Assessing the Promise and Risks of Income-Based Third-Party Payment Programs

Area of Science:

• Health policy
• Health economics
• Public health

Background:

• Affordability remains a significant barrier to enrollment in Affordable Care Act (ACA) marketplaces.
• Third-party payment (TPP) programs, funded by local hospitals and operated by nonprofits, address this by covering premium costs beyond tax credits for low-income consumers.

Purpose of the Study:

• To evaluate the effectiveness of TPP programs in enhancing marketplace coverage affordability.
• To determine if TPP programs negatively impact insurance risk pools.

Main Methods:

• Qualitative study involving interviews with key stakeholders.
• Stakeholders included program administrators, hospital systems, insurance carriers, and consumer advocacy groups.
• Data collected from five local areas and the Washington State marketplace in May-June 2016.

Main Results:

• The most successful local TPP program enrolled 25% of eligible individuals.
• TPP programs facilitated coverage for individuals who would otherwise remain uninsured.
• Hospitals experienced financial benefits through reduced uncompensated care costs that exceeded TPP program expenses.
• Insurance carriers reported no adverse selection in these targeted TPP programs.

Conclusions:

• Widespread implementation of TPP programs could increase enrollment among low-income populations.
• Hospital financial incentives support the feasibility of TPP program replication.
• While TPP programs show promise, substantial nationwide affordability improvements may require policy changes like enhanced premium tax credits and cost-sharing reductions.