Tagged Insurers

5 Ways White House Can Use Its Muscle To Undercut Obamacare

President Donald Trump has vowed to “let Obamacare fail,” after legislative efforts to undo the Affordable Care Act have stalled.

He and congressional Republicans have repeatedly portrayed the Affordable Care Act insurance marketplaces, also known as exchanges, as being in a “death spiral.” But independent analyses have concluded that such spontaneous disintegration isn’t happening.

In a number of ways, the Trump administration’s policies are pushing Obamacare into the vortex.

Reports from Standard & Poor’s, the Congressional Budget Office and the Kaiser Family Foundation all suggest that the exchanges — where people can shop for coverage, often with the help of a government subsidy — are stabilizing. (Kaiser Health News is an editorially independent program of the foundation.)

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But, like every piece of legislation, Obamacare faces a difficult political reality: Its marketplaces require active maintenance and federal support.

The White House can take a number of behind-the-scenes steps to sabotage the exchanges and hasten their undoing. Already, it’s deploying some of those tactics.

“The administration has a lot of power to undermine the markets and make them dysfunctional,” said Sabrina Corlette, a research professor at Georgetown University’s Center on Health Insurance Reforms, who specializes in private insurance markets.

Here’s a look at five ways the White House is already working to weaken the health law, and what that means for consumers.

‘Cost-Sharing Reductions’

Under the ACA, when someone’s income falls between 100 and 250 percent of the federal poverty level — up to about $29,000 for an individual or around $61,000 for a family of four — marketplace carriers must offer a plan with “cost-sharing reductions” (CSRs) that reduce consumers’ out-of-pocket expenses.

Reducing cost-sharing — generally copayments and deductibles — makes plans more expensive for the insurers. The Obama administration used its rule-making power to set up direct payments to carriers to help offset this burden. The Trump White House has inherited that responsibility but also has the power to end the payment program.

The nonpartisan Congressional Budget Office estimated CSR subsidies in 2017 would total about $7 billion. Without that money, analysts say, more insurers might choose to exit, limiting options for consumers, and letting the insurers who remain charge higher prices.

Trump has been committedly noncommittal, publicly indicating he would like to halt the subsidies, but so far — on a month-to-month basis — letting them continue.

The uncertainty makes insurance companies skittish about participating, analysts noted. It’s also one reason some plans say they have had to increase their rates, noted Charles Gaba, a Michigan-based blogger who tracks ACA sign-ups. For instance: When filing plans for the 2018 marketplace, carriers on average raised premiums by about 34 percent — with about 20 points stemming from CSR uncertainty, Gaba said, based on an analysis of 21 states’ initial rate filings. Dropping the subsidies altogether would be even more damaging.

Weaken The Mandate

The White House has already signaled it does not want to enforce the individual mandate — the health law’s requirement that all people have coverage. And administration officials have repeated that position.

Meanwhile, in January, it issued an executive order that encouraged U.S. agencies to grant exemptions and waive or defer health law provisions that could put financial strain on companies or individuals — which could also be applied to the individual mandate.

For 2016 tax returns, though, the Internal Revenue Service continued to impose a financial penalty on people who didn’t have health insurance and who didn’t qualify for an exemption.

But enforcement may be waning. This year, the IRS was supposed to reject tax returns if people didn’t indicate whether they had coverage, flagging them for a potential penalty. Instead, it continued processing them, citing Trump’s executive order.

If the IRS has already processed any tax refunds for consumers, then they “don’t have much leverage” when attempting to collect the mandate fee, said Timothy Jost, emeritus law professor at Washington and Lee University in Virginia and an expert on health reform.

Enforcement of the mandate enforcement, economists note, is crucial to ensuring that enough healthy people buy coverage to balance the costs of sicker beneficiaries.

But even with the mandate in effect, the efforts to defang it bring confusion.

“A lot of people believe the Trump administration is not enforcing it,” Jost said.

As a result, healthy people may become less likely to buy insurance, even as sick ones continue seeking it. That means higher prices, and a shakier pool.

“If they don’t think they’re going to get healthy people in the risk pool, they’re going to increase their rates further to protect themselves,” Jost said. “And as they raise their rates further to protect themselves, people … start to drop out.”

Thus, the president’s position on the mandate is leaving insurance carriers and commissioners “apprehensive,” noted Mike Kreidler, Washington state’s insurance commissioner.

A Bare Market

Skittishness on the part of insurers could lead them to drop out of some marketplaces, leaving consumers in some areas with few or no choices. Those “bare markets” are possible under even stable circumstances — and preventing them requires active federal involvement.

Under the Obama administration, high-level officials were “on the phone daily with insurance company executives … trying to get them to participate,” Corlette said. “It was very much an all-hands-on-deck, ‘we’re going to make it work for you guys’ kind of communication.”

And so far Trump’s Department of Health and Human Services doesn’t appear to be emphasizing this kind of essential outreach, both Corlette and Jost suggested. A few months ago, Kreidler agreed, HHS staffers appeared interested in helping states fill their bare counties — but that support has since dwindled.

“This may be sort of under the radar, but it can have real, lasting effects” for consumer choice, Corlette said.

All Quiet On The Enrollment Front

The administration could further undermine the marketplace by dropping outreach to consumers. It’s already a shorter enrollment period this year — spanning six weeks instead of three months, from Nov. 1 to Dec. 15 — though that change was already slated to eventually take effect.

That shorter period means people may miss the memo on signing up — or at least need an extra push, Corlette said. And that’s another way the administration could undermine the marketplaces: simply choosing not to advertise them.

Last sign-up season, HHS stopped open enrollment advertising in January, pulling ads a few days before the period ended. Enrollment dropped compared with previous years, Jost and Gaba noted, with young, healthy people being more likely not to buy coverage.

The administration also just stopped funding federal contractors that supported efforts by community groups and other organizations in some of the nation’s largest cities to sign up people.

Dropping advertising, shortening open enrollment or simply scaling back on technical maintenance for the marketplace website could all have significant impact, Corlette said. People who are sick and need insurance will likely seek it out, but those who are healthier — for whom health insurance is a less pressing priority — could miss the boat.

Again, Jost said, that affects insurer participation.

“Insurance is a product that need to be sold,” he said. “If the insurers believe they’re not going to get any help at all in marketing their product,” he added, fewer will want to enter the marketplace.

Word of (Bad) Mouth

HHS has taken an active role in criticizing the health law — pushing press releases and videos that argue it has helped more than hurt. That strategy could do a lot of harm, experts said.

If consumers keep hearing the law is failing, Jost noted, some will ultimately believe it, buying coverage only if they need it and thereby skewing the insurance risk pool.

Perceived hostility also has an effect on insurers, steering them away from marketplace participation.

“When you undermine confidence in the marketplace, you don’t need a Ph.D. in economics to know it’s not good long term,” Corlette said.

Categories: Insurance, Repeal And Replace Watch, The Health Law

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5 Ways White House Can Use Its Muscle To Undercut Obamacare

President Donald Trump has vowed to “let Obamacare fail,” after legislative efforts to undo the Affordable Care Act have stalled.

He and congressional Republicans have repeatedly portrayed the Affordable Care Act insurance marketplaces, also known as exchanges, as being in a “death spiral.” But independent analyses have concluded that such spontaneous disintegration isn’t happening.

In a number of ways, the Trump administration’s policies are pushing Obamacare into the vortex.

Reports from Standard & Poor’s, the Congressional Budget Office and the Kaiser Family Foundation all suggest that the exchanges — where people can shop for coverage, often with the help of a government subsidy — are stabilizing. (Kaiser Health News is an editorially independent program of the foundation.)

Use Our Content

But, like every piece of legislation, Obamacare faces a difficult political reality: Its marketplaces require active maintenance and federal support.

The White House can take a number of behind-the-scenes steps to sabotage the exchanges and hasten their undoing. Already, it’s deploying some of those tactics.

“The administration has a lot of power to undermine the markets and make them dysfunctional,” said Sabrina Corlette, a research professor at Georgetown University’s Center on Health Insurance Reforms, who specializes in private insurance markets.

Here’s a look at five ways the White House is already working to weaken the health law, and what that means for consumers.

‘Cost-Sharing Reductions’

Under the ACA, when someone’s income falls between 100 and 250 percent of the federal poverty level — up to about $29,000 for an individual or around $61,000 for a family of four — marketplace carriers must offer a plan with “cost-sharing reductions” (CSRs) that reduce consumers’ out-of-pocket expenses.

Reducing cost-sharing — generally copayments and deductibles — makes plans more expensive for the insurers. The Obama administration used its rule-making power to set up direct payments to carriers to help offset this burden. The Trump White House has inherited that responsibility but also has the power to end the payment program.

The nonpartisan Congressional Budget Office estimated CSR subsidies in 2017 would total about $7 billion. Without that money, analysts say, more insurers might choose to exit, limiting options for consumers, and letting the insurers who remain charge higher prices.

Trump has been committedly noncommittal, publicly indicating he would like to halt the subsidies, but so far — on a month-to-month basis — letting them continue.

The uncertainty makes insurance companies skittish about participating, analysts noted. It’s also one reason some plans say they have had to increase their rates, noted Charles Gaba, a Michigan-based blogger who tracks ACA sign-ups. For instance: When filing plans for the 2018 marketplace, carriers on average raised premiums by about 34 percent — with about 20 points stemming from CSR uncertainty, Gaba said, based on an analysis of 21 states’ initial rate filings. Dropping the subsidies altogether would be even more damaging.

Weaken The Mandate

The White House has already signaled it does not want to enforce the individual mandate — the health law’s requirement that all people have coverage. And administration officials have repeated that position.

Meanwhile, in January, it issued an executive order that encouraged U.S. agencies to grant exemptions and waive or defer health law provisions that could put financial strain on companies or individuals — which could also be applied to the individual mandate.

For 2016 tax returns, though, the Internal Revenue Service continued to impose a financial penalty on people who didn’t have health insurance and who didn’t qualify for an exemption.

But enforcement may be waning. This year, the IRS was supposed to reject tax returns if people didn’t indicate whether they had coverage, flagging them for a potential penalty. Instead, it continued processing them, citing Trump’s executive order.

If the IRS has already processed any tax refunds for consumers, then they “don’t have much leverage” when attempting to collect the mandate fee, said Timothy Jost, emeritus law professor at Washington and Lee University in Virginia and an expert on health reform.

Enforcement of the mandate enforcement, economists note, is crucial to ensuring that enough healthy people buy coverage to balance the costs of sicker beneficiaries.

But even with the mandate in effect, the efforts to defang it bring confusion.

“A lot of people believe the Trump administration is not enforcing it,” Jost said.

As a result, healthy people may become less likely to buy insurance, even as sick ones continue seeking it. That means higher prices, and a shakier pool.

“If they don’t think they’re going to get healthy people in the risk pool, they’re going to increase their rates further to protect themselves,” Jost said. “And as they raise their rates further to protect themselves, people … start to drop out.”

Thus, the president’s position on the mandate is leaving insurance carriers and commissioners “apprehensive,” noted Mike Kreidler, Washington state’s insurance commissioner.

A Bare Market

Skittishness on the part of insurers could lead them to drop out of some marketplaces, leaving consumers in some areas with few or no choices. Those “bare markets” are possible under even stable circumstances — and preventing them requires active federal involvement.

Under the Obama administration, high-level officials were “on the phone daily with insurance company executives … trying to get them to participate,” Corlette said. “It was very much an all-hands-on-deck, ‘we’re going to make it work for you guys’ kind of communication.”

And so far Trump’s Department of Health and Human Services doesn’t appear to be emphasizing this kind of essential outreach, both Corlette and Jost suggested. A few months ago, Kreidler agreed, HHS staffers appeared interested in helping states fill their bare counties — but that support has since dwindled.

“This may be sort of under the radar, but it can have real, lasting effects” for consumer choice, Corlette said.

All Quiet On The Enrollment Front

The administration could further undermine the marketplace by dropping outreach to consumers. It’s already a shorter enrollment period this year — spanning six weeks instead of three months, from Nov. 1 to Dec. 15 — though that change was already slated to eventually take effect.

That shorter period means people may miss the memo on signing up — or at least need an extra push, Corlette said. And that’s another way the administration could undermine the marketplaces: simply choosing not to advertise them.

Last sign-up season, HHS stopped open enrollment advertising in January, pulling ads a few days before the period ended. Enrollment dropped compared with previous years, Jost and Gaba noted, with young, healthy people being more likely not to buy coverage.

The administration also just stopped funding federal contractors that supported efforts by community groups and other organizations in some of the nation’s largest cities to sign up people.

Dropping advertising, shortening open enrollment or simply scaling back on technical maintenance for the marketplace website could all have significant impact, Corlette said. People who are sick and need insurance will likely seek it out, but those who are healthier — for whom health insurance is a less pressing priority — could miss the boat.

Again, Jost said, that affects insurer participation.

“Insurance is a product that need to be sold,” he said. “If the insurers believe they’re not going to get any help at all in marketing their product,” he added, fewer will want to enter the marketplace.

Word of (Bad) Mouth

HHS has taken an active role in criticizing the health law — pushing press releases and videos that argue it has helped more than hurt. That strategy could do a lot of harm, experts said.

If consumers keep hearing the law is failing, Jost noted, some will ultimately believe it, buying coverage only if they need it and thereby skewing the insurance risk pool.

Perceived hostility also has an effect on insurers, steering them away from marketplace participation.

“When you undermine confidence in the marketplace, you don’t need a Ph.D. in economics to know it’s not good long term,” Corlette said.

This story was produced by Kaiser Health News, an editorially independent program of the Kaiser Family Foundation.

Categories: Insurance, Repeal And Replace Watch, The Health Law

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Analysis: Senate’s Latest Health Blueprint Cuts Costs At The Expense Of Chronically Ill

The latest Senate health proposal reins in costs by effectively splitting the individual insurance market, with healthy people diverted into stripped-down plans and chronically ill individuals left with pricey and potentially out-of-reach options, insurance analysts said.

This draft — a fresh attempt by the Republican Party to undo the Affordable Care Act — injects more uncertainty into plans for people with preexisting conditions such as cancer, asthma, diabetes or other long-term ailments. Those people, insured through ACA marketplaces now, could be more isolated than in an earlier version of the Senate bill.

For such patients, “I would be pretty nervous,” said Sabrina Corlette, a research professor at Georgetown University’s Health Policy Institute. “You will have separate pools — one that only healthy people can get into and one for you. That pool is liable to get increasingly expensive — in fact, very expensive over time.”

The two biggest insurer trade groups went further on Friday, saying in an unusually strong-worded letter that “millions of more individuals will become uninsured” if the proposal becomes law.

Plans sold to individuals and families through the Obamacare exchanges cover some 10 million people, many with chronic disease.

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A draft bill released Thursday added a proposal from Texas Sen. Ted Cruz that would let insurers sell health coverage outside the ACA exchanges with no provisions for prescription drugs, mental illness, hospitalization or almost any other benefit.

Such plans would be far cheaper than comprehensive coverage and almost certainly draw younger, healthier people away from high-benefit insurance, analysts said.

Without healthy customers subsidizing the sick, premiums and other costs would soar for plans that accept chronically ill patients, experts said. The Senate draft includes $70 billion over a decade to help pay those costs, but it’s far from clear that would be enough.

Insurers were struggling last week to grasp the implications of the legislation, studded with ambiguous language. One big takeaway: The Senate’s version of health care would undermine historical assumptions and drastically shift risk in the individual market.

Letting carriers sell low-cost, low-benefit plans to healthy consumers “is simply unworkable in any form and would undermine protections for those with pre-existing medical conditions, increase premiums and lead to widespread terminations of coverage for people currently enrolled in the individual market,” America’s Health Insurance Plans and the Blue Cross Blue Shield Association, two lobbying groups, said in a Friday letter to the Senate.

The Republicans are nowhere near success with this plan. Already two of the 52 Republican senators — Kentucky conservative Rand Paul and Maine moderate Susan Collins — have said they won’t support the bill. One more defection would sink it, and a delay caused by the surgery of Arizona Republican John McCain gives opponents more time to build resistance.

Senate leaders had scheduled a vote for this week but postponed it to give McCain time to recover from treatment of a blood clot near his eye.

Meanwhile, the nonpartisan Congressional Budget Office is likely to issue its assessment of the bill this week. The CBO had said an earlier Senate bill would increase the number of people without health insurance by 22 million by 2026.

The Republican plan offers a freer insurance market — something the party has long favored — while purporting to protect those with existing illness. Insurers selling stripped-down plans would be required to also offer traditional Obamacare plans covering preexisting conditions.

You will have separate pools — one that only healthy people can get into and one for you.

Sabrina Corlette, Georgetown University’s Health Policy Institute

But such coverage risks becoming a high-cost ghetto for the chronically ill, experts said. It would likely become unattractive to carriers and unaffordable to members who could face paying thousands of dollars for premiums and thousands more out-of-pocket before coverage kicks in.

Even though insurers selling unregulated plans would be required to offer full-coverage plans to all comers, they could limit their risk with time-tested maneuvers to repel the sick, said Ana Gupte, who follows health care stocks for Leerink Partners.

“They usually find ways to minimize enrollment” such as jacking up premiums or cutting broker commissions for certain coverage, she said.

Nor would there likely be much choice in high-benefit Obamacare plans, she said. Under the Senate bill, carriers seeking to sell skimpy coverage would have to offer only one high-benefit “gold” plan and a medium-benefit “silver” plan as traditionally sold under the Affordable Care Act.

Even then, the legislation would allow state officials to alter Obamacare standards for out-of-pocket maximums and essential health benefits.

That even could allow richer plans intended for the chronically ill to drop coverage of prescription drugs, mental illness, maternity care or other items.

The bill includes two measures intended to keep costs in high-benefit Obamacare plans from spiking out of control. One is the $70 billion in federal subsidies to help cover the expense of the pool of sick people.

“It seems to me it’s not nearly enough” to keep plans affordable for those with chronic illness, said Timothy Jost, emeritus law professor at Washington and Lee University and an expert on health reform.

The other is a six-month waiting period for applicants wanting to buy full coverage who don’t already have it.

That’s supposed to induce healthy people to buy high-coverage plans and help subsidize the sick. Otherwise they risk a coverage gap if they become gravely ill or hurt, raising the chance they would have to pay thousands out-of-pocket for any unexpected medical expense.

But that incentive to buy comprehensive coverage is far weaker than Obamacare’s mandate, which fined people for not having insurance, Jost said. The Republicans’ bills would scrap the mandate.

“I just don’t think it’s going to be terribly effective,” he said.

Categories: Cost and Quality, Insurance, Repeal And Replace Watch, The Health Law

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