Jul 31, 2017

Why the ACA markets could actually collapse — with Trump's help

Alan Diaz / AP

Health insurers are getting awfully close to hitting the panic button. Now that the Republican push to partially repeal the Affordable Care Act has fallen apart, industry groups desperately hope Congress can move quickly to patch the problems in the ACA marketplaces. The highest priority, by far, is funding the law's cost-sharing subsidies — the payments to insurers that help reduce deductibles and other out-of-pocket costs for low-income people.

The overhanging problem: President Trump threatened to cut off those subsidies yet again over the weekend, which experts say would force insurers to leave and would lead to an immediate collapse of the individual markets. And now, in the wake of the Republican repeal blunder, the industry is worried Trump will be more impulsive and follow through on his latest warning.

What's at stake: The ACA's cost-sharing subsidies cost $7 billion this year and $10 billion in 2018. The Trump administration has turned those insurer payments into a month-to-month guessing game, and if the money is cut off, more insurers almost certainly would exit the marketplaces for 2018 and leave thousands of people without insurance options.

Congress could avoid that by funding the payments — something it didn't do for the Obama administration — but so far, Republicans have been in no mood to do that without a broad ACA rewrite attached to it.

Meg Murray is CEO of the Association for Community Affiliated Plans, a trade group of safety net health plans, many of which offer coverage in the exchanges. She said she is "concerned" many of her group's members will drop out of the exchanges if cost-sharing payments are nixed.

The odds of Trump undermining the exchanges by cutting off the cost-sharing payments "just increased dramatically," said Stefanie Miller, an investment analyst at Height Securities — especially with Trump's newest shot on Twitter.

And don't forget the individual mandate: Insurers have also been worried that the Trump administration might undermine the mandate, and Health and Human Services secretary Tom Price couldn't have given them much comfort this weekend, when he suggested on ABC's "This Week" that broader exemptions from the mandate are "on the table."

Price claimed that the mandate is "driving up the costs" of health insurance. But America's Health Insurance Plans, the main health insurance trade group, warned in a letter last week that without the mandate or something else to attract healthy customers, there would be "fewer people covered and a deterioration of the risk pool, which will increase premiums."

Yes, but: Polling from the Kaiser Family Foundation shows the public will hold Trump and Republicans accountable, not Democrats, for anything bad that happens to the ACA insurance marketplaces going forward. That's why Miller believes Congress may decide to bury funding of the cost-sharing subsidies deep within a continuing resolution or the upcoming Children's Health Insurance Program reauthorization bill, assuming Trump doesn't make his own rash decision before then.

"If Democrats are pushing it as part of a continuing resolution, I think Republicans end up eating it," Miller said. "I just don't see a scenario where they want that level of disruption next year on their hands."

Gauging the industry: AHIP, the Blue Cross and Blue Shield Association, the Alliance of Community Health Plans and ACAP have all pushed Congress and the administration multiple times to fund the cost-sharing subsidies permanently — to no avail thus far. The next test comes at the beginning of August, and they've learned not to be optimistic. "We hope the administration will do the right thing," Murray said.

Although Trump's latest threat carries more weight now that the repeal efforts are dead for the time being, other people are convinced Trump is using an empty negotiating ploy. "If they really wanted to blow the thing up, why didn't they cut (the subsidies) off yet?" said one former Hill staffer who works with health industry clients.

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