On Friday night the administration issued an executive order giving Trump administration appointees enormous flexibility in modifying how the Obamacare individual health insurance market works.
Specifically, President Trump has given his administration the power “to waive, defer, grant exemptions from or delay the implementation of any provision or requirement of [Obamacare].”
The administration has not been clear about just exactly what it is they now want to do.
Their action raises a basic question: Why grant this flexibility if it is not their intent to materially change the way Obamacare works in the individual health insurance market?
Every Republican I know of thinks that Obamacare is failing and unstable––particularly because the plans it offers consumers are especially unattractive to working class and middle class people who can only buy individual health insurance that complies with Obamacare rules. Maybe some of these Republicans know this because that is what I have been saying for three years.
If the Republicans are able to repeal and replace Obamacare, in a best case scenario, they won’t be able to have the new program up and running any sooner than 2019––and that could easily slip to 2020. First, they have to repeal Obamacare. Then they have to replace it by getting at least eight Democrats onside in the Senate. Then the Trump administration and/or the 50 states will have to write the new rules for the new marketplace. Then the health plans will have to develop and price the new plans. Then the states will have to approve them for sale.
So, there is no way, under the best of circumstances, the new scheme will be ready until 2019. Meaning Obamacare will have to operate for the rest of 2017 and at least for 2018.
There are a number of potential steps the Trump administration could take, as the order describes it, to modify “any provision…that would impose a financial burden on individuals, families…”
These could include:
Refusing to enforce the very unpopular individual mandate’s penalty for not purchasing health insurance.
Leaving the mandate and its penalty in place but dramatically increasing the Obama administration’s “hardship” exemptions in the face of the expensive high deductible plans people now face.
Enabling health insurers to offer limited duration health insurance plans that they are still allowed to medically underwrite. The Obama administration had intended to eliminate these policies that provided more than three months of coverage. By bringing these policies back to the market, a parallel market of cheaper plans attractive to the healthy could be created thereby pulling healthy consumers out of the Obamacare pool.
The short of it is that the Trump administration, by trying to bring relief to some consumers, could just as easily further undermine the already shaky Obamacare risk pool.
If the pool were to be made worse than it is now, health plans would be challenged to figure out how they could remain in a market already intended for demolition once the new replacement plan was ready in 2019.
In 2017, 31% of counties have only one insurer and 62% of counties have two or fewer insurers in the Obamacare insurance exchanges.
Republicans need to be careful. Making an already fragile insurance exchange market even worse could easily lead to some markets having only one or no health plans selling individual health insurance in 2018. Even if a health plan chooses to stay, a less stable market could lead to even higher prices and deductibles and even narrower provider networks for consumers.
The Republicans have promised to repeal Obamacare, replace it with something better, and make sure no one is hurt in the transition.
But if you take this new executive order to its logical conclusion, doing things like killing or easing the individual mandate or allowing for cheaper medically underwritten plans can’t have any effect other than making an already fragile Obamacare risk pool worse. Making the pool worse can only lead to fewer consumer choices, or no choices, or higher rates and bigger out-of-pocket expenses for those who remain in the Obamacare risk pool.
And, remember, about half of those in the Obamacare compliant individual health insurance market are not subsidized. This is not just about poor people getting subsidies. It is also about the health insurance market millions of middle class consumers participate in––many of them Trump voters.
How can Republicans agree with me that Obamacare is unstable and getting worse and think they can make it even more unstable in the transition and people won’t get hurt?
On Tuesday, the Senate Finance Committee will hold a hearing on Congressman Tom Price’s nomination to be Secretary of Health and Human Services. Senators should be asking Mr. Price if he intends to stabilize or destabilize the already fragile Obamacare risk pool during the transition to the new health insurance program President Trump has promised us.
I suspect that had there been no ACA, people who had policies they “lost” would be paying much more money for much less coverage anyway.
Here are a few data points.
1. My wife’s grandfathered plan has gone from $250 per month to $333. That is in the individual market with a Blue.
2. A somewhat younger friend also in the individual market with the Blue who could not (or did not) grandfather her pre ACA plan has an ACA premium of $650 per month…..and is ineligible for subsidies as she makes too much money.
3. A third friend’s ACA plan is $700 per month (platinum I recall he said) and his insurance company gets his subsidy of $450 per month…so his out of pocket is quite low as long as he doesn’t need care as his deductible is high He discovered as long as he kept his annual income below $62,000 per year the subsidy applied. So he is diligent about keeping his income low.
All examples in one state. And all are Blues…I think the only remaining carrier.
Paul do you have any theories for why that is? Is your wife’s grandfathered plan heavily underwritten, so a plan that wouldn’t be available to someone with pre-existing conditions? Does your wife’s plan have a lifetime maximum or significant benefit gaps? The risk pool for ACA plans isn’t as broad as it needs to be but that alone doesn’t explain the gaps that you’re talking about.
Would you be in favor of leaving Obamacare untouched and offering people the choice of Medi-Buck-type* vouchers if they are in need of subsidies or Obamacare? Viz. we would have–for awhile–two competing programs?
It would be conceptually simple to do this.
*I’m thinking of a type of voucher initially granted based upon income, but further granted based upon income + medical need + wealth.
Just how would this voucher work? Would the user be able to by a cheaper policy without caps, without pre-exist inclusion, with present pre-defines benefits, with lower deductibles and co-pays? Where does the math exist for this?
I was just thinking that they would be used for services only, not insurance. Actuaries might see that they were budget neutral in amount: total subsidies given in exchanges/enrollee=total vouchers equivalent given/enrollee. OOPs would be the same.