The Impacts of the Trump Administration’s ACA Decisions on Public Health

With news of at least the beginnings of a bipartisan Senate deal to at least temporarily stabilize the health insurance marketplace, it’s time to take stock of what will happen if Congress does not move fast.Access to health care for millions almost surely will be affected by the Trump Administration’s stunning decision to immediately cease reimbursing insurers for the cost-sharing subsidies that the Affordable Care Act (ACA) requires them to give to eligible people who buy insurance in the marketplaces.  Without this reimbursement, insurers face two basic choices – to raise premiums in order to cover an estimated $7 billion in losses during 2018, or exit the marketplaces entirely.  Both options have terrible consequences. The premium increase will affect people who buy individual policies but do not qualify for premium subsidies, which phase out at 400 percent of the federal poverty level. Already-high individual premiums could escalate still further.   And if insurers leave the marketplaces, millions who depend on the subsidized coverage they offer will be left with nothing. Because the Administration’s decision to end the premium subsidies takes effect immediately, furthermore, insurers that counted on payments throughout the 2017 plan year will face significant near-term losses.  Faced with this prospect, insurance companies might elect to cut their losses and exit, a right expressly given them if the government fails to keep its end of the cost sharing payment bargain. A number of states have taken steps to prevent this result by permitting insurers to adjust their 2018 premium filings to take this sudden development into account (indeed, many states and insurers actually had anticipated that the Trump Administration would  cease paying).  But other states stuck with the assumption that the Administration would keep paying; now, with the 2018 open enrollment period literally days away, no one is sure what will happen in these states.Some People Protected from Steep Rate Increases It is important that people who buy subsidized marketplace plans and qualify for cost sharing assistance understand that the subsidies will protect them from steep rate increases and that insurers remain obligated under the law to keep paying the subsidies.  The most seriously affected people will be those whose incomes are too high to get the benefit of the premium assistance and who depend on the individual market to provide them with access to a good plan covering the comprehensive range of “essential health benefits” guaranteed under the Affordable Care Act.  Without federal repayment of the cost sharing subsidies, the Congressional Budget Office and the Joint Committee on Taxation estimate that gross premiums (that is, before premium tax credits are accounted for) for marketplace silver plans – the plan level available to people who qualify for subsidies --  will,  on average, need to rise by about 20 percent in order to offset insurer losses.  The dubious silver lining for people simply priced out of the market by price hikes of this magnitude is that they would not be penalized for not purchasing insurance that they cannot afford.  California is perhaps the cleverest state in terms of how it has dealt with the problem created by the Trump Administration’s move.  Faced with the disappearance of cost-sharing repayments to plans, that state’s regulators decided to have insurers load the entire amount they stood to lose into their marketplace silver plans, meaning that while the price of these plans would rise astronomically, all subsidized policyholders would be protected.  In the meantime, prices for gold plans – which offer more cost sharing protection – actually could be lower than the cost of a silver plan.  California’s move to protect the unsubsidized population will mean that those who buy individual policies but who do not qualify for subsidies will need to pay particularly close attention to the cost of various plan choices for 2018. In general, the Administration’s move so late in the year and so close to open enrollment will make life more complicated for consumers, who already face the prospect of a shorter open enrollment season (November 1 – December 15), much less Navigator help because of a 40% reduction in funding for Navigators, and a healthcare.gov blackout for significant periods of time every Sunday, even during the open enrollment season.  Consumers should bear in mind that the nation’s more than 1300 community health centers, which operate in over 9000 locations nationwide, offer enrollment assistance in the communities they serve.  People can go online to www.hrsa.gov to find their closest community health center.The Trump Administration has sought to justify its move on the ground that a federal district court in Washington D. C. determined that the Obama Administration’s payment of subsidies was unconstitutional because Congress had not appropriated the funds.  But this decision is on appeal and has been halted pending appeal.  In other words, there IS no court ruling ordering the Administration to stop paying the subsidies.  To the contrary, the courts have allowed the subsidies to continue while the case is being tried.  (And of course, any time it wanted to, Congress could simply appropriate the subsidy funds and effectively end the litigation).   This would make sense: According to the Associated Press, the majority of the people who have benefited from the cost-sharing subsidies that the administration has stopped paying—nearly 70 percent -- live in states that voted for President Trump. Beyond his decision to dump cost sharing payments, President Trump also issued an executive order on October 12, 2017, instructing the Departments of Health and Human Services, Treasury, and Labor – which together oversee the private insurance market at the federal level – to issue new policies that make it easier to buy health plans that are cheaper – typically because they cover less – than policies governed by the ACA coverage requirements.  This order is expected to relax standards governing the sale of “association health plans” and short term policies.  The association plan changes are expected to make it easier for individuals and self-employed people to band together into large groups that, under the ACA, are exempt from the requirements that apply to the individual and small group markets.  These associations would have flexibility to cherry-pick younger healthier people and to negotiate for plans that cover fewer benefits with far higher cost sharing.  Similarly, rules relaxing the use of short term plans would allow issuers to market essentially junk products whose coverage lasts less than a year and that offer far less in the way of coverage.   Both strategies, according to experts, would cause younger, healthier people to leave the ACA-compliant individual insurance market, further driving up the cost of coverage for people who are older and sicker. The ACA’s most profound achievement has been to make it possible for all people to qualify for decent insurance coverage regardless of health status.  Many things could be done to improve how the law functions: make subsidies more generous; stabilize insurers by offering added protections against exceptionally high-cost members; and market plans more aggressively to younger people.  What should not happen is the deliberate destruction of an already-fragile individual insurance market through policies aimed at destroying insurance, not improving it. Sara Rosenbaum, J.D. is the Harold and Jane Hirsh Professor of Health Law and Policy and Founding Chair of the Department of Health Policy at the Milken Institute School of Public Health, George Washington University. She also holds professorships in the Trachtenberg School of Public Policy and Public Administration and the Schools of Law and Medicine and Health Sciences.