In the last 24 hours, Trump has clearly undercut the Affordable Care Act, sending insurers and millions of Americans into uncertainty.
At 10:47 p.m. on Thursday, the Trump administration released a press statement saying it would stop paying insurance companies for subsidizing health care to low-income people, breaking an agreement between the White House and insurers. Just a few hours earlier that day, he had signed an executive order aimed to hobble the Affordable Care Act (ACA) marketplace, where about 22 million people buy private health plans.
Prior to Thursday’s late news, Trump had begrudgingly paid insurers for subsidies month-to-month, putting insurers and the public more broadly on edge. People who earn too much money to qualify for Medicaid but are still low-income — up to 250 percent of the federal poverty line (FPL) or about $30,000 for one person — receive the subsidy known as cost-sharing reductions (CSR).
Now, thanks to Trump’s actions, ACA enrollees could now see steep premium prices and potential insurer pullouts. The rest of the United States will see more federal dollars spent to clean up this mess. Fourteen states, who did not account for CSR cuts, could see premium hikes or insurer pullouts to account for the loss.
CSRs help many low-income people pay for out-of-pocket costs. The vast majority of people who enroll in the ACA also qualify for premium tax credits, another subsidy offered under current health law. They will be safeguarded by hikes because when premiums go up, so do subsidies. And despite Trump’s decision to end payments, people who receive CSRs will continue to get subsidized care. But it could end up costing the federal government a lot more.
Republicans claim that Trump’s actions on Thursday accomplish many of their goals on health care. In reality, they don’t seem to understand health law. Here are a series of lies Republicans have been making about CSR payments and current health law:
The claim: CSR payments are “Obamacare bailouts”
Attorney General Jeff Sessions said on Fox & Friends Friday that Trump decided to end these payments, because they agree that it’s the right of Congress to appropriate this money under the constitution. “These expenditures can not go on without Congress’ support,” Sessions said.
But CSR payments were written into the current health law. The law clearly says the federal government will reimburse insurers for providing subsidies to low-income people. It’s true that only Congress can appropriate funds, which is why there’s an ongoing lawsuit about this. But if Sessions’ issue with CSR payments is on constitutional grounds, then why didn’t the White House do something in January after Trump came into office?
Trump’s timing could now produce disastrous results, say health experts. Insurance companies finalized premiums late September, and open enrollment begins November 1st.
The curious thing about ending ACA subsidy payments is the timing: Right after insurers finalized 2018 premiums and before open enrollment.
— Larry Levitt (@larry_levitt) October 13, 2017
The Kaiser Family Foundation (KFF) predicted that insurers would react to Trump’s elimination of CSR payments by raising premiums, which in-turn raise premium tax credits (which again, the federal government pays for).
“We estimate that the increased cost to the federal government of higher premium tax credits would actually be 23% more than the savings from eliminating cost-sharing reduction payments,” writes KFF. “For fiscal year 2018, that would result in a net increase in federal costs of $2.3 billion.”
The Congressional Budget Office echoed this analysis, but went further and said the “federal deficits would increase by $6 billion in 2018, $21 billion in 2020, and $26 billion in 2026.”
The threat of eliminating CSR payments to insurers, a threat that began in February, requires the federal government to spend more. Insurance companies are risk averse and many accounted for Thursday’s nightmare scenario.
The claim: “skyrocketing premiums”
The White House decided to take action because “premiums have been skyrocketing.” Trump said this Thursday, before he signed his executive order. David Bossie, Deputy Campaign Manager to the Donald Trump presidential campaign, said this again on Fox & Friends Friday. This has been a main rallying cry against the ACA.
But the reality is this: for people who buy private plans on the individual and small group marketplace country-wide, 2018 premiums have increased largely because of the uncertainty created out of Washington. For example, D.C. Tennessee Blue Cross Blue Shield Chief Executive J.D. Hickey said in a letter they would need to price-in risk if Trump does not pay CSRs or enforcing the individual mandate. Many did.
Insurers and insurance commissioners in 36 states tacked on potential losses onto premiums, preparing for the kneecap. Although many ACA enrollees are protected from these hikes, 6.7 million people will not be protected. They have to pay for their insurance in full.
National Public Radio has a good story describing the people affected by the full price of rising premiums because they don’t qualify for subsidized care. Bob Laszewski,a health policy consultant, told NPR that the Affordable Care Act “is working very well for lower income people, but the Obamacare supporters missed the fact that if you’re raising a family of four on $100,000, you’re not rich. This is the… guy who remodeled your house, who drives a pickup truck and he’s wearing a Trump hat.”
The health law is flawed for having not accounted for people who make too much, but not enough to face steep prices. But the Trump administration’s action thus far do not help these people.
The claim: “zero options”
While signing his first executive order Thursday morning, Trump said that thanks to the ACA, many people will live in a county with no insurance provider.
That simply isn’t true. Insurers had until September 27th to pull out, and no one did. The ACA marketplace was riddled with bare counties at one point. But two companies, CareSource and Centene, covered 55 of the 82 counties that were once at risk of having no ACA coverage.
Now, given the last 24 hours, what Trump said could be true — all because of his own actions. There is an exit clause in the contract insurers signed when they looked to sell ACA-compliant plans. Insurance companies can leave the marketplace, with notice. For insurance companies to raise premiums, they’d need federal and state approval. So pulling out of the marketplace may be a reasonable option to avoid financial losses.
The onus is on Republicans, and people know this. It’s no longer just “Obamacare,” it’s current health law and the law affects people’s lives. Come open enrollment — which is slated to begin in 19 days — people may face unaffordable coverage, thanks to Trump.