A new report co-authored by Vanderbilt University health policy expert Dr. John Graves, assistant professor of preventive medicine, has found that as many as a quarter of people eligible for subsidized health insurance under the Affordable Care Act may be shut out because they don't have a bank account.

Graves worked with two other national experts on federal health care reform, George Brandes and Brian Haile, both of Jackson Hewitt Tax Service, to bring to light what they claim is a potentially serious problem people may encounter when applying for subsidized health insurance under the Affordable Care Act (ACA).

Their report, titled "Uninsured+Unbanked=Unenrolled," uses U.S. Census Bureau data to estimate that 27 percent of those eligible for insurance available in the new marketplaces are "unbanked." Many people within the low- to middle-income range rely on resources like pre-paid debit and credit cards to pay bills. In addition, veterans commonly receive military benefits in the form of pre-loaded credit cards.

"It turns out there are regulatory blind spots in the legislation that addresses how people would pay for their insurance," Graves says. "We found that insurers may require people to pay out of their checking accounts. There is no explicit language to require other forms of payment within the law."

Graves, his co-authors, and other health care experts suggest the federal government must take a second look at the regulatory language to prevent the potential for mass rejection of enrollees as they apply to the marketplace through open enrollment beginning in October.

"It's a pretty easy fix if regulators decide to clarify this. But left on their own, insurance companies know it is more expensive to process payments by credit and debit cards," Graves says. "In addition, plans may be concerned people who are unbanked are likely to be sicker, and so from a cost perspective, they may not be inclined to change their payment requirements."

The report finds states that will allow the federal government to operate the marketplaces, like Tennessee, have a disproportionally large number of "unbanked" residents. In addition, three of the larger insurers in Tennessee, for example, don't allow customers to pay recurring premiums with prepaid debit cards.

Graves' co-authors, who lead the planning and execution of ACA tax and enrollment programs for the national tax preparation firm Jackson Hewitt, are George Brandes, an associate for health care policy, and Brian Haile, senior vice president for health care policy. Haile previously served as director of the Insurance Exchange Planning Initiative of Tennessee and Brandes served as an associate for that office. Jackson Hewitt, which funded and released the report, acknowledges it has a limited commercial interest in prepaid credit cards in that they offer these cards to their customers, many of whom are unbanked.