Obamacare hasn't collapsed, but Trump and the GOP might just let it
Thomson Reuters
A month into his presidency, Donald Trump was surprised.
"Nobody knew healthcare could be this complicated," Trump mused during a White House event on February 27.
Three months, two votes, and one hugely unpopular bill later, the Republican Party is still struggling with just how complicated healthcare can be.
Despite advancing the American Health Care Act (AHCA) out of the House, the GOP's attempt to repeal and replace the Affordable Care Act is still, at best, from completion. A series of snags have complicated the top item on the party's agenda.
Between crumbling insurance markets, policy divisions in the party, and public dissatisfaction with their proposals, the GOP's healthcare overhaul is on shaky ground.
What's the score?
The AHCA took another hit this week when the Congressional Budget Office released its updated projections on the legislation's effects on premiums and coverage.
The CBO found that the bill would bring down premiums in the aggregate and reduce the deficit, but also result in 23 million fewer people having health insurance in 2026 than under the current baseline.
Perhaps most strikingly, the CBO found that a new provision in the AHCA, imposed by the so-called MacArthur amendment, would undermine protections for people with preexisting conditions and leave them subject to sky-high premiums.
(Read a full breakdown of the new CBO score»)
Even before the score, the bill was not popular with Americans.
A poll released by Quinnipiac University on Thursday showed just 20% of Americans support the AHCA, and other polls consistently show that the bill is deeply unpopular.
At the same time, Obamacare has seen a surge in popularity. A recent Gallup poll showed 55% of Americans support the law, its highest level of approval since its passage more than seven years ago.
Thomson Reuters
'It's a very awkward process'
Republicans in Washington have heard the pushback — at least in the Senate.
Even as House GOP leaders were celebrating the passage of the AHCA in a white House Rose Garden ceremony with Trump earlier this month, Senate GOP members were saying they were prepared to scrap the legislation and write their own version of the bill.
Senate Republicans have worked over the last few weeks in an attempt to come up with their own version of a healthcare bill.
It doesn't appear to be going smoothly.
On Tuesday, GOP Sen. Bob Corker expressed frustration with the Senate process, questioning the working group of roughly 13 lawmakers that are crafting the bill.
"It’s a very awkward process, at best," Corker said, according to the HuffPost. "There are no experts. There’s no actuarial. ... Typically, in a hearing, you’d have people coming in and you’d also have the media opining about if a hearing took place, and X came in and made comments."
Senate Majority Leader Mitch McConnell even told Reuters on Thursday that he doesn't "know how we get to 50 [votes] at the moment."
While there are plenty of issues to iron out, there are two major disagreements, said Cynthia Cox, associate director at nonpartisan health policy think tank The Kaiser Family Foundation:
- Medicaid funding: The House version of the AHCA would cut $880 billion in funding from the 2026 baseline, something that did not please some Republican senators. The ACA expanded Medicaid to people making up to 138% of the federal poverty line, resulting in roughly 11 million more people on the program's rolls. "There are red states that have expended Medicaid and they may want to keep this additional Medicaid funding," Cox told Business Insider. Additionally, changes to how the federal government funds Medicaid and how quickly funding would grow could cause cracks in the GOP.
- Funding for tax credits: The AHCA proposes flat tax credits based on age instead of adjusted for income under Obamacare. This means that poorer and older people could see their premiums skyrocket, an alarming proposition to many GOP senators. "There is some acknowledgement that the AHCA are lower for older people and people in rural areas," Cox said. "So there are questions over whether to just increase the total on the AHCA flat tax credits or start to adjust for income and location, which is closer to the ACA."
Both of these issues, Cox said, do have a common theme: money.
"To make any of those changes, they need one relative to the AHCA," Cox said. "So it would also come down to which taxes they cut, or don't."
AP
'They really need clarity'
As all of the concerns swirl around Washington, insurers and state insurance markets across the country face an uncertain future for a critical piece of Obamacare — and a hard deadline.
So-called cost sharing reduction (CSR) payments help to offset costs to insurers for providing low-income Americans with affordable plans that reduce out-of-pocket costs. Their future is uncertain.
(Read more about how CSR payments work »)
As Obamacare was signed into law, the Obama administration stipulated that CSR payments would be funded via the executive branch. That authority was contested by the Republican-led House in a lawsuit that has been ongoing for several years. The House argues that only Congress has the authority to appropriate the funds.
A court ruled in 2016 against the Obama administration, endangering the future of the CSR payments. The Obama administration appealed the ruling. Now, the Trump administration must ultimately decide whether to continue with the lawsuit. Trump himself has cast serious doubt as to whether it will.
On Monday, the Trump administration and the House agreed to delay the next step in the case, punting another 90 days to try and come up with a solution outside of the courts.
But the uncertainty over the critical CSR payments have left insurers in limbo as they decide their plans for the exchanges' 2018 plan year. The deadline to submit plans for the exchanges next year is late June, giving insurers little time and clarity on how to price their plans — or whether it's worth participating at all.
Cox said the uncertainty over the payments could end up driving insurers away, or cause the companies to increase their premiums.
"They really need clarity on this now," Cox said. "Without this clarity, they're either going to have to decide to leave the market or raise their premiums substantially, and in most cases I would expect insurers to do one of those two things."
Matthew Fiedler, a fellow with the Brookings Institution's Center for Health Policy, agreed that the uncertainty could have a negative effect on consumer choices.
"The fact that the administration is a big question mark that needs to be resolved at some point later in the summer can't make them feel particularly good about where the market is," Fiedler told Business Insider. "I think it continues to make them place significant weight on the idea that the payments might ultimately not be there next year and when there's any possibility that they won't be paid it just makes it very hard to plan."
Thomson Reuters
Market wobbles
Already, states where insurers have submitted their 2018 exchange plans have seen significant premium increases.
Republicans have argued that the rates are another sign that Obamacare as it stands is failing and that the need to pass a repeal and replacement is even more urgent.
House Speaker Paul Ryan's website labeled a New York Times editorial attributing some of the insurer exits from insurance exchanges to the AHCA as "disingenuous nonsense."
"The writing was already on the wall that Obamacare was failing," said the post. "Unfortunately, the Left is only now calling it out — with a pathetic attempt to point the finger at Republicans."
Fielder pushed back against that argument.
"We know how large insurers losses were in 2015 and 2016 and we know how much they raised rates in 2017," Fiedler said. "That allows us to reach a pretty good guess as to what their margins are for 2017 and that all suggests that they should've been breakeven for 2017 without market disruption or even a little better. So it's just not plausible given what we know about insurers financials in previous years that they would need to impose another round of very large increases for next year."
In terms of exits, insurers like Blue Cross Blue Shield of Kansas City, which announced Wednesday it was leaving exchanges in Missouri and Kansas, have cited not only losses, but also "the uncertain direction of this market."
One insurer took this a step further and clearly pinned the blame on the AHCA for serious instability in the individual insurance market.
Blue Cross Blue Shield of North Carolina said the company decided to more than double their requested premium increase due to the CSR uncertainty.
The company has requested a 22.9% increase for the average premium in 2018, but said that if the CSR payments were guaranteed, that would only by 8.8%.
"The latest news came earlier this week as the Trump Administration delayed a decision on whether to fight the House lawsuit," Brian Tajlili, the director of actuarial and pricing services for Blue Cross NC, wrote in a blog post on Thursday explaining the decision. "As a result, insurance companies can’t count on being paid for reducing cost-sharing for eligible ACA customers."
Tajlili went on to tie the increase directly to the uncertainty surrounding the CSR payments, saying more clarity on the ACA's future from lawmakers could have driven the premium increases even lower.
"In other words, with the right actions coming out of Washington to stabilize the market, the rate increase from Blue Cross NC would have been between 5% and 6%," Tajlili wrote. "That looks a lot different from the 22.9% we filed."
Blue Cross NC CEO Brad Wilson was even more direct in his criticism of Washington.
"The failure of the administration and the House to bring certainty and clarity by funding CSRs has caused our company to file a 22.9% premium increase, rather than one that is materially lower," Wilson told The Washington Post. "That will impact hundreds of thousands of North Carolinians."
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