Monday, October 02, 2017

The ACA is London after the Blitz

Trump administration sabotage of the ACA has done serious damage and will likely do more. Uncertainty over CSR reimbursement and enforcement of the individual mandate have themselves driven premiums up by over 20% in 2018 (Gaba's estimate) and driven many insurers out of the individual market.

Those premium hikes will probably knock several million unsubsidized buyers out of the individual market.  Weakened mandate enforcement, real or perceived, will probably reduce the numbers of people enrolled not only in the individual market but also in employer-sponsored insurance and Medicaid. An increased percentage of unsubsidized enrollees in the individual market who do stay in will probably be underinsured, pushed into bronze plans and/or overburdened by the combination of rising premiums and out-of-pocket costs. Poor-to-nonexistent outreach from HHS may result in many current marketplace enrollees failing to shop anew and so re-enrolling in a suboptimal plan. Trump's threat to issue an executive order that reportedly would empower association health plans to evade state regulation via ERISA could bleed health enrollees out of the individual market.

Red states, meanwhile, are lining up to accept HHS's invitation to propose work requirements, time limits and more frequent enrollment redeterminations on Medicaid enrollees, which will likely reduce Medicaid takeup.

It's worth keeping in mind, though, that as long as Republicans fail to pass a repeal bill or cap federal Medicaid spending, the damage thus far can be contained, and reversed if and when Democrats regain power -- or, under divided government, Republicans tire of sabotage. Maintaining the ACA's taxes (to fund benefits), the enhanced federal match rate for the Medicaid expansion (and pre-ACA match rates for the rest of Medicaid), the marketplace infrastructure and subsidy structure -- all of that would have been a January dream come true for any ACA advocate.

Federal funding for CSR could yet be sabotaged -- but the damage on that front is largely already done. Ending the federal funding, with adequate warning for insurers, would be highly wasteful and somewhat destructive but would actually result in better coverage for those at the upper end of subsidy eligibility (with incomes in the 201-400% FPL range), while holding harmless those above and below that income band (if handled right).  CBO forecasts that a federal CSR funding cutoff would cost $194 billion over ten years, but also boost coverage by 1 million.

CBO's updated projections for the ACA marketplace are reduced from past years, but CBO forecasts a stable marketplace at more-or-less current levels. Net, CBO forecasts 3 million more uninsured by 2026 than it forecast last year, pre-Trump, pre-sabotage The individual market core is insulated by the subsidy structure, though sabotage with its attendant rate hikes and curtailed participation by insurers hurts upwards of ten million subsidy-ineligible people. Trump's threatened executive order could further intensify adverse selection in the marketplace -- but again, roughly ten million subsidy-eligible enrollees would be insulated.

Of course the threat of repeal, or other ruinous cuts to federal healthcare spending, such as per capita caps on Medicaid, remains very real, and will remain live unless/until Democrats win back at least one house of Congress. But meanwhile, the ACA is like the U.K. after the Battle of Britain - battered but still standing.

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