It’s bad enough that President Donald Trump has pledged to allow the Affordable Care Act to, as he puts it, “ implode.” But Trump has pledged to do more — to intentionally interfere with the workings of the 2010 health insurance law his administration is charged with enforcing to, as he sees it, accelerate the implosion.
And he won’t make his intentions clear, leaving health insurers in a state of uncertainty at a time when they have to finalize rates for next year’s insurance offerings.
There is at least one certainty, though: If Trump follows through with one of his pledges to interfere with the Affordable Care Act’s workings, he would unnecessarily turn the individual health insurance market on its head.
A new report from the nonpartisan Congressional Budget Office released last week shows how.
What Trump has in mind is stopping monthly payments the federal government makes to health insurers known as cost-sharing reduction payments. Those payments reimburse health insurance companies for minimizing out-of-pocket costs, such as copayments and deductibles, for their lowest-income customers who purchase insurance through the health insurance marketplaces the Affordable Care Act created.
Those marketplaces serve the individual health insurance market — which is where people buy insurance when they don’t receive it through work or through another government program. Most people who purchase insurance through the marketplace qualify for tax credits that reduce the cost of their monthly premiums. The lowest-income consumers who buy marketplace insurance receive help from both those tax credits and the cost-sharing reduction payments.
But if the Trump administration cuts off the cost-sharing reduction payments, health insurance companies would have to make up for the loss. They would do that, the Congressional Budget Office concluded, by raising health insurance premiums. In some cases, the budget office projects, health insurers would withdraw entirely from the insurance marketplaces covering some regions.
Premiums on the mid-grade silver plans offered through the health insurance marketplaces would be 20 percent higher next year than they would be otherwise, it projected, and 25 percent higher in 2020 than they would be otherwise.
The portion of the U.S. population living in an area with no insurers serving the individual market would rise to 5 percent next year, up from the 0.5 percent it would be otherwise. That’s a 900 percent increase.
The budget office points out that the federal government would largely be on the hook for health insurance premium increases the Trump administration would bring on by stopping the cost-sharing reduction payments. Budget deficits would be $194 billion higher over the next decade than they would be otherwise. That’s because most people buying insurance in the individual market qualify for tax credits to defray the cost of their monthly insurance premiums. The amount spent on those tax credits would grow in response to the premium spikes.
The budget office also projects that 1 million more people would lack insurance next year than if the Trump administration simply allowed cost-sharing reduction payments to continue.
Maine’s insurance commissioner recently signed off on double-digit increases for the plans offered through the state’s individual insurance marketplace. This is at least partially attributable to general uncertainty surrounding the Affordable Care Act’s fate. If Trump ends cost-sharing reduction payments, the increases will be even steeper.
The administration has been making the cost-sharing reduction payments month by month since it took office in January. On Wednesday, the Los Angeles Times reported that the administration had decided to make another month’s worth of those payments.
But the president won’t commit to continuing those payments. The lack of long-term certainty, which the Trump administration could eliminate simply by committing to enforce the Affordable Care Act as written, is what is roiling the health insurance market.
Markets need regulatory certainty in order to stabilize. When it comes to health insurance, Trump is providing the exact opposite.