Policies to Achieve Near-Universal Health Insurance Coverage

In this report, the Congressional Budget Office examines policy approaches that could achieve near-universal health insurance coverage using some form of automatic coverage through a default plan. As defined by CBO, a proposal would achieve near-universal coverage if close to 99 percent of citizens and noncitizens who are lawfully present in this country were insured either by enrolling in a comprehensive major medical plan or government program or by receiving automatic coverage through a default plan.

Components of Proposals That Would Achieve Near-Universal Coverage

Policy approaches that achieved near-universal coverage would have two primary features:

• At a minimum, if they required premiums, those premiums would be subsidized for low- and moderate-income people, and
• They would include a mandatory component that would not allow people to forgo coverage or that would provide such coverage automatically.

The mandatory component could take the form of a large and strongly enforced individual mandate penalty—which would induce people to enroll in a plan on their own by penalizing them if they did not—or a default plan that would provide automatic coverage for people who did not purchase a health insurance plan on their own during periods in which they did not have an alternative source of insurance. Because lawmakers recently eliminated the individual mandate penalty that was established by the Affordable Care Act, this report focuses on approaches that could achieve near-universal coverage by using premium subsidies and different forms of automatic coverage through a default plan.

Policy Approaches

CBO organized existing proposals into four general approaches, ranging from one that would retain existing sources of coverage to one that would almost entirely replace the current system with a government-run program. All four approaches would provide automatic coverage to people who did not enroll in a plan on their own.

• Two approaches would fully subsidize coverage for lower-income people and partially subsidize coverage for middle-income and some higher-income people while retaining employment-based coverage. Financing would come, in part, from broad-based tax revenues that were not linked to health insurance coverage. Financing also would come from higher taxes on those uninsured people who were covered by the default plan and whose premiums were not fully subsidized; those taxes would be equivalent to their share of the premium. Collecting such taxes from uninsured people would pose challenges.
• Two approaches would fully subsidize coverage for people at all income levels. Financing would come entirely from broad-based tax revenues, and people who did not enroll in a health insurance plan would not owe additional taxes.

Under some approaches, the default plan would be privately managed. Under others, it would be a public plan, operated by the federal government.

The approaches that CBO examined would require varying amounts of government spending to cover the same number of people. They would all require additional federal receipts to achieve deficit neutrality.