After seven years, House Speaker Paul Ryan and President Trump announced Friday that Republican attempts to repeal and replace the Affordable Care Act have, at least temporarily, been laid to rest. But that doesn’t mean that health care reform is over. Far from it.
When asked Friday whether it was fair to the American people to let the ACA fall apart, as Trump has frequently implied will happen, he responded, “It’s gonna happen; there’s not much you can do about it.” In fact, there’s plenty that could be done, and whether the insurance marketplaces implode depends largely on Trump’s next moves.
When Trump says Obamacare is failing, he seems to be referring to one piece of the law, the insurance marketplaces where 12 million people currently buy coverage. But the ACA’s success in reducing the uninsured rate to the lowest it’s ever been was largely the result of expanding Medicaid, the federal insurance program for people with low incomes. Although Republicans argue that the program’s costs are unsustainable, there’s no iceberg in front of that ship.
The insurance marketplaces, set up for people with incomes above the federal poverty line who don’t have employer-sponsored insurance, are stable in most parts of the country, according to the Congressional Budget Office, a bipartisan agency tasked with assessing the economic impact of legislation. They are, however, under duress in several states, most famously Tennessee, where 16 counties don’t have any insurers lined up to sell on the marketplaces for 2018. While there were concerns in previous years that some counties would be left without an insurer, it hasn’t yet happened. The fate of the markets in those counties and a few other states depends on what Republicans do next:
Trump could use HHS to alter or undermine the law
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.
It’s hard to say what effect that lower-than-expected enrollment will have on premiums directly, but the bigger problem could be the uncertainty it has created for insurers as they draft plans and premiums for next year. “There is a lot of uncertainty about how the Trump administration will run this program, and any time there’s uncertainty, insurers will increase premiums more,” said Larry Levitt, a senior vice president with the Kaiser Family Foundation, a health policy research organization. There are also so many people moving in and out of every insurance program that to keep programs up and running, new people must be enrolled each year. If the administration doesn’t keep up enrollment efforts, there could be problems down the road.
HHS could also change requirements for health insurance coverage. Plans sold on the insurance marketplaces are required to cover a list of 10 services, known as essential health benefits, broad categories that include mental health, pregnancy care and prescription drugs. HHS was left to define what must be covered within those categories. Insurers must cover mental health, but must they pay for behavioral therapy for children with autism? They must provide women’s health care, but do they have to provide contraception for all women, free of co-pays? The more plans have to cover, the more they cost. The less they cover, the less useful they are to some of the people who buy them. The Obama administration largely let states decide what those essential benefits would be, but Price could make those decisions at the federal level, requiring insurers to cover fewer services.
But Price could do two things now that would have huge effects on the marketplaces: He could drop a court case left over from the Obama administration, a move that would cut some subsidies to more than half of marketplace enrollees, and he could loosen the most hated part of the law, a mandate requiring most people to have coverage or pay a penalty at tax time. More than 6 million people who get insurance through the marketplaces get help paying for deductibles and co-pays, in addition to the federal help they get to pay for health insurance premiums. A federal judge determined that the subsidies were an illegal appropriation of funds. The Obama administration was fighting the ruling; if Trump’s government lets it stand, it will cost insurers millions and could upend the market.
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. “That’s the kind of hole you could drive a truck through,” Levitt said.
Trump could also use HHS to fix the unstable markets
Although Trump has been signaling that he wants to undermine the insurance marketplaces, his administration has also taken steps to shore them up. A 71-page rule released in February tightens up the requirements for enrollment in the marketplaces and includes measures that insurance companies have requested in order to prevent people from waiting to buy insurance until they have medical needs.
There are also waivers available to states that allow them to change how they run their state marketplaces. Alaska, which has had the most expensive health insurance in the country in previous years, was recently granted one so it can give money to insurers to pay for the most expensive enrollees. HHS has already begun promoting this option, so we should expect to see more waivers in the future.
Congress probably won’t do much of anything
It seems exceedingly unlikely that congressional Republicans, who couldn’t come together to repeal and replace the Affordable Care Act despite seven years of promises, will move to work on health care again in the near future.
And in a sense, Republicans have already done their part to cripple the ACA, by cutting funds meant to help insurers weather the stormy early years of the marketplaces. Democrats and insurers said they were essential because building marketplaces from the ground up and letting in people who had been previously locked out of insurance1 created a lot of uncertainty. Republicans said they were a bailout for the insurance industry and voted down millions of dollars in funding. Several insurers said they left the market as a result.
And it’s possible (though unlikely) that no one will do anything
There will still be winners and losers from the ACA, and the law will still have nontrivial problems. Premiums will keep rising for all kinds of insurance, as will deductibles, and the elephant in the room will continue to be the high cost of health care in the U.S. overall.
Will the insurance marketplaces fail, as Trump has repeatedly said they would? Various experts believe that the double-digit increases in premiums for 2017 would not have been repeated next year. It’s hard to say what these last few months of uncertainty will mean to insurers as they create market plans for 2018, which are due in July. Insurers are making decisions about next year’s premiums in the context of this week’s chaos. Imagine if you had to predict, right now, what the marketplace will look like next year. It would be like filling out your NCAA bracket in January. It’s easy to anticipate, however, that the uncertainty might cause premiums to be higher than they would have otherwise been, particularly if the Trump administration doesn’t send signals to insurers soon on what its intentions are with the law. Most insurance markets are stable and will continue to be, according to the Congressional Budget Office, but some, like Tennessee’s, could be in trouble without federal help.
Meanwhile, some states could take up the Trump administration on its invitation to expand Medicaid under a more conservative vision of the program, allowing components such as work requirements. Kansas is already debating whether to expand the program, and other states will likely follow suit now that it looks like the law is here to stay. If states don’t expand it,2 millions will remain stuck in the coverage gap, unable to get Medicaid but too poor to qualify for insurance subsidies on the marketplaces.
There are constant decisions to make when it comes to health care, and sitting them out would be a decision in and of itself. Congress may take a short breather from health care, and it isn’t likely to dominate headlines as Trump moves to reform taxes and take on immigration. But the future of the Affordable Care Act is far from certain.