The Affordable Care Act (ACA) is the broadest major reform of public and private health care. It has significantly increased access to affordable health insurance, including for adults age 50–64, through the Medicaid expansion and as well as increasing access to private health insurance. The ACA, as interpreted by the U.S. Supreme Court, gives state Medicaid programs the option to cover uninsured adults age 18-65 with incomes up to 138 percent of the federal poverty level (FPL).
State and federal insurance marketplaces have provided individuals and small businesses with new health care coverage options. To help make coverage sold through marketplaces affordable, premium tax credits and cost-sharing subsidies are available for eligible individuals and families. To qualify, they must have incomes between 100 and 400 percent of the FPL.
Transitions to Medicare: Subsidies for coverage through health insurance marketplaces do not extend to people eligible for Medicare. It is critical that people moving from exchanges to age-related Medicare eligibility (at age 65) have information about available resources. Unless a clear process is in place for people transitioning from subsidized coverage to Medicare, those who have been receiving subsidies will be at risk for the full cost of their coverage. They may also face penalties if they do not enroll in Medicare when they become eligible.
Financing: It is important that all the mechanisms and programs that were part of ACA reforms be adequately financed over both the short and long term. For instance, revenues will be required to finance subsidies in the exchanges, fund the Medicaid expansion, implement other reforms, and do necessary outreach. The financing comes from a combination of savings due to the slower growth of Medicare costs and revenue provisions. The additional revenues come from a number of measures, including changes to individuals’ tax deduction for health care expenses, increases in the Medicare payroll tax for workers high incomes, a tax on net investment income for taxpayers with high incomes, fees on segments of the health industry, and a limit on contributions to flexible spending accounts. In addition, the law includes an excise tax on high-cost employer-sponsored health coverage, but its implementation has been delayed until 2022.
State innovation waivers: Under the ACA, states may apply for waivers of select ACA provisions to better meet state needs. This includes allowing states to offer innovative coverage reforms. Waivers are allowed for up to five years, but states can request an extension. In order to be approved, waiver programs must safeguard the ACA’s existing coverage, affordability, and quality-of-care provisions.
States can apply to waive one or more of the following provisions:
- requirements related to qualified health plans (including the “essential health benefits” package);
- cost-sharing reductions;
- refundable tax credits;
- the individual minimum coverage requirement; and
- the employer shared-responsibility requirement.
The law requires transparency of the waiver application process, periodic state reporting on waiver program implementation, and program evaluation. The law also establishes criteria against which requests for waiving ACA coverage provisions must be assessed.
States can fund their waiver programs, within statutory limits, by drawing on federal funding that otherwise would have been used for premium tax credits, cost-reduction payments, and small-business tax credits. States can submit a single application for a waiver of ACA requirements and a waiver of requirements of the Medicare, Medicaid, and the Children’s Health Insurance Program, as well as any other federal law relating to the provision of health care items or services.
For further information on health care coverage, see the following Policy Book sections:
For discussion of access to care, see Individual- and Employment-Based Group Plans).
For more on health care financing, see Taxation of In-Kind Benefits; as well as the following sections: Private Insurance and Expanding Coverage, Individual- and Employment-Based Group Plans, and Retiree Health Coverage.
EXPANSION OF HEALTH CARE COVERAGE: Policy
EXPANSION OF HEALTH CARE COVERAGE: Policy
Federal and state policymakers should enact health care reform that achieves access to health care coverage and provides adequate protection against health care costs.
Health care reform efforts should build upon the goals and policies enacted in the Affordable Care Act (ACA) to improve access to adequate and affordable coverage.
Reform strategies to improve access may include:
- opening existing public health insurance programs (e.g., Medicare, Medicaid, and public employee benefit plans) or new public insurance programs to additional groups of uninsured people with coverage available on a buy-in basis or, depending on income, through the use of subsidies;
- improving the ability of health insurance exchanges to expand access to affordable and portable coverage (available to individuals and employers);
- subsidizing through risk mitigation programs a portion of high health care costs insured by private plans to lower consumer premiums and health care costs;
- expanding subsidies for the purchase of private coverage (e.g., through the tax system) or cost-sharing assistance for those who otherwise could not afford it;
- encouraging employers to offer health insurance to employees or to contribute to the cost of the health care system;
- encouraging individuals to enroll in available health coverage options; and
- continuing group health coverage at group rates for people whose access to group coverage is ending.
Policymakers should ensure any requirement that individuals have health coverage be part of a set of policies that require employers and government – for health coverage, provide a health care safety net or both. States and federal governments should ensure that options providing adequate coverage are both available and affordable, so as to prevent people from being unable to afford care despite their coverage and not impose a penalty on individuals who cannot afford coverage.
Transitions to Medicare
To facilitate transitions to Medicare, federal policymakers should require timely, clear notice to people insured through the health insurance marketplace who receive subsidies and who are approaching Medicare eligibility. The notice must inform them that their subsidies will end when they are eligible for Medicare and explain the process for making a smooth transition to Medicare before those subsidies end (see also Medicare).
Access and buy-in to Medicare or federal coverage for pre-Medicare older adults
Proposals to extend Medicare or other federal coverage to older adults who are not yet eligible for Medicare should include sufficient subsidies to make coverage affordable to individuals with low incomes who are unable to afford the full premium and cost-sharing, not affect the financial stability of Medicare or other federal programs as currently configured, and maintain at least the current level of coverage for workers.
Any reforms that expand private coverage must ensure that affordable and adequate coverage is accessible to all individuals targeted by the expansion, regardless of health or age. A change in market rules is a necessary component of coverage expansion (see also Individual- and Employment-Based Group Plans).
Tax policies that relate to health coverage, health savings, and health spending should be evaluated in the context of fiscal policy as well as that of health policy (including objectives, priorities, and equity).
Tax incentives to support the purchase of private health coverage should:
- give priority to groups that are currently without coverage and are not benefiting from current tax incentives;
- adjust incentives to recognize the high cost of private-market coverage for people who are older, have health problems or histories of poor health, and have low incomes;
- include assistance for those who earn too little to pay taxes and who may have insufficient resources to pay premiums out of pocket during the tax year;
- guarantee access to policies in the private market that offer adequate coverage;
- not single out one type of product; and
- conform to AARP’s taxation principles.
Policymakers should evaluate health care reform’s sources of financing to make sure they are broad-based, stable, capable of growing with enrollment, progressive, and consistent with furthering public health objectives.
State Innovation Waivers
All consumers should receive coverage and care that is at least as good as that required for policies offered through health care exchanges.
While state efforts to innovate and improve upon the ACA to expand and improve coverage are laudable, approved state innovation waivers should ensure that consumers can access coverage and care that is at least as good as that required for policies offered without waivers.
Applications must comply with the coverage, quality, and affordability requirements established by Section 1332 of the ACA.
To ensure a level playing field, federal and state health coverage expansion reforms should apply uniformly to all insurers and self-insured plans in a particular market, covering all individual, small-group, and large-group purchasers. Associations, Multiple Employer Welfare Arrangements, and similar nontraditional pools should be subject to the same rules as the rest of the market. Any expansions of allowable insurance arrangements designed to enhance access to coverage and plan choice—such as association health plans or sales of health insurance across state lines or other arrangements—should also be subject to those same rules.
Applications must comply with the coverage, quality, and affordability requirements established by Section 1332 of the ACA. To qualify for a State Innovation Waiver, the state application must establish that its reform plan would provide coverage that:
- is at least as comprehensive and affordable as ACA coverage;
- covers at least as many residents as the ACA would have covered; and
- will not increase the federal deficit.
Budget neutrality should not be achieved by weakening existing coverage requirements.
Federal and state governments must comply with the public accountability and transparency requirements established by Section 1332 of the ACA.
A state’s public notice and comment process, the post-award public forum, and the draft and final annual reports (which track affordability, comprehensiveness of coverage, the number of people covered, and the impact on the federal deficit) must be published on the state’s public website.
Waiver applications that integrate waiving ACA provisions under Section 1332 with waiving Medicare and Medicaid provisions must align with the relevant AARP policies for those programs.