The Trump Administration and Republicans in Congress have been clear about their desire to “repeal and replace” the Affordable Care Act. But, while that legislative battle plays out, the ACA is still on the books and defines the rules for the American health care system.
This blog post will not look at the repeal and replace battle. Rather, it looks at how the Administration is approaching the ACA now – while the ACA remains the law. In summary, the Trump Administration’s statements – and actions – on the Affordable Care Act look like a case of multiple personalities inhabiting the same body. And that’s not healthy. Here are some examples:
- On March 24, after the failure to pass an ACA replacement, President Trump stated that the “best thing we can do, politically speaking, is let Obamacare explode.”
- Over the past month, the Administration has sent conflicting signals about its willingness to continue funding subsidies under the ACA to help lower-income Americans cover out-of-pocket expenses (cost sharing reductions). In the past week, it has been reported that the Department of Health and Human Services (HHS) indicated these payments would continue – but the following day HHS issued a statement that the Administration was still deciding its position on the matter. And, President Trump has stated that funding these subsidies could be a bargaining chip with Democrats over health care.
If the government fails to fund these cost sharing reductions, it is likely that even the most committed insurance companies will flee the ACA’s exchanges. It is also projected that this move would increase premiums for the benchmark plans on the exchanges by almost 20 percent. In effect, ceasing these payments is a surefire way for the Trump Administration to set off the detonator that really causes the ACA to “explode.”
- On April 13, the government finalized new rules intended to strengthen government run health insurance exchanges under the ACA. The objective of these changes was to make it more attractive for insurance companies to remain on ACA exchanges by reducing the opportunity for individuals to “game” the system and buy coverage after they develop a health condition. These final regulations contain a number of different rules that make it harder for individuals to buy or change coverage mid-year.
So, the Administration is taking actions to stabilize the ACA exchanges, while publicly contemplating other actions that would destabilize them. This whipsaw may make for engaging political theatre, but poses some real risks:
- It has been estimated that 6.4 million Americans currently receive cost sharing reductions. These are people with income below 250 percent of the federal poverty level ($29,700 for an individual and $60,750 for a family of four). Eliminating these reductions could render health care unaffordable for these individuals.
- Insurance companies are legally obligated to provide these cost sharing reductions, even if the federal government does not finance them. This unfunded government mandate would drive carriers from exchanges, cause a spike in premiums, or both.
- Insurance companies crave stability and predictability – two features absent from the current political debates. It is not clear how much patience these companies will have while the Administration and Congress determine their approach to ACA exchanges, and the current uncertainty may be enough to cause more insurance companies to leave the ACA exchanges.
The percentage of ACA enrollees with only one insurance company available jumped from 2% in 2016 to 21% in 2017. People lose when they are left with only one insurance carrier – or no carriers at all – for their coverage, regardless of the political points scored.