President Donald Trump’s executive order to allow cheaper but less comprehensive health plans into the insurance marketplaces is bad. His decision to stop providing cost sharing subsidies to insurance companies is disastrous. The bipartisan group of senators who worked in the wake of the failed attempts to repeal the Affordable Care Act now must urgently resurrect their efforts, and, failing that, Democrats must put the brakes on the rest of the Republican agenda until the stability of America’s insurance marketplaces is restored.
The first part of Mr. Trump’s two-pronged effort to undermine Obamacare may sound benign on the surface. He wants to encourage groups of small businesses to pool together to buy insurance coverage, on the theory that doing so would drive down costs, and he wants to broaden the definition of short-term insurance in a way that would allow more individuals to buy policies that are exempt from the ACA’s minimum coverage requirements and would thus presumably be less expensive.
The association health plans are not a new idea, but whatever advantage they may have had in terms of pooling workers to reduce costs has already been accomplished by the insurance exchanges. More worrisome, many of these plans would likely be exempt from the ACA’s minimum coverage requirements, and, combined with the expansion of the definition of short-term insurance, they would have the effect of pulling younger, healthier patients out of the pool for comprehensive insurance, raising rates for those older and sicker patients who need it. Of course, it’s an open question whether the younger, healthier patients will be buying insurance of any kind, given the signals from the Trump administration that it won’t enforce the requirement that virtually all individuals have health insurance.
But if those moves present long-term challenges to the nation’s health care system, the end of cost sharing subsidies is an immediate crisis. The ACA requires insurers to subsidize certain out-of-pocket expenses for low-income consumers, such as co-pays and deductibles, and the federal government is supposed to reimburse the insurers. The Republican Congress has not specifically authorized those payments, but the Obama administration, and so far the Trump administration, have continued to make them, on the grounds that a prior congressional action made them permissible.
The question of whether that is legal has been hotly disputed in courts. But what is beyond dispute is that the payments are necessary to the overall working of the ACA. Without it, insurers can and likely will pull out of some state insurance exchanges. In other places, premiums will skyrocket as insurers absorb an extra $9 billion in costs next year. State regulators in Maryland approved rates for next year based on the assumption that the Trump administration would continue making the payments, so increases are almost certainly on the way. Just how much, regulators are scrambling to figure out with just weeks to go before open enrollment begins. Nationwide, the likely impact of higher prices on exchanges will be more people dropping out of health coverage, which will lead to both higher uncompensated care costs, which the rest of us pay for one way or another, and even higher premiums.
Some state attorneys general, including Maryland’s Brian E. Frosh, have already indicated that they’ll sue to restore the subsidies. But the matter really ought to be handled through the political process.
Mr. Trump followed up his twin salvos against the Affordable Care Act by inviting Democrats to call him to cut a new deal. They shouldn’t bother. As the debacle over his handling of the Deferred Action for Childhood Arrivals program proves, he’s an unreliable negotiating partner. And lack of legislative accomplishments thus far coupled with his escalating feuds with members of his own party in Congress suggest that he has no ability to deliver votes on Capitol Hill.
The inability of the Senate to coalesce around any effort to replace the Affordable Care Act casts doubt on Congress’ ability to act now, but there are signs that at least some Republicans might be willing to step up to stave off this disaster. Sen. Lamar Alexander, a Tennessee Republican, and Sen. Patty Murray, a Washington Democrat, have been engaged in an attempt at bipartisan legislation to shore up the insurance marketplace, and both are on record opposing an immediate end to these subsidies. Other Republicans have reportedly warned the president that if he cuts them off, the GOP would get the blame for the chaos that ensues.
House Speaker Paul Ryan, meanwhile, issued a statement applauding Mr. Trump on the grounds that his action was an important validation of Congress’ power over the purse — not because the subsidies are bad policy.
No doubt, there are members of the conservative wing of the Republican Party in both the House and the Senate who would never vote to shore up the health insurance marketplaces. But whether enough others appreciate the humanitarian consequences of disrupting health insurance coverage for millions of Americans, surely they recognize the political ones of doing so on the eve of midterm elections. Democrats need to make clear that they will do whatever it takes to restore these subsidies, not because President Barack Obama’s legacy is at stake but because Americans’ lives are.
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