Ideas for Fixing the Health Insurance Markets and Improving Healthcare

By Antonio Paulo Pinto

While the health insurance marketplaces and the healthcare system seem dysfunctional today, and appear to be imploding, there are opportunities to address key issues within the health insurance marketplaces as part of the federal budget. Due May 22, the budget includes a number of open legislative bills being considered by the U.S. Senate and Congress. If passed, these positive changes would take effect by October 2021, just in time for open enrollment season.

As a frame of reference, it’s important to consider that having affordable health insurance is not the same as having access to affordable and timely health care!

For example, the Patient Protection and Affordable Care Act (PPACA) — also known as the ACA/Obamacare — was designed based on voluntary participation and support from the health insurance carriers and health care providers, specifically the hospital systems. However, it requires people to purchase and maintain health insurance coverage with no guarantee that their plans would provide affordable or adequate access to health care services. Ironically, there is no requirement within ACA for maintaining adequate and affordable access to the “care” aspect of healthcare. A simple example is that the ACA does not properly address the anticipated need for more doctors, nurses, and other health care service and support providers in the country. With regards to the hospital systems, the ACA did not include a charity care reporting requirement, policies, or procedures for the hospital systems to address how they would manage charity care, now that they are being paid to treat many people for whom they had previously provided free charity care. If it was about healthcare, why were doctors, nurses, support staff, etc. not an integral part of the solution?

The first priority is to protect the core ideals of ACA, understanding it is still the law and will be through at least 2021. With bipartisan support, this core should provide a common ground from which other more complicated reforms can be designed and implemented. Included in these discussions are:

  • Protect guaranteed issue and cover pre-existing conditions under all health insurance plans.
  • Protect no lifetime maximum health insurance dollar benefit limits for covered medical expenses.
  • Protect the 10 essential health benefits.
  • Protect the now closed Medicare donut hole and restructure Part D, if possible.

Three other items of concern are:

  • The cost of health insurance plans.
  • The cost-sharing that people pay for health care services.
  • Balanced billing by providers and hospitals for out-of-network charges or other expenses not covered by the health insurance plan.

While all these items may seem like they are challenging to address, there are a few basic steps under ACA that can be taken to address them.

Where to start?

1)  Introduce a national high-risk and shared-risk pool to cover people with high cost medical conditions. State-based pools will not be large enough in the smaller population states to make a significant difference in health insurance plan prices for consumers. It’s realistically possible to lower health insurance plan costs by over 30 percent, by covering just the top 1 percent of people with pre-existing medical conditions through the high-risk pools. The high-risk pools should incorporate the essential health benefits (EHB)s and no lifetime limit on health insurance benefits, permanently addressing three concerns within one program.

2) Eliminate the use of the actuarial value calculator (AVC) and tiered health insurance plans, which is possible under ACA, and replacing the metal tiers with an alternative health insurance plan rating program. The result would be the ability to allow the offering of health insurance plans with co-payments and eliminate the need to make people forcibly change their health insurance plan every single year.

The AVC utilizes “per-capita” spend and utilization to design every health insurance plan in the country. This forces many health insurance plans today to be structured as health savings accounts (HSA) or high deductible health plans (HDHP). The “per-capita” language as written into the ACA, can be modified to “median” spend for commercial, non-Medicaid and non-Medicare health insurance plans. If metal tiers are maintained, they can be based on the Maximum-Out-Of-Pocket (MOOP) spend of the health insurance plan. Without the AVC, there should be consideration to allow health insurance plans to mimic Medicare and be sold as Medical-only and Prescription Drug-only health insurance plans. The result would be more affordable options for people’s individual needs.

3) The ongoing lack of price transparency for health care services requires a need for a better option to pay for health care expenses, including out-of-network and balanced billing expenses. The one existing option is a health savings account (HSA). However, one must be enrolled in an HSA qualified health insurance plan in order to be able to have an HSA bank account. The best approach is to uncouple the HSA bank account from the qualified health insurance plan requirement. If someone is enrolled in any health insurance plan, they should be eligible to have an HSA bank account to pay for their medical expenses with tax deductible money. This is especially true now that many people have health insurance plans with limited provider networks and limited prescription drug coverage, requiring they pay separately for expenses the health insurance plan will not cover.

4) The balanced billing issue is currently being addressed with legislation under negotiation. The legislation may not be perfect. However, it is a significant step in the right direction. The average person cannot negotiate with hospitals and providers over complicated and questionable bills, especially when they happen in the emergency room, when other providers are brought into the situation without the patient’s knowledge or permission. One method is to only allow arbitration if the provider demands more than three times what Medicare would have paid for the required services; and that arbitrated bills be aggregated and publicly reported, allowing identification of providers and arbitrators that regularly pursue higher payments.

The items listed above should provide a foundation for straight forward bipartisan solutions, while others will take more effort and creativity. Two of these issues are:

1) How to address Medicaid expansion in an appropriate and long-term manner, with appropriate funding.

2) How to re-design the financial assistance subsidy program, in a realistic, appropriate, and non-disingenuous manner, allowing middle- and lower-income individuals and families a predictable method to pay for health care services and their health insurance plans.

The health care system is complicated and requires people to work together to make it better for all by addressing health insurance plan costs and the healthcare system issues that exist today. The sooner we address the issues, the sooner everyone benefits! We need to stop the partisanship and focus on creating flexible programs for states and for people, with the long-term goal being a balanced and stable healthcare system for decades into the future.



Antonio Paulo Pinto is a consultant specializing in bipartisan solutions for healthcare reform. He is the author of My Two Cents: Taking the Care Out of Health Care.”