By Paige Winfield Cunningham,
President Trump is pressuring Congress to sink parts of the Affordable Care Act. But now that the first attempt at a GOP health-care overhaul has failed, he must decide whether to throw the law a line.
The White House and Republican lawmakers are facing key decisions that could either improve the insurance marketplaces established by the ACA next year or prompt insurers to further hike rates or withdraw from those marketplaces entirely. Republicans had hoped to protect those with marketplace coverage while lawmakers replaced Obamacare.
But with that effort hitting a wall, Trump and his health-care decision-makers are in a bind: They can either let the current system fail and risk raising the ire of 11 million Americans who use the marketplaces, or help stabilize Obamacare and potentially make it harder for Republicans in Congress to abandon the law itself.
“It’s an awkward political environment, there’s no question about it,” said Lanhee Chen, a health-policy expert and former adviser to 2012 presidential candidate Mitt Romney.
Republican objections to the ACA naturally lead them away from assisting it, but the party now bears some responsibility for what happens to it, Chen added.
“The reality of this is Republicans will face some political repercussions for what happens to Obamacare,” he said.
Trump and other Republicans have long predicted a so-called death spiral for the state-based marketplaces set up under President Obama’s signature domestic achievement. Trump has often tweeted and said on the campaign trail that the law will “die of its own weight.” He shrugged off the recent failure of the GOP health-care bill by saying the law is “exploding” anyway.
“The best thing we can do, politically speaking, is let Obamacare explode,” Trump said in the Oval Office last month. “It’s exploding right now.”
The dire predictions have partially come true: Although some state marketplaces offered multiple plan options and only modest premium raises last year, many others provided only one plan choice and double-digit premium hikes. Next year’s outlook is still unclear, but it’s unlikely the marketplaces will suddenly attract a better mix of healthy enrollees to help lower costs.
If the marketplaces further deteriorate, Republicans may take the fall, surveys show. A recent Kaiser Family Foundation poll found that a majority of Americans will now blame Republicans, not Democrats, for marketplace problems, because the GOP spent the past seven years promising to fix and replace the system.
That reality is forcing Republicans, including Trump, to seriously consider a half-dozen actions that could help improve — or at least sustain — the marketplaces where Americans without employer-sponsored plans buy coverage.
“Looking at next year, if we imagine that the marketplace right now is, say, a C-minus, there are several things that need to be done to just preserve it at its C-minus level,” said Mike Adelberg, who under Obama directed the Center for Consumer Information and Insurance Oversight established at the Department of Health and Human Services.
There is a list of actions the administration must decide whether to take to keep the marketplaces humming, most of them through regulatory actions at the Health and Human Services Department or through the Internal Revenue Service.
The actions center on three programs: cost-sharing reductions, reinsurance and risk corridors. Cost-sharing refers to government subsidies to low-income Americans to help them pay for insurance. Trump threatened recently to let such subsidies lapse, but Democrats say they will shut down the government as part of the spending negotiations next week if the president follows through.
Administration officials and lawmakers are still deciding how to handle the issue. A White House spokesman said only that “no decisions have been made at this time.”
Reinsurance and risk corridors are two programs set up under the ACA to redistribute funds from insurers with healthier enrollees to insurers with sicker, more expensive customers.
The marketplaces could also be hurt or helped depending on whether the IRS enforces the ACA’s individual mandate to buy coverage and whether the administration enforces new, tighter rules around enrollment.
By pulling these levers, Congress and the administration could buy goodwill with insurers and also help shield themselves from criticisms that they’re ignoring the plight of those who have already seen the cost of their Obamacare plans rise dramatically. The marketplaces are already facing enough problems without Republicans trying to hurt them even more, said Gail Wilensky, who directed Medicare and Medicaid under George H.W. Bush.
“It is in no one’s interest to stir that pot more than has already been stirred, which is quite enough without anyone’s help,”Wilensky said.
Trump and his administration have given mixed signals on how they will approach the issue.
The Centers for Medicare and Medicaid Services issued tighter enrollment rules last week that shorten the sign-up period for marketplace plans, mandate people pay any outstanding premiums before new coverage begins and, if they’re trying to sign up outside the regular season, require them to prove they meet the qualifications. Theseare all changes that pleased insurers selling marketplace plans.
But the administration has also essentially stopped enforcing the individual mandate to buy coverage, which was supposed to be an important ACA tool to ensure that not just sick people, but also those who are healthy, buy coverage.
The outgoing Obama administration had said that starting this year, the IRS wouldn’t accept tax filings if people failed to indicate whether they had been insured. But under Trump, the agency has said it will continue the practice of accepting forms with that answer left blank, saying the decision meshes with the president’s executive order to reduce the burdens of the health-care law.
“Processing silent returns means that taxpayer returns are not systematically rejected, allowing them to be processed and minimizing burden on taxpayers, including those expecting a refund,” the agency said in a statement, referring to returns that don’t indicate the taxpayer’s health-care status.
It remains unclear whether the Trump administration and Republicans will provide extra payments to insurers, which insurers say are essential for helping them hold down premiums. The most pressing of those payments are cost-sharing reductions, which reimburse insurers for discounting extra insurance costs such as co-payments and deductibles for those with incomes lower than 250 percent of the federal poverty level.
The payments amount to about $7 billion next year. That’s far less than the $110 billion the federal government pays every year to subsidize premiums but still a significant amount for insurers who are overwhelmingly losing money on the marketplaces.
Congress must decide whether to provide those payments in a government funding bill it is taking up next week. Although top Republicans appear reluctant to withhold them, Trump has suggested they could be used as leverage to get Democrats on board with other GOP priorities, such as funding a border wall.
Insurers are also closely watching the administration for how it will treat the reinsurance and risk-corridor programs. They are due one more set of reinsurance payments before the program phases out, and it’s unclear whether the administration will pay all the money available or repay some of the funds to the U.S. treasury, as some Republicans have called for and as the law seems to direct.
A number of insurers have also sued for risk-corridor payments, which the federal government lacked sufficient funds to cover over the past few years. If they get those payments, some insurers might be more prone to continuing to sell marketplace plans next year.
“Hypothetically, if the administration was to settle on the risk corridors, it would make people feel a whole heck of a lot better about sticking around,” Adelberg said.