Republican legislators and policy experts are kicking around a novel way to increase health coverage: automatically enrolling millions of uninsured Americans into low-cost insurance plans.
And unlike Republicans’ other ideas, automatic enrollment is the rare health proposal that doesn’t reflexively alienate liberals. They are generally enthusiastic about policies that would lead to greater coverage.
“It’s a viable idea,” says Andy Slavitt, who ran Medicare under President Obama and is an ardent Affordable Care Act advocate. “What’s appealing about it to Republicans and to Democrats is you want people to have free choice but not be free riders.”
“It’s an interesting idea that has got a lot of promise, but the operational details need to be worked through,” says Stan Dorn, a senior fellow in the Health Policy Center at the Urban Institute, a think tank generally supportive of the Affordable Care Act.
The goal of an automatic enrollment program would be to increase coverage and lower premiums by getting younger and healthier people signed up for coverage. The government would pick a plan for uninsured Americans with premiums equal to the size of their tax credits, meaning they wouldn’t pay anything out of pocket.
An automatic enrollment plan would have an opt-out option, senators say. But research on other similar programs suggests most people won’t use it — that they’ll stay in their no-cost health plan.
“We want to get more people into the pool and that obviously makes it better for everybody,” says Sen. John Thune (R-SD), who has advocated for a discussion of the issue in the Senate working group.
There are significant logistical obstacles to setting up an automatic enrollment program — namely, how to set up a database of all Americans who currently lack insurance. But the idea is gaining traction on Capitol Hill at this point, as senators explore how to create a bill that covers more people than the House’s proposal.
“There was a nice discussion the other day about how senior Republican aides think that auto-enrollment is the direction we should go in,” says Sen. Bill Cassidy (R-LA), an early advocate for the policy. “On the left, Andy Slavitt said auto-enrollment could be a way to get there. We’re changing the conversation.”
Republicans have advocated for automatic health insurance enrollment for about a decade
Republican legislators have been clear about two goals they have for their health care bill: it needs to lower premiums and repeal the individual mandate.
Pulling off both of those objectives is a huge policy hurdle. The individual mandate exists to bring healthy people into the insurance market, thereby holding down the price of premiums.
Ditching the mandate can also lead to fewer people getting insurance — a lesson House Republicans learned with their American Health Care Act, which the Congressional Budget Office estimated to leave 24 million without coverage.
“There are policy reasons why you want people to have coverage and political reasons why a plan that leaves 24 million uninsured can be a liability,” says Lanhee Chen, a health policy expert at Stanford who advised Mitt Romney’s and Marco Rubio’s campaigns on health care. “The discussion has really been around finding a mechanism to expand coverage that would work.”
Republicans have begun eyeing automatic enrollment as a way to get healthy people into the market without a mandate — to “nudge” the uninsured into a plan they might not proactively sign up for on their own.
The uninsured would be signed up for a plan with a low premium and a high deductible. The idea would be to deliver catastrophic coverage, the type of policy that might not pay for every doctor visit but would prevent financial ruin in case of an accident or serious illness.
“You want to have a plan that provides adequate protection for catastrophic events,” Chen says. “I’m less convinced you have to have a spectacularly generous plan or one that would be perceived as relatively generous. I think the plan will provide the backstop catastrophic coverage.”
Automatic enrollment has shown to hugely increase sign-ups in other settings. Companies that enroll workers into 401(k) savings program, for example, have participation rates twice as high as those requiring workers to opt in.
Medicare Part B automatically enrolls seniors when they turn 65, and has nearly universal coverage among the elderly. The government began enrolling low-income seniors into Medicare Part D prescription drug plans, and got 74 percent of the population enrolled in just six months.
Dorn at the Urban Institute noted that there are two states that have used automatic enrollment in Medicaid, South Carolina and Louisiana. Massachusetts used a similar program when it launched its health coverage expansion in 2006, to get low-income residents signed up for coverage.
“That was an important factor behind Massachusetts unexpectedly rapid take up,” Dorn says. “We’ve done this in a lot of different places.”
Republicans last explored the idea of automatic health insurance enrollment in 2009, when House Speaker Paul Ryan (R-WI) and Sen. Tom Coburn (R-OK) introduced a plan that would let states set up such programs.
Their bill suggested that DMVs might be able to check whether people had coverage and, if not, offer the automatic enrollment option.
Congressional Democrats ended up going down a different path, preferring an individual mandate to require nearly all Americans to sign up for coverage.
The big hurdle to automatic enrollment: how do you find the uninsured people?
While automatic enrollment may be an alluring policy idea, experts on both sides of the aisle concede that it is a difficult one to implement. The government doesn’t maintain a list of all Americans who lack insurance coverage, and building one would be a Herculean effort.
All previous examples of automatic enrollment focused on a specific group of people. States could automatically enroll people in Medicaid, for example, by using lists of people on other public assistance programs. They knew those people were below the income threshold to qualify.
Programs that automatically enroll workers in 401(k) plans target employees of a specific company.
But the target of this latest idea is all uninsured Americans, a group that can be difficult to define. People constantly switch jobs, move states, and make countless other decisions that alter their coverage.
“I don’t think this is a super-easy thing to do that doesn’t require any thought at all,” Chen says.
Still, it’s not impossible to imagine how to build the infrastructure for such a program. The Coburn-Ryan proposal suggested letting the DMV and emergency rooms enroll the uninsured into coverage, when they turn up to apply for other services.
Chen and others thought IRS data could be the best start, particularly since the agency already asks about insurance status as part of our tax returns.
That data lags a bit; it’s possible that someone has gained or lost coverage since the prior year. Dorn at the Urban Institute suggested the most concrete workaround: a question on tax forms that asks people whether they have insurance and signs them up if the answer is no.
“You could see a form asking are you covered now and if you say no, it would say we’re going to enroll you in premium-free coverage unless you check this other box,” Dorn says.
Liberals still have concerns about what automatic enrollment would look like in a Republican plan
Some Affordable Care Act supporters worry that the automatic enrollment plans would be too skimpy to provide actual coverage — that they would give enrollees a false sense of security, when their plan didn’t pay for much at all.
“My question is, if my income is $30,000 a year and I’m enrolled into a plan with a $25,000 deductible, how is that protection?” asks Jonathan Gruber, an economist at MIT who helped draft the Affordable Care Act. “In that case, you’re just giving money to health insurers.”
Gruber added that enrollees that default into a health insurance plan might not pay much attention and realize what type of coverage they had until they actually tried to use it. He argues that at a certain point, bare-bones coverage is worse than no coverage at all because it creates a false sense of security.
“This is similar to why we didn’t want lifetime limits in health insurance — it’s one of those things where you think, ‘I’m set, I have insurance,’ but you don’t realize you have a cap,” says Gruber. “People could make the same mistake here, think, ‘I’m auto-enrolled and this is good coverage.’”
One Urban Institute analysis of an earlier version of the House bill showed that the plans older Americans could afford to purchase with just tax credits would be very bare-bones, with deductibles upward of $10,000 and $25,000. The Congressional Budget Office, meanwhile, has warned that it won’t count especially skimpy plans as coverage — but has not drawn a bright line of how generous a plan needs to be in order to count.
The tax credits in the version of the AHCA that the House voted on were more generous than those Urban analyzed, meaning they would provide slightly better coverage. But Chen says that in order to make automatic enrollment work, the Senate bill would need to increase the subsidies even more.
“The tax credits as currently formulated do need to be adjusted,” says Chen. “I don’t think they would be sufficient for older folks. There needs to be some refreshing of those amounts.”
Dylan Scott contributed reporting to this piece.