Foreshadowing Pitfalls for the Affordable Care Act

Several countries have implemented healthcare systems that seek to attain universal health insurance through private markets. Germany, the Netherlands, and Switzerland have already embarked on this journey and can serve as guides for the United States.

Some observers would say that the Affordable Care Act’s health insurance exchanges are an attempt to “Swissify” America and its health insurance marketplace. I, for one, agree.

All four nations possess a mandate to have insurance ( in 1996, the  in 2006, in 2009, U.S. in 2010), each nation provides subsidies to help those in need to purchase coverage, and each nation promulgates regulations to limit price variation of insurance products based on medical conditions.

A recent article explores some of the difficulties faced by these European nations while implementing their mandated healthcare systems, foreshadowing potential pitfalls for the ACA. Two major issues have arisen: (1) enforcing the individual mandate and (2) dealing with individuals who sign up but default on their insurance premiums. We have started to see the same issues creep up here.

All countries have fines for non-enrollment, but the Netherlands and Switzerland allow for forced enrollment. In the United States, that is likely not a viable option. The ACA gives individuals the option of obtaining insurance or paying a fine (), but there is no automatic enrollment.

The response to “defaulters”—those people not paying their premiums—varies across nations. The Netherlands and Switzerland formerly allowed cancelation or suspension of coverage; the U.S. allows it after 90 days. However, the threat of cancellation did not promote coverage, instead it led to increasing uninsurance. In those nations—which all value universality as a goal in and of itself—new options to deal with defaulters now exist including wage garnishments or reduction in benefits.

The lessons learned from abroad which policymakers should clearly understand are that: (1) a looming problem of defaulters and uninsured might exist for the ACA Marketplaces, (2) penalties alone are insufficient to assure coverage, (3) emphasis must be placed on keeping premiums affordable, (4) suspending and canceling coverage is ineffective, and (5) the Marketplaces may need to intercede between insurers and defaulters.

Abstract

Experience from the Netherlands, Switzerland, and Germany suggests that there may be a looming problem concerning uninsured individuals and defaulters that could derail coverage projection numbers in the United States under the Affordable Care Act. In those countries, the young, people with migrant backgrounds, and those with lower incomes-precisely the groups the Affordable Care Act is seeking to cover-are overrepresented in the numbers of the uninsured and defaulters, frequently because of difficulty in paying for their premiums. In these three countries, penalties or suspension of coverage alone has not led everyone to purchase coverage or prevented some from defaulting. Help in addressing the vulnerable position of the uninsured may be needed. Examples include using a multifaceted approach in which public authorities help with debt restructuring, freeing some funds in the exchanges to help vulnerable groups, and compensating insurers for their outstanding payments if they follow an agreed protocol instead of canceling coverage. PMID: 25861802

van Ginneken, E. and Rice, T. Med Care Res Rev. 2015; epub.