Obamacare Won't Explode Unless Trump Wants It To

Prices may rise for enrollees, but there are ways the administration can prevent that. The question is whether it will.

Lucy Nicholson / Reuters

After the American Health Care Act, the GOP’s Obamacare replacement bill, was pulled on Friday, people who feared the bill would cut their own or their loved ones’ health-care access breathed a sigh of relief.

Indeed, the elderly, poor, and those on Medicaid would have suffered disproportionately had the AHCA been passed. But it’s worth remembering that Obamacare still has problems, which is one reason why the Republicans’ calls to repeal it gained so much traction.

The scope of Obamacare’s problems is small, but significant. While health-care costs have been going up less than normal in recent years and premiums for people insured by their employers have also been fairly stable, people who buy their own insurance through the Obamacare marketplaces saw premiums spike by an average of about 25 percent this year. Also, several insurers pulled out of the Obamacare exchanges in the past year, leaving 21 percent of exchange enrollees with just one insurance option and people in Knoxville, Tennessee with potentially no insurers at all.

Most people aren’t affected much by these changes, since they are subsidized by the federal government and shielded from paying more than a small percentage of their income.

But the Kaiser Family Foundation’s Cynthia Cox estimates that about 2 to 3 million people on the Obamacare exchanges do find it unaffordable, because they suffered a large premium increase, live in a state where premiums were already higher than average, and didn’t get a subsidy from the federal government to cushion the blow. Another 3 million people don’t currently have insurance and aren’t eligible for subsidies—suggesting they might be having trouble affording Obamacare plans, too.

So the struggle is real, at least for these 5 million or so people. Will it become more severe now that an Obamacare replacement is off the table?

According to Cox and others, it depends on what the Trump administration does to stabilize insurance markets. If they do nothing, things will probably get worse. For example, by pulling advertising for Obamacare in the final days of open enrollment earlier this year, when more young people sign up for insurance, the administration might have already dampened young peoples’ enrollment, leaving a sicker and more expensive mix of enrollees. It’s likely more insurers will announce they’re pulling out of the exchanges, Cox said, since the anti-ACA stance of the administration has injected more uncertainty into what many already thought were difficult markets. That might leave some counties without a single insurer on the exchange. (It’s unlikely the mandate to buy insurance would be enforced against people in those counties, however.)

If the Trump administration stops enforcing the individual mandate entirely—it has already softened the rule—or grants lots of exemptions to people who simply don’t want to buy insurance, the mix of people in the individual market could become much sicker. That, combined with the instability insurers are already feeling, could cause premiums to rise further.

“I think [premiums] will go up and will go up higher than if they would have if none of this conversation around repealing the ACA was happening,” Cox said.

Because insurers increased Obamacare rates so much last year, it was considered a “one-time event,” according to an S&P Global Ratings analysis. But the Trump administration’s highly public Obamacare criticism, combined with three months of discussion about repeal, might have made insurers newly nervous. “If none of this stuff had happened, and Hillary had been elected, insurers would have said ‘we had big increases, but we’re okay now,’” said John Holahan, a fellow in the Health Policy Center at the Urban Institute.

The problem is, Obamacare isn’t a grandfather clock that Obama set into effortless, perpetual motion. It’s more like a cantankerous old car, one that requires lots of maintenance to keep it purring. As my colleague Vann Newkirk explained last week, there’s a lot the administration could do to undermine the individual market further. House Republicans are currently fighting a lawsuit to stop Obamacare’s payments to insurers to help pay for their customers’ deductibles. It’s up to the Trump administration to either keep fighting that lawsuit or get the House to drop it so those payments can continue—otherwise, many insurers might leave or raise their prices.

“If the administration continues to dispute its obligation to pay health plans for the cost sharing assistance they provide and continues to refuse to pay the risk corridor amounts owed, then it will effectively be making the administrative decision to harm markets everywhere,” said Sara Rosenbaum, a health-policy professor at George Washington University. Together, stopping the enforcement of the individual mandate and stopping the payments to insurers would amount to a rise in premiums of about 25 to 30 percent, said Andy Slavitt, the former acting administrator of the Centers for Medicare and Medicaid Services.

However, there are also dozens of tiny fixes the federal government can make to help people who are struggling to afford insurance. Some would need to be done legislatively: Kevin Counihan, the former CEO of Healthcare.gov, suggested extending Obamacare’s subsidies to people making up to 500 percent of the federal poverty level or opening up a public insurance option for people in counties with few or no insurers. But the Trump administration could do many other things on its own. HHS officials could, as Counihan did, meet with insurers in fragile markets and lobby them to stay in—for example by offering them help advertising to key demographics.

Lots of other ways to fix the ACA have been put forward. Most include proposals that were favored by Hillary Clinton, which might make Trump reluctant to touch them. But others are aligned with a conservative philosophy, like allowing states flexibility in how they want to stabilize their own insurance markets. Health and Human Services Secretary Tom Price has pursued this strategy somewhat, putting out a statement this month reminding states to apply for waivers to fix their markets. If states take him up on it, that could help save their Obamacare exchanges, says Sabrina Corlette, a research professor at the Center on Health Insurance Reforms at Georgetown University.

So far, most prominent Republicans haven’t publicly voiced an eagerness to patch up Obamacare. In fact, some seem to be rooting for the law’s collapse. After the bill was pulled Friday, House Speaker Paul Ryan told reporters, “The worst is yet to come with Obamacare.”

In January, a Health and Human Services spokesman referred to Obamacare as a “failed government program”—one his agency is charged with running.

And on Twitter over the weekend, President Trump predicted that Obamacare would soon “explode.”

It’s not clear if that’s pure bluster aimed at scoring political points or their true feelings about the law. Either way, it hasn’t been very soothing for jumpy Obamacare insurers.

“If they talk about the markets and call them a disaster,” Slavitt said, “they’re going to keep [insurers] from wanting to expand because they don’t believe the administration is supporting the market.”

Whether Obamacare really does explode, in other words, remains to be seen—and is largely up to the Trump administration itself.