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JD Vance is catching a lot of flak for seconding Trump’s debate assertion that when “Obamacare was collapsing…[it wasn’t], he chose to build upon it and make it better” — and for claiming that Trump currently has a healthcare reform plan.
While Vance’s claims are misleading, and the “concepts of a plan” he went on to sketch out would harm the ACA marketplace, not help it, it is in fact true that after Republicans’ drive to substantially repeal the ACA collapsed in 2017, the Trump administration did implement measures that according to conservative precepts would improve markets. A second Trump administration would probably more or less repeat those measures and extend them - -if it fell short of substantially repealing the ACA.
Here is part of what Vance sketched out (via my own near-verbatim transcript):
President Trump’s healthcare plan is actually quite straightforward: you want to make sure pre-existing conditions are covered, make sure people have access to the doctors they need…you also want to implement some deregulatory agenda so people can pick a health plan that suits them. Think: a young American doesn’t have the same health needs as a 65 year-old American. A 65 year-old American in good health has much different healthcare needs than a 65 year old with a chronic condition. We want to make sure everyone is covered, but the best way to do that is to actually promote some more choice in our healthcare system and not have a one-size fits all approach that puts a lot of people into the same insurance pools, the same risk pools — that actually makes it harder for people to make the right choice for their families….
He [Trump] of course has a plan for how to fix American healthcare, but a lot of it goes down to deregulating the insurance markets so that people can choose a plan that actually makes sense for them.
Various healthcare experts, including KFF’s Larry Levitt, have taken this as a proposal to establish high risk pools — a favorite conservative nostrum with a long history of being underfunded and inaccessible to those who need them. That may be true in a sense. But based on the past Trump administration actions that Vance alludes to, the “high risk pool” may be the current ACA marketplace itself — after a second Trump administration gets through with it.
The Trump administration’s major initiative to “build on” the ACA marketplace after repeal failed was to stand up (by administrative rule in 2018) a parallel market of medically underwritten, lightly regulated plans by extending the allowable duration of already-existing so-called “short-term, limited duration plans” (STLD) to up to one year, renewable twice. The Obama administration had limited STLD duration to three months, though not until 2016. In combination with the Republican Congress’s zeroing out of the tax penalty for failing to obtain ACA-compliant insurance, the STLD market was an alternative for people who were priced out of the regulated ACA marketplace — as several million people were before the Biden administration removed the income cap on subsidy eligibility via the American Rescue Plan Act (ARPA) in March 2021. (The ARPA subsidy enhancements were temporary, and extended by the Inflation Reduction Act only through 2025.)
STLD plans can refuse access to people with pre-existing conditions or exclude coverage for the condition. They do not have to cover the ACA’s Essential Health Benefits and generally offer very limited prescription drug coverage, if any, and no substance abuse coverage. They are not subject to the ACA requirement to spend at least 80% of premiums on members’ medical bills (and on a few allowed other expenses) and have been reported to spend as little as 45% of premiums on claims. They do not have to offer a provider network and can pay providers what they deem appropriate, exposing enrollees to balance billing. They do not have to provide an annual out-of-pocket cost cap on covered benefits, though some do. They are much like the plans offered in the pre-ACA individual market.
[n.b. the rest of this post more or less remixes my discussion of the STLD market under the last subhead in this post].
Taking the short term and limited duration out of Short Term Limited Duration insurance was a bad solution to a real problem. The Affordable Care Act promised to make adequate, affordable insurance available to all, via public program or private insurance, but under-subsidization meant that the program fell far short of that promise. Most acutely, the income cap on subsidy eligibility (400% of the Federal Poverty Level) ensured that minimum essential coverage was unaffordable to several million people (as the ACA’s guaranteed issue and EHB requirements had raised the price of coverage). In the most extreme case, a pair of 64 year-olds in Nebraska with an income of $67,000 — just over the 400% FPL threshold in 2018— would have to pay an average of $2,667 per month for the lowest-cost bronze plan available. That year, the average bronze plan single-person deductible was $6,002. More broadly, in August 2015 Urban Institute scholars Linda Blumberg and John Holahan calculated, in a proposal for ACA reform, that marketplace enrollees in the 400-500% FPL range (just over the subsidy eligibility threshold) would pay 18% of income for marketplace premiums and out-of-pocket costs at the median and 25% of income at the 90th percentile.
The expanded STLD plan market at least potentially degraded ACA marketplace risk pools while saddling some people with illusory insurance that failed them when they needed it, as several news accounts related. Still, not all STLD plans were (or are) terrible. Some have extensive provider networks and out-of-pocket cost caps. For some customers not shut out of coverage for a serious pre-existing condition, they offered better-than-nothing coverage at a price well below ACA marketplace coverage — though ARPA’s removal of the income cap on subsidy eligibility vastly reduced the pool of people for whom this is true (and letting the ARPA subsidy boosts expire is therefore essential to remaking the market along these lines). From a healthcare conservative’s perspective, Trump could be said to have “built on” the ACA — though his measures plainly were designed to undermine the ACA-compliant individual market.
To further stimulate the parallel market, CMS administrator Seema Verma proposed loosening the requirements for state “innovation waiver” proposals authorized under ACA Section 1332 and issued a set of “waiver concepts” inviting states to propose schemes that would enable ACA-noncompliant plans to access federal premium subsidies. Georgia was the only state to partially accept the invitation, filing a waiver proposal in late 2020 that, along with establishing a reinsurance program, would eliminate a centralized state-sponsored exchange, establish a “copper” plan level with an actuarial value below the minimum required by the ACA statute, and, in one early iteration, allow plans that did not include all EHBs to be paid for with federal subsidies (that provision was cut from the submitted waiver, as it violates the ACA statute too plainly even for Trump-appointed administrators). While the Trump administration approved the waiver in November 2020, the Biden administration suspended approval of all but the reinsurance program, pending redesign. Georgia has now received CMS approval to open a conventional state-based marketplace, albeit the first to enable Enhanced Direct Enrollment on commercial sites. (Promotion of EDE, which facilitates fast work by brokers, is another Trump administration initiative that can be said to have “built on” the ACA, and was continued by the Biden administration — though EDE has recently proved double-edged, enabling large-scale agent/broker fraud. Weirdly, the pending Georgia exchange has certified for use in November two EDE entities suspended by CMS in August for suspected security breaches and participation in enrollment fraud.)
Failing legislative repeal and “replacement” of the ACA along the lines of the Frankenstein-monster Republican bills of 2017 (the AHCA, the BCRA, and Graham-Cassidy) a second Trump administration could be expected to push Verma’s waiver concepts in directions that clearly violate the ACA statute, e.g. by allowing federal subsidies to fund medically underwritten plans or plans that do not include all of the ACA’s required Essential Health Benefits. On this as on all other fronts, a second Trump administration would likely be less constrained by law than the first one. In combination with sunsetting the ARPA enhanced subsidies, such measures could indeed convert the ACA-compliant into a high risk pool, as former Obama-era acting CMS administrator Andy Slavitt warned that Trump’s STLD market would do. That is, with medically underwritten plans eligible for subsidies, only those with pre-existing conditions might choose ACA-compliant that don’t discriminate on the basis of health.
Takeup of STLD plans appears to have been far more limited than some market watchers feared or CBO predicted in the wake of the Trump rule. That’s in part because more than half of states either limited STLD terms on their own (as the Trump administration rule permitted) or banned them altogether. The Biden administration removed most (not all) of the demand for STLD plans as a full-year coverage option via the ARPA subsidy enhancements, and retracted the Trump administration’s extension of allowable STLD plan terms, limiting them once again to three months. A recent Commonwealth Fund analysis concluded:
A modest number of people — no more than one-fifth of the 1.5 million the CBO projected — are likely to have enrolled in STLDI plans that became available after the Trump administration’s regulatory change. This enrollment mainly appears to have displaced marketplace coverage. There is no evidence that the broader availability of STLDI plans had any meaningful effect on nongroup coverage in general or on uninsurance.
If the ARPA subsidy enhancements are allowed to sunset, however, and the Trump administration encourages state initiatives like Georgia’s, effectively eliminating government-sanctioned exchanges and allowing subsidies for ACA-noncompliant plans, Trump’s “concept of a plan” may take chaotic but recognizable shape.
I should add, too, that fraught and important as political combat over the shape of the individual market for health insurance was, is, and will be, to a large extent this fifteen-year battle obscures the core battleground of ACA-related healthcare policy: funding and eligibility for Medicaid. Virtually all formal Republican healthcare proposals, from ACA repeal bills to Republican Study Group plans, Project 2025, and Trump administration budgets, include massive cuts to Medicaid, including rollback of the ACA expansion of Medicaid eligibility. The ACA extended Medicaid eligibility to all citizens and most legally present noncitiizens with incomes up to 138% of the Federal Poverty Level — an expansion rendered optional for states by the Supreme Court in 2012 and currently implemented by 40 states plus D.C. At most recent count (December 2023), some 22 million Medicaid enrollees are rendered eligible by ACA eligibility criteria. Proposed Republican cuts to Medicaid invariably go far beyond repeal of the ACA eligibility expansion by converting Medicaid funding to block grants or imposing per capita caps on funding, plans which CBO has projected will cut funding by about $1 trillion over ten years and $4 trillion over 20 years. Those plans are core to the Republican agenda, and would do more damage than any disfigurement of the individual market.
Ultimately, the pre-existing condition that matters most, and is shared by most Americans (and indeed most humans), is inability to pay full price for health insurance. For most Americans under age 65, an employer pays the bulk of the premium, usually about three quarters of it. In the ACA marketplace, the government fulfills that role for more than 90% of enrollees, paying an average of more than 80% of the premium. In Medicaid, federal and state government pay the entire premium. Republicans want to kick 15-20 million people off Medicaid, sharply cut subsidies in the individual market, and alleviate the cost of those cuts for some by subsidizing medically underwritten, lightly regulated insurance. That’s their concept. That’s their plan.
