Many of us breathed sighs of relief on Friday when House Speaker Paul Ryan announced the withdrawal of legislation to roll back the Affordable Care Act. The bill, the American Health Care Act, would have resulted in 24 million people losing insurance and $880 billion less for Medicaid over the next 10 years -- while giving an $883 billion tax cut targeted to the wealthiest. At town hall meetings and over the phones, members of Congress heard from constituents urging them to leave the ACA’s coverage expansions in place. Yet the bill’s defeat doesn’t mean that the idea of healthcare coverage for all has been accepted, or that the ACA’s achievements are safe.
In the New York Times piece “Who Stopped the Republican Health Bill?” Wilson Andrews, Matthew Bloch, and Haeyoun Park give a picture of the 33 House Republicans who were key to the bill’s collapse. Fifteen of those representatives are in the “hard-liners” group and opposed Ryan’s legislation because it didn’t go far enough in undoing the ACA. It was an in attempt to woo these men (and they are all men) that the bill’s authors agreed to weaken the ACA’s requirement for insurers to cover “essential health benefits” – ten categories of services, including emergency services, hospitalization, maternity and newborn care, prescription drugs, and mental health and substance use disorder treatment. (Read Kim Krisberg's post on these essential health benefits for more details.)
In other words, the AHCA didn’t collapse just because House members agreed it was wrong to take health insurance away from 24 million people; it was also because some didn’t think it went far enough in removing guarantees of coverage affordability and adequacy. The public seems to be lining up in favor of a government role in assuring health coverage is available and affordable, but many elected leaders are not following suit.
Will the ACA “explode”?
After the bill’s demise, President Trump – who had worked to gain House Republicans’ support for the legislation – claimed that Obamacare will now “explode” and leave an opening for another legislative effort. To what extent can Trump make that happen if he decides to prioritize political points above the health of the US population?
Congress and the White House both have responsibilities under the ACA, and they can use those roles to influence the insurance stability and value. Most of the impact will likely be seen in the marketplaces for individual insurance plans. Insurers participating in these marketplaces have already been hurt by Senator Marco Rubio’s successful effort to slash the amount of funding they could receive to offset having costs from too many high-cost enrollees in their plans. Some insurers have pulled out of markets where they previously offered plans; as a result, consumers in some states' marketplaces can buy plans from only one insurer. Uncertainty about the fate of the ACA could also lead insurers to raise premiums for individual policies more than they would have otherwise.
Insurers could also lose a large amount of expected federal money under Republicans’ legal challenge to cost-sharing subsidies. The ACA requires insurers to reduce the out-of-pocket payments charged to enrollees with incomes between 100 and 250 percent of the federal poverty level, and the federal government then reimburses them. House Republicans sued the Obama administration for making these insurer payments out of existing funds after the House voted down a funding request. Last year, a federal judge ruled in the House Republicans’ favor, finding that these subsidy payments are subject to annual rather than permanent appropriations – i.e., Congress has to vote every year to make them, rather than assuming that they’re part of the permanent system established by the ACA. That ruling was on hold pending the Obama administration’s appeal, but if the Trump administration drops the appeal, the ruling will go into effect. If insurers have to subsidize lower-income enrollees out of their own funds, many will likely choose to drop out of the marketplaces.
Trump administration actions could also influence enrollment in individual policies – and fewer younger, healthier enrollees could mean higher premiums. Anna Barry-Jester of FiveThirtyEight highlights two ways the executive branch could influence marketplace enrollments:
While Congress writes the bills, a lot of their interpretation and implementation is up to federal agencies. In the case of health care, that task falls on the Department of Health and Human Services, whose new secretary, Tom Price, has been a fervent opponent of the ACA. And while the law has been heavily criticized as government overreach, there’s quite a bit of flexibility written into it.
HHS has already made some moves that could affect the insurance marketplaces in the future. The final days of the open enrollment period for the insurance marketplaces set up by the ACA coincided with Trump’s inauguration. HHS and the Trump administration quickly pulled advertisements promoting enrollment, ads that had been effective in previous years at getting young adults to sign up for coverage. The move appeared to dampen enrollment among this group, a typically healthier set that is key to balancing out the insurance rolls and keeping costs down.
… On the individual mandate, Price could weaken enforcement or redefine who is exempt, though there are some legal limitations to how far he could take those changes. Either way, the net effect would be fewer signups, particularly among young and healthy people who have less incentive to get coverage.
POLITICO’s Dan Diamond explains that some rules already proposed by the Trump administration with the stated aim of assisting insurers could backfire:
The Trump administration also proposed new rules last month that would tighten up the health law’s special enrollment periods and change certain plans' “actuarial value” — essentially, the share of total costs that the insurer pays — which can push more costs onto patients. The White House maintains that those are necessary steps to shore up a mess that they inherited, by limiting who's signing up for coverage and allowing insurers to sell cheaper plans. Insurers had been pushing for those changes in order to stay in the market.
Some former Obama officials say that the changes, particularly extra verification requirements for people who sign up outside the usual enrollment season, may backfire and actually drive health plan customers away.
It's "quite possible that the new verification procedures [for special enrollment] could worsen, rather than improve, the individual market risk pool," said Brookings economist Matt Fiedler, another former White House official under Obama. [Former HHS senior counselor Aviva] Aron-Dine noted that the Obama administration in December 2016 had proposed a limited test of changing the special-enrollment policy, rather than rolling it out nationally. “Going full-speed ahead is counterproductive," she cautioned.
In addition, she said that HHS’s decision to reduce that share of costs insurers pay — that actuarial value — in benchmark plans will mean that the value of tax credits will fall, making insurance more expensive for some. Health plans will be able to design options with higher deductibles and out-of-pocket costs.
Allowing insurers to offer plans with higher out-of-pocket costs won’t just affect enrollment, of course; it also affects people who purchase those plans, get diagnosed with major health problems, and then find themselves facing bills even larger than those they would have received under the Obama-era ACA.
Also, as Kim Krisberg described in her post last week, Secretary Price has the ability to affect the essential health benefits that are key to the quality of health insurance plans.
Medicaid work requirements
Enrollment in Medicaid could also be affected if HHS gives states more leeway to impose work requirements for Medicaid beneficiaries. The Kaiser Family Foundation’s MaryBeth Musumeci explains that the Obama administration denied previous requests from some states (submitted as part of what are called “Section 1115 waivers”) to require work or other approved activities like job training as a condition of Medicaid eligibility. Earlier this month, though, the Centers for Medicare and Medicaid Services issued a letter to state governors indicating its willingness to approve such waiver requests. Musumeci notes that nearly 80% of Medicaid adults are in working families, but their jobs tend to be in low-wage industries that don’t offer health benefits. Requiring documentation of approved activities or exemptions would increase administrative burdens (and costs) for states without necessarily achieving a significant increase in Medicaid beneficiaries’ employment. Musumeci concludes:
Conditioning Medicaid eligibility on meeting a work requirement likely would apply to a small number of people, given that most Medicaid beneficiaries who can work already are doing so. Depending on how they are implemented, work requirements could adversely affect some people, who are unable to comply due to their health, family caregiving obligations or other reasons, by preventing them from accessing needed health coverage through Medicaid.
Because states will have to develop and submit waiver applications in order to be able to impose work requirements, the impact of this policy stance will be felt unevenly. The first states to adopt these requirements will be those in which lawmakers are most willing to have some eligible low-income individuals and families miss out on the opportunity for Medicaid coverage in exchange for reducing the odds that anyone who’s avoiding work for unapproved reasons will receive Medicaid coverage.
Trump administration at a crossroads
State actions will affect the future of the Medicaid expansion, while the Trump administration’s approach to healthcare will have the most substantial impact on the marketplaces that sell individual policies. In decisions about subsidies, plan design, enrollment requirements and advertising, and other aspects of health insurance, I hope President Trump and his appointees prioritize the health of the US population above a politically-motivated desire to see the ACA “explode.”
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