Expansion of Health Care Coverage

Background

The Affordable Care Act (ACAThe ACA—the shortened abbreviation for the Patient Protection and Affordable Care Act— is comprehensive health care reform legislation enacted by Congress and signed into law on March 23, 2010. ) 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 MedicaidA joint federal/state program that provides health care and LTSS. However, to qualify for Medicaid LTSS, people must have extremely low assets and income, or they have to “spend down” most of their assets. expansion and as well as increasing access to private health insurance. The ACAThe ACA—the shortened abbreviation for the Patient Protection and Affordable Care Act— is comprehensive health care reform legislation enacted by Congress and signed into law on March 23, 2010. , as interpreted by the U.S. Supreme Court, gives state MedicaidA joint federal/state program that provides health care and LTSS. However, to qualify for Medicaid LTSS, people must have extremely low assets and income, or they have to “spend down” most of their assets. programs the option to cover uninsured adults age 18-65 with incomes up to 138 percent of the federal povertyThe federal government defines “poverty” as income below specific thresholds. These thresholds are adjusted annually for inflation and vary according to family size and the age of the head of the family. 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-sharingThe share of insurance-covered costs that a person pays out of pocket, including deductibles, coinsurance, and copayments. It does not include premiums, balance billing amounts for non-network providers, or the cost of non-covered services. subsidies are available for eligible individuals and families. To qualify, they must have incomes between 100 and 400 percent of the FPL.

Transitions to MedicareMedicare is the federal health insurance program for people who are age 65 or older, certain younger people with disabilities, and people with End-Stage Renal Disease (ESRD), (permanent kidney failure requiring dialysis or a transplant).: Subsidies for coverage through health insurance marketplaces do not extend to people eligible for MedicareMedicare is the federal health insurance program for people who are age 65 or older, certain younger people with disabilities, and people with End-Stage Renal Disease (ESRD), (permanent kidney failure requiring dialysis or a transplant).. It is critical that people moving from exchanges to age-related MedicareMedicare is the federal health insurance program for people who are age 65 or older, certain younger people with disabilities, and people with End-Stage Renal Disease (ESRD), (permanent kidney failure requiring dialysis or a transplant). eligibility (at age 65) have information about available resources. Unless a clear process is in place for people transitioning from subsidized coverage to MedicareMedicare is the federal health insurance program for people who are age 65 or older, certain younger people with disabilities, and people with End-Stage Renal Disease (ESRD), (permanent kidney failure requiring dialysis or a transplant)., 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 MedicareMedicare is the federal health insurance program for people who are age 65 or older, certain younger people with disabilities, and people with End-Stage Renal Disease (ESRD), (permanent kidney failure requiring dialysis or a transplant). when they become eligible.

Financing: It is important that all the mechanisms and programs that were part of ACAThe ACA—the shortened abbreviation for the Patient Protection and Affordable Care Act— is comprehensive health care reform legislation enacted by Congress and signed into law on March 23, 2010. 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 MedicaidA joint federal/state program that provides health care and LTSS. However, to qualify for Medicaid LTSS, people must have extremely low assets and income, or they have to “spend down” most of their assets. expansion, implement other reforms, and do necessary outreach. The financing comes from a combination of savings due to the slower growth of MedicareMedicare is the federal health insurance program for people who are age 65 or older, certain younger people with disabilities, and people with End-Stage Renal Disease (ESRD), (permanent kidney failure requiring dialysis or a transplant). costs and revenue provisions. The additional revenues come from a number of measures, including changes to individuals’ tax deductionReduction in the amount of income that is subject to tax. A dollar of a deduction reduces taxes by only a fraction of a dollar, as determined by the taxpayer’s applicable tax rate for health care expenses, increases in the MedicareMedicare is the federal health insurance program for people who are age 65 or older, certain younger people with disabilities, and people with End-Stage Renal Disease (ESRD), (permanent kidney failure requiring dialysis or a transplant). 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 ACAThe ACA—the shortened abbreviation for the Patient Protection and Affordable Care Act— is comprehensive health care reform legislation enacted by Congress and signed into law on March 23, 2010. , states may apply for waivers of select ACAThe ACA—the shortened abbreviation for the Patient Protection and Affordable Care Act— is comprehensive health care reform legislation enacted by Congress and signed into law on March 23, 2010. 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 ACAThe ACA—the shortened abbreviation for the Patient Protection and Affordable Care Act— is comprehensive health care reform legislation enacted by Congress and signed into law on March 23, 2010. ’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 benefitsTen categories of services insurance plans must cover under the ACA, including: physician services, emergency, laboratory, maternal health, and mental health services, as well as prescription drugs. Plans must also offer dental coverage for children. ” package);
  • marketplaces;
  • cost-sharingThe share of insurance-covered costs that a person pays out of pocket, including deductibles, coinsurance, and copayments. It does not include premiums, balance billing amounts for non-network providers, or the cost of non-covered services. reductions;
  • refundableA tax credit whose full amount is paid even if it exceeds the amount of taxes owed. 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 ACAThe ACA—the shortened abbreviation for the Patient Protection and Affordable Care Act— is comprehensive health care reform legislation enacted by Congress and signed into law on March 23, 2010. 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 ACAThe ACA—the shortened abbreviation for the Patient Protection and Affordable Care Act— is comprehensive health care reform legislation enacted by Congress and signed into law on March 23, 2010. requirements and a waiver of requirements of the MedicareMedicare is the federal health insurance program for people who are age 65 or older, certain younger people with disabilities, and people with End-Stage Renal Disease (ESRD), (permanent kidney failure requiring dialysis or a transplant)., MedicaidA joint federal/state program that provides health care and LTSS. However, to qualify for Medicaid LTSS, people must have extremely low assets and income, or they have to “spend down” most of their assets., 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 AARP principles governing health care reform, see AARP Health PrinciplesTaxation, and Long-Term Services and Supports.

For more on health care financing, see Taxation of In-Kind Benefits; as well as the following sections: Private Insurance and Expanding CoverageIndividual- and Employment-Based Group Plans, and Retiree Health Coverage.

EXPANSION OF HEALTH CARE COVERAGE: Policy

EXPANSION OF HEALTH CARE COVERAGE: Policy

General

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 (ACAThe ACA—the shortened abbreviation for the Patient Protection and Affordable Care Act— is comprehensive health care reform legislation enacted by Congress and signed into law on March 23, 2010. ) to improve access to adequate and affordable coverage.

Reform strategies to improve access may include:

  • opening existing public health insurance programs (e.g., MedicareMedicare is the federal health insurance program for people who are age 65 or older, certain younger people with disabilities, and people with End-Stage Renal Disease (ESRD), (permanent kidney failure requiring dialysis or a transplant)., MedicaidA joint federal/state program that provides health care and LTSS. However, to qualify for Medicaid LTSS, people must have extremely low assets and income, or they have to “spend down” most of their assets., 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-sharingThe share of insurance-covered costs that a person pays out of pocket, including deductibles, coinsurance, and copayments. It does not include premiums, balance billing amounts for non-network providers, or the cost of non-covered services. 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.

Individual mandates

Policymakers should ensure any policy stipulating that individuals have health coverage also require employers and government to bear their fair share of financial responsibility 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 MedicareMedicare is the federal health insurance program for people who are age 65 or older, certain younger people with disabilities, and people with End-Stage Renal Disease (ESRD), (permanent kidney failure requiring dialysis or a transplant)., federal policymakers should require timely, clear notice to people insured through the health insurance marketplaceAn organization in each state in which individuals and small businesses can purchase plans that comply with the requirements of the ACA. Individuals can choose from a range of government-regulated and standardized health care plans. who receive subsidies and who are approaching MedicareMedicare is the federal health insurance program for people who are age 65 or older, certain younger people with disabilities, and people with End-Stage Renal Disease (ESRD), (permanent kidney failure requiring dialysis or a transplant). eligibility. The notice must inform them that their subsidies will end when they are eligible for MedicareMedicare is the federal health insurance program for people who are age 65 or older, certain younger people with disabilities, and people with End-Stage Renal Disease (ESRD), (permanent kidney failure requiring dialysis or a transplant). and explain the process for making a smooth transition to MedicareMedicare is the federal health insurance program for people who are age 65 or older, certain younger people with disabilities, and people with End-Stage Renal Disease (ESRD), (permanent kidney failure requiring dialysis or a transplant). before those subsidies end (see also Medicare).

Access and buy-in to Medicare or federal coverage for pre-Medicare older adults

Proposals to extend MedicareMedicare is the federal health insurance program for people who are age 65 or older, certain younger people with disabilities, and people with End-Stage Renal Disease (ESRD), (permanent kidney failure requiring dialysis or a transplant). or other federal coverage to older adults who are not yet eligible for MedicareMedicare is the federal health insurance program for people who are age 65 or older, certain younger people with disabilities, and people with End-Stage Renal Disease (ESRD), (permanent kidney failure requiring dialysis or a transplant). should include sufficient subsidies to make coverage affordable to individuals with low incomes who are unable to afford the full premium and cost-sharingThe share of insurance-covered costs that a person pays out of pocket, including deductibles, coinsurance, and copayments. It does not include premiums, balance billing amounts for non-network providers, or the cost of non-covered services., not affect the financial stability of MedicareMedicare is the federal health insurance program for people who are age 65 or older, certain younger people with disabilities, and people with End-Stage Renal Disease (ESRD), (permanent kidney failure requiring dialysis or a transplant). or other federal programs as currently configured, and maintain at least the current level of coverage for workers.

Private-market reform

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 policy

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.

Financing

Policymakers should evaluate health care reform’s sources of financing to make sure they are broad-based, stable, capable of growing with enrollment, progressiveIn taxation, a situation in which people with lower income pay a smaller percentage of their income than do people with higher income., 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 ACAThe ACA—the shortened abbreviation for the Patient Protection and Affordable Care Act— is comprehensive health care reform legislation enacted by Congress and signed into law on March 23, 2010. 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 ACAThe ACA—the shortened abbreviation for the Patient Protection and Affordable Care Act— is comprehensive health care reform legislation enacted by Congress and signed into law on March 23, 2010. .

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 ACAThe ACA—the shortened abbreviation for the Patient Protection and Affordable Care Act— is comprehensive health care reform legislation enacted by Congress and signed into law on March 23, 2010. . 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 ACAThe ACA—the shortened abbreviation for the Patient Protection and Affordable Care Act— is comprehensive health care reform legislation enacted by Congress and signed into law on March 23, 2010. coverage;
  • covers at least as many residents as the ACAThe ACA—the shortened abbreviation for the Patient Protection and Affordable Care Act— is comprehensive health care reform legislation enacted by Congress and signed into law on March 23, 2010. would have covered; and
  • will not increase the federal deficitThe amount by which annual expenditures exceed annual revenues..

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 ACAThe ACA—the shortened abbreviation for the Patient Protection and Affordable Care Act— is comprehensive health care reform legislation enacted by Congress and signed into law on March 23, 2010. .

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 deficitThe amount by which annual expenditures exceed annual revenues.) must be published on the state’s public website.

Waiver applications that integrate waiving ACAThe ACA—the shortened abbreviation for the Patient Protection and Affordable Care Act— is comprehensive health care reform legislation enacted by Congress and signed into law on March 23, 2010. provisions under Section 1332 with waiving MedicareMedicare is the federal health insurance program for people who are age 65 or older, certain younger people with disabilities, and people with End-Stage Renal Disease (ESRD), (permanent kidney failure requiring dialysis or a transplant). and MedicaidA joint federal/state program that provides health care and LTSS. However, to qualify for Medicaid LTSS, people must have extremely low assets and income, or they have to “spend down” most of their assets. provisions must align with the relevant AARP policies for those programs.