Let the unraveling begin.
Experts say the executive actions taken last week by President Donald Trump on the nation’s healthcare system will cause dramatic changes.
Those impacts could be felt as early as this week, experts say, and certainly in the weeks after the latest enrollment period for the Affordable Care Act (ACA) insurance marketplaces, which begins on Nov. 1.
The actions brought swift condemnation from health-related organizations across the board, as well as quick legal action.
On Friday, 18 states and the District of Columbia filed a joint lawsuit against the president’s decision to immediately stop the payments to insurance companies that subsidize policies purchased in ACA marketplaces by lower-income consumers.
The next monthly payment on those subsidies was scheduled for this Wednesday.
The insurance subsidy decision was announced by the White House late last Thursday.
A few hours earlier, President Trump unveiled an executive order that’ll allow small businesses and individuals to form association health plans.
That order also allows individuals to purchase short-term insurance plans for up to one year.
In addition, it encouraged the loosening of regulations of health savings accounts (HSAs).
The president said he was taking the action because Senate Republicans failed on several attempts this year to approve a plan to repeal and replace Obamacare
“With these actions, we are moving toward lower costs and more options in the healthcare market and taking crucial steps toward saving the American people from the nightmare of Obamacare,” Trump said at the signing of the executive order.
However, healthcare leaders across the country said the president’s actions will have nightmarish effects on their industry.
On Saturday, America’s Health Insurance Plans (AHIP) released a letter along with seven other organizations urging Congress to fund the ACA insurance subsidies.
The groups said the president’s action will drive up premiums and reduce options.
“We strongly believe that this funding must continue for the good of the American people. We have consistently maintained that uncertainty around [the] funding drives up costs and reduces choice for those who buy their own coverage,” the statement read. “The administration’s decision to end this essential support for millions of Americans will have harmful consequences for patients, families, businesses and taxpayers.”
Experts interviewed by Healthline agreed that the White House’s actions will drive up insurance premiums and cause insurance companies to drop out of ACA marketplaces.
Mary Ann Hart, an associate professor in the health administration graduate program at Regis College in Massachusetts, put it succinctly.
“I can’t think of one positive thing [about these orders],” she told Healthline.
The insurance subsidies
The federal government paid $7 billion in cost-sharing reduction (CSR) payments to insurance companies participating in the ACA marketplaces this past year.
Those payments were expected to reach at least $9 billion next year.
The payments cover more than 6 million consumers in the ACA marketplace.
Trump said the payments are in essence a “bailout” to an insurance industry that’s getting rich at the expense of taxpayers.
He also said the White House isn’t legally authorized to make those payments, as it’s Congress’ responsibility. That point has been the subject of a legal battle for the past several years.
“The insurance companies… made a fortune, that money was a subsidy and almost, you could say, a payoff for insurance companies,” the president told reporters on Friday.
Trump received support for his decision from the Citizens’ Council for Health Freedom, an organization advocating for the complete repeal of Obamacare and returning the authority over healthcare services to the states.
“[The council] has been calling for the end of the unconstitutional CSR subsidies for many months and applauds the decision as a step in the right direction toward restoring health freedom for all Americans,” the organization said in a statement.
However, virtually every other health organization said the decision will have disastrous consequences.
The American Medical Association (AMA) said it was “deeply discouraged” by the decision.
“This most recent action by the administration creates still more uncertainty in the ACA marketplace just as the abbreviated open enrollment period is about to begin, further undermining the law and threatening access to meaningful health insurance coverage for millions of Americans. Our patients will ultimately pay the price,” the AMA said in a statement.
Hart added the president’s action will encourage insurance companies to leave the ACA marketplace next year as well as raise premiums.
“The elimination of cost-sharing reductions is part of the Trump plan to unravel the Affordable Care Act,” she told Healthline. “It will make health insurance unaffordable for low-income people who are unable to get insurance through employment or through Medicaid. It will weaken insurance markets by encouraging private insurers to exit the health insurance exchanges, reducing competition and consumer choice, and raising premiums in the remaining private plans in those markets.”
Kurt Mosley, vice president of strategic alliances for Merritt Hawkins health consultants, agreed that insurance firms will drop out of the ACA system.
“It would give insurance companies a legitimate reason to drop out of the state exchanges because it violates the subsidy agreement that they had when they entered the marketplaces,” Mosley told Healthline.
Dr. Cameron Webb, a member of the Doctors for America board of directors, said the elimination of the subsidies will have an “incredible impact.”
“It’s pulling the floor out from under the most vulnerable Americans,” he told Healthline.
Chris Sloan, a senior manager at Avalere Health consultants, said the subsidy decision has serious consequences for insurance companies.
He explained that those companies won’t get the payments for the final three months of this year. They’ll have to absorb the losses.
“The health plans are just going to have to eat it,” Sloan told Healthline.
In addition, most firms have already locked in their ACA premiums for 2018. Some were able to include the possibility of the subsidy elimination in the premium adjustments they submitted to states this summer.
However, none of them will be able to change those premiums next year unless they get special permission from the states.
The result, Sloan said, will be that many insurance firms will drop out of the ACA marketplace.
“They just can’t continue to eat those losses,” he said.
Sloan added that even if the orders were withdrawn in the next few weeks, the decisions have created instability that could reverberate through next year.
“Instability in itself matters,” he said.
The executive orders
The experts also see some negative impacts coming from Trump’s executive order.
The action has several components.
First, it allows individuals and small businesses to form “association health plans” and purchase insurance policies across state lines.
Trump said the plans will increase options for consumers and lower their healthcare costs.
“This will create tremendous competition and transformative — in so many ways — change aimed at creating more and lower prices for millions of Americans,” the president said in his Thursday remarks. “But the competition will be staggering. Insurance companies will be fighting to get every single person signed up, and you will be hopefully negotiating, negotiating, negotiating, and you’ll get such low prices for such great care.”
Mosley said there are some positives to the proposal.
He said it could help small businesses provide affordable healthcare to their workers. It could also increase the number of Americans with health insurance.
“It’s a good idea if it lowers premiums and expands access,” he said.
However, Mosley and other experts see some problems with the setup.
For starters, insurance companies might have to deal with different healthcare rules from state to state. There’s also the possibility that claims against a particular plan might exceed the money that plan has available to pay.
Hart noted that these plans aren’t subject to the minimum standards for insurance set under the ACA.
The plans could, for example, prohibit people with preexisting conditions. Or they could charge higher premiums for people with chronic conditions.
Hart said these “junk insurance” plans were around before the ACA, and they didn’t always work well.
“It’s not a new idea. It’s an old idea that is coming back,” she said. “We’re going back in time.”
Dan Mendelson, president of Avalere Health, said the system could provide plans with an “invitation to cherry-pick” states with the most lax regulations.
The state of Tennessee has a version of these association health plans. According to a report on Vox, things haven’t gone all that well.
Among other things, Tennessee has some of the highest ACA premiums in the country.
Some organizations see the same thing happening nationwide.
“The executive order would allow junk plans to be sold to consumers without adequate protections, including coverage of essential health benefits such as prescription drugs and maternity care,” Public Citizen said in a statement. “As a result, these plans could be sold more cheaply, and plans would target younger and healthier people.”
"This is an all-out assault on the consumer protections gained under the Affordable Care Act, creating sub-par health care for some and higher costs for others,” added the American Nurses Association in a statement. “Patients could be sold insurance plans that do not cover essential health services, like contraception, mental health care, and addiction treatment; patients with pre-existing conditions may not be able to afford coverage.”
The president’s order also allows individuals to buy short-term limited duration insurance policies for up to a year. Those plans are limited to 90 days under Obamacare.
Trump said on Thursday these policies will allow people who are between jobs or don’t want to participate in the ACA marketplace to have health insurance at about a third of the cost of an Obamacare plan.
Indeed, the average cost of ACA premiums in the final quarter of 2016 was $393 per month, compared to $124 for short-term policies.
However, health experts point out that these policies also aren’t required to meet minimum Obamacare standards.
“That’s the standards we want to have with insurers,” said Webb, who served as a White House fellow from August 2016 to August 2017, advising both the Obama and Trump administrations on healthcare. “We’re going to go back to the Wild West.”
Webb said people could buy these policies and then be bankrupted if a serious health condition arises during that year.
“You have to be protected,” he said.
The experts also note that these plans could draw away healthy, young individuals from the ACA marketplace.
This could cause premiums to rise in the marketplace as well as with employer-based health insurance plans.
“This could raise premiums for most consumers,” said Mendelson.
The American Cancer Society said the order threatens the healthcare of people fighting deadly diseases.
“Exempting an entire set of health plans from covering essential health benefits like prescription drugs or specialty care and allowing expansion and renewability of bare-bones short-term plans will split the insurance market,” the organization said in a statement. “If younger and healthier people leave the market, people with serious illnesses like cancer will be left facing higher and higher premiums with few, if any, insurance choices.”
Advocates for people with HIV had similar concerns.
“This order could undermine critical health insurance consumer protections in the small group market and lead to the erosion of these protections in the individual market depending on how it is implemented,” said Dr. Melanie Thompson, chair of the HIV Medicine Association, in a statement. “Under these new options, some people living with HIV and others with chronic medical conditions would be unable to afford health insurance and the life-saving medications and healthcare it provides.”
The final component of the executive order sets in motion plans to make HSAs more available to consumers.
The experts said these accounts have some positive attributes.
“HSAs are the way to go,” said Mosley. “Among other things, they help patients be more responsible [with their healthcare costs].”
However, Hart warned about consumers relying on those accounts.
“HSAs can be useful,” she said, “but they are not a panacea or a replacement for good health insurance.”
All in all, experts aren’t optimistic about the healthcare industry if Trump’s actions aren’t just a negotiating tactic with congressional Democrats and do indeed take hold next year.
“They undermine Americans’ faith in the marketplace,” said Webb.
Mosley noted that the bottom line is still with doctors.
He noted that you can have any kind of insurance you want, but if your doctor doesn’t accept it, then you aren’t covered.
“Doctors always have the last say on this,” Mosley said.