The Trump administration is quietly dismantling the Affordable Care Act, taking a series of regulatory steps that will make it easier for insurance companies to sell plans that exclude patients with preexisting conditions or don’t cover basic services like maternity care, mental health treatment, and prescription drugs.
Republicans weren’t able to repeal Obamacare in Congress. Now the Trump administration appears to be settling for the second-best thing: weakening Obamacare’s insurance regulations, changes that will hurt Americans who are older and sicker while benefiting the young and the healthy.
The Health and Human Services Department published new rules Tuesday that widen access to “short-term” health plans, a small subset of insurance products that are meant to cover short gaps in insurance coverage. The Obama administration aggressively regulated these plans, allowing insurance companies to sell them only as 90-day options.
The Trump changes allow insurance companies to sell the skimpier plans for a year, encouraging many more people to buy them and use them as a more regular source of coverage. Officials are also considering allowing insurance companies to extend them further.
These plans are likely to attract young and healthy consumers, leaving behind a pool of older and sicker patients in the Obamacare markets and driving up the prices there.
“This all looks a lot like the landscape in 2013 [before the Affordable Care Act took effect],” said David Anderson, a research associate at the Margolis Center for Health Policy at Duke University whose work focuses on health insurance design.
The Trump administration was already weakening Obamacare
Already in recent weeks, the Trump administration has shown little interest in enforcing Obamacare’s guarantee that healthy and sick people get access to the same type of health insurance.
For example, it hasn’t intervened in Idaho, where regulators recently told insurers they can simply disregard many of the Affordable Care Act rules and sell new “freedom plans” that discriminate against sicker enrollees.
Typically, you’d expect the federal government to get involved — to step in and enforce federal law when a state refuses. But when pressed by a reporter on this issue Tuesday, HHS Secretary Alex Azar demurred.
“I’m not in a position to rule on something I’ve seen a media report about,” he said, adding that he doesn’t “believe in premature opinions on complex topics.”
The Trump administration wants to widen access to plans that deny coverage for preexisting conditions and discriminate against women
The rules the Trump administration rolled out Tuesday relate to “short-term” health plans, coverage that is meant to fill gaps between more permanent policies (for someone who takes a few months off between jobs, for example).
Short-term coverage is allowed to skirt several of the health care law’s core provisions: Plans can deny people insurance based on their medical history, charge them higher premiums because of their preexisting medical conditions, and craft skimpy benefits packages that will appeal mostly to young and healthy people.
For example: I looked at the short-term plans available to someone like me in Washington, DC, on the website eHealthInsurance. The cheapest plan would run $94 per month; the most expensive would be $504. The cheapest unsubsidized Obamacare plan, by contrast, is $232 each month.
A plan that costs $94 a month sounds like a great deal, if you can get it. But a lot of people can’t: All the short-term plans I looked at include an “underwriting” questionnaire, which asked whether I had any preexisting health conditions.
The application for one plan stated clearly: if I answered yes to the questions below, “coverage cannot be issued.” These are two of the questions I’d have to answer:
Even if I said no, the plan would have a long list of benefits it wouldn’t pay for, including:
- Prescription drugs (generic or brand name)
- Routine prenatal care, pregnancy, and childbirth
- Injuries resulting from “skydiving, scuba diving, auto racing, bungee jumping, hang or ultra light gliding, parasailing, sail planing, or rodeo contests”
- Any treatment for STDs
- “Care, treatment or supplies for the feet”
- Treatment for cataracts
- Treatment for “skin tags and other specific conditions of the skin and skin diseases”
This is only a partial list of exclusions for one plan (you can read the entire list here). Notably, this plan would charge me a higher premium because I am a woman: a $94 monthly premium versus the $77 premium my twin brother would pay for the exact same policy. Before the Affordable Care Act took effect, it was common for insurance plans to charge women of childbearing age higher premiums. Obamacare outlawed that practice.
The Obama administration tried to curtail the presence of plans like this in the individual market, on the grounds that they disadvantage sick Americans and offer a false sense of security by excluding a whole slew of benefits.
In 2015, the government limited these types of short-term plans to only offering 90-day policies that were not renewable. Now the Trump administration is going in the opposite direction: allowing these “short-term” policies to run for 364 days and exploring whether to allow consumers to renew them.
The Trump administration has framed this decision as bringing more choice into the insurance marketplace, and for some, that’s true. Healthy people will certainly have more choice to sign up for these skimpier plans. But sicker people will end up paying the price of those healthy people exiting the Obamacare marketplace.
Bringing back bare-bones plans will likely increase premiums
Health policy experts know whom these short-term plans appeal to: young, healthy people who want a cheaper option than Healthcare.gov currently offers. This is especially true for young, healthy people who earn just slightly too much to qualify for Obamacare’s premium subsidies, meaning they foot their entire insurance bill on their own.
“This is really attractive to currently uninsured, young, and probably male individuals who are making just over 400 percent of the poverty line [the cutoff for Obamacare subsidies],” Anderson says.
These people will likely leave the Obamacare marketplace, flocking to these new, cheaper plans. And most of them will probably be fine if they don’t have a catastrophic incident. But that’s the thing about health care: You can’t predict who might have a catastrophic health expense — the result of a rodeo contest, perhaps — that these short-term plans won’t cover.
Some of those people might end up losers in this new insurance scheme. And we know another group of people who will definitely be disadvantaged by the Trump rules: sicker Americans, who won’t be allowed into these skimpy new plans.
They will stay behind in the Obamacare insurance marketplace. And those without insurance subsidies will likely see their premiums go up as the healthy people head for the exits.
How many people flee the marketplaces — and how much premiums rise — is really hard to predict. The Trump administration thinks it will be in the neighborhood of 100,000 to 200,000 people, from a marketplace that has about 10 million enrollees. They believe this will lead to premiums rising $2 to $4 per person.
Some analysts agree with them, although they expect the number would rise over time.
“It sounds potentially reasonable, but I think longer term, you’d expect that number to rise,” says Chris Sloan, a senior manager with the research firm Avalere Health.
But others think it’s much too low — that the marketplaces will see many more people (particularly the 14 percent of Obamacare enrollees who don’t receive insurance subsidies) leaving the market.
These people, if they’re healthy, won’t have much to lose. Their premiums will go down if they switch to a short-term plan. And unlike previous years, they won’t have to pay a penalty for not carrying Obamacare-compliant coverage. That’s because the recently passed Republican tax bill nixed Obamacare’s individual mandate.
What type of people are likely to lose in this scenario? Anderson thinks of a family that was often described by Sen. Bill Cassidy (R-LA) during the Obamacare repeal debate as paying $40,000 in annual premiums (the Washington Post tracked down this family and found it was closer to $31,000, or $2,654 each month for a family of four).
That family has a daughter who has seizures and needs four different medications. They earn too much to receive Obamacare subsidies (the family says their income is somewhere in the six figures, described by one family member as “not high but middle class”), so they pay their full premium.
This family’s premiums are a significant burden, no doubt. But these new “choices” won’t fix that problem because the short-term plans won’t accept a family whose child has significant, expensive medical needs. They aren’t required to take on enrollees with preexisting conditions, so they won’t. Those people are expensive and raise premiums.
These are the people who will get left behind in the Obamacare marketplaces as healthier people switch to the short-term plans. And they’ll face higher premiums there as a result.
“That family is going to be far worse off,” says Anderson. “They make too much money for subsidies, but they have someone in the family who cannot be in, or even get into, an underwritten plan.”
One state is instructing insurers to ignore Obamacare. The Trump administration is doing nothing.
Want to know how the Trump administration feels about pre-existing conditions? Take a look at the situation currently unfolding in Idaho.
A few weeks ago, state regulators sent health plans a bulletin. It said that they could once again start charging higher prices to people with preexisting conditions. They could once again exclude coverage for expensive medical needs, such as pregnancy, or decide to charge their female enrollees higher premiums. These are all practices that the Affordable Care Act clearly bars.
The Idaho guidance wasn’t limited to short-term plans. It said that insurers could do this for long-term, regular health plans too, so long as they offer at least one Obamacare-complaint plan on the market. This Idaho plan would have the same effect, in practice, as the federal regulations: moving healthy people to a cheaper market while leaving sicker people behind in a more expensive market.
The Wall Street Journal broke this news about a month ago, on January 25. Blue Cross of Idaho announced one week ago that it intends to start selling these noncompliant plans in April. It sent out a press release, with details of what those plans would look like. They will have $1 million benefit limits (making them unusable for certain high-cost patients). One will not cover maternity benefits.
Azar faced questions about the Idaho situation in a Tuesday briefing with reporters. He said he wasn’t “in a position to rule on something I’ve seen a media report about.”
But here’s the thing: This isn’t just a media report. It is a state sending guidance to health insurers that almost certainly runs afoul of federal law.
And Azar is the exact person who is in the position to act on Idaho. Traditionally, you’d expect the federal government to step in at this point and enforce a law when the state refuses. But so far, nothing has happened. Observers worry this could encourage other states to take similar steps, as they’ll no longer fear federal interference.
“The thing that worries me is every single red state that wants to do something more aggressive is gonna leap at the opportunity,” Nicholas Bagley, a law professor at the University of Michigan who is generally supportive of Obamacare, says. “We’ll see a patchwork on the individual market every bit as profound as the disparity in Medicaid expansion.”