Yes, the most immediate threat to the future of Obamacare is dead, for now. And in the wake of the House fiasco, President Trump as well as some Senate Republicans have made noises about reaching out to Democrats to shore up the health insurance program. But the Trump White House and congressional Republicans still have it within their power to damage the prospects of health coverage for millions of Americans, whether by actively undermining the Affordable Care Act by administrative fiat or by letting it wither by neglect.
Trump alluded to that prospect Friday when he said that “the best thing we can do politically speaking is let Obamacare explode.” Referring to the Democratic leaders in the House and Senate, he added: “I think the losers are Nancy Pelosi and Chuck Schumer, because now they own Obamacare.”
Trump’s may have been the most irresponsible remarks uttered by any political leader in the long debate over the Affordable Care Act, because it signaled to insurance companies and to enrollees that the administration would make little or no effort to avoid an avoidable outcome.
“That rhetoric in and of itself has a destructive impact,” Andy Slavitt, the last acting administrator of Medicare and Medicaid under the Obama administration, told me. That’s because Trump’s words could drive insurers out of the individual market. “If you’re a competitor in the marketplace and you hear that the regulator wants the market to explode, you say, ‘Why should I participate?’”
Under Secretary of Health and Human Services Tom Price, the administration has taken some modest steps to encourage insurers to stay in the market. But he and Trump also have taken steps that will undermine it, and could take more.
Administration policy will unfold against the backdrop of the failed House repeal effort. Although much of the commentary following the House GOP’s failure even to bring its bill to a vote Friday focused on the political and legislative process that broke down, the underlying cause of the failure was more fundamental. Despite seven years of complaining about the Affordable Care Act, the Republican Party never has articulated a vision of what it wants the American healthcare system to be, whether in terms of its cost or the breadth of coverage.
As a result, the repeal bill turned into an incoherent hodgepodge of GOP shibboleths, including a big tax cut for the wealthy and the evisceration of Medicaid, the health coverage program for the neediest Americans. Toward the end of the quest for votes, House Speaker Paul Ryan (R-Wis.) even agreed to add a provision repealing the ACA’s mandate that every health plan provide 10 essential health benefits, including maternity care, hospitalization and emergency care, and prescription drug coverage — a provision that Rep. James P. McGovern (D-Mass.) denounced from the House floor.
“It is so cartoonishly malicious,” McGovern said, “that I can picture someone twirling their mustache as they drafted it in their secret Capitol lair last night.”
If the administration is determined to allow the individual market to “explode,” it can do so without taking many overt steps. Trump’s first executive order, issued the day of his inauguration, gave HHS and other agencies broad latitude to undermine the ACA by encouraging them “to waive, defer, grant exemptions from, or delay” any provision of the law that would “impose a fiscal burden” on pretty much anyone — state, hospital, doctor or patient.
Given the authority vested in the HHS to oversee the law, there may be little that could be done to force the agency to support the ACA in every particular, or to keep it from spreading doubt about its efficacy.
“Simple non-enforcement is all they have to do, to give people the perspective that if they don’t comply with the mandate, it won’t be enforced,” Slavitt observes. “And they’ve sent that signal in several different ways.”
White House officials appearing on Sunday political talk shows have cast doubt on the administration’s intention to enforce the mandate, which requires all Americans to carry health insurance or face financial penalties. In February, the Internal Revenue Service, which oversees those penalties, told tax preparers that it wouldn’t automatically reject tax returns that failed to certify that the filer had insurance—an early-warning tool the IRS was prepared to implement for the first time for 2016 returns due next month.
By indicating that it will go easy on nonfilers and non-enrollees, the administration especially is encouraging young and healthy people to go without coverage—depriving the insurance pool of the most sought-after participants and driving up premiums for everyone else.
Another threat to the stability of the market centers on the ACA’s cost-sharing reduction subsidies, which help cover deductibles and co-pays for households earning less than 250% of the federal poverty line, or $60,750 for a family of four. About 57% of all enrollees are eligible for the reductions, but they’ve been overturned by a federal judge because money for them wasn’t specifically appropriated in the ACA.
The judge’s order has been stayed pending the outcome of a lawsuit filed by House Republicans. The Obama administration was fighting the lawsuit, but Trump could drop the defense. That would allow insurers to exit the individual market immediately—which really would explode the market. So far, Trump hasn’t signaled which direction he plans to take on the issue.
To be fair, Price’s HHS took some steps in mid-February to give insurers some confidence that the individual marketplace will be stable next year. The agency proposed shortening the open-enrollment period for 2018 to about six weeks, ending Dec. 15, and tightening enforcement of special eligibility rules, which allow people to enroll after open enrollment—say because they’ve relocated, gotten married, or had a baby. The agency proposes to require better documentation eligibility for such enrollments, which insurers asserted had allowed too many people to sign up for insurance only after they became sick.
Price also has indicated that he’ll look more kindly on applications from states for waivers from some ACA rules. Some could enhance the marketplace in some states, say by allowing the creation of high-risk pools to pay for treatment of patients with chronic or catastrophic conditions, or setting up reinsurance programs to absorb insurer losses.
But Price and the newly appointed Medicare and Medicaid director, Seema Verma, also have encouraged states to impose new restrictions on Medicaid recipients. These could include premium payments or work requirements, which go against the grain of Medicaid both in its traditional form, which largely serves low-income families with children, and under its ACA expansion, which also covers childless adults.
Medicaid has never been predicated on its recipients’ seeking or holding a job, in part because it’s unnecessary and counterproductive. About 80% of all Medicaid recipients already are members of working households, and 60% are working themselves. Of the others, according to a 2016 survey by the Kaiser Family Foundation, all but 3% are ill or disabled, going to school, are family caregivers at home, retired, or unable to find a job. In other words, work requirements appear to be more an ideologically punitive step than a practical one.
Four states — Indiana, Pennsylvania, Arizona and Kentucky —have applied for waivers imposing a work, job search, or job training requirement on applicants, but none has been approved thus far. Without a waiver, the law forbids adding work requirements to Medicaid. Under the Obama administration, the prospect of gaining any such waiver was effectively nil.
“I don’t believe that making people pick up trash at the side of the road in order to get a breast exam is the way to go,” Slavitt says. But Price and Verma say they’re amenable to a different approach.
What’s most doubtful is whether Congress is capable of taking any action that will fix the flaws in the ACA, including inadequate subsidies and ineffective incentives for younger and healthier Americans to enroll in health plans. One proposal, from Sens. Susan Collins (R-Maine) and Bill Cassidy (R-La.), would supplant the ACA’s tax subsidies with state- or federally funded health savings accounts allowing individuals to buy health plans on the open market.
The Cassidy-Collins bill would allow states to choose whether to keep the ACA as is, dump most of it, or fashion their own versions; in any case, the states would have to maintain such consumer provisions as a protection of coverage for those with pre-existing conditions and such basic benefits as mental health coverage and preventive services. Under the state option, residents would be automatically enrolled in a health plan unless they opt out.
Cassidy-Collins has its flaws, but its acknowledgment that much of Obamacare warrants saving sets it apart from typical conservative Republican proposals.
“Susan and I have talked to six or seven Democratic senators,” Cassidy told me, “and they all take this as a good-faith effort to be bipartisan.”
But he maintains, like other Republicans, that left on their own, the ACA marketplaces are doomed by rising premiums and medical costs. “Obamacare is going to implode because of how it’s written, not because of any concerted attack,” he says.
That’s debatable. The Congressional Budget Office projected earlier this month that the ACA exchanges “would probably be stable in most areas” either under the continuation of the ACA or the proposed House repeal. But since they’re only 3 years old, the still-fragile marketplaces need the care and nurturing of a committed White House and HHS to thrive. During the campaign, Cassidy observes, “President Trump pledged to cover all, to care for people with pre-existing conditions, without a mandate and at lower cost.” Whether Trump remains committed to those goals and whether they’re even attainable without strong federal support for the concepts are unanswered questions.