JAMA Forum: The Health Care Law That Continues to Escape Death

Image: ©iStock.com/Ellenmck

During the debate this year over repealing and replacing the Affordable Care Act (ACA), some took to calling the Republican health care proposals “zombie bills” because such proposals kept coming back from apparent death—only to really die, at least for the time being, when the Senate lacked the votes for the latest proposal, the Graham-Cassidy bill.

Now, it’s the ACA itself that refuses to die, despite President Trump’s  recent comment that,  “It’s dead. It’s gone. It’s no longer—you shouldn’t even mention. It’s gone.”

Touch and Go

The ACA survived this year’s debate with all of its benefits and requirements intact. But going into open enrollment for the ACA insurance marketplace—which began November 1 and runs through December 15—things have seemed touch and go, in large part because of actions and statements by the Trump administration.

President Trump’s “it’s dead” comment was referring to the ACA’s marketplace. There is nothing dead about the ACA’s Medicaid expansion in 32 states (plus the District of Columbia), which covers more people than the marketplace does, or its insurance protections (such as those for people with preexisting conditions), or other benefits, like coverage of dependents up to age 26 years on their parents’ plans.

The administration took actions widely perceived as designed to undermine the marketplace, including

  • Terminating payments—totaling an estimated$7 billion in 2017—to insurers to compensate them for the ACA’s requirement that they provide reduced cost-sharing to marketplace enrollees who have incomes up to 250% of the poverty level.
  • Reducing federal fundingfor outreach by 90%
  • Reducing grants to community-based navigators who help people sign up for coverage by 41%.

If these efforts were intended to make the marketplace implode, they may, in fact, be backfiring.

It’s much too early to draw any firm conclusions, but in the first week of open enrollment, sign-ups in the federal insurance market totaled 1,478,250, including 345,719 new consumers and 1,132,531 renewing consumers. On an average daily basis, total sign-ups are up 60% over the start of last year’s open enrollment period, and sign-ups among new consumers are up 53%.

Enrollment tends to surge just before the deadline, and the open enrollment period is shorter than last year (when it ran until January 31). These increases in sign-ups could therefore prove illusory, but they are also hardly the picture of a program that is dead.

One possible explanation for this apparent success is the peculiar math resulting from the termination of cost-sharing subsidy payments to insurers.

Insurers still have to provide reduced deductibles and copays to low-income enrollees, so they are making up for the loss of federal payments by increasing premiums. However, in the vast majority of states, insurers—in many cases at the direction of state insurance departments—have increased premiums only for silver-level plans. These silver plans have special significance because they are the only plans in which low-income consumers can receive reduced cost-sharing and because they also are the benchmark for federal income-related premium subsidies provided to marketplace enrollees. The Kaiser Family Foundation (KFF) estimates that insurers have added a surcharge on silver premiums for 2018 ranging from 7% to 38% to compensate for the loss of federal cost-sharing payments.

The result is that low-income consumers eligible for cost-sharing reductions are at worst held harmless, since they can still enroll in silver plans and the federal premium subsidies rise dollar for dollar with the increased premiums. Middle-income people buying their own insurance can also avoid the premium surcharges by buying bronze or gold plans.

Interestingly, the higher premiums for silver plans, and the higher premium subsidies that result, are making bronze and gold plans even cheaper for low-income enrollees. The premium subsidies function like a voucher that enrollees can use in any plan. The KFF estimates that 42% of uninsured people eligible to buy in the marketplace plan can get a bronze plan for zero premium after accounting for premium subsidies. These bronze plans come with high deductibles—averaging $6002 per person in 2018—so they may not be the best choice for everyone. But a free insurance plan is certainly better than being uninsured, and that represents a powerful marketing opportunity.

The ACA’s Medicaid expansion may also be getting some momentum from the recent referendum in Maine, where residents voted decisively to become the 32nd state (plus the District of Columbia) to adopt the expansion.

Potential Roadblocks 

To be sure, there are plenty of potential roadblocks ahead for the ACA. For example:

  • Premiums in the individual insurance market have been increasing substantially, even aside from the surcharge related to the termination of cost-sharing subsidy payments. This threatens to put insurance out of reach for middle-class consumers buying on their own without the benefit of premium subsidies.
  • The Senate has added repeal of the ACA’s individual mandate to its tax bill. Repealing the mandate would, according to the Congressional Budget Office, result in 13 million more people uninsured by 2027, increase premiums in the individual insurance market by 10% while also reducing the federal budget deficit by $338 billion over the next decade (which is why it’s a potentially attractive addition to the tax bill).
  • President Trump recently issued an executive order directing federal agencies to write regulations to expand access to loosely regulated association health plans and short-term insurance policies. Short-term insurance plans—which do not have to comply with the ACA’s required benefits and can exclude coverage of preexisting conditions—could destabilize the ACA marketplace, particularly if the individual mandate is waived for people who buy those plans (which is not the case now).

It is also possible that next year, Congress could return once again to efforts to repeal and replace the ACA.

But, at least for now, the ACA seems very much alive.

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About the author: Larry Levitt, MPP, is Senior Vice President for Special Initiatives at the Kaiser Family Foundation and Senior Advisor to the President of the Foundation. Among other duties, he is Co-Executive Director of the Kaiser Initiative on Health Reform and Private Insurance. (Image: Ted Grudzinski/AMA)

 

About The JAMA Forum: JAMA has assembled a team of leading scholars, including health economists, health policy experts, and legal scholars, to provide expert commentary and insight into news that involves the intersection of health policy and politics, economics, and the law. Each JAMA Forum entry expresses the opinions of the author but does not necessarily reflect the views or opinions of JAMA, the editorial staff, or the American Medical Association. More information is available here and here.

 

 

 



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