October 23, 2017—On October 13, President Trump took action to modify the Affordable Care Act (ACA). Benjamin Sommers, associate professor of health policy and economics in the Department of Health Policy and Management, said these changes may have some effect on the 2017 open enrollment period, which runs from November 1-December 15, but they could have even larger long-term implications.
President Trump’s first announcement was to end cost-sharing payments to insurance companies. What will the impact of that decision be?
The Affordable Care Act has tax credits in place to help make premiums more affordable, depending on your income. But once you get that coverage, a lower- or middle-income family still might face a deductible of several thousand dollars or large co-pays. So the ACA set up a system of cost-sharing reductions that would make these plans more generous and would make it easier for these families to pay for prescription drugs, doctor’s visits, and hospitalizations.
The way that the law chose to do that was requiring insurance companies to provide discounted care, and then the government reimbursed them for that. But the law was drafted in a way that didn’t guarantee the money was going to be allocated by Congress.
Under the ACA, insurance companies still have to provide these reduced cost-sharing levels for these lower- and middle- income families. But now they won’t get paid back for it. So, if you’re running an insurance company, this leaves you with two options. One is to raise prices to compensate for the loss of the government payments. Some insurers say that they’re going to raise premiums by 20% if the government stops making these payments.
The other option is simply to stop offering ACA plans. That would result in people having fewer coverage options, and some counties could end up with no insurers in the marketplace.
This latest action is the strongest signal to date, building on a bunch of smaller steps that the Trump administration has taken, that they do not seem interested in stabilizing the marketplaces or making it work better for consumers. Their goal is to, as much as they can, make it seem that the marketplaces are doomed to fail. They may think that this is a form of negotiating leverage with moderates in the Republican Party and with Democrats. Whether that strategy will work politically is unclear. But as policy, it’s hard to view this as anything other than an attempt to hamper the markets and to hurt the ACA’s ability to cover people.
President Trump’s second action was issuing an executive order calling for a broad new array of health insurance products. What are the ramifications of this order?
The order instructs the departments and agencies with responsibilities for insurance oversight to allow more permissive rules for so-called association health plans. These plans are a way for groups of people to band together to buy health insurance.
The issue is that the administration has basically said it is going to exempt these association plans from most of the requirements of the Affordable Care Act—things that most consumers are very satisfied with under the law. For example, under the ACA companies can’t charge higher premiums for people with preexisting conditions. That requirement could disappear under the association plans. Coverage of essential health benefits, including prescription drugs, maternity benefits, and mental health, could also be removed in these association plans. The overall level of coverage in terms of what percentage of expenses will be paid for by health insurers could also be up in the air.
It remains to be seen how these regulations will get written. The administration’s announcements were just the first step in that process. But one possiiblity is that we’re going to see bare bones plans that don’t cover very much. And those plans are going to primarily appeal to young healthy people for enrollment. That’s a real risk to the stability of the marketplaces, because if young and healthy people sign up for these cheap, bare bones plans, the result will likely be higher premiums for the plans that do cover preexisting conditions or essential health benefits, as those plans will be populated by those who are sick.
If the marketplaces destabilize or become too expensive, many people could lose the insurance that had covered them under the ACA.
From a public health perspective, the main concern is that people who don’t get insurance through work and have incomes too high for Medicaid would no longer have access to meaningful coverage because the markets could essentially crumble.
This is the latest effort to hurt the ACA, following the repeal and replace effort in Congress. What are your thoughts on the future of the ACA?
I think Americans certainly should be concerned. For the last 10 months, stopping the cost-sharing payments has been largely discussed by the administration as a bargaining chip or theoretical tactical move. But now, they’ve actually done it, and this puts marketplace insurers and the people who rely on them in a position of great uncertainty. So, if you have coverage right now through the ACA marketplace, I think it is much less certain that this coverage will still be there in a year than it was before they made these announcements.
The repeal debate is not dead either. Both votes on repeal that the Senate held the past several months were essentially a vote or two away from passing. Of course, in 2018, we’ll have new elections and that will change the composition of the Senate. That means legislation to repeal the ACA that failed this year could go through in the future. So there’s a lot at stake for people who care about health policy and who worry about coverage and access.