Republicans Need a Nudge to Lower Health Care Costs

Congress should allow employers to sign workers up for insurance after giving them time to select a plan themselves. Workers would be notified by their employers of the insurance plan selected for them and should be allowed to opt out of coverage at any time. Employers should be limited to placing workers in plans requiring little or, ideally, no premium contribution from their employees.

Further, Congress should authorize and facilitate the use of automatic enrollment by the states for those outside the employer-sponsored health care system. States would need to use existing sources of data on insurance enrollment to identify individuals who would be candidates for automatic enrollment. The federal government has data through the tax system on enrollment in employer plans, and the A.C.A. exchanges and state-regulated insurers have data on who is signed up in the individual insurance market.

States could also opt to collect new data, through their own tax systems and from other government offices. States would use this data to identify uninsured households that most likely have incomes that would allow them to qualify for premium assistance, Medicaid or the Children’s Health Insurance Program.

Automatic enrollment works best when the financial burden on the beneficiaries is minimal or, preferably, nonexistent. People found eligible for Medicaid generally owe no premiums, so states can automatically enroll Medicaid-eligible individuals without imposing a premium on them. Individuals with slightly higher incomes are eligible for subsidies, too, but they usually must pay an additional premium themselves to get coverage. Congress should modify current law to allow even higher deductible plans for the auto-enrolled population with incomes above Medicaid eligibility. These individuals would then be able to get coverage of their high medical expenses without paying a premium.

Those who are automatically enrolled would be able to opt out at any time, or to change their plans during the annual open enrollment period. In effect, these households would get free high-deductible catastrophic insurance protection. Automatic enrollment of this kind would also work with the different subsidies for coverage proposed by Republicans in their A.C.A.-replacement plans last year.

It will take some time to work out the administrative steps to make automatic enrollment run smoothly. Available federal coverage data collected from employers could be shared with states and used to automatically enroll families into insurance during open enrollment for the coming year. For instance, tax data obtained this year, for the 2017 tax year, could be used by the states to automatically enroll people for coverage starting in 2019. Insurers will need to participate in data crosschecks to prevent duplicate enrollments. As future data is collected, subsidies and enrollment could be adjusted accordingly.

Congress is currently considering legislation, sponsored by Senators Lamar Alexander, Republican of Tennessee, and Patty Murray, Democrat of Washington, to shore up the A.C.A.’s marketplaces. Their plan, while commendable, is unlikely to lower premiums because it does not do enough to get more consumers back into the market. The legislation would be greatly improved if it were amended to include broad authority for employers and states to use automatic enrollment to boost coverage. Insurers would find the prospect of broader enrollment attractive if the administrative questions can be addressed.

Despite the acrimony around health care, there is more consensus on some policies than appears at first glance. Lawmakers from both parties have expressed support for lowering health insurance premiums and providing federal subsidies to increase enrollment into insurance among households without access to job-based coverage. Automatic enrollment can accomplish both of these important goals.

Lanhee J. Chen (@lanheechen) is a research fellow at the Hoover Institution and director of domestic policy studies in the public policy program at Stanford University. James C. Capretta is a resident fellow at the American Enterprise Institute.

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