Affordable Care Act

February 28, 2019

How to cut premiums by a third and expand access to coverage for millions

Blue Cross and Blue Shield companies believe everyone should have access to healthcare coverage, no matter who you are or where you live.

Since its implementation, the Affordable Care Act (ACA) has made insurance coverage available to millions who previously were uninsured, and 90 percent of Americans now have health coverage. But the marketplace for individual insurance has been marked by instability, and rising premiums have made purchasing coverage difficult for those who do not receive financial assistance.

That’s why we’ve developed a comprehensive plan that, if fully implemented, would cut individual market premiums by 33 percent while expanding access to coverage to an additional 4.2 million people.

Why focus on the individual market?

Today, more than 14 million people purchase comprehensive coverage in the individual health insurance market. This includes those without job-based insurance, including small business owners and self-employed individuals, workers in the gig economy, workers who are not eligible for employer-sponsored health plans and retirees who are not yet eligible for Medicare. Many individuals who have significant medical conditions that require extensive, often costly care depend on the individual market for coverage.

Unfortunately, individual market premiums are often unaffordable for people with incomes above 400 percent of the federal poverty level who do not qualify for financial assistance. Many purchasers must pay more than 15 percent of their income for health insurance so they can obtain the medical care they need.

That’s too much.

This is why we believe the individual market should be strengthened to make coverage more affordable while protecting those with pre-existing medical conditions.

To achieve this, we recommend that policymakers take these critical steps:

1. Revise federal assistance to help more people afford coverage

It is imperative to build on the progress we have made in providing access to health coverage regardless of health condition or economic status. Congress should enhance tax credits for younger people to make coverage more affordable and boost enrollment among younger, healthier adults. In addition, Congress should adjust the current tax credit structure to ensure no one purchasing coverage in the individual market pays more than 12 percent of income for health insurance. Congress also should expand cost-sharing protections to reduce out-of-pocket costs for lower-income people who are having trouble affording the care they need.

2. Enact policies to lower costs and remove financial barriers to accessing care

Five percent of people who buy coverage in the individual market represent almost 60 percent of health care claims’ costs. To protect those with serious conditions and lower premiums for everyone, Congress should establish a sustained federal funding mechanism to support the cost of caring for those with significant medical needs. Policymakers also should provide relief from the health insurance tax and allow health plans linked with health savings accounts to cover certain high-value services before the deductible. For example, a health plan could provide coverage of insulin before the deductible to ensure patients with diabetes have access to this live-saving drug.

3. Improve outreach to encourage people to obtain and maintain insurance

A recent Commonwealth Fund survey found that 40 percent of America’s 27.5 million uninsured, working age adults were not aware of their state’s marketplace or the federal government’s marketplace, HealthCare.gov. Exchanges should provide enhanced outreach, education and marketing to encourage enrollment. In addition, policymakers should continue to allow consumers to automatically renew their coverage, which helps ensure continued enrollment.

Taken together, the actuarial firm Oliver Wyman estimates these three actions would reduce the average premiums for policies that provide all benefits of the ACA by 33 percent, while enabling an additional 4.2 million people to obtain coverage that meets the comprehensive requirements of the law.

How to cut premiums by a third and expand access to coverage for millions

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