The Making of the Deal (Or Not)
So, now we have a bi-partisan deal laid out by Lamar Alexander (Rep-Tenn) and Patty Murray (Dem-Wash). But what does it mean and is it too little too late to save the Affordable Care Act (ACA) even if the Republican Congress gets around to putting it into action? Here's the gist:
1. Cost-sharing reduction payments would be funded through 2019. As a reminder, these are payments to insurers to help reduce out-of-pocket expenses for low- and middle-income people. The loss of these payments to insurers is estimated to total $7 billion dollars this year and $10 billion next year. Without them insurers will face huge financial losses this year with subsequent dramatic increases in premiums.
Of note, even without the subsidies, the poorest will still be protected from premium increases by tax credits, required under the ACA. (This will result in a much higher burden on taxpayers in general.) People whose incomes are too high for these credits -- for example a single person making $65,000 or a family of four making $120,000 -- will face a dramatic increase in premiums.
2. Before his happy departure as Secretary of Health and Human Services, Tom Price had slashed the budget for advertising and providing information on how people can enroll in the insurance exchanges. Under the new bi-partisan deal, this program would be re-funded.
3. The deal would allow anyone to purchase a catastrophic plan with a high deductible. Currently this is limited to people under age 30. The risk with this provision is that this will draw healthier people out of the insurance exchanges.
4. States would have more flexibility to change some of the ACA requirements, although coverage for essential benefits and preexisting conditions would still be protected, at least on paper. To refresh your memory, here's a list of the essential benefits.
This deal is an agreement in concept only. It isn't clear if the Senate would even turn it into a bill. Some Democrats believe that the best they can hope for is to fold it into the spending bill at the end of the year.
Of note, if Congress decides to fund the CSR payments, Trump may (intentionally or inadvertently) have done a good thing in the long run. Obama had set them up as an executive decision, which made their Constitutionality questionable and so they were vulnerable from the start. If Congress can actually get its two heads together on this, then it would provide some ongoing support for the ACA.
What Happens Now With CSR Payments, Deal or No Deal
Even if Congress decides to fund CSR payments, it's probably too late for insurers to lower their rates for 2018. Medical costs are still out of control, and after the passage of the ACA more sick people than anticipated gained coverage. So premiums would be increasing, no matter what.
However, before Trump's order to eliminate CSR payments, there's evidence that the insurance market was beginning to stabilize. According to a number of experts, premium increases in 2018 would fall between between 5% and 10%, plus an additional 3% increase from an insurance tax. After Trump's announcement insurers estimated the increase at an average of 40%. https://www.vox.com/policy-and-politics/2017/10/18/16458316/obamacare-premiums-trump
Other Trump Actions That Can Add to the ACA Deterioration
In addition to cutting CRS funding, the Trump administration is threatening to end the individual mandate, which would take additional younger healthy people out of the insurance market.
And, to make this worst, he recently announced allowing organizations with similar missions to form associations through which members can purchase insurance – even across state lines. This puts them under the category of large-group plans, which makes them exempt from ACA requirements covering essential benefits, which apply only to individual and small group insurance policies.
He also lengthened the period of a skimpy short-term limited insurance plan so that people could be covered under it for a year, instead of just three months. These plays are totally exempt from ACA regulations. They don't have to cover essential benefits and can deny coverage to people with pre-existing conditions.
The result, again, even more healthy people will be drawn to these plans that will be cheaper and provide less coverage to those enrolled under them. So far, these executive orders don't have any effect and won't without HHS (now Priceless) making the regulatory changes to achieve them, which could take months.
Summarizing the Effects of Executive Actions and the Bi-Partisan Deal
The Obama administration had planned on a broad competitive market that included enough healthy people to keep rates low, but the GOP and Trump administration have done everything they can to sabotage this. So, let's summarize all the potential changes, including those in the bi-partisan deal and Trump's orders that will alter enrollments so that healthier people will be drawn out of the exchanges, leaving the sick to face dramatically higher premiums:
· The dumping of CSR funding
· Getting rid of the individual mandate
· Allowing associations with loosely grouped memberships that allow fewer benefits than required by the ACA.
· Lengthening the duration of skimpy short-term policies that also do not require essential benefits
Putting all of these efforts together will push the healthy out of the exchange leaving the sick to face exorbitant rates, restoring the Dark Ages of American Healhcare that the GOP are so comfortable with.
And, one more thing.
A dark undercurrent of resentment is running through the country that the GOP is taking advantage of and the Democrats are ignoring. Insured workers and those insured through the exchanges are all experiencing premium increases, limited physician networks, and higher out of pocket payments. In other words, although the rate of those who are insured has gone up since the ACA, so has the rate of underinsured. At the same time, under the ACA in the expanded states, Medicaid recipients still have rich benefits with limited or no out-of-pocket payments. (It should be noted that in the non-expansion state, Medicaid is not available at all to most of the very poor single adults.)
Although any medical payments can still be a burden for people at or below the poverty line, the perception among many among the employed middle class is that the very poorest have a health and financial advantage over the hard-working American.
This is creating a dangerous disparity with ugly results, but we have to listen to the people who are expressing their unhappiness. "I'm paying through the nose every month and I wasn't able to see the doctor I wanted, while that dead beat down the road gets to see a shrink for free." This perception will only get worse if Trumps initiatives go into effect. People with the lowest income will still be protected, while those with higher incomes (but who are by no means wealthy) will face extreme increases in rates.
Patching up the ACA isn't good enough. Until we have a system that has consistent base-line benefits, a single income-based premium for people of any age, and a method of controlling our costs we will not have workable health care.