On Thursday, Oct. 12, President Donald Trump made two decisions that signal significant changes to healthcare. In the morning, he signed an executive order that paved the way for agencies to look at certain issues including insurance companies selling products across state lines, the possibility of small businesses (and maybe even groups of individuals) forming associations to create a larger risk pool similar to larger corporations to buy insurance, and expanding temporary insurance plans (which don't meet ACA criteria and typically offer fewer benefits and exclude coverage for pre-existing conditions but cost less) to make them more available for longer periods of time to individuals purchasing coverage on their own. Those who purchase insurance products that don't meet ACA coverage mandates continue to be subject to a tax penalty at the end of the year. Although the president has signaled on multiple occasions that he would like to see the penalty go away, not be enforced or include more exceptions.
In the evening, the president announced he was doing away with the cost-sharing subsidies paid to insurance companies to help them lower deductibles and help offset co-pays for lower income individuals. This is not the same as the premium subsidies built into the ACA for those who buy insurance through the marketplace. Most who purchase through the exchange will not see a difference in cost. However, insurers will have to make a decision as to whether they will stay in the ACA marketplace or exit, which could leave individuals with few or ... in some cases ... no options.
Another concern is that the proposed changes might lead more healthy people to abandon ACA-compliant plans in favor of cheaper plans with fewer benefits, leaving the exchanges with sicker, more costly patients on the rolls. High income individuals, who do not receive tax subsidies for purchasing coverage, might also see higher premium prices. It should be noted that the Affordable Care Act remains the law of the land so these are actions that could be taken outside of the body of the law. Although the the federal agencies looking at the changes suggested by the executive order have been working on options, the process is subject to normal rule-making and public comment periods, which means it is unlikely there will be a clear directive in the next few months. Additionally, it is anticipated there will be legal challenges to the cost-sharing subsidies for deductibles.
The announcements come just a couple of weeks before the shortened 2018 open enrollment period launches on Nov. 1.
David O. Barbe, MD, President, American Medical Association, on CSR Payments
"The AMA is deeply discouraged by the Administration's decision last night to end the cost sharing reduction (CSR) payments to insurers, which are used to reduce deductibles and co-payments for low-income enrollees in the marketplace plans created under the Affordable Care Act (ACA). Republicans and Democrats alike have expressed concern about the affordability of healthcare coverage under the ACA, and bipartisan efforts have been underway in Congress to provide the specific authorization and funding for CSR payments to address the legal issues involved. This most recent action by the Administration creates still more uncertainty in the ACA marketplace just as the abbreviated open enrollment period is about to begin, further undermining the law and threatening access to meaningful health insurance coverage for millions of Americans. Our patients will ultimately pay the price. We urge Congress to accelerate its efforts to reinstate these payments before further damage is done."
Tom Nickels, Executive Vice President, American Hospital Association, on Executive Order to Promote Healthcare Choice & Competition
Patients depend on comprehensive health insurance to access and afford the care they need, including services provided by America's hospitals and health systems. Today's executive order will allow health insurance plans that cover fewer benefits and offer fewer consumer protections. No one can predict future healthcare needs with complete certainty and such plans could put patients at risk when care is needed most.
In addition, these provisions could destabilize the individual and small group markets, leaving millions of Americans who need comprehensive coverage to manage chronic and other pre-existing conditions, as well as protection against unforeseen illness and injury, without affordable options. And, regarding consolidation, respected economic studies demonstrate that the hospital field's trajectory has resulted in both cost savings and quality improvements for the patients we serve.
The AHA is committed to ensuring that individuals and small businesses have affordable, comprehensive healthcare coverage options, and we encourage the Administration to achieve this goal without sacrificing critical consumer protections by stabilizing the individual and small group markets.
U.S. Rep. Jim Cooper (TN-05) on the President's Executive Order
"Today's announcement is one of many steps this administration has taken to undermine the Affordable Care Act. It creates an exclusive market for the healthy at the expense of the sick, and is opposed by all kinds of healthcare experts," Rep. Cooper said. "In the end, Washington lobbyists stand to benefit the most. This executive order will only hurt Americans, not help them."
And on the Decision to Stop ACA Subsidies
"The Affordable Care Act made America healthier and families more secure. It relied on subsidies to bring more people under the umbrella of coverage. Trump is canceling those subsidies, which will throw people off their insurance due to higher premiums that will be unaffordable," Rep. Cooper said. "As our nation's insurance commissioners have noted, the insurance markets will soon be in chaos. The president could have helped fix our healthcare system, building on what we've learned from the ACA; instead he is destroying it."
About 59 percent of all marketplace enrollees in Tennessee benefit from cost-sharing reduction payments. That includes 18,588 Davidson County residents; 1,281 Dickson County residents and 919 Cheatham County residents in 2016.
Michele Johnson, Executive Director, Tennessee Justice Center, on Executive Order
The president's executive order continues the campaign to sabotage a health insurance system that millions of Americans with pre-existing conditions rely on. But people shouldn't be confused. They can still buy coverage on healthcare.gov starting November 1st, because the president's executive order won't affect their coverage in 2018. It is time for the president and Congress to abandon partisan politics and put the interests of American families first by finding healthcare solutions that work for everyone.
The American Academy of Actuaries on Executive Order
The American Academy of Actuaries is cautioning that President Trump's executive order on association health plans (AHPs) and short-term, limited-duration insurance could present significant risks and have unintended consequences for consumers and health insurance markets.
"Creating exemptions from the Affordable Care Act insurance market rules can have far-reaching and unintended effects," said Academy Senior Health Fellow Cori Uccello. "These effects could include tilting the market in favor of entities with weaker benefits or solvency standards and weakening the protections for consumers with pre-existing health conditions. To avoid these adverse outcomes, the risks and consequences for consumers and insurers need to be well understood and addressed before the departments of Labor, Treasury, and Health and Human Services issue any regulations pursuant to this order."
The Academy has detailed the risks and other public policy considerations associated with expanding the availability of non-ACA-compliant plans, including association health plans and short-term plans. "It's important that AHPs and short-term plans not serve as a workaround of federal and state insurance rules and protections that have been created to benefit consumers," said Uccello.
And on CSR Reimbursements
The American Academy of Actuaries' Health Practice Council is urging Congress to help stabilize the individual health insurance market by permanently funding cost-sharing reduction (CSR) reimbursements to insurers under the Affordable Care Act (ACA), in light of the Trump administration's decision to immediately end the payments.
"Higher premiums are necessary when CSR reimbursements to insurers are not made," said Academy Senior Health Fellow Cori Uccello. "In states where rates for 2018 were filed assuming federal CSR payments would be made, premiums may be insufficient to cover the cost of care, which could lead insurers to reconsider their decisions to participate in the market. Permanently funding the CSR reimbursements through congressional action is needed to avoid further premium increases and insurer market withdrawals that could lead to a loss of coverage."
Under the ACA, low-income enrollees are eligible for CSRs to decrease their out-of-pocket spending requirements, reducing the financial barriers to receiving healthcare. The law stipulates that insurers provide the CSRs to eligible enrollees. The law also stipulates that the federal government reimburse insurers for the CSRs, and until now the federal government has done so. However, these payments were legally challenged and a U.S. District Court ruled that they are subject to congressional appropriation. Absent these reimbursements, insurers would need to raise premiums accordingly to cover the costs of the CSRs.
"Enrollees who receive premium subsidies would be insulated from the full increase in premiums caused by the end of CSR reimbursements, but enrollees who don't could face the full brunt of the increase, potentially reducing enrollment, increasing the uninsured population, and deteriorating the risk pool," said Uccello. "Permanent congressional appropriation of CSR reimbursements could prevent these destabilizing effects."
In addition, in the absence of CSR reimbursements, federal spending will likely rise. The Congressional Budget Office estimated that the increase in federal premium subsidies would exceed federal savings due to eliminating CSR reimbursements to insurers. A Health Practice Council FAQ published this past summer explains: "Cost-Sharing Reductions: What Are They and Why Do They Need to Be Funded?"