KILLING THE AFFORDABLE CARE ACT

September 22, 2017 | Featured Articles

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The congressional failure to replace, or repeal, ACA has done little to halt White House ACA-elimination attempts. Rather, it shifted the Trump Administration’s repeal strategy to one of utilizing underhanded tactics, by undermining the federal ACA exchanges and individuals’ support through de-funding specific provisions. “Let Obamacare implode”, tweeted President Trump in July 2017—following failure of the Republican-led Senate to repeal the ACA. President Trump has since embraced a strategy of financial pressure and executive orders to lower families’ enrollments throughout the nation.

According to a Kaiser Family Foundation (KFF) tracking poll, 61% of Americans did not support the ACA repeal efforts as of July, 2017. Following the “skinny repeal” failure (amendment to H.R. 1628), 52% of registered Republicans (and 95% of Democrats) surveyed in this poll felt that Congress should “fix Obamacare rather than allow it to fail”. Yet, ACA failure is the objective of most Cabinet members in alignment with President Trump’s goal of ACA repeal. Consequently, the likelihood of viable ACA exchanges in the future (along with future ACA functional ability) is lessening.

De-Funding Subsidies and Legal Actions

Two types of federal subsidies were included in the ACA to support the ACA’s mandate of insurance coverage for all Americans. The first type was premium assistance for low and moderate-income individuals (in concert with Medicaid/CHIP coverage for impoverished individuals). The second type was assistance to insurers participating in the ACA’s federal exchanges. Ending federal subsidies for purchasing health insurance is an expressed objective of the Trump Administration. 

Insurance companies participating in the ACA exchanges are dependent upon cost-sharing subsidies to cover their discounted health plan coverage. Through cost-sharing subsidies to insurers, the ACA aimed to enable exchange-based health plan enrollees to incur lower out-of-pocket expenses, with the goal of helping these individuals to buy insurance rather than forego it. In response to the federal court ruling in 2016 that the Obama Administration could not reimburse insurance companies for ACA-related costs (since Congress had not appropriated such funds), Lynch (President Obama’s attorney general) appealed Judge Collyer’s decision in the Republican-filed lawsuit, House v. Price, during which cost-sharing subsidies to insurers continued to be paid.

Despite President Trump wanting to drop that appeal, attorney generals from 17 states (plus the District of Columbia) on August 1, 2017 blocked this from occurring. In turn, as of September 6, 2017, President Trump remains undecided as to whether his administration will make scheduled CSR payments in September, and this is now fostering increased insurer confusion and anxiety, further destabilizing the ACA exchange program.

Cost-Sharing Reduction (CSR) – Weakening of a Fundamental ACA Component

Approximately $7 billion in payments were made by the federal government to insurers in 2017. A cost-sharing reduction provision was included in the ACA to obtain insurer “buy-in”, and curtail the need for insurers to raise annual premiums to off-set anticipated federal exchange participation costs. This was due to the recognition that an unstable market produces anxiety and uncertainty for business (e.g., insurance companies) in predicting the following year’s expenses, and then determining a plan to assure adequate revenue to meet expected expenses.

The rationale behind inclusion of the ACA’s CSR provisions was to mitigate financial risk, and thereby reduce the following: a) the likelihood that insurers would leave the federal exchanges, and b) the likelihood that annual premiums would be increased beyond most exchange enrollees’ ability to pay. By sowing insurer confusion and fear, President Trump’s goal is to accelerate insurer departure from the exchanges and American displeasure with the ACA—even if the result is a loss of coverage and healthcare access by millions of people–in order to ensure it collapses.

The failed Republican-proposed American Health Care Act (AHCA) was already determined by the Congressional Budget Office to cause a loss of health insurance coverage for millions of people, and this Trump Administration strategy is widely predicted to also lead to millions of Americans losing coverage.

Elimination of ACA Outreach and Enrollment Navigators

As the Human Health and Services (HSS) head, Tom Price withdrew $5 million in funds targeted for advertising aimed at encouraging ACA exchange insurance enrollment after Trump became president. The Trump Administration intends to spend 90% less on ACA enrollment advertising than under President Obama in 2016 (only $10 million as compared to $90 million). Tom Price—Trump’s choice for Secretary of HSS and an ACA opponent—also has cut funding by 41% for enrollment navigators (people who assist individuals in choosing a health plan to meet their needs).

Additionally, HSS cancelled ACA contracts in 18 cities that brought enrollment assistance into libraries and workplaces, and has removed detailed directions from the ACA’s HealthCare.gov web-pages assisting individuals to enroll and/or renew enrollment.

Such drastic cuts before open enrollment commences this November is likely to cause potential ACA health exchange enrollees to become frustrated and forego purchasing insurance coverage. The open enrollment window has also been reduced to 45 days from nearly twice that time period under President Obama.

Enabling Greater State Latitude in ACA Regulation Compliance

President Trump’s executive order in January 2017 pertaining to the ACA directed the HSS and other federal agencies to enable states to have greater flexibility in adhering to or enacting healthcare system regulations. The ACA mandate for Essential Health Benefits (EHBs) in insurance plans is another area that the Trump Administration can weaken, in that HSS is enabling greater state latitude in requiring the previously-mandated EHBs (through changing of their “benchmark” plan).

In addition to granting more state authority in ACA decision-making, the Trump Administration, in tandem with HSS, has advised the IRS not to enforce ACA-mandated fines for foregoing insurance. Additionally advised was heightened IRS scrutiny of individuals signing up for ACA exchange coverage outside of the annual enrollment period (i.e., due to marriage, loss of job-based insurance, or a birth). This is yet another strategy to weaken the ACA’s “individual mandate”, and generate obstacles for health plan enrollment. Not surprisingly, those that benefit most from the exchanges are often minorities in low-paying jobs without employer benefits. The threat of facing scrutiny for enrolling is enough to ensure that many minorities give the exchanges a wide berth.

Reducing ACA Tax Revenue Streams

President Trump’s tax reform plan—which will be crafted by the Republican-led House Ways and Means Committee into a Bill for debate—includes elimination of the ACA’s tax-based funding mechanisms (e.g., the 3.8% net income investment tax).  Besides its other detrimental effects on future federal revenue, tax code changes corresponding to Trump’s tax reform plan would tremendously reduce the federal dollars available for ACA administration. Consequently, the Centers for Medicare and Medicaid Services (CMS) budget—under the HSS—would probably experience funding and service cuts as a result (and particularly the CMS demonstration projects funded by the ACA).

Destabilization as a Strategy to Destroy ACA Achievements

Democrats and many Republicans in Congress do not want the ACA to fail, because the result is most likely to be higher national healthcare costs. ACA destabilization is also likely to result in increased withdrawal by insurers from the ACA exchange marketplace. However, President Trump, conservative Republicans in Congress, and most of Trump’s cabinet members want repeal of the ACA to prove that Obama’s healthcare legislation—passed with no Republican congressional support—was a failure. Toward that end, these elected leaders are willing to cause financial pain and hardships for insurers and the U.S. population as a whole, despite the wishes of the People.

According to a report issued in January 2017 by the Urban Institute, eliminating CSR payments in 2017 would “cause insurers significant harm” with resultant widespread insurer exit from the ACA exchanges. Even if President Trump chooses to halt CSR payments to insurers, these insurers would remain responsible for paying their enrollees’ healthcare bills—which could lead to large insurer financial losses, a consequence Wall Street will not tolerate well.

This Robert Wood Johnson Foundation-funded research report also concluded that repeal of the individual mandate would result in higher premiums in 2018 to compensate for insurer expectations of a sicker risk pool. Inevitably, the Trump Administration’s weakening of the ACA could also lead to a higher dependence on hospital emergency rooms for care by individuals who can no longer obtain insurance coverage and/or afford the cost.

As of August 2017, 78% of Americans felt that the Trump Administration should fix the ACA rather than repeal it. Empathy by the president and members of Congress for the healthcare needs of the U.S. population are needed, rather than health system destabilization and needless misery in order to show flaws in the opposing party. Especially concerning is that the Trump Administration has embarked on a multi-pronged strategy to weaken the ACA (and our healthcare system) through deregulatory efforts across agencies and massive funding cuts, in tandem with limiting federal revenue.It could not be clearer that our health care system is being held hostage by an Administration that would rather shred livelihoods than govern with conscience.

Breaking: In a last minute attempt to push something – anything! – through, the GOP has introduced the Graham-Cassidy Bill, the latest iteration of the Republican legislative effort to repeal and replace the Affordable Care Act. It is worse than the original ‘Trumpcare’ bill; this time threatening K-12 education, and is even worse for women’s health than the previous bill. If we can get past September 30th without this heinous bill passing, can we at least hope that this will be the end of the Trumpcare Zombie for good? We shall see.