This is the accessible text file for GAO report number GAO-11-392R 
entitled 'Private Health Insurance Coverage: Expert Views on 
Approaches to Encourage Voluntary Enrollment' which was released on 
March 25, 2011. 

This text file was formatted by the U.S. Government Accountability 
Office (GAO) to be accessible to users with visual impairments, as 
part of a longer term project to improve GAO products' accessibility. 
Every attempt has been made to maintain the structural and data 
integrity of the original printed product. Accessibility features, 
such as text descriptions of tables, consecutively numbered footnotes 
placed at the end of the file, and the text of agency comment letters, 
are provided but may not exactly duplicate the presentation or format 
of the printed version. The portable document format (PDF) file is an 
exact electronic replica of the printed version. We welcome your 
feedback. Please E-mail your comments regarding the contents or 
accessibility features of this document to Webmaster@gao.gov. 

This is a work of the U.S. government and is not subject to copyright 
protection in the United States. It may be reproduced and distributed 
in its entirety without further permission from GAO. Because this work 
may contain copyrighted images or other material, permission from the 
copyright holder may be necessary if you wish to reproduce this 
material separately. 

GAO-11-392R: 

United States Government Accountability Office: 
Washington, DC 20548: 

February 25, 2011: 

The Honorable E. Benjamin Nelson:
Chairman:
Subcommittee on the Legislative Branch:
Committee on Appropriations: 

United States Senate: 

Subject: Private Health Insurance Coverage: Expert Views on Approaches 
to Encourage Voluntary Enrollment: 

Dear Chairman Nelson: 

To help expand health insurance coverage among the 50 million 
uninsured Americans, the Patient Protection and Affordable Care Act as 
amended (PPACA) mandates that individuals, subject to certain 
exceptions, obtain health insurance coverage or pay a financial 
penalty beginning in 2014--the "individual mandate".[Footnote 1] At 
the same time, PPACA generally requires insurers to accept all 
applicants, regardless of health status,[Footnote 2] and prohibits 
insurers from excluding coverage based on any preexisting conditions. 
[Footnote 3] An individual mandate such as PPACA requires has been the 
subject of continued debate. Many health care policy experts have 
stressed the importance of a mandate in expanding health care coverage 
and keeping premiums affordable. For example, experts have noted that 
such a federal requirement may be necessary to prompt many 
individuals, such as younger, healthier individuals, to obtain 
coverage they otherwise would forego--particularly once they are 
guaranteed access to that coverage later when they may need it. They 
suggest that bringing these younger, healthier individuals into the 
insurance market is necessary to avoid adverse selection, whereby 
disproportionately less healthy individuals who need health care 
services enroll in coverage, leading to higher premiums that further 
discourage healthy individuals from enrolling.[Footnote 4] Some 
experts have argued that the individual mandate does not go far enough 
to ensure that all of the uninsured enroll, and that to do so would 
require heavier penalties that are fully enforced to be truly 
effective.[Footnote 5] Other experts suggest that, rather than 
requiring individuals to obtain health insurance coverage, a more 
appropriate role for the federal government would be to consider 
alternatives to encourage voluntary enrollment. Some of these experts 
also question the legality of a federal mandate.[Footnote 6] Since its 
enactment, the federal mandate has been subject to a number of court 
challenges to its constitutionality. 

Because of the possibility that legislative or judicial action could 
result in a change to, or elimination of, the mandate, you asked us to 
identify potential alternatives to encourage, rather than require 
individuals to obtain private health insurance coverage. For this 
report, we obtained the views of multiple experts on the range of 
approaches Congress could consider to encourage voluntary enrollment 
in private health insurance coverage.[Footnote 7] 

To obtain the views of experts, we interviewed 41 officials from 21 
organizations that provide research and analysis on health care issues 
or otherwise are health care stakeholders. We identified these 
individuals and organizations based on a literature search of relevant 
published research or commentary, referrals from the Institute of 
Medicine of the National Academy of Sciences, referrals from those we 
interviewed, and internal GAO expertise. We selected the experts based 
on demonstrated subject matter expertise; representation of a range of 
perspectives (specifically including both proponents and opponents of 
the individual mandate); and representation from a wide range of 
institutions, including academia, business and consumer organizations, 
state government, health insurers, professional organizations, and 
policy research organizations. See enclosure I for the complete list 
of experts we interviewed and their organizational affiliation. 

During each phone interview, we asked the experts to identify 
approaches that might encourage individuals to voluntarily enroll in 
health care coverage, regardless of any views the experts might hold 
on the importance of a mandate to expand health care coverage. We 
solicited comments on a list of approaches we circulated in advance, 
based on our preliminary research, as well as comments on approaches 
that arose during the discussions and those that arose during previous 
interviews with other experts. At the conclusion of our interviews, we 
circulated to all the experts we interviewed a list of approaches 
compiled from all of our interviews, allowing each the opportunity to 
comment on any specific approach not discussed during their interview. 
We incorporated the experts' comments as appropriate. 

We did not independently evaluate the potential effectiveness or the 
legal implications of the approaches individually or in combination. 
[Footnote 8] Moreover, we did not explore suggestions that primarily 
emphasized more generous subsidies or significant expansions of 
publicly funded insurance programs as a means of expanding coverage. 
The approaches identified in this report are not endorsed by GAO, nor 
necessarily by any particular experts we interviewed, or the 
organizations they represent. 

We conducted our work from October 2010 to February 2011 in accordance 
with all sections of GAO's Quality Assurance Framework that are 
relevant to our objectives. The framework requires that we plan and 
perform the engagement to obtain sufficient and appropriate evidence 
to meet our stated objectives and to discuss any limitations in our 
work. We believe that the information and data obtained, and the 
analysis conducted, provide a reasonable basis for any findings in 
this product. 

Background: 

Of the nearly 265 million individuals in the United States under age 
65 in 2009, more than 156 million (59 percent) received health care 
coverage through employer-sponsored group market plans and nearly 17 
million (6.3 percent) were covered by health plans purchased directly 
from an insurer in the individual market. Another 56 million (21 
percent) were covered through public programs such as Medicaid--the 
government-sponsored health insurance program for certain low-income 
people--or other public programs.[Footnote 9] Most employees 
participate in employer-sponsored insurance where available, in part 
because employers typically subsidize a large share of employees' 
premiums and premium contributions are tax-deductible. Premiums for 
individual health insurance coverage usually depend on individuals' 
risk factors such as health status and age and thus may vary 
substantially, with individuals paying the full premium. In addition, 
a total of 50 million--one in five nonelderly Americans--were 
uninsured, with more than three-quarters of the uninsured from working 
families,[Footnote 10] and the vast majority in low-or moderate-income 
families.[Footnote 11] Research indicates that uninsured individuals 
may forego some health care, and they may not be able to pay for care 
that they do receive. Uncompensated care costs for the uninsured 
amounted to about $57 billion in 2008.[Footnote 12] 

PPACA contains a number of provisions that are designed to expand 
access to private health insurance, many of which take effect in 2014. 
For example, in addition to the individual mandate, PPACA requires the 
establishment of American Health Benefit Exchanges in each state by 
January 1, 2014, through which eligible individuals and small 
employers can compare and select insurance coverage amongst 
participating health plans.[Footnote 13] Upon enrolling in plans 
offered through the Exchanges, certain individuals may qualify for 
premium tax credits and cost sharing reductions.[Footnote 14] PPACA 
requires the Exchanges to perform several functions, including: 
awarding grants to third parties to facilitate enrollment into 
available plans, establishing telephone hotlines to respond to 
requests for assistance, and maintaining Web sites to provide 
comparative information on health plans for consumers.[Footnote 15] In 
addition, the Exchanges must provide for initial open enrollment 
periods, followed by annual open enrollment periods in subsequent 
years, as defined by the Secretary of Health and Human Services. 
[Footnote 16] 

PPACA also imposes certain requirements on employers and other 
insurers offering private health insurance. For example, beginning in 
January 2014, employers with more than 200 full-time employees that 
offer health coverage must automatically enroll new full-time 
employees into a plan--referred to as "autoenrollment"--providing 
these employees the opportunity to disenroll from the plan--or opt 
out--if they so choose.[Footnote 17] In addition to requiring insurers 
to accept applicants regardless of health status, PPACA allows 
insurers offering individual or small group coverage, beginning in 
January of 2014, to impose varying premiums based only on certain 
factors, including age.[Footnote 18] Insurers may vary premiums based 
on age by no more than a 3 to 1 ratio for adults (meaning that the 
rates for the oldest person in the pool would be no more than three 
times higher than for the youngest person). Starting January 1, 2011, 
PPACA requires insurers offering group or individual coverage to 
expend a significant percentage of their premium revenues on 
reimbursement for clinical services provided to their enrollees and 
activities that improve health care quality--also referred to as the 
medical loss ratio requirement.[Footnote 19] See enclosure II for 
further background information on the issues discussed in this report. 

Results in Brief: 

The experts we interviewed discussed several specific approaches to 
encourage voluntary health insurance enrollment during our interviews. 
The approaches are summarized below, generally presented in the order 
of frequency with which they were proposed by the experts for 
consideration. These approaches are not endorsed by GAO, nor 
necessarily by any particular experts we interviewed, or the 
organizations they represent. 

* Modify open enrollment periods and impose late enrollment penalties. 

* Expand employers' roles in autoenrolling and facilitating employees' 
health insurance enrollment. 

* Conduct a public education and outreach campaign. 

* Provide broad access to personalized assistance for health coverage 
enrollment. 

* Impose a tax to pay for uncompensated care. 

* Allow greater variation in premium rates based on enrollee age. 

* Condition the receipt of certain government services upon proof of 
health insurance coverage. 

* Use health insurance agents and brokers differently. 

* Require or encourage credit rating agencies to use health insurance 
status as a factor in determining credit ratings. 

In discussing these approaches, four key themes emerged. First, 
experts emphasized that most people would prefer to purchase health 
insurance coverage; however, to the extent that high cost is a 
barrier, the use of financial incentives is key. Second, they stated 
that regardless of the particular approach taken to increase voluntary 
enrollment in the absence of an individual mandate, the availability 
of affordable, high-quality health care plans with a basic set of 
benefits, and full coverage of preventive care services is essential 
to encouraging voluntary enrollment in the coverage. Third, experts 
said that strong marketing and public education from trusted, 
community-based sources informing people about their health care 
choices, their costs, and the consequences of not enrolling in a 
timely manner are important. And fourth, they said convenient access 
to the health insurance system through multiple access points staffed 
by knowledgeable individuals would further facilitate enrollment. 

Experts expressed important cautions in interpreting their comments on 
these approaches. Not all the experts concurred that any particular 
approach merited consideration, and those who proposed an approach for 
consideration did not necessarily suggest its impact would be 
significant or comparable to that of an individual mandate. Experts 
noted that various approaches would have different impacts on 
encouraging voluntary enrollment, and that a combination of multiple 
approaches holds more potential to encourage voluntary enrollment than 
any single approach. For example, a marketing and public education 
campaign may be combined with other approaches, and would be important 
to the successful implementation of any effort to encourage enrollment 
in health insurance. Furthermore, they emphasized that independent 
research is required to fully evaluate the potential effectiveness and 
legal or other implications associated with any approach or 
combination of approaches. 

Enclosure III contains the full discussion of each approach, including 
an overview of how each would work and key associated challenges and 
trade-offs. 

As agreed with your office, unless you publicly announce the contents 
of this report earlier, we plan no further distribution until 30 days 
after its issuance date. At that time, we will send copies of this 
report to relevant congressional committees and other interested 
members. The report will also be available at no charge on GAO's Web 
site at [hyperlink, http://www.gao.gov]. 

If you or your staff have any questions regarding this report, please 
contact me at (202) 512-7114 or dickenj@gao.gov. Contact points for 
our Offices of Congressional Relations and Public Affairs may be found 
on the last page of this report. Individuals making key contributions 
to this report include Randy DiRosa, Assistant Director; Iola D'Souza; 
Laurie Pachter; Pauline Seretakis; Hemi Tewarson; and Stephen Ulrich. 

Sincerely yours, 

Signed by: 

John E. Dicken:
Director, Health Care: 

Enclosures - 3: 

[End of section] 

Enclosure I: Experts Interviewed by GAO about Approaches to Encourage 
Voluntary Health Insurance Enrollment: 

Organization: America's Health Insurance Plans; 

Name: Gary Bacher; 
Title: Senior Vice President. 

Name: Donna Horoschak; 
Title: Senior Vice President, Product Policy. 

Name: Betsy Pelovitz; 
Title: Vice President, Product Policy. 

Organization: American Academy of Actuaries; 

Name: Cathy Murphy-Barron; 
Title: Chairperson of the Federal Health Committee. 

Name: David Shea; 
Title: Former Chairperson of the Federal Health Committee. 

Name: Cori Uccello; 
Title: Academy Senior Health Fellow. 

Name: Tom Wildsmith; 
Title: Vice President of the Health Practice Council. 

Organization: American Enterprise Institute for Public Policy Research; 

Name: Joseph Antos; 
Title: Wilson H. Taylor Scholar in Health Care and Retirement Policy. 

Name: Thomas P. Miller; 
Title: Resident Fellow. 

Organization: American Federation of Labor and Congress of Industrial 
Organizations; 

Name: Gerald M. Shea; 
Title: Assistant to the President for Government Affairs. 

Organization: Assurant Health; 

Name: Don Hamm; 
Title: President and Chief Executive Officer. 

Organization: Blackstone Group; 

Name: Dr. Robert Galvin; 
Title: Chief Executive Officer, Equity Healthcare. 

Organization: Blue Cross Blue Shield Association; 

Name: Alissa Fox; 
Title: Senior Vice President. 

Name: Justine Handelmeyer; 
Title: Vice President. 

Name: Kris Haltmeyer; 
Title: Executive Director. 

Name: Robert Imes; 
Title: Director. 

Organization: CDBykerk Consulting, LLC; 

Name: Cecil D. Bykerk; 
Title: President. 

Organization: Columbia University; 

Name: Dr. John W. Rowe; 
Title: Professor of Health Policy and Management, Mailman School of 
Public Health. 

Organization: Consumers Union; 

Name: Lynn Quincy; 
Title: Senior Health Policy Analyst. 

Organization: Council of State Governments; 

Name: Chris Whatley; 
Title: Director, Washington Office and Deputy Executive Director. 

Name: Ellen Andrews; 
Title: Health Policy Consultant. 

Name: Nell Etheredge; 
Title: Legislative Analyst. 

Organization: Employee Benefit Research Institute; 

Name: Dr. Paul Fronstin; 
Title: Senior Research Associate. 

Organization: Harvard University; 

Name: Dr. David Cutler; 
Title: Otto Eckstein Professor of Applied Economics/Professor of 
Economics. 

Organization: The Henry J. Kaiser Family Foundation; 

Name: Diane Rowland; 
Title: Executive Vice-President and Executive Director, Kaiser 
Commission on Medicaid and the Uninsured. 

Name: Gary Claxton; 
Title: Vice President and Director of the Health Care Marketplace 
Project. 

Organization: The Heritage Foundation; 

Name: Dr. Stuart Butler; 
Title: Director of the Center for Policy Innovation. 

Name: Ed Haislmaier; 
Title: Senior Health Research Fellow. 

Organization: The Lewin Group; 

Name: John Sheils; 
Title: Senior Vice-President and Principal. 

Organization: Mercer; 

Name: Susan Connolly; 
Title: Senior Consultant, Health Benefits Practice, Intellectual 
Capital. 

Name: Chris Covill; 
Title: Head of Voluntary Benefits Consulting Group. 

Name: Sharon Cunninghis; 
Title: US Health and Benefits Consulting Business Leader. 

Name: Stephanie Poe; 
Title: Americas Head, Public Relations. 

Name: Tracy Watts; 
Title: Senior Health Care Consultant. 

Organization: Massachusetts Institute of Technology; 

Name: Dr. Jonathan Gruber; 
Title: Professor of Economics. 

Organization: National Business Group on Health; 

Name: Helen Darling; 
Title: President. 

Organization: The Urban Institute; 

Name: Dr. Robert Reischauer; 
Title: President. 

Name: Dr. Linda Blumberg; 
Title: Senior Fellow. 

Name: Stan Dorn; 
Title: Senior Fellow. 

Name: Dr. John Holahan; 
Title: Senior Fellow. 

Organization: U.S. Chamber of Commerce; 

Name: James Gelfand; 
Title: Director of Health Policy. 

Source: GAO. 

[End of table] 

[End of section] 

Enclosure II: Health Insurance Coverage and Select Provisions of the 
Patient: 

Protection and Affordable Care Act As Amended (PPACA): 

More than 156 million (59 percent) of the individuals in the United 
States under age 65 received health care coverage through employer- 
sponsored group market plans in 2009.[Footnote 20] Employers are not 
required to offer health insurance, but most large employers provide 
coverage either by purchasing plans from insurers or by self-funding 
their own plans, and most eligible employees tend to participate in 
these employer-sponsored plans.[Footnote 21] Small employers (often 
defined as 50 or fewer employees) are less likely to provide coverage 
than large employers, and when they do, they generally purchase that 
coverage from insurers in the small group market.[Footnote 22] Workers 
employed by small employers, and these workers' families, are more 
than twice as likely to be uninsured as individuals in households with 
a worker at a large employer. Large and small employers typically 
subsidize a large share of employees' health insurance premiums, 
[Footnote 23] and employer and employee contributions for workers' 
health coverage are generally excluded, without limit, from workers' 
taxable income.[Footnote 24] 

Private group health insurance coverage is regulated at both the 
federal and state levels. For example, the Health Insurance 
Portability and Accountability Act of 1996 (HIPAA) established federal 
requirements to ensure access, portability, and renewability within 
the group insurance markets. One of HIPAA's provisions prohibits 
insurers from imposing exclusion periods based on preexisting health 
conditions when individuals are moving between different group health 
plans, such as when they change jobs.[Footnote 25] Another HIPAA 
provision prohibits insurers from imposing varying premiums for 
similarly situated group plan enrollees on the basis of health status 
or medical history.[Footnote 26] States also impose various 
requirements on insurers. For example, states may require insurers in 
the small group markets to limit the variation allowed in premiums 
based on health status and other risk factors.[Footnote 27] 

An additional 16.7 million (6.3 percent) Americans under age 65 in 
2009 were covered by health plans purchased directly from an insurer 
in the individual market. These plans are generally purchased by self-
employed individuals, early retirees, or workers who were either not 
offered, or decided not to participate in, employer-sponsored health 
insurance. Unlike the employer-sponsored group market where premiums 
generally are based on the risk characteristics of the entire group, 
premiums for individual market coverage are generally based on each 
individual's expected health care costs depending on risk factors such 
as health status and age. Also, individual plans tend to have higher 
administrative costs, and unlike employer-sponsored coverage, 
individual plan premiums are not subsidized by an employer and are 
generally not tax-deductible.[Footnote 28] As a result, the cost of 
individual market coverage is typically greater and more varied than 
employee contributions to employer-sponsored coverage. HIPAA provides 
certain guaranteed access to coverage for eligible individuals moving 
from group to individual coverage, but this protection does not apply 
to individuals moving between individual market plans.[Footnote 29] At 
the state level, insurance in the individual market may be less 
regulated than in the group market. To varying degrees, many states 
permit health insurers to use medical underwriting--a process used to 
assess an applicants' health status and other factors to determine the 
basis for applicable premiums, the extent of coverage they provide, or 
whether to provide coverage at all.[Footnote 30] 

In 2009, a total of 50 million--one in five--nonelderly Americans were 
uninsured. More than three-quarters of the uninsured were from working 
families,[Footnote 31] and the vast majority were in low-or moderate- 
income families. Adults also made up more than their share of the 
uninsured--especially young adults ages 19 to 29.[Footnote 32] 
Research indicates that uninsured individuals may forego some health 
care, and they may not be able to pay for care that they do receive. 
Uncompensated care costs for the uninsured amounted to about $57 
billion in 2008. About 75 percent of this was paid by federal, state, 
and local funds for care of the uninsured.[Footnote 33] 

PPACA[Footnote 34] makes several changes to the regulatory structure 
governing private health insurance markets. For example, beginning in 
January 2014, PPACA generally requires that individuals obtain health 
insurance or pay a penalty for each month of noncompliance. 
Individuals are required to maintain certain minimum essential 
coverage for themselves and their dependents, which includes employer-
sponsored plans, individual plans, and government-sponsored plans. 
[Footnote 35] Prior to PPACA, Congress has considered other 
legislation that included requirements for individuals to obtain 
health insurance.[Footnote 36] 

PPACA requires the establishment of American Health Benefit Exchanges 
by January 1, 2014, to provide eligible individuals and small 
employers access to a selection of private health plans.[Footnote 37], 
[Footnote 38] When enrolling in a health plan through the Exchanges, 
certain individuals may qualify for premium tax credits and cost 
sharing reductions.[Footnote 39] PPACA requires the Exchanges to 
perform several functions, including the following: 

* Provide for an initial open enrollment period and annual open 
enrollment periods for subsequent years, as defined by HHS.[Footnote 
40] 

* Establish navigator programs, through which grants are awarded to 
third parties for specified activities including: facilitating 
enrollment in the health plans, conducting public education to raise 
awareness of the availability of the health plans, distributing 
information about the plans and opportunities for premium tax credits 
and cost sharing reductions, and providing information to consumers in 
culturally and linguistically appropriate ways.[Footnote 41] 

* Establish telephone hotlines to respond to requests for assistance 
and maintain Web sites with standard comparative information on health 
plans.[Footnote 42] 

PPACA imposes requirements on certain employers. Beginning in January 
2014, employers with more than 200 full-time employees (FTEs) that 
offer health coverage must automatically enroll new FTEs into a plan 
they currently offer. Employers must provide adequate notice and the 
opportunity for an employee to opt out if they so choose.[Footnote 43] 
An employer with at least 50 FTEs that does not provide coverage to 
employees and their dependents for any month generally is subject to 
an assessable payment if one or more of its full-time employees signs 
up for a plan through an Exchange and is eligible for a premium tax 
credit or cost sharing reduction.[Footnote 44] An employer with at 
least 50 FTEs that offers coverage to employees and their dependents 
may also be subject to an assessable payment, subject to certain 
exceptions, if one or more of its FTEs enrolls in a health plan 
through an Exchange and is eligible for premium tax credits or cost 
sharing reductions due to the nature of the coverage offered by the 
employer.[Footnote 45] As of March 1, 2013, employers also must 
provide current employees (and new employees at the time of hiring) 
with specific information including about the existence of an 
Exchange, the services it provides, and the manner in which the 
employees may contact the Exchange for assistance.[Footnote 46] 

PPACA regulates certain features of health coverage offered by 
insurers in both individual and small group markets. For example, as 
addressed above, PPACA requires insurers to accept all applicants, 
regardless of any preexisting medical conditions, thus establishing 
guaranteed issuance of coverage for individuals and employers. PPACA 
allows insurers offering individual or small group coverage beginning 
in January 2014, to impose varying premiums based only on certain 
factors, including age, but will limit the age-based variation to no 
more than a 3 to 1 ratio for adults across age rating bands 
established by the Secretary of HHS.[Footnote 47] Starting January 1, 
2011, PPACA requires that insurers offering coverage spend at least 85 
percent for the large group market and 80 percent for the small group 
and individual markets of premium revenues on reimbursement for 
clinical services and health care quality improvement activities. 
[Footnote 48] 

[End of section] 

Enclosure III: Expert Views on Approaches to Encourage Voluntary 
Enrollment in Private Health Insurance Coverage: 

The experts we interviewed discussed several specific approaches to 
encourage voluntary private health insurance enrollment during our 
interviews. The specific approaches are summarized below, followed by 
more detail on how each would work and key associated challenges and 
trade-offs discussed by experts in the remainder of this enclosure. 
They are generally presented in the order of frequency with which they 
were proposed by the experts for consideration. These approaches are 
not endorsed by GAO, nor necessarily by any particular experts we 
interviewed, or the organizations they represent. 

* Modify open enrollment periods and impose late enrollment penalties. 

* Expand employers' roles in autoenrolling and facilitating employees' 
health insurance enrollment. 

* Conduct a public education and outreach campaign. 

* Provide broad access to personalized assistance for health coverage 
enrollment. 

* Impose a tax to pay for uncompensated care. 

* Allow greater variation in premium rates based on enrollee age. 

* Condition the receipt of certain government services upon proof of 
health insurance coverage. 

* Use health insurance agents and brokers differently. 

* Require or encourage credit rating agencies to use health insurance 
status as a factor in determining credit ratings. 

In discussing these approaches, four key themes emerged. First, 
experts emphasized that most people would prefer to purchase health 
insurance coverage; however, to the extent that high cost is a 
barrier, the use of financial incentives is key. Second, they stated 
that regardless of the particular approach taken to increase voluntary 
enrollment in the absence of an individual mandate, the availability 
of affordable, high-quality health care plans with a basic set of 
benefits, and full coverage of preventive care services is essential 
to encouraging voluntary enrollment in the coverage. Third, experts 
said that strong marketing and public education from trusted, 
community-based sources informing people about their health care 
choices, their costs, and the consequences of not enrolling in a 
timely manner are important. And fourth, they said convenient access 
to the health insurance system through multiple access points staffed 
by knowledgeable individuals would further facilitate enrollment. 

Experts expressed important cautions in interpreting their comments on 
these approaches. Not all the experts concurred that any particular 
approach merited consideration, and those who proposed an approach for 
consideration did not necessarily suggest its impact would be 
significant or comparable to that of an individual mandate. Experts 
noted that various approaches would have different impacts on 
encouraging voluntary enrollment, and that a combination of multiple 
approaches holds more potential to encourage voluntary enrollment than 
any single approach. For example, a marketing and public education 
campaign may be combined with other approaches, and would be important 
to the successful implementation of any effort to encourage enrollment 
in health insurance. Furthermore, they emphasized that independent 
research is required to evaluate the potential effectiveness and legal 
or other implications associated with any approach or combination of 
approaches. 

Modify Open Enrollment Periods and Impose Late Enrollment Penalties: 

Expert Views on Alternative Approach: 

In the absence of a mandate, open enrollment periods could be enhanced 
beyond the annual periods provided for under the Patient Protection 
and Affordable Care Act, as amended (PPACA) by incorporating different 
open enrollment period frequencies and coupling them with various 
penalties for late enrollees who do not enroll when first eligible. 
[Footnote 49],[Footnote 50] Limiting access to coverage to only such 
periods is intended to reduce the likelihood that individuals would 
otherwise wait until they need health care to enroll. 

Open enrollment periods could vary in their frequency. Generally, the 
less frequent they are, the less likely individuals will risk 
remaining uninsured until the next such period. While PPACA provides 
for annual periods, these could be extended to every 18 months, every 
2 years, or less frequently--some suggesting as infrequent as every 5 
years. Or the open enrollment period could be a one-time event in 2014 
with subsequent special open enrollment periods only for individuals 
experiencing qualifying life events that change eligibility for 
coverage, such as giving birth or attaining adulthood, divorce, or 
changing jobs.[Footnote 51] Any open enrollment period frequency would 
need to provide for portability between health plans for those who 
have remained continuously covered. 

A range of penalties could be applied that generally either increase 
the cost or restrict access to coverage for late enrollees.[Footnote 
52] 

* Increase costs: Late enrollees could enroll during subsequent open 
enrollment periods, or possibly between open enrollment periods, but 
incur financial penalties. Such penalties could take the form of 
requiring retroactive payments of missed premiums from the date of the 
last open enrollment period,[Footnote 53] or a flat or gradually 
escalating premium penalty depending upon the length of time without 
coverage.[Footnote 54] To encourage individuals to maintain their 
coverage once enrolled, the premium penalties could decline after a 
period of continued coverage, until they are eventually eliminated. 
Other financial penalties could include higher cost-sharing for the 
individual, such as copayments, coinsurance, or deductibles. Another 
financial penalty could be to reduce or deny subsidies for otherwise 
eligible late enrollees. Another variation would be to provide a 
premium discount to all individuals who enroll when first eligible, 
but withhold the discount from late enrollees. 

* Restrict access to coverage: Late enrollees could enroll during 
subsequent open enrollment periods or possibly between such periods, 
but face restrictions on the extent of coverage available to them. For 
example, insurers could use medical underwriting[Footnote 55] to 
identify preexisting medical conditions that could be excluded from 
coverage for a period of time.[Footnote 56] Alternatively, insurers 
could limit access to plans offered in the Exchanges with more limited 
benefits, such as those at or below the level of the bronze 
plan.[Footnote 57] Another variation is to limit for late enrollees 
the ability to move up to more generous plans within the Exchanges or 
limit access to any plans within the Exchanges. Late enrollees could 
be eligible for a specified period only for high risk pool coverage, 
where premiums may be higher.[Footnote 58] 

Individuals who experienced a qualifying life event, such as becoming 
newly eligible for coverage by birth or attaining adulthood, divorce, 
or changing jobs, would not be considered late enrollees and thus not 
be subject to these penalties. 

Expert Views on Key Challenges, Trade-Offs, or Other Issues: 

* Financial penalties increase costs and can impose further barriers 
to individuals for whom affordability is already a concern. Even with 
subsidies, plans may not be affordable for some, and penalties would 
compound this concern.[Footnote 59] Under any circumstances, financial 
penalties should not become so expensive as to preclude late enrollees 
from ever obtaining coverage. For example, a gradually escalating 
premium penalty could be capped at some point so those who are unable 
to enroll when first eligible will not face prohibitively high 
premiums forever when they do attempt to enroll.[Footnote 60] 
Incentives for timely enrollment may work better than penalties for 
late enrollment. 

* Infrequent open enrollment periods--particularly with restricted 
access to coverage in between--may be perceived as punitive and may be 
contrary to the goal of coverage expansion. For example, a frequency 
of 2 years or less often, coupled with coverage exclusions for 
preexisting conditions for late enrollees, may provide a strong 
incentive to obtain coverage when first eligible, but also reinforces 
the uninsured status of individuals that PPACA addresses. That is, 
individuals not electing coverage during open enrollment could be 
locked out of the health insurance market for an extended period of 
time and remain uninsured. 

* A waiver of financial penalties or coverage exclusions could be 
considered for certain low-income individuals. 

* Open enrollment periods and penalties tend to be more effective in 
prompting individuals to enroll who are risk-averse or have access to 
highly subsidized insurance, such as individuals whose employers offer 
and subsidize coverage, or the Medicare population. Open enrollment 
periods and penalties may be less effective in prompting enrollment 
among young and healthy individuals who may not believe they will get 
sick and are thus less risk-averse, and those without access to 
subsidized coverage. 

Expand Employers' Roles in Autoenrolling and Facilitating Employees' 
Health Insurance Enrollment: 

Expert Views on Alternative Approach: 

To help expand the number of employees with coverage in the absence of 
a mandate, the autoenrollment requirement for large employers under 
PPACA could be expanded to include smaller employers, potentially 
including those that do not offer coverage.[Footnote 61] In addition, 
employers that do not offer coverage to their employees could be 
required to play a role in facilitating their employees' access into 
plans offered in the exchanges, including deducting employee premium 
contributions from payroll. 

* Expanded Autoenrollment with Opt-Out: 

The goal of this approach is to overcome individuals' inertia in 
choosing a plan by having employers automatically enroll them if they 
do not enroll themselves. As with current autoenrollment requirements 
under PPACA, employees could opt out of the plan to which they have 
been autoenrolled. With the default option of enrollment in coverage 
unless it is declined, however, participation rates may be higher than 
they otherwise would, particularly among the young and healthy who may 
be less motivated to actively enroll but who may retain the coverage 
once enrolled. Rather than limit this autoenrollment requirement to 
employers with more than 200 employees, the requirement could be 
expanded to smaller employers, possibly also including those who do 
not offer health insurance. Where employers do not offer coverage, 
their role would be to autoenroll employees into a plan through the 
Exchanges. Employees without existing coverage would be given a short 
window to select a plan offered by their employer, or receive 
information about the plans offered through the Exchanges if the 
employer did not offer coverage.[Footnote 62] Employees who do not 
voluntarily enroll by the deadline would then be automatically 
enrolled into the most basic, low-cost plan offered by the employer, 
or randomly assigned into the lowest level plan offered through the 
Exchanges.[Footnote 63] Employees could opt out or select a different 
plan within a specified time frame. After that time, employee premium 
contributions would be deducted from their paychecks and, if 
applicable, sent to the appropriate health plans in the Exchanges. 

Autoenrollment leverages employers' experience in administering 
payroll deductions and benefits. Since employers know whether 
employees have enrolled in their coverage and have access to their 
payroll, two key problems in providing coverage for the uninsured--
identification of the uninsured and collection of premiums--are 
mitigated.[Footnote 64] Also, autoenrollment may be more palatable 
than a mandate because employees incur no financial penalties for 
opting out. 

* Employer Facilitation of Employee Coverage Through Exchanges: 

Under this approach, employers that do not offer health insurance 
coverage could facilitate their employees' voluntary enrollment into 
health plans offered through the Exchanges. As in autoenrollment, the 
workplace would be the venue to determine insurance status, educate 
employees about their health care choices,[Footnote 65] and assist in 
the enrollment process.[Footnote 66] Once employees have selected a 
plan, their premium contributions could be deducted from their 
paychecks and forwarded to the Exchange in their state. Employers may 
choose to contribute to premium costs on the basis of a defined 
contribution amount or a percentage of premium, or they may choose to 
contribute nothing. To provide incentives for employees to purchase 
plans through the Exchanges, pre-tax premium deductions could be 
permitted for this coverage, similar to the tax treatment of employer- 
sponsored coverage. 

Expert Views on Key Challenges, Trade-Offs, or Other Issues: 

* The cost and complexity of autoenrollment is likely to be greater 
for smaller employers and for employers who do not offer health 
coverage. Autoenrollment could involve significant costs particularly 
for small employers without personnel or administrative systems in 
place to help with the process. Employers that do not currently offer 
coverage will face new requirements relating to plan selection and 
enrollment, amending payroll and other systems to collect data and 
deduct premium contributions, and making payments to insurers. And 
because the deductions from worker paychecks will be significantly 
higher where the employer had not previously offered coverage--
typically smaller employers--these employers may encounter negative 
reactions from employees surprised by large deductions from their 
paychecks. These challenges to smaller employers would need to be 
considered in determining the appropriate employer size for an 
expanded autoenrollment requirement, whether the requirement should be 
imposed on employers that do not offer coverage, and whether financial 
assistance should be provided to help small employers manage the 
associated costs. 

* The nature of the opt-out process has important implications. The 
more required of employees, the less likely they are to opt out. For 
example, requiring employees to talk to an individual or go to a Web 
site to decline may yield fewer opt-outs than simply handing employees 
a form to check a "yes" or "no" box. Employees requesting to opt out 
could also be provided information about the consequences of doing so, 
such as their liability for the full costs of medical expenses or the 
obstacles to later obtaining coverage after initially declining it. 
Also, the window of time during which employees may opt out, presents 
trade-offs. Shorter periods could result in employees being 
autoenrolled who were caught unaware by the short time frame and did 
not intend to be enrolled. Longer periods could result in employers 
deducting premiums for employees who later decide to opt out. 

* Health care coverage may be viewed as a private or sensitive topic, 
and both employees and employers--particularly small employers--may be 
reluctant to discuss coverage issues. For example, employees may not 
wish to reveal to their employer their existing coverage through 
Medicaid--the government-sponsored health insurance program for 
certain low-income people--or other public programs. 

* Strong resistance from employees could subject employers to legal 
challenges for placing employees in plans they did not want or that 
they believe to be unsuitable, such as single coverage versus family 
coverage. Autoenrollment may be viewed by some as simply too intrusive. 

* Autoenrollment is more effective when the cost of health insurance 
is not an issue. Individuals with low income will be more likely to 
opt out due to the cost of health insurance premiums. Even with 
premium tax credits or cost sharing reductions, the lowest level 
Exchange plan--the bronze plan--may be too expensive for some 
individuals with low income. 

* Employer and employee contributions for employer-sponsored health 
coverage are generally excluded, without limit, from employees' 
taxable income. However, employee premium contributions for health 
coverage obtained individually through the Exchanges would not be 
excluded from taxable income. 

* Some of the same challenges related to autoenrollment may also apply 
to the employer facilitation approach--particularly to small 
employers--including the cost and complexity of enrollment and health 
plan selection,[Footnote 67] amending payroll and other systems to 
collect data and deduct premium contributions, employee and employer 
discomfort and privacy concerns related to health care coverage 
discussions, and cost issues. As with autoenrollment, these challenges 
to smaller employers would need to be considered in determining the 
appropriate employer size for a facilitation requirement and whether 
financial assistance should be available to help small employers 
manage the associated costs. 

* This approach would not address the large number of uninsured 
individuals who are unemployed. 

Conduct a Public Education and Outreach Campaign: 

Expert Views on Alternative Approach: 

Voluntary enrollment could be enhanced by a coordinated campaign to 
inform citizens about the benefits of voluntarily enrolling in health 
care coverage, the choices and costs of various health plans, and the 
implications of not enrolling, beyond what is provided for under 
PPACA.[Footnote 68] Such a campaign may be combined with other 
approaches, and would be important to the successful implementation of 
any effort to encourage enrollment in health insurance, whether or not 
an individual mandate were included. It should use simple, easily 
understood language to communicate its message. It should involve 
targeted outreach to specific groups of the uninsured such as the 
young and healthy, working families, or low-income groups. To better 
reach these groups, the campaign could partner with trusted 
individuals or organizations, including those not typically associated 
with health care or health insurance. 

The campaign could focus on the benefits of obtaining private health 
insurance, including how affordable insurance may be after subsidies, 
the cost of health care services without insurance, and full coverage 
for preventive care, which may draw people who are uninsured due to 
cost concerns. Some of the advertising used to promote Massachusetts' 
health care reform could be used as a model. For example, to 
communicate the message that having health insurance is beneficial in 
a simple and easily understandable way, state officials used an 
advertisement showing an image of a person falling off a ladder and 
the costs of treatment for a broken arm with and without insurance. 

The campaign would need to be based on a clear understanding of the 
demographics of the uninsured, and include targeted outreach programs 
to specific groups. Massachusetts, for example, realizing that many of 
the uninsured in the state tended to be young, male, and employed 
individuals, partnered with Major League Baseball's Boston Red Sox to 
advertise messages about health reform during live games as well as 
during breaks of televised games. An outreach campaign should partner 
with a wide range of trusted sources such as community-based 
organizations, unions, employers, and media figures to reach other 
specific groups of people. Health care providers could reach uninsured 
people at the point of service. Targeted advertising through large 
employers with many uninsured workers could reach the working 
uninsured and advertising on Internet-based social media networks 
could reach younger individuals. A campaign could include personalized 
information on average or expected costs based on medical information 
individuals provide, or hospital bills could include information on 
what the charged services would have cost under a plan in the 
Exchange. Web-based tools could also be provided to allow people to 
compare the costs of various plans. Funding for the campaign could be 
distributed in small grants to a variety of local community and 
volunteer groups rather than to a few large groups, to better reach 
smaller communities. 

Expert Views on Key Challenges, Trade-Offs, or Other Issues: 

An education campaign without some incentive to encourage enrollment 
may not significantly affect enrollment. Conducting an education and 
outreach campaign could significantly increase costs. In addition, the 
money spent does not directly affect individuals' incentives, 
coverage, or costs of insurance, and the effects of a campaign can be 
difficult to measure. 

Provide Broad Access to Personalized Assistance for Health Coverage 
Enrollment: 

Expert Views on Alternative Approach: 

The Exchanges could expand voluntary enrollment by providing broad 
access to individual assistance to make it as simple and convenient to 
enroll as possible, beyond their responsibilities under PPACA. 
[Footnote 69] For example, access points at commonly visited locations 
such as pharmacies, libraries, schools, and grocery stores could be 
set up. Qualified, licensed employees staffing these access points 
could provide one-on-one support to assist with the enrollment 
process. These employees could be paid a flat fee for enrolling 
individuals in qualifying coverage. 

Face-to-face interactions and personalized help are vital in ensuring 
high participation rates. Other partners and approaches could be used 
to increase individuals' access to enrollment support. For example, 
trusted entities that already work with relevant personal data, such 
as health care providers, tax preparation volunteers, and other 
community service providers, could be encouraged to facilitate 
patients' enrollment into appropriate plans based on face-to-face 
interviews. Various Web sites and Internet services could be another 
way to provide personalized help to individuals by providing 
applications and tools to assist with the selection of an appropriate 
plan. 

Expert Views on Key Challenges, Trade-offs, or Other Issues: 

* Recruiting adequate staff capable of providing informed and useful 
support to insurance consumers seeking to enroll in coverage at 
multiple access points could be expensive and challenging, and state 
regulation of individuals who sell insurance products would need to be 
considered. 

* Online tools may not be as effective as one-on-one support because 
some people may lack the requisite computer equipment or skills to 
successfully navigate Web sites. 

* The money spent on these activities does not directly affect 
individuals' incentives, coverage, or costs of insurance. 

Impose a Tax to Pay for Uncompensated Care: 

Expert Views on Alternative Approach: 

Rather than a penalty associated with a mandate, a tax could be 
imposed on all taxpayers to help cover the costs of emergency room and 
other uncompensated care incurred by people without health insurance. 
The tax could be rebated or waived upon proof of health insurance, and 
would be assessed on a sliding scale based on income. A variant on 
this approach could be to assess the tax only on those who receive 
uncompensated care. Individuals who receive uncompensated care could 
be identified by the health care provider by submissions to the 
Internal Revenue Service (IRS). The IRS could collect the tax from the 
uninsured individual and reimburse the provider. Under another 
variant, uninsured individuals could be denied the personal exemption 
allowed in the tax code. A third variant could be to impose a tax on 
those employers who do not offer health insurance if their employees 
incur uncompensated care costs, similar to the "Free Rider Surcharge" 
in Massachusetts.[Footnote 70] 

Expert Views on Key Challenges, Trade-Offs, or Other Issues: 

* This approach may be considered by some to be a functional 
equivalent of a mandate. 

* This approach will not work for people who do not file taxes, a 
group which may overlap with a large segment of the population that is 
uninsured and likely to incur uncompensated care. 

* The same exemptions from the individual mandate penalty that exist 
under PPACA[Footnote 71] would need to apply to an uncompensated care 
tax. 

* If the tax were lower than the annual premium for the lowest cost 
plan--either an employer-sponsored or a bronze plan in an Exchange--
people may choose to pay the tax if necessary and forego health 
insurance. 

Allow Greater Variation in Premium Rates Based on Enrollee Age: 

Expert Views on Alternative Approach: 

To provide for lower premiums for the younger, often healthier 
individuals who are so important to bring into the insurance pool, 
PPACA premium rate variation requirements could be modified.[Footnote 
72] For example, as an alternative to premium rate variation based on 
age rating of 3 to 1, insurers could be allowed to provide for a 
premium rate variation based on age within a range of 5 to 1. Many 
states allow health plans to vary premiums based on age by 5 to 1 or 
more.[Footnote 73] 

Expert Views on Key Challenges, Trade-Offs or Other Issues: 

While allowing greater variation could result in lower premiums for 
younger enrollees, premiums could increase for older enrollees, 
potentially creating barriers to access for some of these individuals. 

Condition the Receipt of Certain Government Services Upon Proof of 
Health Insurance Enrollment: 

Expert Views on Alternative Approach: 

A "government services mandate" could condition the receipt of certain 
services that the federal government currently provides--such as a 
college loan--on proof of health insurance coverage. Individuals 
attempting to obtain such services could be encouraged or required to 
have health insurance. A rational connection should exist between the 
conditioned service and health care. For example, a college student's 
illness coupled with lack of health insurance could result in failure 
to complete college. Therefore it might be appropriate to require 
students availing themselves of federal college loans to have health 
insurance. The selected services should also relate specifically to 
uninsured populations. Insurance status would have to be continuously 
monitored to ensure coverage between the provision of services, for 
example before each disbursement of a college loan. 

Expert Views on Key Challenges, Trade-Offs, or Other Issues: 

* A government services mandate may be considered a functional 
equivalent of a mandate. 

* This approach would place significant administrative burdens on 
multiple public agencies to determine health insurance and potential 
exemption status. 

* As an unintended consequence of this approach, people may forego 
services to avoid having to purchase health insurance. 

* This approach could deprive an already vulnerable population of 
necessary services. 

* Such an approach would provide an inducement only to those who 
receive the government services that are conditioned upon having 
health insurance. 

Use Health Insurance Agents and Brokers Differently: 

Expert Views on Alternative Approach: 

Currently, insurers typically pay agents and brokers to sell health 
insurance through commissions based on the price of the product sold. 
This may motivate them to sell higher cost products or products that 
may not best meet the needs of individuals. Under PPACA's medical loss 
ratio (MLR) requirements, insurers will be required to use a certain 
percentage of their premium revenues for reimbursement of clinical 
services and health care quality improvement activities,[Footnote 74] 
limiting revenue available for administrative expenses--including 
compensation for agents and brokers--to 15 percent or less for 
insurers in the large group market and 20 percent or less for insurers 
in the individual and small group markets. Experts anticipate that 
these new MLR requirements may significantly reduce compensation 
available for agents and brokers. 

Alternate ways could be developed to hire and compensate a workforce 
of agents and brokers and leverage their existing expertise to 
facilitate coverage through the Exchanges. Exchanges or small 
employers that do not offer insurance could hire agents and brokers to 
assist uninsured individuals or employees to select and enroll in 
appropriate plans.[Footnote 75] Alternatively, the MLR requirement in 
PPACA could be amended to provide insurers with more flexibility to 
use premium revenue to compensate brokers for providing certain value-
added services, such as identifying opportunities for explaining 
variations in plans through the Exchanges for individuals as well as 
opportunities for premium tax credits and cost sharing reductions. 
Also, agents and brokers could be paid a flat fee for enrolling 
previously uninsured individuals in qualifying coverage in the 
Exchanges, reducing any incentive to sell more expensive coverage that 
might not be appropriate for the consumer. 

Expert Views on Key Challenges, Trade-Offs, or Other Issues: 

* Paying agents and brokers adds to the administrative costs and may 
be less cost effective than other means of encouraging enrollment. 

* Developing appropriate compensation mechanisms is needed to provide 
incentives for the enrollment of individuals in the most appropriate 
plans. 

* Allowing agents to identify individuals without insurance could 
compromise the privacy of the uninsured. 

* Agents and brokers would need to have the cultural fluency relevant 
to uninsured populations. 

* Changing the MLR requirement could result in less premium revenue 
available to spend on health care or could result in premium increases. 

Require or Encourage Credit Rating Agencies to Use Health Insurance 
Status As a Factor in Determining Credit Ratings: 

Expert Views on Alternative Approach: 

Credit rating agencies could be required or encouraged to use 
individuals' health insurance status in the determination of credit 
scores, encouraging individuals to obtain health insurance to improve 
their access to credit. Currently, health insurers do not report data 
to credit rating agencies. Lenders use credit scores to determine to 
whom they should issue loans, particularly for home or automotive 
purchases. A lack of health insurance could be used as a measure to 
help assess the risk of bankruptcy due to increased risk of 
catastrophic health costs. In addition, individuals looking to build a 
credit history could use the prompt payment of premiums as evidence of 
credit-worthiness. 

Expert Views on Key Challenges, Trade-Offs, or Other Issues: 

* Credit rating agencies would need to first research the relationship 
between health insurance status and credit worthiness, and the 
implications of linking credit scores to health insurance status for 
low-income individuals. 

* Credit rating agencies would need to consider how to treat 
enrollment in public programs like Medicare and Medicaid. 

* The penalty in this case--a poor credit score--may be too abstract 
or uncertain to motivate individual behavior. Many uninsured and low- 
income individuals may not pay attention to their credit rating 
because they do not anticipate taking out home or automotive loans. 

* Reporting systems of agencies that collect health insurance 
information and interface with credit reporting systems would require 
standardization. 

* The penalty may disproportionately affect low-income individuals, 
who may already face challenges in access to credit. 

[End of section] 

Footnotes: 

[1] Pub. L. No. 111-148, §§ 1501(b), 10106(b), 124 Stat. 119, 244, 909 
(Mar. 23, 2010), as amended by the Health Care and Education 
Reconciliation Act of 2010, Pub. L. No. 111-152, §§ 1002, 1004, 124 
Stat. 1029, 1032, 1034 (Mar. 30, 2010). Beginning in January 2014, 
individuals must maintain minimum essential coverage for themselves 
and their dependents, which includes employer-sponsored health plans, 
individual plans, and government-sponsored plans. Individuals must pay 
a penalty for each month they fail to comply with this mandate. 
Certain individuals, such as members of qualifying religious groups, 
are exempt from this mandate and other individuals, such as federal 
taxpayers whose household income is below the applicable filing 
threshold, are exempt from the penalty. 

[2] For plan years beginning on or after January 1, 2014, PPACA 
requires health insurers offering group and individual coverage in a 
state to accept every employer and individual that applies for 
coverage in that state, subject to certain requirements. Pub. L. No. 
111-148, § 1201(4), 124 Stat. 156. 

[3] PPACA prohibits group health plans and insurers offering group and 
individual coverage from excluding coverage for any preexisting 
conditions. This prohibition is generally effective for plan years 
beginning on or after January 1, 2014 for adults and for plan years 
beginning on or after September 23, 2010 for individuals under age 19. 
Pub. L. No. 111-148, §§ 1201(2), 10103(e),(f), 124 Stat. 154, 895. 

[4] For example, see J. Gruber, "Why We Need the Individual Mandate," 
Center for American Progress, Washington, DC, April 2010; and L. 
Blumberg and J. Holahan, "The Individual Mandate--An Affordable and 
Fair Approach to Achieving Universal Coverage," New England Journal of 
Medicine, 361:6-7, July 2009. 

[5] For example, see A. C. Enthoven: "A Few Cautions About Exchanges," 
Kaiser Permanente Institute for Health Policy, California, January 
2011; and "CBO Understates Major Impact Of Weakened Individual 
Mandate," Blue Cross Blue Shield Association, Chicago, IL, October 
2009. 

[6] For example, see R. E. Moffit, Ph.D: "Choice and Consequences: 
Transparent Alternatives to the Individual Insurance Mandate," Harvard 
Health Policy Review, Vol. 9, No. 1. Cambridge, MA, Spring 2008; and 
R. Barnett, N. Stewart, T. Gaziano: "Why the Personal Mandate to Buy 
Health Insurance Is Unprecedented and Unconstitutional," The Heritage 
Foundation, Legal Memorandum No. 49, Washington, DC, Dec 2009. 

[7] Prior to PPACA, Congress has considered other legislation that 
included requirements for individuals to obtain health insurance. See, 
for example, the Health Equity and Access Reform Today Act of 1993, 
H.R. 3704, S. 1770, 103RD Cong. (1993). In addition, as of July 2007, 
Massachusetts required its residents, subject to certain exceptions, 
to obtain health insurance. Mass. Gen. Laws ch. 111M, § 2. 

[8] In this report, we express no opinion on the merits of any 
lawsuits challenging the constitutionality of the individual mandate 
or other provisions of PPACA. In addition, we did not independently 
identify or analyze all PPACA provisions that may be implicated by the 
various approaches and instead address those provisions that were 
referenced by the experts. 

[9] The enrollment for each source of coverage exceeds the total of 
the nonelderly population because some people have multiple sources of 
coverage. See Paul Fronstin, "Sources of Health Insurance and 
Characteristics of the Uninsured: Analysis of the March 2010 Current 
Population Survey," EBRI Issue Brief, no. 347 (September 2010). 
Individuals 65 and older are generally eligible for Medicare, the 
federal program that serves elderly and certain disabled individuals. 

[10] The majority of uninsured workers are not offered health 
insurance by their employer, or may not be eligible for coverage often 
because they have not worked for their employer for a sufficient 
amount of time or they do not work enough hours. See The Kaiser 
Commission on Medicaid and the Uninsured: The Uninsured: A Primer-Key 
Facts About Americans Without Health Insurance, December 2010 (Menlo 
Park, Calif. and Washington D.C). The high cost of insurance is also a 
key barrier for some uninsured workers--the employee's share of the 
average annual cost of employer-sponsored family coverage was nearly 
$4,000 in 2010. See Kaiser Family Foundation and Health Research and 
Educational Trust, Employer Health Benefits 2010 Annual Survey, (Menlo 
Park, Calif., and Chicago, Ill.: 2010). 

[11] Adults and particularly young adults ages 19 to 29 are especially 
likely to be uninsured. 

[12] See The Kaiser Commission on Medicaid and the Uninsured: The 
Uninsured: A Primer-Key Facts About Americans Without Health 
Insurance, December 2010.(Menlo Park, Calif. and Washington D.C). 

[13] Pub. L. No. 111-148, § 1311(b), 124 Stat. 173. In this report, we 
refer to American Health Benefit Exchanges as "the Exchanges." The 
Exchanges facilitate the purchase of individual coverage and provide 
for the establishment of Small Business Health Options Programs to 
assist small employers in facilitating enrollment of their employees 
into qualified health plans in their state. 

[14] Pub. L. No. 111-148, §§ 1401-1402, 10105, 10108(h), 124 Stat. 
213, 906, 914, as amended by, Pub. L. No. 111-152, §§ 1001, 1004, 124 
Stat. 1030, 1034. 

[15] Pub. L. No. 111-148, § 1311(d)(4), 124 Stat. 176. 

[16] Pub. L. No. 111-148, § 1311(c)(6), 124 Stat. 175. The Exchanges 
must also provide for special enrollment periods in certain 
circumstances. 

[17] Pub. L. No. 111-148, § 1511, 124 Stat. 252. 

[18] Pub. L. No. 111-148, §§ 1201(4), 10103(a), 124 Stat. 155, 892. If 
a state permits insurers that offer large group coverage to 
participate in an Exchange, then these premium rate limitations also 
apply to those insurers (with the exception of self-insured plans). 

[19] Pub. L. No. 111-148, § 1001(5), 10101(f), 124 Stat. 136, 885. 
Insurers offering large group coverage must spend at least 85 percent 
and insurers offering individual and small group coverage must spend 
at least 80 percent of premium revenues on these qualifying health 
care expenses, subject to possible increases in required percentages 
by states. If insurers fail to meet these targets, they must provide 
an annual rebate to each enrollee on a pro rata basis. 

[20] P. Fronstin, "Sources of Health Insurance and Characteristics of 
the Uninsured: Analysis of the March 2010 Current Population Survey," 
EBRI Issue Brief, no. 347 (December 2010). 

[21] In 2010, almost all (99 percent) large employers offered health 
insurance and over 80 percent of employees who were offered employer- 
sponsored coverage and were eligible for that coverage elected to 
participate. See Kaiser Family Foundation and Health Research and 
Educational Trust, Employer Health Benefits 2010 Annual Survey, (Menlo 
Park, Calif., and Chicago, Ill.: 2010). 

[22] Small employers employ nearly 30 percent of the private sector 
workforce. In 2010, 68 percent of small employers, and 59 percent of 
the smallest employers (between 3 and 9 employees) offered their 
employees health insurance. See Kaiser Family Foundation and Health 
Research and Educational Trust, Employer Health Benefits 2010 Annual 
Survey, (Menlo Park, Calif., and Chicago, Ill.: 2010). 

[23] In 2010, large employers contributed about 82 percent of the 
average annual premium ($5,050) for single coverage and about 74 
percent of the average annual premium ($14,038) for family coverage. 
While small employers contributed a similar share for single coverage, 
they contributed only 65 percent of the average annual premium for 
family coverage. Thus workers employed by small employers paid over 27 
percent more for family coverage than workers employed by large 
employers. See Kaiser Family Foundation and HRET 2010 Annual Survey. 

[24] Employers can offer a "premium conversion" arrangement, which 
allows workers to pay their share of the premium for employment-based 
coverage with pretax dollars. In addition, workers whose employers 
sponsor flexible spending accounts are able to pay out-of-pocket 
expenses with pretax dollars. 

[25] Group health plans and health insurance issuers offering group 
coverage may only impose preexisting condition exclusion periods when: 
(i) the individual received treatment for the condition during the six-
month period prior to the individual's enrollment date, (ii) the 
exclusion is for not more than one year after enrollment (or 18 months 
for late enrollees), and (iii) the period of exclusion is reduced by 
the number of days of the individual's prior creditable coverage. In 
addition, preexisting condition exclusions cannot be applied for 
pregnancy, genetic conditions and certain children. See 29 U.S.C. 1181 
(2006) and 42 U.S.C. § 300gg (2006). PPACA expands upon this 
requirement by prohibiting group health plans and insurers offering 
group and individual coverage from excluding coverage for any 
preexisting conditions. This prohibition is generally effective for 
plan years beginning on or after January 1, 2014 for adults and for 
plan years beginning on or after September 23, 2010 for individuals 
under age 19. Pub. L. No. 111-148, §§ 1201(2), 10103(e),(f), 124 Stat. 
154, 895. 

[26] See 29 U.S.C. §1182(b) (2006) and 42 U.S.C. § 300gg-1(b) (2006). 

[27] More stringent state regulation of the variation in premiums 
imposed by insurers can make coverage more affordable for small 
employers with high-risk employees, but may also increase the cost of 
insurance for healthier groups. For example, in those states, a small 
employer with older workers, including some in poor health, would pay 
the same premium as an employer of the same size and geographic 
location with younger, healthier workers. In contrast, in a state with 
less stringent regulation, a small employer with older and less 
healthy workers could pay significantly more than an employer of the 
same size and geographic location with younger, healthier employees. 

[28] Total qualified health care expenses (including premiums) are 
deductible if they exceed 7.5 percent of adjusted gross income. Self- 
employed individuals may also be able to deduct 100 percent of health 
insurance premiums. 

[29] Insurers offering individual plans may not deny coverage to, or 
impose any preexisting condition 

exclusion on individuals who (i) have had at least 18 months of prior 
creditable coverage, defined as a group health plan, government plan, 
or church plan, with no break of more than 63 days, (ii) have 
exhausted any available continuation of coverage, (iii) are not 
eligible for other group or government coverage; and (iv) did not lose 
group coverage because of the nonpayment of premiums or fraud. See 42 
U.S.C. § 300gg-41 (2006). As referenced above, in addition to 
prohibiting insurers from excluding coverage based on any preexisting 
conditions, PPACA also expands upon this prohibition by requiring 
insurers offering group or individual coverage to accept every 
individual and employer that applies for coverage in that state, 
subject to certain requirements, for plan years beginning on or after 
January 1, 2014. Pub. L. No. 111-148, § 1201(4), 124 Stat. 156. 

[30] For example, health insurers may temporarily or permanently 
exclude coverage for specific medical conditions, or impose a 
'preexisting condition exclusion' which for a fixed period limits 
coverage of services for any medical condition the purchaser has at 
the time coverage takes effect; or they may charge higher premium 
rates to purchasers perceived to be high risk. In 2008, 29 percent of 
individuals age 60 to 64 who applied for individual insurance policies 
were denied coverage based on their health status. See The Kaiser 
Commission on Medicaid and the Uninsured: The Uninsured: A Primer-Key 
Facts About Americans Without Health Insurance, December 2010 (Menlo 
Park, Calif. and Washington D.C). 

[31] Workers usually enroll in employer-sponsored coverage if it is 
available and they are eligible; however, the majority of uninsured 
workers are not offered health insurance by their employer, or may not 
be eligible for coverage often because they have not worked for their 
employer for a sufficient amount of time or they do not work enough 
hours. The high cost of insurance is also a key barrier--the 
employee's share of the average annual cost of employer-sponsored 
family coverage was about $4,000 in 2010. See The Kaiser Commission on 
Medicaid and the Uninsured: The Uninsured: A Primer-Key Facts About 
Americans Without Health Insurance, December 2010.(Menlo Park, 
California and Washington D.C). 

[32] Young adults had the highest uninsured rate (32 percent) of any 
age group. More than half of uninsured young adults were in families 
with at least one full-time worker, but their low incomes made it more 
difficult for them to afford coverage. (The median income of uninsured 
young adults in 2008 was $15,000.) See The Kaiser Commission on 
Medicaid and the Uninsured. 

[33] See The Kaiser Commission on Medicaid and the Uninsured: The 
Uninsured: A Primer-Key Facts About Americans Without Health 
Insurance, December 2010.(Menlo Park, California and Washington D.C). 

[34] Pub. L. No. 111-148, 124 Stat. 119 (Mar. 23, 2010), as amended by 
the Health Care and Education Reconciliation Act of 2010 (HCERA), Pub. 
L. No. 111-152, 124 Stat. 1029 (Mar. 30, 2010). 

[35] Some individuals are exempt from the mandate, such as members of 
qualifying religious groups, while others are exempt from the penalty, 
such as federal taxpayers whose household income is below the 
applicable filing threshold. Pub. L. No. 111-148, §§ 1501(b), 
10106(b), 124 Stat. 244, 909, as amended by Pub. L. No. 111-152, §§ 
1002, 1004, 124 Stat. 1032, 1034. 

[36] See, for example, the Health Equity and Access Reform Today Act 
of 1993, H.R. 3704, S. 1770, 103RD Cong. (1993). In addition, as of 
July 2007, Massachusetts required its residents, subject to certain 
exceptions, to obtain health insurance. Mass. Gen. Laws ch. 111M, § 2. 

[37] Pub. L. No. 111-148, § 1311(b), 124 Stat. 173. In this report, we 
refer to American Health Benefit Exchanges as "the Exchanges." The 
Exchanges facilitate the purchase of individual coverage and provide 
for the establishment of Small Business Health Options Programs to 
assist small employers in facilitating enrollment of their employees 
into qualified health plans in their state. 

[38] In order to participate in the Exchanges, health plans generally 
must offer essential benefit packages, as defined by the Secretary, 
with at least one of four levels of coverage--bronze, silver, gold, or 
platinum. Bronze plans provide the lowest level of coverage. Pub. L. 
No. 111-148, §§ 1302, 1311(b), 124 Stat. 163, 173. 

[39] Pub. L. No. 111-148, §§ 1401-1402, 10105, 10108(h), 124 Stat. 
213, 906, 914, as amended by, Pub. L. No. 111-152, §§ 1001, 1004, 124 
Stat. 1030, 1034. 

[40] Pub. L. No. 111-148, § 1311(c)(6), 124 Stat. 175. The Exchanges 
must also provide for special enrollment periods in certain 
circumstances. 

[41] Under PPACA, the Secretary of Health and Human Services also must 
establish procedures under which states may allow agents and brokers 
to enroll individuals and employers in health plans offered through 
the Exchanges and assist individuals to apply for premium tax credits 
and cost sharing reductions. Pub. L. No. 111-148, § 1312(e), 
10104(i)(2), 124 Stat. 183, 901. 

[42] Pub. L. No. 111-148, § 1311(d)(4), 124 Stat. 176. 

[43] Pub. L. No. 111-148, § 1511, 124 Stat. 252. Automatic enrollment 
is subject to any waiting period authorized by law. 

[44] Pub. L. No. 111-148, § 1513(a), 124 Stat. 253. 

[45] Pub. L. No. 111-148, § 1513(a), 10108(i), 124 Stat. 253, 914, as 
amended by, Pub. L. No. 111-152, § 1003, 124 Stat. 1033. Access to 
employer-sponsored coverage does not disqualify individuals from 
participating in Exchange plans or for premium tax credits or cost 
sharing reductions for these plans. For example, when an employer's 
coverage imposes premiums exceeding 9.5 percent of the household 
income of the employee, or the coverage pays less than 60 percent of 
covered expenses, that individual may qualify for premium tax credits. 

[46] Pub. L. No. 111-148, § 1512, 10108(i), 124 Stat. 252, 914. 

[47] Pub. L. No. 111-148, § 1201(4), 10103(a), 124 Stat. 155, 892 (to 
be codified at 42 U.S.C. § 300gg). If a state permits insurers that 
offer large group coverage to participate in their Exchange, then 
these premium rate limitations also apply to those insurers (with the 
exception of self-insured plans). 

[48] Pub. L. No. 111-148, §§ 1001(5), 10101(f), 124 Stat. 136, 885. 
States have the option to increase these percentages. 

[49] As referenced in enclosure II, the American Health Benefit 
Exchanges (the Exchanges) must provide for an initial open enrollment 
period in 2014, followed by annual open enrollment periods in 
subsequent years, as defined by the Secretary of Health and Human 
Services. The Exchanges must also provide for special enrollment 
periods in certain circumstances. 

[50] For individuals 65 and older, Medicare Part B covers physician 
and outpatient services, and Medicare Part D covers prescription 
drugs. Under these programs, beneficiaries who do not enroll when they 
are first eligible may have to pay late enrollment penalties in the 
form of higher premiums. 

[51] A broad definition of qualifying life events would be required to 
assure all scenarios are covered and to assure portability continues 
to exist between health plans for those continuously covered. 

[52] The types of penalties could also be combined--for example, a 
waiting period combined with a small financial penalty. 

[53] For example, an individual who missed an annual open enrollment 
period from December 1 through December 31 and joined in the 
subsequent April would be required to pay retroactive premiums from 
January through March. 

[54] For example, a 10 percent penalty might apply for the first year 
of late enrollment, a 15 percent penalty for the second year, and a 20 
percent penalty for the third year, and so on. 

[55] Medical underwriting is a process used by insurers to assess an 
applicants' health status and other factors to determine the basis of 
premiums, the extent of coverage provided, or whether to provide 
coverage at all. 

[56] As referenced in enclosure II, PPACA prohibits insurers offering 
group or individual coverage from excluding coverage based on any 
preexisting conditions and requires insurers to accept every 
individual and employer that applies for coverage in that state, 
subject to certain requirements. 

[57] As referenced in enclosure II, in order to participate in the 
Exchanges, health plans generally must offer essential benefit 
packages, as defined by the Secretary, with at least one of four 
levels of coverage, from lowest to highest-bronze, silver, gold, or 
platinum. 

[58] Thirty-five states have established high risk pools that provide 
coverage of last resort for high risk individuals who do not have 
access to group insurance and have been denied individual market 
coverage because of their preexisting medical conditions. In addition, 
PPACA provided for the establishment of a temporary federal high risk 
pool program for individuals who have preexisting conditions and who 
have been uninsured for 6 months prior to applying for the program. 
This federal risk pool program will operate until 2014. Pub. L. No. 
111-148, § 1101, 124 Stat. 141. 

[59] As referenced in enclosure II, certain individuals may qualify 
for premium tax credits and cost sharing reductions when enrolling in 
a plan offered through an Exchange. 

[60] Some experts suggested a cap of 150 percent of premium. 

[61] As referenced in enclosure II, beginning in January 2014, PPACA 
requires employers with more than 200 full-time employees (FTEs) that 
offer health coverage to automatically enroll new FTEs into one of the 
plans they offer if they do not enroll themselves. Employers must 
provide adequate notice and the opportunity for employees to opt out 
if they so choose. 

[62] This period could coincide with an open enrollment period for 
existing employees. New employees could have a similar window at the 
time of hire. 

[63] The coverage would be portable for individuals moving between 
employers and from group to individual coverage. 

[64] Since more than two-thirds of the uninsured are working, low- 
income people, autoenrollment through employers would be effective in 
reaching this group. 

[65] As referenced in enclosure II, PPACA requires employers to 
provide employees with certain information about the Exchanges. 

[66] Alternatively employers could hire brokers and agents to educate 
and assist employees, although hiring brokers or agents to help 
employers in educating employees about their health plan choices is 
not without challenges. Employers may be reluctant to bring insurance 
agents into the workplace or to adequately compensate them, and 
appropriate compensation mechanisms need to be developed to ensure 
employees are steered into the most suitable plans rather than those 
that maximize revenue for the brokers. 

[67] The federal government or the Exchanges could provide model 
communication materials for small employers. 

[68] As referenced in enclosure II, PPACA requires the Exchanges to 
facilitate enrollment into plans by providing adequate information to 
consumers. For example, the Exchanges are required to establish a 
program through which third parties--which may include health 
insurance agents and brokers--may receive grants to conduct public 
education awareness activities, distribute information about the 
plans, and facilitate enrollment. 

[69] As referenced in enclosure II, PPACA requires the Exchanges to 
perform several functions including establishing telephone hotlines to 
respond to requests for assistance, maintaining Web sites with 
standard comparative information on health plans, and awarding grants 
to third parties,which may include health insurance agents or brokers, 
to facilitate enrollment. 

[70] Under the "Free Rider Surcharge" in Massachusetts, businesses 
with 121 or more full-time equivalent employees who do not offer 
insurance may be required to pay a surcharge if their employees, or 
dependents of their employees, make significant use of the state's 
Health Safety Net, formerly the Uncompensated Care Pool. 

[71] For example, uninsured federal taxpayers whose household income 
is below the applicable filing threshold are exempt from the financial 
penalties that may be imposed for failing to purchase health insurance. 

[72] As referenced in enclosure II, PPACA permits insurers offering 
individual or small group coverage through the Exchanges to vary 
premiums based only on certain factors including age by no more than a 
3 to 1 ratio. 

[73] "Impact of Changing Age Rating Bands in 'America's Health Future 
Act of 2009,'" Oliver Wyman, September 28, 2009. 

[74] See enclosure II for additional information on this requirement. 

[75] As referenced in enclosure II, under PPACA, the Secretary of 
Health and Human Services must establish procedures under which states 
may allow agents and brokers to enroll individuals and employers in 
health plans offered through the Exchanges and assist individuals to 
apply for premium tax credits and cost sharing reductions. PPACA also 
provides that the Exchanges award grants to entities, which may 
include agents and brokers, to facilitate enrollment. Thus, agents and 
brokers may be a resource to address other approaches to encourage 
voluntary enrollment discussed in this document such as those relating 
to public education and outreach and providing access to personalized 
assistance. 

[End of section] 

GAO's Mission: 

The Government Accountability Office, the audit, evaluation and 
investigative arm of Congress, exists to support Congress in meeting 
its constitutional responsibilities and to help improve the performance 
and accountability of the federal government for the American people. 
GAO examines the use of public funds; evaluates federal programs and 
policies; and provides analyses, recommendations, and other assistance 
to help Congress make informed oversight, policy, and funding 
decisions. GAO's commitment to good government is reflected in its core 
values of accountability, integrity, and reliability. 

Obtaining Copies of GAO Reports and Testimony: 

The fastest and easiest way to obtain copies of GAO documents at no 
cost is through GAO's Web site [hyperlink, http://www.gao.gov]. Each 
weekday, GAO posts newly released reports, testimony, and 
correspondence on its Web site. To have GAO e-mail you a list of newly 
posted products every afternoon, go to [hyperlink, http://www.gao.gov] 
and select "E-mail Updates." 

Order by Phone: 

The price of each GAO publication reflects GAO’s actual cost of
production and distribution and depends on the number of pages in the
publication and whether the publication is printed in color or black and
white. Pricing and ordering information is posted on GAO’s Web site, 
[hyperlink, http://www.gao.gov/ordering.htm]. 

Place orders by calling (202) 512-6000, toll free (866) 801-7077, or
TDD (202) 512-2537. 

Orders may be paid for using American Express, Discover Card,
MasterCard, Visa, check, or money order. Call for additional 
information. 

To Report Fraud, Waste, and Abuse in Federal Programs: 

Contact: 

Web site: [hyperlink, http://www.gao.gov/fraudnet/fraudnet.htm]: 
E-mail: fraudnet@gao.gov: 
Automated answering system: (800) 424-5454 or (202) 512-7470: 

Congressional Relations: 

Ralph Dawn, Managing Director, dawnr@gao.gov: 
(202) 512-4400: 
U.S. Government Accountability Office: 
441 G Street NW, Room 7125: 
Washington, D.C. 20548: 

Public Affairs: 

Chuck Young, Managing Director, youngc1@gao.gov: 
(202) 512-4800: 
U.S. Government Accountability Office: 
441 G Street NW, Room 7149: 
Washington, D.C. 20548: