After nine months of trying and failing, Republicans in Washington have all but given up on repealing and replacing the Affordable Care Act for the foreseeable future.
But there are other steps they may take in the coming months that could still destabilize the individual insurance marketplaces created under the 2010 law, also known as Obamacare. That’s true even in California, where state leaders have made a concerted efforts to insulate health care consumers from decisions made in D.C.
Covered California, the state run individual insurance market, is expected to announce a surcharge for its Silver plans in the coming days to reflect uncertainty over whether President Donald Trump and the Republican-controlled Congress will continue to fund the cost sharing reductions that insurers are required to pay for low income patients. In August, Covered California announced it had delayed until Sept. 30 its decision on whether to add the premium surcharge, in hopes Congress would guarantee the payments. It hasn’t happened.
As a result, subscribers to the state’s Silver plans are likely to see an average 12.4 percent increase in their insurance premiums. Consumers, however, won’t feel the pain of that surcharge, because Covered California negotiated with insurers to focus the premium increase on the Silver plan, which is subsidized by the federal government. An increase in premiums will trigger an increase in subsidies to the plan’s subscribers, balancing out the rising cost.
Covered California has also taken steps to counteract other decisions by the Trump administration that will impact the next open enrollment period, which runs from Nov. 1 to Dec. 15. The Department of Health and Human Services has slashed its advertising budget, curbed outreach and halved the enrollment period. That’s prompted accusations of sabotage from Obamacare supporters, who worry that far fewer new people will sign up for state exchanges without a major marketing effort. California, however, has used flexibility under the 2010 law to extend the enrollment period another six weeks, to Jan. 31. And the state upped its marketing budget, to $111 million – 11 times the federal marketing budget under Trump.
“Getting more people enrolled helps bring down the costs of coverage,” explained Anthony Wright, executive director of Health Access California, which supports Obamacare. “The less people enrolled means we have a smaller and sicker risk pool.” California, Wright says has “one of best risk mixes in the nation” because so many people in the state – nearly 1.5 million – have signed up for Covered California insurance plans.
Wright and others worry, however, that the number of healthy people signing up for Obamacare plans could shrink if the president follows through on a couple of policy moves he’s promised. One is ending enforcement of Obamacare’s individual mandate, which requires Americans to have health insurance or pay a tax penalty. In an executive order issued the day of his inauguration, Trump suggested his administration would seek to ease the financial burdens – like the mandate – imposed on individuals by Obamacare.
So far, the administration has continued to enforce the mandate, but even the suggestion that it might not could lead people to forgo insurance. “If there is an effect, we would see it after the open enrollment period” this fall, said Larry Levitt, vice president at the Kaiser Family Foundation, a health care think tank.
Trump also suggested last week he is preparing to issue an executive order that would allow insurers to sell health plans across state lines. Speaking to reporters on Sept. 27, the president promised “a very major executive order where people can go out, cross state lines, do lots of things and buy their own health care.”
Trump said the order is “being finished now” and will likely be unveiled next week. Details are murky, but one approach would be to allow people to form health “associations” that can cover individuals in different states and don’t have to meet Obamacare care standards. Proponents, like Kentucky Sen. Rand Paul, argue that such associations would help lower insurance premiums for healthy people.
Levitt, however, warns that “if an association set up in Mississippi can sell coverage to people in California, that could be quite disruptive and destabilizing (for the state insurance market), and there is little that California can do about it.”
Such an order from the White House would doubtless draw legal challenges. And most major insurers would probably not be interested in participating, given the complexity of creating multi-state networks of health care providers. But “that doesn’t mean some association couldn’t find some insurer to … back its coverage,” Levitt says, “particularly if this becomes a way to subvert the (Affordable Care Act)’s consumer protections.”
Republicans in Congress could also upend state marketplaces if they continue to pursue efforts to slash spending on Medicaid and Medicare. Republicans need to find ways to offset the costs of their tax reform proposal – their top policy priority this fall. And while Senate leaders have signaled in their new budget released Friday that they will seek other ways to do that, House Republicans may continue to try to target those health programs. California would be particularly hard hit by cuts to Medicaid, which covers 14 million people in the state.
Congress also has let funding for the Children’s Health Insurance Program lapse. The federal program, which helps pay for health coverage for low- and moderate-income children, expired at the end of September. The Senate and House have both introduced legislation to authorize money for it for another five years. The House version proposes cutting more than $5 billion from Obamacare’s Prevention and Public Health Fund to pay for it. Most health care experts predict Congress will reach a deal on the program by year-end, when a handful of states begin to exhaust their funding for the program. California’s CHIP funds are projected to run out sometime between December 2017 and March 2018. But there are no sure bets in today’s gridlocked Washington.
That has health care advocates in California nervous, since all those federal funding streams are critical for the state to continue to support its Obamacare marketplace. “With the framework and the financing of the (Affordable Care Act) we can do a lot,” says Wright. “Without the funding, it’s really hard.”
Emily Cadei: email@example.com, @emilycadei