Some bitter pills to swallow in Trump's ACA prescription

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Raise that subsidy cap...

It may be a fool’s errand to write about reported features of a now-stayed Trump administration plan to extend the enhanced ACA premium subsidies for two years, with various conditions and haircuts imposed.

Since House hardliners have stayed the plan, it’s likely to get worse if it ever sees light of day. But as outlined in the various media reports, the pending plan is full of poison pills — or, shall we say, enrollment-inhibiting side effects. The features already floated raise a question we may well be confronted with: If Republicans do coalesce round a plan something like what’s been floated, would Democrats (most, some, a handful) get on board? Should they?

Let’s consider the constraints imposed on the enhanced subsidy schedule in the Trump outline.

The HOPE Act, extending enhanced ACA subsidies with a slight haircut, is cause for...hope

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Pandora...don't ignore her

Picture yourself in a boat on a river, with tangerine trees, and a Republican party that grounds genuine fiscal conservatism (the kind that eschews multi-trillion-dollar tax cuts) in fact rather than in lies and fantasy. What might a compromise on extension of the enhanced premium subsidies in the ACA marketplace look like?

Stop presses: It might look like the bill put out by the Problem Solvers’ caucus today. (I mean ‘‘stop presses” literally, as I was sketching out my own compromise here when I came across the bill in question.)

The Healthcare Optimization Protection Extension (HOPE) Act (summary here, bill text here) was introduced today by Problem Solvers members Tom Suozzi (D-NY), Don Bacon (R-NE), Josh Gottheimer (D-NJ), and Jeff Hurd (R-CO). It addresses two legitimate concerns about the enhanced premiums subsidies (eAPTC) created by the American Rescue Plan Act and currently funded only through 2025: that they spend too much money subsidizing high-income enrollees (questionable, but not absurd), and that they opened an easy pathway to fraud (true, but only in concert with other factors that can be addressed to shut the fraud down).

The HOPE bill only lightly increases the premium burden at incomes over 600% of the Federal Poverty Level ($93,900 annually for an individual, $126,900 for a couple, $192,900 for a family of four). The subsidy “cliff” — the cap on eligibility — goes back in place, but rises from the pre-ARPA (and now pending) 400% FPL to 935% FPL. The new cliff will take a substantial bite from some pretty affluent individuals and families, as explored below, but the ranks of those affected are small.

100 Years of ACA Repeal

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Please, Sir, may I have my inadequate calorie ration up front?

In its initial lightly sketched form, Senator Bill Cassidy’s ACA reform plan is the least bad of several Republican proposals, in that it extends funding for the enhanced ACA premium subsidies (eAPTC) that will otherwise expire at the end of 2025, while redirecting them.

As outlined to the Washington Examiner, Cassidy’s proposal would end eAPTC but use the $26 billion estimated cost to fund Flexible Spending Accounts (FSAs) for subsidy-eligible ACA enrollees — that is, funds to spend directly on out-of-pocket costs (or other medical costs, e.g., dental). As Charles Gaba notes, it’s unclear whether each enrollee’s FSA would be funded with the amount of eAPTC she would have been eligible for, or whether the FSA would be flat-rate or allocated by some other formula. (Cassidy emphasizes that HRAs, unlike Health Savings Accounts, are use-it-or-lose it, saving the federal government money from enrollees who access little or no medical care in a year.)

The incentive for most enrollees would be strong to use their reduced premium subsidies to buy a bronze plan (average deductible about $7,400) and use the FSA to cover first-dollar expenses. That’s donut-hole coverage, as the FSA wouldn’t cover all expenses up to the deductible or annual out-of-pocket maximum (as high as $10,600). It would work for a lot of people, while leaving lots more who would otherwise have been in high-CSR silver (actuarial value 94% or 87%, in contrast to 60% for bronze) saddled with thousands more in out-of-pocket expense.

A tincture of gold mitigation in the 2026 ACA marketplace

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Trumpcare 2.0 is also gold-laden

Amidst the carnage wrought by the (still reversible) expiration of the enhanced subsidies in the ACA marketplace, one substantial mitigating factor has emerged: silver loading has reached a milestone. While net-of-subsidy premiums for benchmark silver plans will more than double for the average subsidized enrollee, the average lowest-cost gold plan will be priced below the benchmark (second-cheapest) silver plan for the first time.

That average masks a ton of variation: the average lowest-cost gold plan is priced below benchmark in only 20 states. But those states include Texas and now Florida, which together accounted for more than a third of all enrollees nationally (8.7 million). In total, average lowest-cost gold plans have premiums below benchmark in 20 states with 12.7 million enrollees, 52% of all enrollees nationwide. (In another 12 states, lowest-cost gold premiums average less than 105% of benchmark premiums.)

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CMS spin on the ACA marketplace, threaded through the Washington Post

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To have or have not..or have a lot less

My last post delved into CMS’s spin on the expiring enhanced ACA subsidies — that is, the agency’s focus on a) the comparatively modest increase in subsidized enrollees’ premiums for the lowest-cost bronze plan available in 2026 (up a mere 35%, compared to the 114% increase for benchmark silver calculated by KFF) and b) on a relative reduction in the lowest-cost bronze premium compared to 2020 (seven OEPs ago!).

I am sorry to see this distorted frame adopted in the Washington Post by a veteran ACA reporter, Paige Cunningham. The article is not factually inaccurate (though I can’t quite make some of the premium quotes work), but it downplays the impact of expiration of the enhanced subsidies on those who remain subsidized.

Here are the select facts Cunningham reports through the CMS filter: