The derailment of the American Health Care Act (AHCA) has given the supporters of the Affordable Care Act (ACA) much to be joyous about. But many are wondering what happens next in the health care debate. According to the Congressional Budget Office, insurance marketplaces established under the ACA are not collapsing and should remain stable — but only if the Trump administration doesn’t actively undermine the ACA. Unfortunately, this work is already underway.
Through his January Executive Order (EO) Trump has already given the Department of Health and Human services (HHS) and other federal agencies the power to alter and grant exemptions to portions of the ACA that prove to be onerous for patients, insurers, drug manufacturers and states. This EO weakens the “individual mandate” by allowing for a lenient interpretation of the “hardship exemptions” to the law. It gives agencies the go-ahead to ignore penalties under the individual mandate. The executive action also makes it possible for the government to grant waivers to states who might want to implement work requirements and require more low-income people to pay premiums to enroll in Medicaid. In total, these actions would decrease the number of enrollees and endanger the stability of the insurance markets.
Due to the stalling of the AHCA, essential health benefits (emergency services, hospitalization, maternity care and newborn care among others) under the ACA were preserved. But the secretary of the HHS can still define the details within these broad benefit categories. For example, HHS could allow insurers more leeway in defining which prescription drugs they would cover. Hence, HHS still has the ability to drastically alter these benefits, lowering the incentive to enroll and further weakening the ACA.
The “risk corridor” program under the ACA asked profitable insurers to pay some of those profits into a pool to help insurers who lost money. If the insurer’s loss exceeded what the companies paid in, the government would step in to make up the difference.
In 2014 Senator Marco Rubio inserted language into the omnibus government spending bill that prohibited HHS from using general funds to pay failing insurers. Thus in 2014, when insurers lost $2.9 billion and paid only $362 million into the program, the government was only able to pay 13 percent of the $2.5 billion that insurers requested. This provision has already caused many insurance co-ops to leave the market. As insurance risk is pooled at the state level, and with so many insurers deciding to leave, states like Tennessee are in a precarious position with some of its counties not having a single insurance provider. It might soon become necessary for the government to intervene and stabilize these marketplaces. With the ACA already hobbled by Senator Rubio, it remains to be seen how the Trump administration will respond.
The administration can also decide to stop cost-sharing subsidy payments with insurers. These payments lower the enrollee’s out-of-pocket payment for deductibles, coinsurance and copayments and, in addition, lowers their maximum out of pocket cost. The subsidies are linked to the person’s income and family size such that people with incomes less than or equal to 150% of the federal poverty level (FPL) can enroll in a plan where cost sharing subsidies cover on average 94% of out of pocket costs while those whose incomes are within 200-250% FPL would have on average 73% of their costs covered. If the subsidies are taken away, co-payments and deductibles will rise, further decreasing the size of the insurance pool.
Lastly, the Trump administration has already canceled $5 million in ads that were aimed at getting more people to sign up for insurance by the open enrollment deadline January 31, 2017. This outreach is essential to the success of the ACA, and if this continues enough young and healthy people may not sign up for insurance to keep the ACA viable.
By no means is the health care debate in the United States settled. There are many changes on the horizon of which supporters of the ACA should be cognizant. The ACA may be the law of the land, but its survival is not yet certain.