Trump to end health sub­si­dies

Or­der signed to fur­ther erode tenets

Northwest Arkansas Democrat-Gazette - - FRONT PAGE - In­for­ma­tion for this ar­ti­cle was con­trib­uted by Ri­cardo Alonso-Zaldivar of The As­so­ci­ated Press; by Amy Gold­stein of The Wash­ing­ton Post; by Robert Pear and Reed Abelson of The New York Times; and by Natasha Rausch and Zachary Tracer of Bloomberg News.

WASH­ING­TON — Pres­i­dent Don­ald Trump is plan­ning to end key fed­eral sub­si­dies paid to in­sur­ance com­pa­nies un­der the Af­ford­able Care Act, his ad­min­is­tra­tion’s most dras­tic move yet to over­haul the health care law af­ter Repub­li­cans in Con­gress failed to re­peal and re­place his pre­de­ces­sor’s sig­na­ture leg­isla­tive ac­com­plish­ment.

The cost-shar­ing re­duc­tion pay­ments help cover de­ductibles and other out-of-pocket costs when low-in­come peo­ple use their Af­ford­able Care Act in­sur­ance plans. They’re paid monthly to in­sur­ers, and are es­ti­mated at $7 bil­lion in to­tal this year.

The le­gal­ity of the pay­ments is the sub­ject of a le­gal dis­pute, and health in­sur­ers have pushed

Con­gress to ap­pro­pri­ate the funds. Con­gres­sional ac­tion would ef­fec­tively end the risk of the pres­i­dent end­ing them uni­lat­er­ally.

In a state­ment, the White House said the Depart­ment of Jus­tice and the Depart­ment of Health and Hu­man Ser­vices both con­cluded that there is no ap­pro­pri­a­tion for cost-shar­ing re­duc­tion pay­ments to in­sur­ance com­pa­nies un­der the Af­ford­able Care Act.

“The bailout of in­sur­ance com­pa­nies through th­ese un­law­ful pay­ments is yet an­other ex­am­ple of how the pre­vi­ous ad­min­is­tra­tion abused tax­payer dol­lars and skirted the law to prop up a bro­ken sys­tem,” the White House said in the state­ment. “Con­gress needs to re­peal and re­place the dis­as­trous Oba­macare law and pro­vide real re­lief to the Amer­i­can peo­ple.”

Still, any ac­tion to end the pay­ments may face le­gal ob­sta­cles of its own. Sev­en­teen states and the District of Columbia won the right in Au­gust to de­fend the pay­ments in a court case. Politico ear­lier said the or­der could come as early as to­day.

In­sur­ers in many states have al­ready boosted their rates for 2018 to ac­count for the risk that the cost-shar­ing pay­ments won’t be made, af­ter months of threats from the Trump ad­min­is­tra­tion to cut them off. That will re­duce the fi­nan­cial im­pact on in­sur­ers next year, though how they’ll re­spond for the rest of 2017 wasn’t im­me­di­ately clear.

Sen­ate Mi­nor­ity Leader Charles Schumer and House Demo­cratic Leader Nancy Pelosi re­acted Thurs­day night to the re­ports that Trump planned to stop the cost-shar­ing pay­ments.

The Democrats said Trump “has ap­par­ently de­cided to pun­ish the Amer­i­can peo­ple for his in­abil­ity to im­prove our health care sys­tem.” They added that “mil­lions of hard-work­ing Amer­i­can fam­i­lies will suf­fer just be­cause Pres­i­dent Trump wants them to.”

The de­ci­sion fol­lows Trump’s sign­ing Thurs­day of an ex­ec­u­tive or­der that tells fed­eral agen­cies to con­sider a num­ber of steps that could erode many of the core tenets of Obama’s health law.

In the or­der, the pres­i­dent asked reg­u­la­tors to craft rules that would al­low small busi­nesses to band to­gether to buy in­sur­ance across state lines, let in­sur­ers sell short­term plans cur­tailed un­der the Af­ford­able Care Act, and per­mit work­ers to use funds from tax-ad­van­taged ac­counts to pay for their own cov­er­age.

The White House and al­lies por­trayed the pres­i­dent’s move as wield­ing ad­min­is­tra­tive pow­ers to ac­com­plish what con­gres­sional Repub­li­cans have failed to achieve: fos­ter­ing more cov­er­age choices while tear­ing down the law’s in­sur­ance mar­ket­places.

While the ad­min­is­tra­tion char­ac­ter­ized the or­der as a way to drive down ris­ing pre­mi­ums and ex­pand cov­er­age to more Amer­i­cans, crit­ics said it would un­der­mine ex­ist­ing mar­kets by en­cour­ag­ing health­ier peo­ple to buy skimpier plans. That would likely lead pre­mi­ums for Af­ford­able Care Act plans, which of­fer more en­com­pass­ing cov­er­age re­gard­less of a per­son’s health his­tory, to surge.

Other ex­perts said Trump’s pro­pos­als ap­pear to be mod­est and would have lim­ited im­pact.

The steps the pres­i­dent out­lined Thurs­day will take months for the fed­eral bu­reau­cracy to fi­nal­ize in reg­u­la­tions. Ex­perts said con­sumers should not ex­pect changes for next year.

Trump said that Thurs­day’s move “is only the be­gin­ning.” He promised “even more re­lief and more free­dom” from Af­ford­able Care Act rules. And although lead­ing GOP law­mak­ers are ea­ger to move on from their un­suc­cess­ful at­tempts this year to abol­ish cen­tral facets of the 2010 law, Trump said that “we are go­ing to pres­sure Con­gress very strongly to fin­ish the re­peal and re­place of Oba­macare.”

Democrats de­nounced Trump’s or­der as more “sab­o­tage” while Repub­li­cans called it “bold ac­tion” to help con­sumers. A ma­jor small-busi­ness group praised the pres­i­dent, while doc­tors, in­sur­ers, and state reg­u­la­tors said they have con­cerns and are wait­ing to see de­tails.

“We want to make sure that all the con­sumer pro­tec­tions are there and in­cluded,” said Michael Munger, pres­i­dent of the Amer­i­can Academy of Fam­ily Physi­cians.

Many of the new in­sur­ance prod­ucts could be ex­empt from re­quire­ments of the Af­ford­able Care Act that Repub­li­cans say have con­trib­uted to sharp in­creases in pre­mi­ums but that sup­port­ers say have cre­ated a base line of care that has pro­tected con­sumers from “junk in­sur­ance.”

Ad­min­is­tra­tion of­fi­cials said they had not yet de­cided which fed­eral and state rules would ap­ply to the new prod­ucts.

Trump’s or­der could even­tu­ally make it eas­ier for small busi­nesses to band to­gether and buy in­sur­ance through new en­ti­ties known as as­so­ci­a­tion health plans, which could be cre­ated by busi­ness and pro­fes­sional groups. A White House of­fi­cial said th­ese health plans “could po­ten­tially al­low Amer­i­can em­ploy­ers to form groups across state lines” — a goal cham­pi­oned by Trump and many other Repub­li­cans.

Those “as­so­ci­a­tion health plans” could be shielded from some state and fed­eral in­sur­ance re­quire­ments. Re­spond­ing to con­cerns, the White House said par­tic­i­pat­ing em­ploy­ers could not ex­clude any work­ers from the plan, or charge more to those in poor health. Self-em­ployed peo­ple might be able to join.

But state of­fi­cials pointed out that an as­so­ci­a­tion health plan can set dif­fer­ent rates for dif­fer­ent em­ploy­ers, so that a com­pany with older, sicker work­ers might have to pay much more than a firm with young, healthy em­ploy­ees.

“Two em­ploy­ers in an as­so­ci­a­tion can be charged very dif­fer­ent rates, based on the med­i­cal claims filed by their em­ploy­ees,” said Mike Krei­dler, state in­sur­ance com­mis­sioner in Wash­ing­ton.

The White House plan also in­cludes eas­ing cur­rent re­stric­tions on short-term poli­cies that last less than a year — an op­tion for peo­ple mak­ing a life tran­si­tion, from re­cent col­lege grad­u­ates to early re­tirees.

Loos­en­ing the rules on short-term plans would cre­ate an­other op­tion out­side of the Af­ford­able Care Act by al­low­ing peo­ple to buy low­cost, tem­po­rary plans in­stead of more com­pre­hen­sive, longer-term cov­er­age.

Such short-term plans typ­i­cally pro­vide lim­ited cov­er­age that doesn’t pay for ma­ter­nity care, ad­dic­tion treat­ment or other ar­eas held to be crit­i­cal ben­e­fits un­der Obama’s law. The plans also of­ten have an­nual life­time lim­its and can ex­clude sick in­di­vid­u­als from buy­ing them.

Un­der the Af­ford­able Care Act, th­ese plans don’t meet the in­di­vid­ual man­date of hav­ing health in­sur­ance, so buy­ers are sub­ject to a tax penalty.

Trump’s ac­tion also is in­tended to widen em­ploy­ers’ abil­ity to use pre­tax dol­lars in “health re­im­burse­ment ar­range­ments” to help work­ers pay for any med­i­cal ex­penses, not just for health poli­cies that meet Af­ford­able Care Act rules.

“This could be much ado about noth­ing, or a very big deal, depend­ing on how the reg­u­la­tions get writ­ten,” said Larry Le­vitt of the non­par­ti­san Kaiser Fam­ily Foun­da­tion. “The in­tent of the ex­ec­u­tive or­der is clear, to dereg­u­late the in­sur­ance mar­ket…it’s un­clear how far the ad­min­is­tra­tion will ul­ti­mately go.”

Le­vitt said as­so­ci­a­tion health plans and short-term health in­sur­ance poli­cies could be de­signed to lure health­ier peo­ple away from the state in­sur­ance mar­kets cre­ated by Obama’s health law. They’d of­fer lower pre­mi­ums to those will­ing to ac­cept fewer ben­e­fits. That would drive up costs for con­sumers in the al­ready-shaky Af­ford­able Care Act mar­kets, mak­ing them less at­trac­tive for in­sur­ers and rais­ing sub­sidy ex­penses for the govern­ment.

But econ­o­mist Dou­glas Holtz-Eakin, pres­i­dent of the cen­ter-right Amer­i­can Ac­tion Fo­rum, said it looks like the im­pact will be on mar­ket niches, not the broad land­scape of health in­sur­ance.

“This just isn’t a rev­o­lu­tion to in­sur­ance mar­kets,” he said. “It’s a pol­icy change.”

In a state­ment ear­lier Thurs­day, Pelosi said, “The Amer­i­can peo­ple over­whelm­ingly re­jected Trump­care, but Pres­i­dent Trump is still spite­fully try­ing to sab­o­tage their health care, drive up their costs and gut their cov­er­age.”

But Sen. Rand Paul, R-Ky., called Trump’s ac­tion “one of the most sig­nif­i­cant free mar­ket health care re­forms in a gen­er­a­tion” that would “re­duce govern­ment in­ter­fer­ence and pro­vide more af­ford­able health care op­tions to ev­ery­day Amer­i­cans.”

Paul at­tended the White House cer­e­mony and was hon­ored by Trump with a pen used to sign the ex­ec­u­tive or­der. Paul was among the hand­ful of GOP sen­a­tors whose op­po­si­tion scut­tled the most re­cent ef­fort to re­peal Obama’s law. Con­gres­sional Repub­li­cans have moved on from health care, and are now fo­cus­ing on tax cuts.

The New York Times/DOUG MILLS

Pres­i­dent Don­ald Trump, sur­rounded by small-busi­ness own­ers and oth­ers, signs an ex­ec­u­tive or­der Thurs­day at the White House in­struct­ing of­fi­cials to re­write fed­eral rules on health in­sur­ance cov­er­age.

AP/EVAN VUCCI

Sen. Rand Paul, R-Ky., stands with Pres­i­dent Don­ald Trump af­ter Trump signed an ex­ec­u­tive or­der on health care rules Thurs­day. Paul called Trump’s ac­tion “one of the most sig­nif­i­cant free mar­ket health care re­forms in a gen­er­a­tion.” Trump gave Paul the pen he used to sign the or­der.

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