Insuring Everyone: Private Coverage For A Nation's Health

Insuring the entire population privately is a complex and challenging task, as evidenced by the United States, which has the most complex health insurance system among high-income countries. The US system relies on various factors, including employer-provided insurance, income level, age, and health status. While the Affordable Care Act (ACA) has made significant strides in expanding coverage and reducing the uninsured rate, there are still gaps in the system. As of 2022, an estimated 43% of working-age adults were inadequately insured, either uninsured, experiencing coverage gaps, or underinsured.

To privately insure the entire population, several measures need to be considered. Firstly, auto-enrolment mechanisms can be implemented to ensure that all legal residents are insured, regardless of their employment status. This can be achieved by treating all residents as insured and collecting income-related premiums through the tax system. Secondly, short-term insurance plans and other inadequate coverage options should be limited or banned to ensure that consumers are adequately protected from catastrophic medical costs. Thirdly, deductibles and out-of-pocket costs need to be addressed by enhancing cost-sharing reduction subsidies and changing the benchmark plan to offer better financial protection. Additionally, states can play a crucial role by regulating their fully insured employer markets and exploring policy options to improve employer coverage.

Furthermore, it is essential to address the high healthcare prices that drive up premiums and deductibles. Creating new public insurance options and regulating provider pricing can help alleviate the financial burden on individuals. By implementing these measures, the goal of privately insuring the entire population can be more effectively achieved, providing comprehensive and continuous coverage to all.

Self-insured health plans

A self-insured health plan, also known as a self-funded health plan, is one in which the employer assumes the financial risk of providing healthcare benefits to their employees. In practical terms, this means that the employer pays for each out-of-pocket claim as they are incurred, instead of paying a fixed premium to an insurance company. Self-insured employers will typically set up a special trust fund to earmark money (from both corporate and employee contributions) to pay incurred claims.

According to a 2000 report by the Employee Benefit Research Institute (EBRI), approximately 50 million workers and their dependents received benefits through self-insured group health plans sponsored by their employers. This represented 33% of the 150 million total participants in private employment-based plans nationwide.

There are several reasons why employers choose to self-insure:

• The employer can customize the plan to meet the specific healthcare needs of its workforce, as opposed to purchasing a 'one-size-fits-all' insurance policy.
• The employer maintains control over the health plan reserves, enabling maximization of interest income.
• The employer does not have to pre-pay for coverage, providing improved cash flow.
• The employer is not subject to conflicting state health insurance regulations/benefit mandates, as self-insured health plans are regulated under federal law (ERISA).
• The employer is not subject to state health insurance premium taxes, which are generally 2-3% of the premium's dollar value.
• The employer is free to contract with the providers or provider network best suited to meet the healthcare needs of its employees.

However, self-insurance may not be the best option for every employer. Since the employer assumes the risk for paying the healthcare claim costs for its employees, they must have the financial resources (cash flow) to meet this obligation, which can be unpredictable. Therefore, small employers and other employers with poor cash flow may find that self-insurance is not a viable option.

Making insurance affordable

The Affordable Care Act (ACA) has extended health coverage to over 20 million people and has lowered the cost of coverage or care for millions more. However, ACA has been criticised for not doing enough to make coverage affordable for middle-income earners.

Tax Credits and Subsidies

The federal government has made available tax credits and subsidies to make health insurance affordable for almost everyone. About 85% of Americans are eligible for subsidies. The ACA offers two types of cost-reduction programs to reduce monthly premiums and out-of-pocket expenses for moderate and low-income people. The first is the premium tax credit, which cuts monthly payments. The second is the cost-sharing subsidy, which reduces the out-of-pocket costs associated with visiting a doctor or hospital.

Increasing or Eliminating the Income Cap on Premium Tax Credits

A straightforward solution to making coverage more affordable for middle-income earners would be to increase or eliminate the income cap on premium tax credits. This would ensure that nearly all consumers have coverage options that cost less than 10% of their incomes. Extending premium tax credits to people at higher income levels would make net premiums more affordable for middle-income earners.

Other Options

Other options to make insurance more affordable include:

• Subsidising premiums through a federal reinsurance program.
• Expanding access to plans exempt from ACA consumer protections.
• Creating a public option to put downward pressure on ACA individual market prices.

Continuous coverage

Enhancing Affordability: High costs are one of the main reasons why people go without insurance. Making private insurance more affordable can be achieved by providing subsidies or tax incentives, regulating insurance premiums, or implementing policies such as the Affordable Care Act, which improve the affordability of coverage.

Expanding Public Coverage: Public insurance programs, such as Medicaid, can provide a safety net for low-income individuals and those who are unemployed. Expanding eligibility criteria and simplifying enrollment processes can help ensure that more people have access to public coverage.

Addressing Gaps in Coverage: Gaps in coverage can occur during transitions between insurance plans or due to loss of eligibility. Implementing policies that allow for continuous eligibility, such as automatic enrollment and maintaining coverage during transitions, can help prevent these gaps.

Improving Private Insurance Design: Private insurance plans often have high deductibles and out-of-pocket costs, which can make them inadequate for many individuals. Regulating insurance companies to limit deductibles and out-of-pocket expenses can improve the quality of coverage. Additionally, ensuring that insurance plans cover essential health benefits and providing clear information about coverage can help individuals make informed choices.

Promoting Auto-Enrollment: Auto-enrollment mechanisms can help ensure that individuals who are eligible for coverage, especially those who may not actively seek it out, are enrolled and continuously covered. This can be facilitated by treating all legal residents as insured and collecting income-related premiums through the tax system.

Addressing Chronic Uninsurance: Certain populations, such as undocumented immigrants and individuals in the Medicaid coverage gap, face chronic uninsurance due to their ineligibility for federally subsidized coverage. Providing a federal fallback option or expanding eligibility criteria can help ensure that these populations have access to continuous coverage.

By implementing these strategies and addressing the specific challenges within each country's healthcare system, it is possible to work towards the goal of continuous coverage for the entire population.

Insurance for undocumented immigrants

In the United States, undocumented immigrants are not eligible for insurance coverage under the Affordable Care Act (ACA) and are ineligible for federally funded coverage, including Medicaid and Marketplace coverage. This is due to restrictions based on citizenship and immigration status. As a result, undocumented immigrants face unique barriers to accessing health insurance, with limited options available to them.

However, some states have taken steps to address this issue and expand access to health insurance for undocumented immigrants. For example, California and Oregon have provided full Medicaid benefits to all low-income residents, regardless of their immigration status. Additionally, states like Colorado and Washington have implemented state-funded subsidy programs to make private coverage more affordable for undocumented immigrants. These programs have significantly reduced the cost of coverage, increasing access for this underserved population.

Other states, such as Minnesota and New York, have expanded access through related coverage programs like Basic Health Programs (BHP). Minnesota has used state funds to extend eligibility for its BHP, MinnesotaCare, to Deferred Action for Childhood Arrivals (DACA) recipients, while New York plans to do the same with its Essential Plan. These programs provide heavily subsidized coverage to citizens and lawfully present immigrants with incomes between 133% and 200% of the poverty line.

While these state-level efforts have helped to fill some of the gaps in coverage, a more comprehensive solution to the high uninsured rate among undocumented immigrants will likely require changes in federal law. Until then, states can continue to play a crucial role in helping undocumented populations obtain affordable and comprehensive health insurance.

Insurance for low-income families

Private health insurance is often unaffordable for low-income families. In the US, the Affordable Care Act (ACA) has helped to protect low-income families from losing coverage, and in 2022, the number of nonelderly uninsured individuals dropped to 25.6 million, a decrease of 3.3 million from 2019. Most of the nonelderly uninsured are in working low-income families, and the high cost of insurance is the main reason they lack coverage.

In the US, Medicaid and the Children's Health Insurance Program (CHIP) provide free or low-cost health coverage to some low-income people, families, and children. Some states have expanded their Medicaid programs to cover all people below certain income levels, and all states must offer former foster children uninterrupted Medicaid coverage until they turn 26. In addition, the Children's Health Insurance Program (CHIP) provides low-cost health coverage to children in families that earn too much to qualify for Medicaid.

In New York, there are also free or low-cost insurance options for residents with low incomes. For example, Child Health Plus provides affordable health insurance for children regardless of income or immigration status, and the Essential Plan offers free or low-cost insurance for adults with low incomes who don't qualify for Medicaid.

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