Executive actions likely to disrupt ACA marketplaces
Frustrated by the GOP’s failure to repeal the Affordable Care Act, President Donald Trump last week took matters into his own hands. The administration announced two sweeping actions that could dramatically disrupt the insurance marketplace.
The administration on Thursday said it would stop making payments that help insurers offset the cost of reducing low-income people’s deductibles and copayments. Earlier that day, Trump signed an executive order aiming to ease ACA insurance rules and give individuals and businesses access to cheaper health plans with fewer benefits and consumer protections.
“Obamacare is a broken mess. Piece by piece we will now begin the process of giving America the great HealthCare it deserves!” Trump tweeted on Friday.
Industry leaders were critical of both steps, fearing that the changes will not only drive up insurance costs, but reduce coverage options for patients.
“We are alarmed by news of administration decisions that could create turmoil across insurance markets and threaten healthcare coverage for millions of working Americans, especially people who face financial hardships,” said Dr. Bruce Siegel, CEO of America’s Essential Hospitals.
The Trump administration had been maki ng the cost- shar i ng reduction payments on a month-by-month basis, creating uncertainty for insurers. With the payments in place, average deductibles for people with incomes below 150% of the federal poverty level fell from $3,609 to $255; for people with incomes between 150% and 200% of poverty, deductibles were $809. The cost for people between 200% and 250% of poverty was $2,904, according to the Kaiser Family Foundation.
The president and conservatives have called the $7 billion the government spent in subsidies this year a bailout, a claim the insurance industry denied. “These payments are not a bailout—they are passed from the federal government through health plans to medical providers to help lower costs for patients,” America’s Health Insurance Plans and the Blue Cross and Blue Shield Association said in a statement.
It’s widely anticipated that insurers will sue the government to recover the CSR funds promised by the ACA, as some insurers have successfully sued to recover ACA risk corridor funding. “Plans are definitely exploring that,” said said Margaret Murray, CEO of the Association for Community Affiliated Plans, which represents safety net insurers.
Meanwhile, the president’s goal to trim ACA coverage rules will have to be implemented through
The president and other conservatives have labeled the $7 billion the government spent in subsidies this year a bailout.
time-consuming rule-making, lessening the chance the changes will take effect in time for 2018. And experts said the executive order is likely to face legal challenges.
The administration is pushing to offer more affordable coverage to people if they band together through business and occupational associations. It could go a long way toward achieving the Republican goal of gutting ACA market rules and allowing consumers to buy stripped-down coverage in a less-regulated market.
But many insurance leaders, state regulators and policy experts fear that Trump’s order, depending on how it’s implemented, could drive up premiums and make coverage less available in the regulated individual market. That’s because healthier customers likely would move into the cheaper, leaner plans, leading insurers to raise rates for more comprehensive plans or exit the market.
The American Academy of Actuaries warned that the changes sought by Trump risk tilting the market in favor of plans with weaker benefits and solvency.
Trump’s order directs his administration to develop regulations within 60 days to expand coverage through low-cost, short-term health plans that are exempt from ACA market rules. The plans would not have to comply with requirements to cover 10 categories of minimum essential benefits or accept all applicants at the same rates regardless of pre-existing medical conditions. The o rder a pparently w ould a llow i ndividuals to buy such short-term plans lasting up to 364 days, rather than the current 90 days.
The new regulations could trigger legal challenges over whether they comply with the ACA and other statutes.
“Many commentators, including me, think the law should be changed to foster competition across state lines,” said Stuart Gerson, partner at Epstein Becker & Green. “But I don’t think you can solve this problem without changing the law.