that failed to pass in July would have allowed people to use money from tax-preferred health savings accounts (HSAs) to pay their insurance premiums. A little-noticed proposal from a group of ideologically diverse health care experts included a similar idea.
HSAs are linked to high-deductible insurance plans, and consumers use the money in the account to pay their out-of-pocket expenses. The money put into the account and the earnings are not taxable.
With a few exceptions, people with HSAs have not been allowed to use those funds to pay monthly premiums. But the change would be one way to provide relief to people who buy their own insurance, earn too much to get federal premium subsidies, and cannot deduct premiums from their taxes because they are not technically self-employed. Such people, though likely small in number, have been disproportionately hurt by rising premiums in the individual market since the ACA took full effect.
Still, the change would involve some trade-offs.
Roy Ramthun, who helped design HSAs as a Senate staffer in the early 2000s and helped implement them while at the Treasury Department during the George W. Bush administration, said that, generally, “Republicans have preferred to subsidize insurance premiums through tax deductions and credits and leave the HSA for out-of-pocket expenses.” Allowing premiums to be paid from HSA funds, he said, “could eat up the entire balance of the account and leave nothing for out-of-pocket expenses.” There are limits to how much money can be put into an HSA. For 2017, the maximum is $3,400 for an individual and $6,750 for a family.
Kaiser Health News is a national health policy news service that is part of the nonpartisan Henry J. Kaiser Family Foundation.
