What if we bought individual health insurance through our tax preparers? At first, the idea seems bizarre, but give me a minute to explain.
Given the well-known problems of HealthCare.gov and many of the state health exchanges, people seeking insurance coverage need a better way to buy. And commercial alternatives to government sites seem an obvious portal to Affordable Care Act coverage.
You can buy directly through insurance company websites, but the Obama Administration worries that would make it impossible to compare policies offered by different carriers in the way you could on a well-functioning exchange. For instance, if I go the Blue Cross site, I’m not likely to learn much about Kaiser Permanente’s offerings. On the other hand, commercial online health insurance marketplaces allow for comparison shopping, but raise issues of privacy (and perhaps even fraud from fake sites).
Or, you could make your purchase of health insurance a relatively seamless part of filing your tax return.
It actually makes a lot of sense. After all, the Affordable Care Act subsidies are tax credits and the information you need to figure out your subsidy amount is based on the income tax you pay. The penalty you’d owe for not buying insurance is a federal tax. Tax preparers already have—and are legally required to protect—nearly all the personal information they’d need to help figure the subsidy.
Storefront tax preparers can connect customers to health insurance markets through in–person contact. Or people could link electronically through a website such as Intuit’s TurboTax.
Brian Haile, Jackson Hewitt’s senior vp for health policy, predicts more people could end up buying through their connection with tax preparers than any other portal. “It’s a no-brainer,” he told me, “The Affordable Care Act is a series of amendments to the Internal Revenue Code and we help customers with their taxes. We can make this far more accessible for folks.”
I’m hardly the first person to think of this. My Urban Institute colleague Stan Dorn has been exploring this idea since 2011—long before the HealthCare.gov site crashed. And now tax prep outfits are taking steps in this direction.
Tax preparers won’t act as insurance brokers themselves. Instead, they are partnering with commercial online health marketplaces to ease enrollment.
For example, Jackson Hewitt is working with the online marketplace Getinsured to enroll people. Jackson Hewitt will calculate subsidies and potential penalties and, if customers choose, transmit that information to Getinsured. If the Jackson Hewitt customer wants to buy coverage, all she’ll need to do is pick an insurance plan. Jackson Hewitt can even fill out all the paperwork for people to enroll in Medicaid. It says it will not charge for any of these insurance-related services.
Because Jackson Hewitt has 2800 locations in Walmart stores, it could be an especially important link to the uninsured.
H&R Block announced in September that it is partnering with the commercial online health exchange GoHealth to help people enroll through Block-branded online chat and phone support. Block also announced that it will have insurance agents located in its Arizona tax offices as part of a pilot program.
Intuit has created a product called TurboTax Health to assist buyers and has entered into its own partnership with the commercial online marketplace eHealth Inc.
Combined, these three firms alone claim to help file nearly 50 million returns—making them a huge potential portal for insurance buyers. The IRS estimates that about two-thirds of low-income taxpayers use paid preparers–many use walk-in firms such as Block and Jackson Hewitt. And Haile estimates that 90 percent of the uninsured get refunds. He predicts these individuals will be far more interested in buying insurance with those refunds in-hand than they are today, when they are focused on holiday shopping.
Using tax prep firms as a link into the health insurance market won’t solve all the problems of the Affordable Care Act. For instance, the Obama Administration still needs to make sure the back end of its electronic system works, including the government data hub needed to verify buyer information. But Haile is right: For many people-especially those eligible for subsidies—the tax filing season is a perfect time to enroll and tax preparers are a great way to connect them to plan options.
Given its problems with the government site, the Administration ought to be promoting these commercial alternatives. And tax prep firms ought to seize the opportunity.