Five things to know about Trump’s controversial ObamaCare decision


The Trump administration’s decision to end payments to insurers meant to help low-income people afford their insurance has set off a battle in the courts and new fears about the possible collapse of former President Obama’s health-care law.

Ending the payments is the most dramatic step taken to date by President Trump, who has been frustrated with the GOP Congress’s inability to repeal the law.

{mosads}Trump has talked about allowing ObamaCare to implode, and his critics believe he is pushing that along with his actions.

Here’s what ending the payments will mean, both for the law itself and for the people who use it to purchase health insurance.

Ending the payments won’t kill ObamaCare.

Trump’s move wasn’t a complete surprise, and while it will cut into the law it won’t kill it off.

Many states and insurers had been preparing for Trump to take this step, and they will be spared from the brunt of the impact.

Still, challenges for the exchanges are coming.

The administration already loosened restrictions on the plans that insurance companies can offer.

In combination, the moves mean there will likely be fewer people signing up for insurance during the upcoming open enrollment period, which begins Nov. 1, according to Joel Ario, a managing director at consulting firm Manatt Health. People who do sign up will likely be sicker, which could make insurance more expensive.

But Ario, who served as director of the Health and Human Services’ Office of Health Insurance Exchanges under Obama, said people shouldn’t expect the insurance markets to collapse into the dreaded “death spiral,” so long as the law protects people with pre-existing conditions and provides tax credits to help people lower their premiums.

Those policies can only be changed by Congress, not by executive decision.

“There’s going to be a core number of people in these marketplaces, so there’s not much of a chance of collapse, but they will certainly languish,” Ario said.

Premiums, however, could rise

Insurers across the country were already raising rates because of uncertainty surrounding the law, and cutting off the insurer payments just makes the likelihood of hikes greater.

Insurers already had to provide states with their expected rates, though some states, understanding what Trump might do, allowed them to file two different rates to account for the possibility that the federal payments could be cut off.

Washington state’s insurance commissioner Mike Kreidler said rates for his state assuming the payments would not be made are substantially higher than those that assume the payments will be made.

“That increase, to me, is a tax that’s being imposed by the president on the people that are most financially challenged,” Kreidler said.

People who receive federal subsidies likely won’t feel these costs, but the millions of people who are not eligible will get hit.

“Insurers will get hit in the short term, but they’re pretty good at passing on their costs, whether it’s through rate increases or other strategies,” Ario said.

Insurers could leave the marketplaces

Since open enrollment begins in less than three weeks, there’s not a lot of time for insurers to decide if they will continue to participate in state exchanges.

ObamaCare requires carriers to continue providing lower deductibles and co-pays for lower-income individuals for the rest of this year. But without the federal payments, insurers will no longer get a subsidy to do so, and plans could decide it’s better to cut their losses and leave.

“As I look around the country, clearly some states are on very shaky ground, and you could see the collapse of individual markets in a number of states,” Kreidler said.

Whether insurers are actually allowed to leave depends on state laws, said Elizabeth Carpenter, a vice president at Avalere Health. If states allow plans to file new rates, there may be an incentive for them to stay, she said.

Kreidler said he worries about a domino effect.

“At some point, insurers may say it’s just too unstable for us to stay in this market. If everyone else catches a cold, I’m not sure we can keep from coming down with one too,” Kreidler said.

There could be lawsuits from insurers

Insurers are likely to sue the Trump administration, seeking to force it to make the payments. Experts believe the government has a legal obligation to provide the payments, and think insurers have a strong case.

In a blog post, Nicholas Bagley, a law professor at the University of Michigan, noted that the government made promises to insurers that the payments would be made. According to Bagley, the payments represent an entitlement, and the courts have been clear that the government needs to pay entitlements, or be in default.

Kreidler said he is still instructing plans to continue pricing as if the payments will be made.

“We’re leaving the door open. If a temporary restraining order was issued by the court, I don’t want to tell [insurers] they won’t be paid. I don’t want to backtrack,” said Kreidler, who acknowledged that circumstances could change quickly.

Some states are already taking action.

Eighteen states and Washington, D.C., are signing onto a new lawsuit, which was filed Friday.

The complaint will seek a temporary restraining order, preliminary injunction and permanent injunction requiring the cost-sharing reduction payments be made.

But the lawsuits could take time, and insurers may not be able to wait.

President risks getting blamed for ‘Trumpcare’

Trump landed two major hits on ObamaCare this week with the insurance executive order and the decision to end the payments to insurers.

In doing so, he runs the risk of being blamed for problems in the health-care system.

A new poll by the Kaiser Family Foundation found that a large majority of the public — 71 percent of respondents — said they want to see Trump to try and make ObamaCare work rather than make it fail.

The poll also found that 60 percent favor Congress guaranteeing the insurer payments while 33 percent say they are a bailout and should be stopped.

“I think when [Trump] exercises his own executive authority and acts solely on his own, he owns this, and you will see this increasingly called Trumpcare,” Ario said. “It’s hard to take the actions he’s taken and then say he bears no responsibility for the consequences of those actions.”

Tags Affordable Care Act Health insurance ObamaCare
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