The BFD turns 11

In a few hours, the BFD that is the Affordable Care Act turns eleven.  Like many eleven years, it is gangly and occasionally awkward as it is changing and beginning to mature.

The ACA  individual marketplace is entering its fourth phase.  The first phase was pre-implementation and infrastructure construction.  The second phase was the Obama Administration roll-out and implementation where the dueling priorities of keeping insurers on board and getting people covered in a politically acceptable manner (grandmother plans notably) were often in conflict.  The third phase was schlerotic neglect by the Trump Administration along with a deep misunderstanding of the impact of CSR termination.  The fourth phase is now.  It is the significant expansion of affordability and a likely aggressive administrative agenda that links the ARA subsidy expansion with changes in consumer fritctions.  These will be some of the first major legislative corrections and improvements that expand coverage and affordability.

I think that the big push over the next couple of years will be smoothing out the administrative frictions and choice complexity of the exchanges.  The choice environment is tough.  There are a lot of steps that can be taken to make choices easier and better.  I think smarter defaults that strive to never expose people to strictly dominated plan choices would be a good start.  After that, linking administrative records such as tax records and unemployment applications to the exchanges for automatic determination of eligibility for Medicaid or exchange coverage would be a nice next step.  I also think that stronger “meaningful difference” regulation would curate the choice set to a more managable array.  Actions that reduce the number of steps and the complexity of calculations that people need to either implicitly or explicitly make will improve the exchanges.

Even more importantly, Medicaid Expansion has survived the Supreme Court.  Last night, Wyoming took the first step (of many) on the path to accepting Expansion.  This step is partially motivated by the ARA promising to effectively pay current non-expansion states to expand Medicaid for the next two years by increasing the Legacy Medicaid match rate by 5% points. Legacy Medicaid is much bigger funding wise then Expansion Medicaid, so states that have not expanded will see net new revenues coming in greater than their 10% share match for Expansion going out.

We know that health insurance has significant mortality effects.

We know that health insurance has significant morbidity effects.

We know that health insurance has significant mental health effects.

We know that health insurance has significant financial stability effects.

The past decade has been spent building a foundation and occasionally pushing against the walls to hold them up.  The next decade will be spent building on that foundation and improving a convoluted kludge of a system.