The US labor market is shifting away from full-time, permanent jobs that offer employer-sponsored group health insurance. A key labor market trend is the large and growing proportion of employees working as contract workers, independent contractors, part-time and temporary workers, and members of the “gig economy” such as Uber and Lyft drivers. Another trend is the steady decline in the proportion of small employers offering health coverage. A third trend is the shifting of a substantial portion of the cost of employer coverage from the firm to the worker. Employees’ contributions to employer group health insurance have far outpaced the growth in their earnings, and this has led some workers to decline job-based coverage.
In addition, many workers are being displaced by technology. Finally, despite very tight labor markets in 2018, the labor force participation rate remains very low. Some of this reflects the retirement of baby boomers but another large chunk represents people in their prime working years (25-54) stuck outside the labor force, many of whom would like to work but face barriers to employment and are not prepared for the demands of a modern work force.
The US needs a viable source of nearly automatic health coverage for such workers. This paper makes the case for correcting problems with the Affordable Care Act (ACA) and building on it to move the US toward universal health coverage. Incremental progress toward universal coverage can be achieved without mandates on individuals and employers and without a single payer system. This is not to discredit those approaches, and the termination of the penalties for not having health coverage starting in January 2019 removes one of the important pillars of the ACA.
While the debate over mandates and Medicare for all continues, however, we need to find an analytically and politically viable approach to make health coverage available and affordable for millions of uninsured Americans. Most important, we need to fix and strengthen the ACA Marketplaces (Exchanges) and help people who are eligible for subsidized coverage but currently not participating obtain and retain it easily. We also need to avoid kicking people off Medicaid for whom, at least in the near-term, it is the only source of affordable health coverage.
Expanding health coverage will be more affordable if we address the fundamental cost drivers. These include: (1) the ongoing march of medical technology, bringing wondrous advances in patient care, but frequently without balancing such advances with the related risks and harms, or with the costs; (2) avoidable use of the ER and inpatient hospital admissions, for lack of the effective prevention and management of chronic medical conditions; (3) the very high prices of many health services and products; (4) our neglect of the strong forces outside of the medical system that drive people into it, such as poor housing, food insecurity, tobacco use, substance use disorders, and inadequate transportation; and (5) open-ended tax subsidies that are poorly targeted to need and discourage employees from being conscious of the quality of health care and cost when they select a health plan.
The following policy measures address these problems:
Improve the viability of ACA Marketplaces and the Individual Markets
- Restore the ACA Cost Sharing Reduction (CSR) program.
- Encourage more states to develop reinsurance programs and consider re-constituting a national approach.
- Shore up and strengthen the ACA risk-adjustment program.
- Extend eligibility for the ACA option of “catastrophic coverage” insurance plans from young adults under the age of 30 to all adults.
- Avoid converting short-term, thin-benefit health insurance plans into multi-year plans.
- Avoid proposals that would restore pre-ex exclusions, insurance rating based on health status and gender, and other insurance rules that encourage insurers to shun older and sicker patients or price them out of coverage.
Significantly Expand Automatic Enrollment Strategies to Insure More Americans
- Federal and state governments create incentives for automatic enrollment in public programs.
- States create incentives for employers to use auto-enrollment into their health benefit programs
- and develop approaches to broaden coverage that fit their own situations.
Continue to Reform Medicaid but Avoid Harsh Measures that Block or Drop Enrollment
- Limit the use of work rules and create a broad range of acceptable community/work. arrangements with phase-ins of requirements; work supports create a better path out of poverty than removing people from Medicaid who are going to have a hard time finding affordable private market alternatives.
- Develop care plans for Medicaid enrollees with complex medical and social needs.
Address the Underlying Health Care Cost Drivers
- Develop a new approach to health technology assessment.
- Overhaul the incentives driving avoidable hospital use.
- Develop new strategies to reduce high prices.
- Address the social determinants of health.
- Cap open-ended tax subsidies and re-deploy savings to help finance coverage for those with low incomes.
The shrill battle over the Affordable Care Act is keeping the country from a constructive debate over the best and most bipartisan ways to move in the direction of universal health coverage through incremental, substantial reforms while controlling health costs. We need a cease-fire in the battle over ACA, leading to a non-ideological blueprint for health reform. This report is designed to offer a menu of policy options in that spirit, and to highlight several promising reforms underway in Maryland.