How the GOP Could Nudge the Uninsured Toward Coverage

Automatically enroll many Americans in no-premium, high-deductible policies unless they opt out.

 
 

An examination room at the Esperanza Health Center in Philadelphia, March 13.

 
An examination room at the Esperanza Health Center in Philadelphia, March 13. PHOTO: GENCE FRANCE-PRESSE/GETTY IMAGES

Republicans in Congress say they’ll keep working on health-care reform. It never made sense to give up after only a few months of trying, but their plan would have better prospects if they modified it to address the criticism that it would leave too many people without insurance. The solution is to enroll uninsured Americans automatically in no-premium health coverage.

The GOP does not want to require Americans to get health insurance. Besides, a mandate is no guarantee; many people are going without insurance under ObamaCare because they cannot afford the law’s expensive plans or aren’t aware of their options. According to the Treasury Department, 6.5 million people paid ObamaCare’s individual-mandate penalty in 2016 for not having had coverage the year before, and another 12.7 million received exemptions from the tax and remained uninsured. 

Congress can help these Americans and many others get insurance by enrolling them in no-premium, no-obligation plans from which they could withdraw if they wanted to. 

Most Americans get their insurance through an employer, Medicare or Medicaid. That was true before ObamaCare and would remain true under the plan the GOP considered earlier this year. The question is what to do about people who are ineligible for employer or government coverage. ObamaCare gives them income-tested premium credits for buying insurance in the individual market; the GOP plan would replace that with age-adjusted tax credits.

But how to make sure people stay covered? ObamaCare aims to help people with pre-existing conditions by prohibiting insurers from charging them higher premiums or restricting their coverage. The GOP wants to provide similar protections, but only to those who stay enrolled. People who opt out would pay a penalty when they try to re-enter the market.

In that case, Congress should also help policyholders avoid breaks in coverage. Lawmakers could require insurers to offer products whose premiums match the value of the federal tax credits. If the basic, age-adjusted federal tax credit for a 40-year-old man in a given state is, say, $3,000, then every insurer in the state would have to make a policy available for such customers with a $3,000 premium.

Insurers would adjust the upfront deductibles in these plans as necessary to ensure that the premium equals the credit. Most consumers in the individual market would thus have the option to get an insurance plan with no cost to themselves. This no-premium coverage would necessarily have higher deductibles than costlier options, but it would provide financial protection against expensive medical claims, which is the primary purpose of insurance.

As with other benefit programs, many Americans wouldn’t use the credits for which they are eligible, out of inertia or lack of information. To solve that problem, the states could automatically place eligible households into the no-premium option, randomly assigning them to one of several competing insurance plans and then notifying policyholders of their coverage.

Opponents will argue that automatic enrollment infringes on personal liberty. But people placed into such coverage would be free to opt out or to select an option that better suits their needs. Few people opt out of employer pensions when they are placed into them automatically, and no-premium insurance would impose no cost on the enrollees. 

Placing as many of the uninsured as possible into no-premium insurance would require a coordinated administrative effort. Federal tax data capture who has remained uninsured under ObamaCare. Those households would be eligible for the tax credits under the recently withdrawn GOP bill and could be placed into no-premium plans unless new data show they have become insured. States could supplement federal data by requiring residents to say whether they are insured when they pay state taxes or renew their driver’s license. The states also could allow hospitals and physicians to identify uninsured patients to be enrolled into no-premium plans.

Republicans are right to argue that reducing health costs for consumers is crucial. But their plan also must make sure most Americans have health insurance. Automatic enrollment into no-premium coverage would help achieve this goal.

Mr. Capretta is a fellow at the American Enterprise Institute. Mr. Chen is a fellow at the Hoover Institution and director of domestic policy studies in the Public Policy Program at Stanford University.

Appeared in the Apr. 19, 2017, print edition.

https://www.wsj.com/articles/how-the-gop-could-nudge-the-uninsured-toward-coverage-1492555423

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