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Two Ways Health Insurance Auto-Enrollment Might Work

A new health policy idea with increasing bipartisan support in the U.S. Senate is auto-enrolling consumers in catastrophic health plans.

Repealing Obamacare’s individual mandate, the government would automatically sign consumers up for emergency-only coverage. Surprisingly, this is one health care idea that seems to cross party lines, but most of the conversations stop when the details start.

How would it work? What would it cost? How would the government know who needed catastrophic coverage?

It would be a big change from our current system, certainly, but that doesn’t mean it’s impossible. Here are two ideas for how the policy might work—a registry model, and a universal coverage model. But first, let’s explain what auto-enrollment means.

What is auto-enrollment?

Based on the ideas floating around Congress, auto-enrollment policies would ensure that every American has at least some form of insurance for high-cost, unexpected health care events.

In theory, consumers would have to “opt-out” of this catastrophic plan, rather than opting in to coverage as we do today. It would probably have a very high deductible, and it wouldn’t cover preventive care or other types of treatment, so consumers would still be expected to obtain their own insurance for comprehensive care.

In the event that something “catastrophic” occurs, like a terrible accident or emergency surgery, the consumer would still be responsible for their high deductible—let’s say $10,000. But an uninsured consumer facing $50,000 in medical bills would otherwise owe every penny, so catastrophic coverage with a high deductible is a better scenario than no coverage at all.

While legislators haven’t proposed any official auto-enrollment policies, Republicans are reportedly discussing the idea as the Senate drafts its version of the American Health Care Act. But the devil is in the details. Following are two ways it might work.

The big registry

Currently, the U.S. does not have any functional type of health care registration system. Developing such a system could be one way to accomplish auto-enrollment, with the added benefit of addressing patient identification challenges that hospitals often face.

This month, the College of Healthcare Information Management Executives named four finalists in their $1 million crowdsourcing competition to develop a secure, national patient identification system. Insurance status could be included as a parallel track in the system’s development, and the government could use the data to auto-enroll anyone listed as uninsured.

It’s unquestionably ambitious, but the U.S. wouldn’t be the first to develop a massive registry for its population. India’s “Aadhaar” system is the world’s largest biometric ID system, with more than 1.13 billion people enrolled.

Further, research shows care standards improve with robust patient identification, reducing errors and improving medical records management. This benefit could further incentivize the government to take on the massive project of a national health care registry.

However, one can easily imagine pushback in the U.S. Many consumers would not want the government to have a registry of their patient records or insurance status.

Universal catastrophic coverage

Another option would be a catastrophic version of universal coverage. In other words, everyone would have some level of tax-funded health insurance. Again, it wouldn’t be full insurance—you couldn’t use it to get check-ups or prescriptions, so you would still want an employer or individual health plan for basic care.

But it could function as a middle-ground compromise between universal coverage Democrats and free-market Republicans.

Universal catastrophic coverage would protect Americans from massive health care bills, while giving them the freedom to select their own plans for other types of coverage. Under this system, everyone could simply be enrolled through the Social Security system at birth and pay via taxes.

Wouldn’t consumers just abandon their insurance plans? Some definitely would, just like they did before the ACA and do today. The difference is that today, the uninsured bear the entirety of their medical bills, no matter how much they owe. This would essentially create a cap, alleviating some of the cost pressure of extremely high medical bills. The risk of going uninsured would decrease some, but not entirely—consumers who want to avoid the super high deductible, or who just need additional coverage, would still be incentivized to get regular health insurance.

However, universal catastrophic coverage would mean a tax increase, which is a very hard sell.

Auto-enrollment in health insurance would be a novel idea under our current health care system. But as both parties have now taken a stab at health reform, and challenges still remain, a new approach might be necessary.

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