With the failure of several bills in the Senate to repeal or replace the Affordable Care Act (ACA), the effort to significantly remake the 2010 health law is apparently on hold, if not dead. This is a dramatic turn of events that few anticipated when Republicans took control of the White House and Congress after 7 years of vowing to repeal the ACA.
So, now what?
For the foreseeable future, all the ACA’s benefits and requirements stand—expanded Medicaid coverage for 11 million people, low-income adults; premium tax credits for about 9 million low- or middle-income people buying their own insurance; guaranteed insurance for people with preexisting conditions, and requirement that people buy insurance or pay a penalty.
The biggest question at this point is whether the Trump administration will pivot towards trying to make the law work, after the president said he might just “let Obamacare fail” to gain negotiating leverage in the repeal and replace debate.
This is without a doubt an awkward situation for President Trump and Secretary of Health and Human Services Tom Price. They have bitterly criticized the ACA, and that was at some level understandable during the high-stakes Congressional debate. But now that the debate is over for the time being, the Trump administration is left running a government responsible for implementing the law.
What would it look like for the administration to run the ACA effectively?
Most immediately, open enrollment for the ACA’s marketplaces begins November 1, and insurers have to decide by late September whether they will participate. There are a host of actions the administration could take to make it successful.
Provide Clarity Around the Rules: There is still uncertainty as to whether the administration will enforce the individual mandate and continue to make $7 billion in cost-sharing subsidy payments to insurers—which have been in limbo because of threats from the administration to cut them off and a lawsuit brought by the House of Representatives challenging the authority to make them. This uncertainty is leading insurers to propose bigger premium increases than necessary to cover the anticipated growth in medical care expenses or, in some cases, to pull out of the market entirely. If the cost-sharing payments are stopped, the Kaiser Family Foundation (KFF) estimates that insurers would have to raise premiums by an additional 19% to offset the losses.
Maintaining Outreach and Consumer Assistance: There is enormous churn in the individual insurance market as people get or lose jobs with health benefits and see their incomes rise or fall. Millions of new people need to sign up for insurance each year just to maintain steady enrollment. Importantly, any decrease in enrollment is likely to be disproportionately among healthy people. So far, the administration has mostly taken steps to pare back outreach activities, cancelling ads at the conclusion of open enrollment for this year, and recently ending contracts for consumer assistance activities. It seems unlikely that President Trump will promote ACA enrollment on an online video show like “Between Two Ferns,” as President Obama did. However, a basic level of outreach is key to making the market function.
Encouraging Insurers to Participate: The ACA represents a market-based approach to health coverage, and insurers need to participate to make it work. The number of insurers selling in the marketplaces has dropped somewhat, as some carriers found they couldn’t compete and others were concerned that not enough healthy people were signing up to maintain a balanced risk pool. However, a recent KFF analysis suggests that insurers are doing much better financially this year in the individual market, following substantial premium increases. Still, there are currently 17 counties at risk of having no insurers participating in the marketplace for 2018 (out of a total of 3143), and that number could grow if uncertainty about cost-sharing payments and individual mandate enforcement persists. If there are no marketplace insurers in a county, there is no way for enrollees to access premium tax credits, and many would likely end up uninsured. The Trump administration has generally characterized insurer exits as a sign that the ACA is failing, rather than encouraging carriers to expand their service areas to fill in bare counties.
There are also ways the Trump administration can tweak the ACA through its executive powers, while still making a good faith effort to implement the law effectively.
In particular, the administration can give states flexibility to experiment through Medicaid waivers and ACA waivers under section 1332 of the law. These waivers have certain restrictions. For example, section 1332 waivers must be budget neutral for the federal government and provide coverage that is at least as comprehensive and affordable. And, certain provisions cannot be changed through waivers, such as guaranteed insurance for people with preexisting conditions and community rating (offering insurance at the same price regardless of a person’s health status). However, these waivers provide an opportunity to create a more state-based approach, which was a key goal for Republicans in the recent health care debate.
Congress could be pivotal, as well. Appropriation of funding for the cost-sharing payments to insurers could remove any ambiguity that they will be paid. Also, even if uncertainty about the cost-sharing payments and individual mandate is resolved, there are still pockets of the country, particularly in rural areas, where the individual insurance market is fragile. An infusion of federal funding to help cover the medical expenses of high-cost patients could lower premiums and bring stability to those markets. Sen Lamar Alexander (R, Tennessee), chair of the Senate Health, Education, Labor, and Pensions Committee, has announced plans to hold bipartisan hearings in early September with a goal to quickly pass legislation.
There are also potential political consequences to just allowing—or, in fact, pushing—the ACA to fail at this point. According to KFF polling, 59% of the public believes that the president and Republicans in Congress are now responsible for any ACA-related problems moving forward. So in much of the public’s view, particularly now that the Congressional debate has stalled, Obamacare may have become Trumpcare.