Though Republicans in Congress have not passed a repeal of the Affordable Care Act, President Donald Trump has used a series of executive orders and directives in an attempt to peel back parts of the law.
Last week, the administration announced it would stop paying cost-sharing reductions to insurance companies for individual plans purchased through Healthcare.gov, sparking fears of insurance rate hikes just before enrollment season.
Official estimates show that losing cost-sharing payments could push some premiums up by 20 percent in states like Missouri. In the meantime, open enrollment for individual plans opens Nov. 1.
“The destabilizing impact that this will have on insurance markets is much greater than anything else we’ve seen so far,” said Joe Bottani, a partner at Arch Brokerage and the sitting president of the St. Louis Association of Health Underwriters. “My concern here is there’s a lot of politics on both sides being played, and it does dramatically impact people directly.”
More than half of Missourians who enroll in coverage on Healthcare.gov have plans subsidized by cost-sharing reductions, but they likely don’t know it. The federal payments are made directly to insurance companies to bring down deductibles and co-pays for people whose incomes fall below 250 percent of the federal poverty level, or about $61,500 a year for a family of four.
But the Affordable Care Act requires insurance companies to maintain cost sharing reductions, even if the federal payments cease. So insurers likely will recoup their losses by raising premiums for other individual plans; by an average of 20 percent next year and 25 percent by 2020, according to the Congressional Budget Office. Most consumers will be protected by rising premiums by income-based tax credits, which are a separate subsidy and remain unaffected. But an increasing burden on that stream of funding will end up costing the federal government more in the long run, the CBO posited — about $6 billion more in the next year alone.
Already, Bottani said, Missouri struggled to entice insurers to sell plans in all 115 counties. When insurance companies announced preliminary rates in September, consumers learned they would face a 35 to 42 rate increase for individual plans.
Bottani thinks insurers likely filed the rates under the assumption that cost-sharing subsidies would be revoked, so he doubts that Missouri insurers would hike premiums again on the cusp of enrollment season. But state law allows them to make changes up to 60 days before the plans go into effect.
So why would the president take an action that government agencies warn will raise premiums and cost money?
“Personally, I don’t see a logical decision here in reducing cost-share reductions... This could be an undermining motivation, to undermine the law and drive other action because of that,” Bottani said. “I think it’s a possibility it’s a negotiation technique, that this is a way to make the markets even more unstable in an effort to force some legislation that hasn’t been passed.”
The people who will bear the brunt of the changes, Bottani said, make too much to qualify for tax credits to lower their premium. And the decision fails to make any kind of dent in the root of the issue: rising health care costs.
“At some point we have to address the cost. A lot of regulations address who’s paying the bill, but the bottom line is costs continue to escalate at an unsustainable level,” Bottani said.
Revoking the cost sharing payments is the latest move by the Trump administration to curtail the Affordable Care Act through executive authority. Critics say the ongoing changes will discourage signups and further destabilize the markets. Grants to hire insurance “navigators” to help people sign up for individual plans have been cancelled, funding for advertising Healthcare.gov has been pulled, and the U.S. Department of Health and Human Services has scheduled outages of the website on Sunday mornings during the six week enrollment season.
On Tuesday, two U.S. senators announced a bipartisan bill that would reinstate the subsidies temporarily, but it’s unclear if it has enough support to pass.
A separate executive order by the president last week also exempted certain types of coverage, such as association health plans and short term plans, from Affordable Care Act rules. Though skimpier plans could be less expensive for people who don’t use a lot of health services, advocates worry it will pull healthier people out of the individual market for fuller plans, pushing prices up for people who are sick.
“The law is still in place, but there have been a lot of actions by the president and his administration to undermine the strength of the law and the benefits of the law,” said Nancy Kelley, program director for the Missouri Foundation for Health. “It seems like this would roll back the clock, on the protections from the ACA.”
Follow Durrie on Twitter: @durrieB