Four Ways to Help Fix Obamacare
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The Fiscal Times
March 19, 2014

Now that a few million Americans have gained health coverage through the new insurance exchanges, Republicans have shifted their Obamacare-strategy.  Instead of symbolically voting to repeal the law, the GOP is proposing “fixes” in order to satisfy voters ahead of the midterm elections.

House Speaker John Boehner told reporters this week that the House GOP is working on an eight-to-10-point plan aimed at fixing the Affordable Care Act.

Related: Americans Want to Fix, Not Repeal Obamacare

Both Democrats and Republicans seem to agree that the law has issues that have had unintended consequences on families, businesses and the economy that need to be addressed—including the millions of people whose plans were cancelled under the law last fall.

“We are going to do everything we can to deal with folks who find themselves in a tough position as a consequence of this," President Obama told NBC News in an exclusive interview last fall.

In order to address issues and ease the transition, the administration has announced a number of changes and delays throughout the rollout including postponing the employer mandate until 2016.

Meanwhile, Republicans have offered up a spate of issues that would unravel major pieces of the law -- like delaying the individual mandate and proposing to eliminate the law’s risk corridor provision that is needed to keep premiums stable.

Unsurprisingly, both parties are far from agreement on how to improve the law. Still, both are forging ahead, since, according to a survey by Hart Research Associates and Public Opinion Strategies the majority of Americans say they want lawmakers to fix Obamacare rather than repeal it, as the House GOP has voted to do more than 50 times.

House Majority Leader Eric Cantor said last week that Republicans will be unveiling their wish list of Obamacare alternatives in the coming weeks.

However, in the meantime, there are a handful of technical policy glitches that experts agree should be addressed right now.

Here are some trouble spots in the law identified by health care experts:

1. The Family Glitch - Perhaps one of the more glaring issues within the Affordable Care Act is what’s referred to as the “family glitch.” Since the law was intended to make health care more affordable, it prohibits employer health plans from exceeding 9.5 percent of an employee’s household income. However, the way the law was written, it only applies to individual coverage for the employee—and not his or her family’s coverage—which is significantly more expensive. This means that if an employer offers a worker “affordable” insurance for an individual plan, but doesn't provide it for her family, they cannot qualify for a subsidy through the state or federal health exchanges.

Larry Levitt at the Kaiser Family Foundation said the glitch potentially affects an upwards of 3 million dependents. An analysis by Kaiser found that while an average plan for an individual is about $5,600, it shoots up to about $15,700 for a family.

Solution: Back in the earlier stages of the Affordable Care Act, Sen. Ron Wyden (D-OR) proposed the Free Choice Vouchers system that would have allowed employees to receive an employer contribution if they couldn’t afford their employer-based coverage. Employees would have then been able to shop in the new health exchanges for a policy that met their family’s needs. That provision, however, was removed from the law in 2011.

2) Medicaid’s Coverage Gap- When the Supreme Court ruled that states would have the choice to opt out of Medicaid expansion it created an unintended consequence of pushing low-income people who would have qualified for Medicaid without access to coverage in states that chose not to expand their programs. These people fall into the coverage gap because they fall below the federal poverty level that would qualifty them for federal subsidies to buy coverage on the exchanges and they are ineligible for Medicaid in their state.

The Kaiser Family Foundation estimates that about 5.2 million poor, uninsured adults will fall into this “coverage gap,” within the 26 states that opted out of Medicaid expansion.

Solution: The administration has tried to cushion the blow by exempting people that fall into the coverage gap from paying the individual mandate’s penalty for not having health coverage. Still, the law is not expanding insurance to these people—as it was intended to do.

Families USA Director Ron Pollack explained that the only real solution to the problem lies with the states. “They can either choose to expand their Medicaid program—which are fully funded by the federal government until 2017 when they are responsible for 10 percent of funding, or they can apply for a federal waiver.”  Several states including Arkansas have used the waiver option as an alternative to Medicaid expansion. That option allows states to use federal dollars to provide low-income people with funding to purchase policies on private exchanges.

"Because of the Supreme Court decision, this is a problem that only the states can fix, so they're going to have to think about this," former president Bill Clinton said last fall.

3) Extend Further Funding to CHIP - Though the Child Health Insurance Program is, of course, separate from the Affordable Care Act and was created back in 1997, its funding was extended through 2015 as part of the law. If Congress chooses not to continue funding the program—, which services more than 8 million children-- millions of, low-income kids would lose health care coverage, despite expansion under the new law.

Pollack of Families USA worried that, because extended CHIP funding was tied into the ACA, it could potentially be used as a political football ahead of the 2016 presidential elections.

Solution: The American Academy of Pediatrics' Committee on Child Health Financing recommended in February that Congress fully fund CHIP through 2019.

“Since CHIP is not an entitlement, it needs funding in 2015, Pollack said. “If that doesn’t happen, at a lot of kids will go without coverage.”

4) Recoupment for people with Varying Incomes - Under the law, some individuals can receive a refundable tax credit to make health care more affordable in advance of their annual income. However, experts say this is problematic because some people with varying incomes may end up earning more than expected, leaving them with a larger credit than they should qualify for. When this happens, the individuals are required to repay the excess in the form of a tax penalty. 

Solution: Pollack suggested that a simple way to address this is to make the subsidy based on an individual’s income from the previous year.

This article was updated on March 25 at 11:16 a.m. to correct the explanation of the Medicaid gap.

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Washington Correspondent Brianna Ehley, based in D.C., covers Congress, government agencies and spending issues, health care, and tax and economic policy for The Fiscal Times.