As a result of its public and private health care coverage reforms, the Affordable Care Act (ACA) has significantly increased access to affordable health insurance, including for older adults age 50-64, through the Medicaid expansion and increased 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 (see also this chapter’s section Health Care Coverage: Private Insurance—Individual- and Employment-Based Group Plans).
The state and federal insurance exchanges have provided individuals and small businesses with a new option for health coverage. To help make coverage sold through the exchanges affordable, premium tax credits and cost-sharing subsidies are available for eligible individuals and families with incomes between 100 percent and 400 percent of the FPL (see also the AARP Health Principles sections in this chapter; in Chapter 3, Taxation; and in Chapter 8, Long-Term Services and Supports for AARP principles governing health care reform).
Transitions to Medicare—subsidies for coverage through health insurance marketplaces do not extend to people eligible for Medicare, so 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 put 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 and may 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 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 (see also Chapter 3, Taxation - Tax Expenditures and Incentives—Taxing Employer-Provided Benefits; Sections in this chapter, Health Care Coverage: Private Insurance—Individual- and Employment-Based Group Plans, and Retiree Health Coverage.)
State innovation waivers—under the ACA, states may apply for waivers of select ACA provisions to better meet state needs, including 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 benefitsA set of 10 categories of services health insurance plans must cover under the Affordable Care Act. These include doctors' services, inpatient and outpatient hospital care, prescription drug coverage, laboratory services, preventive care and chronic disease management, pregnancy and childbirth,… ” 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.
EXPANDING HEALTH CARE COVERAGE: Policy
The federal government, in partnership with the states, should implement policies enacted in the Affordable Care Act (ACA) that expand access to coverage and help make it more affordable. Where states do not implement optional policies, the federal government should use its authority to provide residents of those states with expanded coverage options authorized by the ACA.
Health care reforms should significantly improve access to adequate and affordable coverage for those who either are without public or private insurance or are at risk of losing 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—coverage could be available on a buy-in basis or, depending on income, through the use of subsidies;
- developing health plans specifically for the uninsured;
- establishing health insurance exchanges that expand access to affordable and portable coverage (available to individuals and employers) by negotiating with private insurers for packages of benefits and coverage that meet minimum coverage requirements;
- subsidizing through risk mitigation programs a portion of high health care costs insured by private plans;
- subsidizing the purchase of private coverage (e.g., through the tax system) 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 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 Medicare, federal policymakers should require timely, clear notice to people insured through the health insurance marketplace who are receiving 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 this chapter’s section on Health Care Coverage: Medicare).
Access/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.
Private market reform
Reforms that rely on expansion of private coverage must ensure that affordable and adequate coverage is accessible to all individuals targeted by the expansion, regardless of health or age. Reform of market rules is a necessary component of coverage expansion (see also this chapter’s section 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 income 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.
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.
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 as ACA coverage;
- is at least as 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.
State 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 a state’s public website.
Waiver applications that integrate waiving ACA provisions under Section 1332 with waiving Medicare and/or Medicaid provisions must align with the relevant AARP policies for those programs.