Trumpcare Just Snuck Through the Back Door
After 900 unsuccessful attempts to repeal the Affordable Care Act (that number may be slightly lower, it has been a long year), President Trump took two actions yesterday that could disrupt insurance markets. Don’t panic just yet . Your current coverage is still valid and you can still purchase Obamacare for the next year. But that bodes very bad news.
Here are two specific things that happened:
- The President signed an executive order directing agencies to authorize the sale of “associative health plans” on the market. These are meager insurance plans that provide very little coverage.
- The White House has announced that the government will stop paying subsidies that keep deductions low for low- and middle-income people on certain plans.
These actions, as well as those taken by the White House earlier this year, weaken the ACA so much that some health policy experts call the situation “synthetic withdrawal.” According to analyst Topher Spiro, here are just a few of what has happened so far:
- In January, a government order ordered agencies to relax the requirement for everyone to buy health insurance. (Everyone who buys insurance has low rates.)
- The IRS has ended the application of the tax penalty for refusing to buy insurance.
- Much of the information on health insurance and how to get it is missing from government web pages.
- In January (heck, it’s still January) Trump canceled most of the ads that encourage people to register in the final days of open registration. By some estimates, half a million fewer people signed up than expected .
- Trump has begun to threaten not to pay equity reduction payments, and some insurers have already decided to raise premiums for 2018 due to uncertainty (yes, this is more than they could otherwise ).
- The House of Representatives passed the version of what should be the cancellation of the ACA, confusing people as to whether the ACA is still in effect. (This.)
- Insurers are no longer required to cover birth control measures for plans sponsored by an employer with religious or moral objection to birth control.
- The open recruitment period this year will be half that of previous years, with downtime every Sunday morning. And his advertising budget has been cut by 90 percent .
- And now this.
Why CSR payments are a big deal
By canceling CSR payments, the government is shooting itself in the foot – it will actually cost them more in the long run – and this could make the insurance market a previously mythical death spiral into reality.
Here’s how. Part of the ACA deal is that insurers must offer plans with lower deductibles and co-payments for low- and middle-income people who buy a silver plan in the marketplace. A family of four can get this deal if their income is between $ 24,600 and $ 61,500.
These payments are called “cost savings” because deductibles and co-payments are how you “share” costs with your insurance company. According to the ACA, the government takes a portion of your bill by paying it directly to your insurance company so they can offer you the plan without raising your premiums.
(This is separate from the premium tax credit, which is given to you to lower your premiums.)
If the government stops paying CSRs, insurers will have to raise their premiums. The Kaiser Family Foundation calculates that premiums for the silver plan must be 19 percent higher to cover the difference. If you are eligible for premium tax credits, your payments will not change; the other subsidy, the premium tax credit, absorbs the difference.
And yes, all this costs public money. They will save $ 7 billion this year, but if the lack of corporate social responsibility persists for a decade, the government will spend (in the form of premium subsidies) $ 194 billion . The Congressional Budget Office also previously estimated that one million people would lose insurance in 2018 if CSR ceased operations in 2017.
It was the worst time to stop paying CSR
Here’s the weird thing about the timing: The decision is made before the start of the open recruitment, November 1, but after the insurance companies have already fixed their rates for 2018. Insurance companies and governments had to guess if CSRs would continue to flow. Some guessed correctly, some did not.
This means that insurers may not be able to raise premiums to cover their costs; instead, they may decide that they cannot offer insurance at the promised price and exit the market instead. The plan you were going to sign up for? Gone.
This raises an odd legal mystery: the law says the government “must” pay CSR, but Congress has never allocated money to do so. There is a litigation going on over this, currently at a kind of deadlock that allows the CSR to continue to be paid. The White House referred to this in its decision, saying the payments were illegal. However, the government’s deal with insurance companies was that they would pay CSR and insurance companies are tightening up. This means they can take legal action.
So what happens to the insurance you were about to buy? Who knows! Maybe insurers can get approval for an emergency price hike, or maybe they leave the market altogether before you can sign up. If they ditch the government exchanges after you sign up, you will lose the premium subsidy, which could dramatically increase your premiums . We really need to wait and see this.
Sarah Cliff summarizes the damage if all goes according to plan:
As a reminder, Trump is pursuing a policy of spending billions more on the government to insure fewer people.
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Stopping these payments increases premiums for everyone using Obamacare: seniors, young people, sicker and healthier people. And that puts the already fragile Obamacare market at greater risk of a last-minute mass exodus of health plans that assumed the government would pay those subsidies – and don’t think they could withstand the financial blow.
There is one possible way out here: Congress could fund the CSR to enable them to continue working. Maybe it’s time to call your Senators and Representatives!
The Association’s plans for health protection are also bad news
Earlier in the day, before the CSR bomb exploded, President Trump signed an executive order to legalize “association health plans” that do not comply with ACA rules for basic benefits (goodbye, maternity care) or keeping premiums low. for people with disabilities . pre-existing conditions.
These plans prey on young, healthy and stupid people. (Unfortunately, most of us are dumber than we think.) They are cheap, but provide very little protection. If you break your leg or give birth to a baby, you face huge hospital bills.
There is another big drawback: since only healthy, shortsighted people will sign up, this means that comprehensive insurance plans – the ones (almost) everyone has now – will no longer have a balanced pool of sick and healthy people. If you are in a plan with a sick group, your premiums will go up. Which, in turn, might make you say: hmm, maybe I would be better off with a cheap plan or no plan at all.
All this leads to higher premiums for real health insurance and discredits people choosing the insurance plans of the association. This is not speculation; these plans were legal in Tennessee through a strange loophole. Tennessee has some of the highest premiums in the country and is struggling to keep insurers in the market .
The executive order is also supposed to make the “out-of-state insurance” fantasy come true. The only problem is, if you live in Pennsylvania and you buy a Montana plan, the plan will not include Pennsylvania doctors or hospitals in your network. Insurers have already been allowed to sell plans statewide ; they are simply not interested.
New approved plans do not yet exist; an executive order simply instructs agencies to figure out what rules they can create to allow them to exist.
So … We’re still next year, right?
Good news, open recruitment starts on November 1st! You can still sign up for insurance. Prices are fixed, at least in theory. Your insurance company probably won’t go bankrupt or leave the market. Good luck?