The Can’t-Miss Way to Expand Obamacare

The next logical step is a universal cost cap, guaranteeing people that they’ll never be socked with unpayable medical bills.

By Ladan Ahmadi David Kendall

Tagged Affordable Care ActequalityHealth CareJoe BidenRepublicans

You may have missed it, but the war over the Affordable Care Act is over. The unceremonious end happened on February 24, when Republican Senator Michael Crapo (R-ID) waved the white flag. “I appreciate hearing that,” Crapo told HHS nominee Xavier Becerra when informed that the would-be secretary’s top priority would be to shore up the GOP’s bête-noir, the ACA. Three weeks later, President Joe Biden signed into law the $1.9 trillion American Relief Plan, which included new measures to strengthen and expand the ACA. Republicans complained a lot about that bill and supplied zero votes for it, but notable in their criticisms was the absence of anything resembling an attack on the new health-care expansions under the ACA.

After more than 70 fruitless Republican attempts to repeal it, zero replacements passed, several defeats before the Supreme Court, and Trump’s short-lived and unpopular executive orders, this is what surrender looks like. A neutral comment at a hearing, a pass on taking a whack at in the stimulus bill, a quiet desire to move on.

But Democrats must do anything but move on. After 11 years of defending this landmark health-care law, it’s time to go on the offensive again and finish the job of the ACA.

But finishing the job will take a thoughtful approach, as expanding health-care coverage is complicated and often maddeningly hard to pass into law.

How can this best be done? First of all, by focusing on cost.

It is cost that motivates typical voters more than universal coverage. In our 2,200-person survey taken at the end of 2020, voters ranked controlling their health-care costs as their number one hope for the new Administration (beyond ending the pandemic). A recent Families USA poll showed that nine of 10 voters want Congress and the President to lower health-care costs and prescription drug prices this year. And for good reason. Americans have been pummeled by rising costs for years. Health care-cost increases used up 45 percent of workers’ raises from 2009 to 2019. Deductibles for employers with coverage at work have risen 111 percent over ten years.

Second, realize that what Democrats have put on the table on costs is not enough. Addressing surprise billing and prescription drug costs under Medicare, as is the plan in HR 3 (House Democrats’ signature health-care effort), is important. But together these measures account for only 12 percent of the nation’s health-care spending.

Third, supersize a little-known provision in the ACA to cap and contain costs for everyone. The ACA caps costs for people buying coverage on the exchanges based on their income. Under President Biden, those protections were expanded so no one in the exchanges will pay more than 8.5 percent of their income on health insurance premiums. That’s a great provision—but it applies only to people who buy their coverage through the exchanges, and that’s only one in 28 Americans. Those protections should be expanded to everyone.

The solution, then, is a Universal Cost Cap that would put a limit on the out-of-pocket and out-of-paycheck costs for everyone based on their income no matter where they get their insurance. That means whether a person gets insurance through their employer, the exchanges, or Medicare or Medicaid, their deductibles, co-pays, and premiums would be capped as a portion of what they earn. The impact on Americans would be huge. It would be a major expansion, and the benefits would be unprecedented.

A 2021 study published in Health Affairs found that low-income families who had ACA exchange plans with full cost caps spent 17 percent less on health-care costs and had a 30 percent less chance of having catastrophic health-care costs that could add up to decades of debt. Can you imagine how working and middle-income families would feel if the amount they paid for health coverage and care was 17 percent less than they had been paying? For a typical person with coverage through her employer, it would amount to a savings of $1,842 a year.

Implementing a Universal Cost Cap would permanently end people’s financial vulnerability on health care. It would allow all families to budget their health-care costs for the year. They would have peace of mind over never having to pay more than a set amount that is affordable – no matter what.

Capping costs would also greatly increase coverage because it would be far more affordable. Minority populations who are disproportionately uninsured or underinsured would benefit the most. Even with the coverage gains made in minority groups through the ACA and expansion of Medicaid in many states, those gains have stalled and, in many cases, begun reversing. According to Kaiser Family Foundation, compared to white Americans, Black Americans are still 1.5 times more likely to be uninsured, Hispanic Americans are 2.5 times more likely to be uninsured, and Native Americans and Alaska Natives are 2.4 to 2.9 times more likely to be uninsured.

In 2019, 15 percent of Hispanics and 13.4 percent of Black Americans reported delaying and/or going without medical care due to costs. And according to a 2020 Gallup survey, half of all U.S. adults said that a major health event in their household would bankrupt them. For nonwhite adults that number was closer to two-thirds. In fact, Black Americans are 2.6 times more likely to go into debt to pay for their medical bills. For many of the most vulnerable, cost remains one of the biggest barriers to coverage.

In addition to solving the cost problem for families, a Universal Cost Cap has a series of attributes that make it easy to explain to voters. It’s big and bold but builds on what we have by improving a now decade-old law that people like, with 53 percent of the public now holding a favorable view of the ACA compared to 34 percent unfavorable.

It won’t disrupt anyone’s coverage—it would just add on to what they have. It’s universal, so everyone benefits, reducing disparities in our current system. And it’s tangible. Just as protections for pre-existing conditions was the highlight of the ACA because Americans knew what they were getting, the cost cap concept is simple—everyone knows how they will benefit.

How can the federal government afford to cap everyone’s costs, including those who don’t have any coverage? It can come from the new market incentives in universal cost caps that would finally put pressure on the health-care industrial complex to eliminate wasteful care and limit excessive prices. For example, prices charged by hospitals in seven states exceed three times what Medicare pays. Eliminating one-third of the projected growth rate in costs would be enough to institute cost caps and protect workers’ raises over the next ten years from ever-rising premiums.

With universal cost caps in place, universal coverage becomes simpler. The fight over expanding coverage would not pit those with insurance against those without because the covered gain so much. The affordable price of health care would make it far less financially burdensome for those without coverage to now purchase a plan. And those who fall through the cracks can be rescued through automatic enrollment and backstops for anyone who still lacks insurance.

The fight against the ACA from the right is now over. Democrats should finish the job of the ACA and use it to address the cost problem plaguing too many Americans once and for all. President Biden’s campaign promise on health care was, “I’ll not only restore Obamacare, I’ll build on it.” Biden and Democrats should make good on that promise through Cost Caps For All.

Read more about Affordable Care ActequalityHealth CareJoe BidenRepublicans

Ladan Ahmadi is Deputy Director of Economic Communications and Health Policy at Third Way.

David Kendall is senior fellow for health and fiscal policy at Third Way.

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