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Future Of The ACA: Reducing Out-Of-Pocket Spending

“Policy options to address cost sharing are more straightforward. Instead of tying premium tax credits to premiums for the second-lowest-cost silver plan (people who qualify for tax credits pay a percentage of their incomes for coverage pegged to the premium for a plan with a 70 percent actuarial value), the credits could be based on the premium of the second-lowest-cost gold plan (that is, a plan with an 80 percent actuarial value), as described and modeled by the Urban Institute.¹⁸ In this way, subsidized enrollees could obtain a plan with lower cost sharing for a comparable premium, thereby lowering their total out-of-pocket spending on health care.

“Alternatively, federal assistance for cost sharing (known as cost-sharing reduction, or CSR, subsidies) could be increased and extended to people with incomes above 250 percent of poverty to reduce out-of-pocket spending. The effectiveness of this policy is based on the presumption that the federal government would permanently fund the subsidies or codify the practice of “silver loading”¹⁹—either of which would increase funding certainty and thus market stability. Another way to increase affordability would be to exempt specific services (for example, primary care visits) from the deductible—a practice often referred to as offering “standardized plans.” Several states, including Massachusetts and California, and the District of Columbia require Marketplace plans to meet specific cost-sharing and benefit standards beyond those required by the ACA.²⁰“

Source: Chiquita Brooks-LaSure, Elizabeth Fowler, and Gayle Mauser. Building On The Gains Of The ACA: Federal Proposals To Improve Coverage And Affordability. Health Affairs 2020 39:3, 509-513.

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Future Of The ACA: Coverage For Low Income Americans

“Coverage for the lowest-income Americans remains the most significant unfinished business of the ACA. As passed by Congress, the ACA intended that all states would expand eligibility for Medicaid to most people with incomes below 138 percent of the federal poverty level, but the 2012 Supreme Court decision in National Federation of Independent Business v. Sebelius made Medicaid expansion optional for states.⁴ Fourteen states had not expanded Medicaid as of January 2020,⁵ leaving 4.4 million people uninsured.⁶ Further challenging ACA coverage gains, policies of the administration of President Donald Trump⁷ have led nearly twenty states to request federal approval to impose work requirements as a condition of Medicaid eligibility for certain populations. Work requirements are the subject of ongoing litigation, and a study published in the New England Journal of Medicine found that approximately 17,000 people in Arkansas had lost coverage in the three-month period before a judge halted the implementation of that state’s waiver.⁸

“Just as people eligible for premium tax credits are guaranteed coverage regardless of state residency, the federal government must ensure coverage for the lowest-income Americans so that health care is neither linked to health status, employment, or state residency nor subject to limitation by state waivers.”

Source: Chiquita Brooks-LaSure, Elizabeth Fowler, and Gayle Mauser. Building On The Gains Of The ACA: Federal Proposals To Improve Coverage And Affordability. Health Affairs 2020 39:3, 509-513.

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Future Of The ACA: Eliminating The “Subsidy Cliff”

“For middle-income Americans without employer-sponsored coverage who do not qualify for premium tax credits or cost-sharing assistance, affording Marketplace coverage can be a significant challenge. Premium tax credits help offset premiums, but people with incomes above 400 percent of poverty experience the “subsidy cliff”—they pay the full premium and bear the brunt of premium increases. This phenomenon helps explain why enrollment has decreased among people who do not receive premium assistance. In 2019 an analysis by the Centers for Medicare and Medicaid Services found that 87 percent of Marketplace enrollees received a premium subsidy.¹⁰ Affordability is also an issue for people with incomes of 250–400 percent of poverty, who are eligible for federal financial assistance for premiums but not for cost sharing. An Urban Institute analysis found that Marketplace enrollees with incomes of 300–400 percent of poverty and health care costs in the 90th percentile pay 20.6 percent of their incomes in premiums and out-of-pocket expenses, compared to 17.3 percent for Marketplace enrollees with incomes below 200 percent of poverty.¹¹ In 2020 the Henry J. Kaiser Family Foundation estimated that the average combined medical and prescription drug deductible for silver plans purchased by people with incomes over 250 percent of poverty on HealthCare.gov was $4,544.¹² Insured people with high cost sharing often forgo necessary treatment, which leads to poor health outcomes.¹³

“Policies to improve premium affordability include extending premium tax credits to people with incomes above the current threshold, increasing the generosity of tax credits, and making reinsurance—which protects individual market plans from extraordinarily high medical costs—permanent. (The ACA included three years of reinsurance funding.) Several of these policies have been proposed in different forms at the state level (for example, state-based reinsurance programs through a waiver), and the Bipartisan Health Care Stabilization Act, if enacted, would provide $30.5 billion to support reinsurance.¹⁴“

Source: Chiquita Brooks-LaSure, Elizabeth Fowler, and Gayle Mauser. Building On The Gains Of The ACA: Federal Proposals To Improve Coverage And Affordability. Health Affairs 2020 39:3, 509-513.

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World Health Systems Facts is a project of the Real Reporting Foundation. We provide reliable statistics and other data from authoritative sources regarding health systems and policies in the US and sixteen other nations.

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Page last updated January 30, 2025 by Doug McVay, Editor.