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Changes Needed to Health Law, Says Urban Institute Report

By Sahir Doshi, CQ Roll Call

August 11, 2015 -- The Urban Institute, advised by former White House health officials, recommended Tuesday that the Centers for Medicare and Medicaid Services allow states to partially expand Medicaid by covering people with income up to the federal poverty line, rather than 38 percent above the poverty line.

The suggestion was one of several in a report that described ways to improve the Affordable Care Act. The report was noteworthy not only because it occasionally strayed from Obama administration positions and contained implicit criticism of the law but also because it provided a glimpse of what some Democrats would do to change the law if they could.

Democrats won't have the opportunity to revise the law in the next year, given Republicans' control of Congress. Even if Democrats controlled Congress and the presidency, the cost of the proposals—$453 billion to $559 billion over 10 years—would make it challenging to get enacted. A few of the recommendations could be implemented by executive action, though, without the need for Congress to pass new legislation.

Former administration officials who reviewed the report included Liz Fowler and Chris Jennings.

Among the recommendations were proposals to:

  • Enhance the premium tax credits and cost-sharing reductions for people who buy health insurance through the health care law's new marketplaces. The revised premiums would reduce the amount that individuals would have to pay as a percentage of their and expand the cost-sharing subsidies that pay for patients' out-of-pocket costs to people with income up to three times the federal poverty limit, rather than 2.5 times the poverty limit. Subsidies would be linked to gold-level plans, which cover about 80 percent of medical costs, rather than the silver plans, which pay for about 70 percent of costs.
  • Expand benefits for workers' families who were affected by the so-called "family glitch." The organization wants the IRS to change its interpretation. 
  • Increase federal grants for IT development and operations; consumer outreach and enrollment activities; and the enforcement of regulations.

The Urban researchers recommended paying for the proposal by, among other things, increasing the Medicare payroll tax on wages, extending Medicaid drug rebates to Medicare, boosting cigarette and alcohol taxes, and replacing the so-called Cadillac excise tax for high-cost health insurance plans with a cap on the tax exclusion for contributions to employer-based health insurance.

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