Home – Obamacare Lives, But Road Forward Is Rocky

Obamacare Lives, But Road Forward Is Rocky

After going through more resurrections than Jason Voorhees or Freddy Krueger, the GOP’s Congressional efforts to kill the Affordable Care Act finally seem to be dead. If so, the question becomes what happens now? While definitive answers are in short supply, there is no shortage of possible scenarios going forward for the historic health plan most Americans now refer to as Obamacare.


The most immediate concern for the law’s supporters is a threat by President Donald Trump to kill the law on his own, predominantly by withholding payment of federal subsidies to health insurers that are required under the ACA to help low-income enrollees pay for their coverage.


CSR supporters got a boost last Tuesday when the U.S. District Court of Appeals for the District of Columbia granted a motion filed by 16 Democratic attorneys general – led by California AG Xavier Becerra and New York AG Eric Schneiderman - that allows them to have a legal role in the House case. Becerra said he and his fellow AGs filed the motion because they believed the Trump administration would bow out of the suit, which was filed in 2014 against the Obama administration.


“You could smell it. You could read it in tweets,” Becerra told the Sacramento Bee. “When we intervened in May, we saw no one was really standing up for the millions of American families that rely upon the Affordable Care Act insurance plans to be able to send their kids to doctors and believe that they could afford to have their child in a hospital. The record is replete with evidence that the Trump administration is not willing to defend the Affordable Care Act.”


Even so, the Trump administration has continued making the payments as the case works its way through the courts. But in the aftermath of the failure in the Senate of several repeal and/or replace measures the president has threatened to stop making those payments, which he has called “bailouts.”  


But that could become problematic. Since health insurers are required to offer the subsidies no matter what, losing federal reimbursement would almost certainly guarantee they would raise rates everywhere else to compensate for the loss. Health insurers in a handful of states have in fact already announced double-digit rate hikes for 2018, spikes they say could be much lower if they receive assurance the CSR reimbursements will continue. Others have announced two sets of rates – one based on the continuance of CSRs and another without. Society of Actuaries fellow David Dillon said in an interview with NBC News that without the continued CSR payments insurers will have no choice but to impose big rate hikes.


“No carrier is going to take a 10 to 20 percent hit on a low-profit margin product” without raising rates, he said.


Cutting off the payments may also in fact be even more costly for the government. Because subsidies are based on a purchaser’s income, a spike in the premium cost means a corresponding increase in the subsidy. And while those subsidies are based on the cost of a so-called “silver plan” sold in their region, a spike in that plan could actually provide larger subsidies to those buying other plans as well. According to the actuarial consulting group Oliver Wyman, it is even conceivable that some consumers could end up obtaining their coverage for free.


Insurers also have another option: leaving the market altogether. Anthem Blue Cross of California, for instance, cited the uncertainty over the CSR payments in announcing last week it would be pulling out of 16 of the state’s 19 pricing regions, leaving consumers in almost half of all Golden State counties without Anthem offerings through their exchange. In a statement, Anthem president Brian Ternan said the company had no other choice.


“The market for these plans has become unstable. And with federal rules and guidance changing, it’s no longer possible for us to offer some of those plans,” he said.


Higher rates based on Trump’s refusal to pay the CSRs could also lead to more litigation. Last Tuesday California Insurance Commissioner Dave Jones (D) told reporters he would file suit against the Trump administration if the CSRs are withheld and health insurers like Anthem implement the higher rates. 


Trump is expected to announce his intentions as early as this week. But there is even more ongoing litigation to consider. Health insurers have filed numerous lawsuits over a different funding issue, claiming they are owed more than $8 billion over spending restrictions Republicans forced on so-called “risk corridors” during the Obama administration. Courts have to date split on suits filed in Illinois and Oregon (both are under appeal) with more suits still pending and many more expected to be filed if any are ultimately successful.


Amidst all this turmoil and uncertainty – and in spite of the President’s stated wishes - there is a growing movement within Congress to stabilize the roiling insurance markets. Sens. Patty Murray (D-Washington) and Lamar Alexander (R-Tennessee) announced the Senate Health, Education, Labor and Pensions committee would begin bipartisan hearings on ways to stabilize the Affordable Care Act marketplaces for 2018 when Congress returns from recess in September. Alexander told reporters the committee will from insurance commissioners, consumers, governors, insurance companies and health care experts, with a goal of having legislation in place by September 27, the date when insurers must contractually commit to participating in health benefits exchanges for 2018.


The committee won’t lack for suggestions on how to improve the current system.


In June the National Governors Association released a suite of ideas compiled by its Governors’ Bipartisan Health Reform Learning Network, made up of six Republican and seven Democratic governors. Those suggestions included obtaining greater input from governors on national health policy, stabilizing the insurance market (in part by funding the CSRs), implementing a streamlined process for obtaining Medicaid waivers for states that wish to customize their own expansion, allowing states to take action to lower prescription drug prices and emulating states like Alaska, Minnesota and Oregon which have created their own “reinsurance” funds to compensate insurers for the cost of their most expensive patients.


Others have suggested requiring insurers that want to participate in the Medicaid program to also offer policies through the health benefits exchanges. In short, no exchanges, no Medicaid. New York Gov. Andrew Cuomo (D) announced such a plan in June, which drew sharp criticism from health insurers like New York Health Plan Association President and CEO Paul Macielak. In a statement, Maceliak questioned the mandate’s legality and said it could make the insurance markets even more unstable.


In a June Washington Post editorial, author and health consultant Steven Brill further suggested dropping the ACA’s 3-to-1 rate ratio – which limits premiums for older people to no more than three times that of younger people - to the 5/1 pre-ACA ratio.  To compensate, he would offer larger subsidies to older people while also requiring younger folks a 50 percent discount for their first year of enrollment. Other suggestions include somewhat more arcane options like tort reform and antitrust reforms.


Other proposals abound, all with varying challenges. But for observers like Micah Weinberg, President of the Economic Institute at the Bay Area Council, a pro-business San Francisco advocacy group that supports the ACA, all solutions have a pretty obvious starting point.


“It’s not exactly rocket science that a solid fix would involve actually implementing the law as it was intended and to stop messing with its basic framework so we can get down to doing the hard work of addressing health care costs,” he says. “Messing with the basic framework and creating all this complexity only advantages those who want to maintain the status quo, which includes ever-rising health care costs.”


He says a recent proposal vetoed in Nevada Gov. Brian Sandoval (R) dubbed “Medicaid for All” makes some sense, though with all the usual “the devil is in the details” caveats. Although he doubts Medicaid is the right “chassis” for such a delivery plan in a state as large as New York or California, Weinberg calls it “the kind of incremental step that could make a difference.”


Given the hugely complex nature of the health care debate, any positive step to stabilize the system – even an incremental one – might be cause for celebration.