How the Biden Administration Can Expand ACA Exchange Enrollment
The head of a company that provides platforms for state-based ACA public exchange programs lays out a plan for getting people covered.
The 2020 election is now behind us, and the Democrats have won control of both the House of Representatives and the Senate. With this blue lean, the Biden administration and congressional Democrats are expected to pursue the policy agenda they campaigned on, including some, if not all, of the health care policy changes set forth in the Biden health care plan.
Below is an overview of what I view as the most meaningful health care policy changes that we can expect the new White House to put into action to strengthen the Affordable Care Act (ACA), lower the uninsured rate, and increase affordability.
1. Allow access to the ACA’s premium tax credit subsidies at higher income levels
Currently, under the ACA, an individual with a household income over 400% of the federal poverty level (FPL) is not eligible for a premium subsidy to reduce the monthly premium amount. Under the Biden health care plan, however, an individual with an income level above 400% of FPL would qualify for a premium subsidy. For example, an individual at 800% of FPL (which is around $100,000 for this individual) could receive a subsidy if they purchase an individual market ACA public exchange plan.
This change is important because while a plan may be deemed affordable on paper, in reality, many Americans are still not buying health insurance because the premiums are just too expensive.
2. Increase the premium subsidy amounts
In addition to allowing more access to subsidies, Democrats have proposed to increase the premium subsidy amounts for individuals purchasing an individual market ACA exchange plan. Subsidies today are based on the premium for the second-lowest cost silver plan. The Biden plan has proposed that subsidies be based off gold plans, which are more expensive, so the subsidy amounts available to consumers would increase.
The amount of subsidy a consumer receives is based on “affordability.” Affordability is defined as a plan with premiums that total 9.83% or less of a person’s income. Many argue that a premium that eats 10% of a person’s income is unaffordable. Biden has proposed lowering the affordability rate to 8.5% of income.
3. Permit those with employer plans to shop on the exchange
Currently, under the ACA, if an employee is offered an affordable plan, the employee is not eligible to shop on the exchange and is not eligible for a premium subsidy.
Democrats have proposed that this restriction be removed, including for those with employer-sponsored insurance. This proposal would let people purchase an individual market ACA exchange plan and leverage premium subsidies if they choose to forego their employers’ coverage. This would give the employee more choice and, in theory, attract more people to shop on the exchanges.
If enacted into law, these changes will result in a stronger individual health insurance market. In fact, the Kaiser Family Foundation estimates that millions of Americans with employer coverage would find more affordable coverage in the individual market. Based on this estimate alone, it is reasonable to believe that the individual market could grow by millions.
If more Americans are incentivized to enroll in a plan because of better affordability, the ratio of sick enrollees to healthy enrollees becomes more balanced. When that happens, premiums are likely to decrease in the future, further encouraging enrollments, lowering the uninsured rate, and strengthening the ACA.