Obamacare Is on the Ropes—Again
With open-enrollment numbers slipping, the Republican tax plan gaining steam, and CHIP still in limbo, critical elements of health-insurance programs are in danger.
It’s been two months since the last major push to repeal the Affordable Care Act died in the Senate, but the law is still on the ropes. Republican efforts to stymie the law and dismantle connected pieces of the national health infrastructure are taking their toll. With or without a full repeal, policy developments on the horizon could topple Obamacare, causing millions to lose coverage or see their health-care costs increase beyond their ability to pay.
Very few pieces of the health law aren’t vulnerable right now. To start, it turns out that despite numerous reports of “surges” in sign-ups on HealthCare.gov, the federal-exchange website, at the beginning of the open-enrollment period in November, overall uptake might still be anemic compared with last year.
This was the desired result on the part of the White House. The Trump administration slashed the open-enrollment advertising budget and halved the sign-up period this year. That means that in order to outpace 2016’s numbers on the federal exchange, enrollment would have had to start strong and outpace every 2016 benchmark. Buoyed by promotion from health-care companies and private citizens—including Barack Obama—a strong start materialized, but the pace has recently slipped. So far, 2.3 million people have signed up for coverage on the federal exchange, but about 7 million more would need to enroll before the end of open enrollment on December 15 to match last year’s numbers.
If this year’s enrollment falls short, it could further imperil exchanges that are already at risk. Insurance companies plan both their rates and their participation in the exchanges based on future margins, which depend on both the volume and health of enrollees. Existing instability on the exchanges—and GOP “sabotage”—have already increased premiums, although most consumers don’t actually see those rising costs because federal subsidies hide them. But with the addition of more uncertainty, generated by the administration’s refusal to make cost-sharing-reduction payments to insurers, there’s a greater incentive to leave markets altogether or find ways to select against poorer enrollees. The number of counties with no insurers offering plans on the exchanges is already rising, and there are over 1,000 counties with only a single insurer.
Given the peculiarities of the open-enrollment period this year, those numbers might increase. The decrease in sign-up volume would be a problem in and of itself, but the kinds of people who choose not to enroll is also an issue. Some navigators, professionals who assist consumers with signing up for insurance, expect that the abridged enrollment period and cuts to advertising will lead to much fewer healthier and younger people signing up for care—and those people are vital to keeping exchange risk pools balanced and keeping premiums from spiking even further. In the words of one navigator interviewed by West Virginia Public Broadcasting: “They are typically the people who waited until [the] last minute and they are typically swayed by the advertising that the federal government isn’t paying for this year.”
Realistically, even open-enrollment numbers that surge past last year’s targets might not keep the exchanges in working order. That’s because the Republican tax bill heading toward a final vote in the Senate dismantles the key provision in Obamacare holding those exchanges together: the individual mandate. In addition to its deficit-increasing tax cuts for older and wealthier Americans, the bill in its current form also stealthily kills the requirement that all Americans have insurance, thus accomplishing at least part of the “skinny repeal” that failed to gain traction in the Senate before. While in theory this provision would reduce the bill’s overall effects on the deficit—because fewer people signing up for insurance translates to fewer federal tax credits—realistically it would probably be a blow to the exchanges and to much of the Affordable Care Act’s coverage gains.
An analysis from the Congressional Budget Office predicts that’s what would happen. The CBO report says that repealing the mandate would reduce the number of insured people by 13 million over the next 10 years. While some of the decrease would come from people simply choosing not to pay for insurance, the bulk of it would come from losing the mandate as the “glue” for the whole program.
For example, the CBO projection includes about 5 million people who’d leave Medicaid rolls, even though Medicaid is free. Other, previous analyses have found that the mandate helps ease the stigma of enrolling in Medicaid, a means-tested program traditionally viewed as welfare. They’ve also found it helps spread awareness about coverage options to low-income people and their children. What’s more, diminishing risk pools on the exchanges—the result of an imbalance between high- and low-cost patients—raise premiums and can influence insurer decisions to pull out of markets.
It’s hard to imagine those changes would leave stable, working exchanges in the years ahead. Again, insurers make decisions based on risk, and it seems the Trump administration and a Republican Congress are presenting them with plenty of risk.
The bill’s potential effect on Americans’ health doesn’t stop at the mandate. The CBO also reports that if the projected deficit increase of $1.5 trillion isn’t mitigated through additional legislation, it’ll trigger automatic cuts in mandatory spending, including up to $25 billion a year from Medicare. That alone wouldn’t be enough to close the deficit gap, but it’d have serious implications for the decades-old program. Twenty-five billion dollars is only 4 percent of its annual budget, but as Vox’s Sarah Kliff explained, for life-saving therapies and programs requiring expensive drugs and devices, that 4 percent makes all the difference.
Additionally, as my colleague James Hamblin noted, the overall health effects from income inequality run deeper and broader than coverage numbers suggest. With the bill expected to increase relative disparities between upper- and lower-income tiers, some researchers predict that the stress of trying to make it out of the working class will only increase, and with it, so will health disparities.
In short, the legislation would put incredible strains on the remaining infrastructure of the health law, just as another blow is potentially around the corner. As more and more senators, including Maine’s Susan Collins, have been coaxed to get on board with the GOP’s tax plan, a reauthorization bill for the Children’s Health Insurance Program has languished since Congress allowed the program to lapse in September. States have been relying on reserve funding to keep the 9 million children insured through the program covered, but for many states that money will soon run out. The lack of a deal on CHIP is baffling for a program that has long enjoyed bipartisan support, and all the more so because the holdup appears to be the cost of the program. CHIP, which costs roughly $15 billion annually, is in limbo while a $1.5 trillion tax plan consolidates GOP support.
Nothing is a sure thing at this point. Obamacare sign-ups could rally over the next two weeks. A final tax plan could still be defeated in either chamber, or lawmakers could ditch the individual-mandate provision. And CHIP could still get reauthorized, even if it takes a bit of congressional brinksmanship to get there. But with markets already wracked by instability and uncertainty, damage to the greater health-care landscape has already been done.