Trump takes a sledgehammer to the ACA
President Trump left little doubt yesterday that he intends to do as much damage as he can to the Affordable Care Act's insurance markets. And he can do a lot.
The bottom line: The executive order Trump signed yesterday aims to undercut some of the ACA's core ideas about how insurance markets should work. His decision to halt the law's cost-sharing subsidies will blow up those markets in the short term. And his administration has taken a slew of other steps to undermine enrollment. There's one constant here — to wound the ACA as badly as possible.
The impact: Here's what will happen once the insurer subsidies are cut off:
- Insurers have already locked in their premiums for next year. Many them will try to find some way to go back and tack on a premium major increase or, if they can't do that, to pull out of some markets entirely.
- This will create even more pressure on Congress to guarantee funding for the subsidies, as part of a newly urgent bipartisan ACA fix. Having a fresh health care crisis on the front burner can't be good for tax reform, and getting an agreement on the ACA won't be easy.
- If Congress doesn't act quickly, there's a decent chance insurers will sue the administration. They're still legally obligated to reduce their customers' out-of-pocket spending, and the law says they're supposed to be compensated for that.
- The Democratic attorneys general of California and New York are already threatening to sue, too.
The fix: Congress can solve this. University of Michigan law professor Nicholas Bagley, an expert on this issue, told me that if Congress appropriates the money for these subsidies, they would begin flowing again immediately. The problem is, Republicans aren't in the mood to do that without some big concessions from Democrats — and the Senate bipartisan talks aren't anywhere close to a deal.
The executive order: It's short. It's vague. It leaves critical questions unanswered. But it does tell us where this administration wants to take the health care system — what it wants insurance, and insurance markets, to look like. It tells us Trump will at least try to get there on his own. And that alone tell us a lot.
Be smart: Insurance can cover a lot and cost a lot, or cover less and cost less. The ACA said insurance should be reasonably comprehensive and accessible to people who need it, even if that meant healthier people had to pay more. That foundational view of insurance is what Trump's order would attempt to reverse.
The ACA sought to flatten out the disparate experiences of the healthy and the sick. Trump would begin to resegregate them.
How it works: Association health plans — letting small businesses pool together to buy insurance coverage as if they were one large business — got most of the attention in the lead-up to yesterday's announcement. But, depending on how all this is actually implemented, the order's other provisions might pose a greater threat to the ACA's core principles.
- "AHPs, I do not believe are going to sell junk insurance," said Chris Condeluci, an attorney and policy consultant who worked on the Republican side of the Senate Finance Committee during the ACA debate.
- Association health plans are regulated a lot like the health plans offered by larger employers. Some of the ACA's consumer protections still apply: the plans cannot impose annual or lifetime caps on benefits, for example. They also can't charge one person in the association a higher premium because of a pre-existing condition.
- The bigger threat to the ACA's framework might come from expanded access to short-term insurance plans, which are subject to hardly any benefit mandates and provide few coverage guarantees.