Drew Altman is president and chief executive of the Henry J. Kaiser Family Foundation. Larry Levitt is senior vice president of the Kaiser Foundation.
Republicans failed to repeal and replace the Affordable Care Act early Friday because of divisions within their own ranks, and because they tried not only to repeal and replace the ACA but also to cut and cap the Medicaid program, generating opposition from many red-state governors and their senators.
But most of all, they failed because they built their various plans on the false claim — busted by the Congressional Budget Office — that they could maintain the same coverage levels as the ACA and lower premiums and deductibles, while at the same time slashing about a trillion dollars from Medicaid and ACA subsidies and softening the ACA’s consumer protection regulations. Had they succeeded, they would have won a big short-term victory with their base, which strongly supports repeal, but suffered the consequences in subsequent elections as the same voters lost coverage or were hit with higher premiums and deductibles.
The challenge now is to stabilize the ACA’s insurance marketplaces. They are not in free fall or imploding, as President Trump suggests, and in most markets insurer profits have been improving. But these are fragile markets, especially in rural areas, and there are 38 “bare counties” where no insurer currently intends to participate in 2018. About 20 percent of marketplace enrollees have access to only one insurer, with the biggest problems in rural areas.
Insurers have submitted their initial rates to state regulators for 2018, and in some areas, the increases are steep. These companies are hedging their bets in the face of uncertainty emanating from Washington, and who can blame them? Now, with ambiguity over legislative action to repeal and replace the law lifted, the remaining uncertainty is whether Congress and the administration will take steps to stabilize markets or instead undermine them.
The immediate question is whether the administration will implement the law as intended or, in a sense, enact “skinny repeal” through administrative action. To stabilize the marketplaces, the administration would need to enforce the individual mandate as intended, commit to providing payments to insurers that compensate for reducing cost-sharing for low-income enrollees, and continue to provide outreach funds to support enrollment and consumer education activities.
Insurers need to finalize their 2018 rates soon and sign contracts with the federal marketplace by the end of September, so clarity on the $7 billion in cost-sharing payments to insurers is key. If they’re not made, insurers will need to raise premiums by about 19 percent, or they might just decide to exit the market entirely. These payments are subject to a lawsuit filed the House, so Congress might need to step in and assure that the payments will continue.
It is unclear whether Republicans and Democrats can work together on narrow legislation to stabilize the marketplaces without once again opening up a broader debate about the ACA. Republican bills included significant federal funds to help insurers cover the cost of high-risk patients, an idea that was also part of the ACA for its first three years of implementation. These reinsurance or risk-sharing pools would bring premiums down, especially for middle-class consumers not eligible for tax credits in the marketplaces, a primary goal for both parties.
Conservatives may be resistant to such spending, so Congress might also consider ideas they advocated in the recent debate, such as allowing premiums to be paid from health savings accounts. This, too, would provide premium relief to middle-class people buying their own insurance.
Still, only 7 percent of the American people get their insurance through the individual market. Finding consensus on the narrow issue of stabilizing this slice of the health insurance system should be possible if the larger, partisan debate about Obamacare is truly over.
It is also possible as the smoke clears on the health-care battlefield that more states will want to move forward with Medicaid expansions, now that federal funding for those expansions appears secure. Red states will likely seek a conservative stamp on their expansions, adding elements such as work requirements, drug testing, premium payments, time limits or testing private insurance models. Some of these policies will be controversial, and others may stretch what’s allowed under federal law too far. But some wrinkles will no doubt be necessary if Medicaid is to be expanded to the millions of people in the 19 holdout states.
But one thing is clear: 59 percent of the public says President Trump and the Republicans are now in control of government and are responsible for making the ACA work, and 74 percent says they should “do what they can to make the law work.”
It’s apparent what needs to be done to stabilize the marketplaces and who owns the ACA going forward. It’s no longer Obamacare; it’s now just the nation’s health insurance system.