The battle over health care is moving to the states.
The most immediate effect of the recent steps taken by Donald Trump and congressional Republicans to unravel the Affordable Care Act will be to create an even deeper gulf between red and blue states in the availability and quality of health insurance. An array of blue states are exploring ways not only to blunt Trump’s moves, but also to reach beyond the ACA with new mechanisms to expand coverage. Simultaneously, many red states are leaning into the rollback—both by seeking to limit access to Medicaid, and by embracing Trump’s efforts to deregulate insurance markets in ways that will restore the pre-ACA separation between the healthy and sick.
“In the states that don’t act to strengthen their regulation, you are going to see these non-group-insurance markets weaken” by eroding the risk-sharing between the healthy and the sick that the ACA required, Linda Blumberg, a fellow at the Urban Institute who closely studies the law, says. “It really takes us major steps back to where we were prior to [the law].”
Two big moves from Trump and congressional Republicans are expanding this wedge between the states. The first is the tax bill’s provision repealing the ACA’s individual mandate, which required all Americans to buy insurance. The second is the administration’s recent proposal to significantly expand the availability of “short-term” health plans that don’t guarantee minimum benefits or prohibit discrimination against consumers with preexisting health problems.
Those two measures encourage healthier people to leave the ACA exchanges, and either purchase the skimpy, but less expensive, short-term plans or forego insurance altogether. In a recent study, the Urban Institute projected about 9 million people would abandon the exchanges for one of those options. That would leave an older and sicker population remaining on the exchanges, which would raise premiums and reduce access to care, particularly for those who earn too much to qualify for the federal subsidies the ACA established.
But states have a surprising degree of autonomy to block Trump’s moves, and blue states are positioning themselves to do so. Five Democratic-leaning states in the Northeast already functionally prohibit the sale of short-term plans, and several others—Washington state has moved the quickest—may join them with regulatory or legislative limits.
Even more ambitiously, about a half-dozen states are examining ways to restore a mandate on individuals to buy insurance. The conversations are most advanced in Maryland, where state legislators are racing against an April 9 adjournment date to pass an individual mandate with an intriguing twist: The legislation would allow anyone without insurance to funnel their penalty into an account they could apply to buying coverage the next year.
As Maryland demonstrates, blue states are looking beyond blocking Trump’s moves and moving toward expanding the ACA framework. Several states are exploring proposals to restore a public option to compete with private insurers—a top liberal priority dropped from the ACA amid resistance from the insurance industry and centrist Democrats. Through the new proposals, Democrats would allow the uninsured to buy into state Medicaid plans. New Mexico legislators are examining the idea, and J.B. Pritzker, the front-runner for the Democratic gubernatorial nomination in Illinois, has endorsed it.
Not surprisingly, given its liberal lean and enthusiastic embrace of the ACA, California is pursuing multiple avenues to build on the health-care law. Anthony Wright, the executive director of the advocacy group Health Access California, told me his state is likely to pass legislation blocking short-term plans. And while many liberals in the state remain focused on the long-term goal of establishing a state-run single-payer system, where government directly pays for all health-care services, Wright expects growing consideration of restoring a mandate—coupled with financial assistance—and creating a Medicaid buy-in. With such steps, Wright said, California reformers believe they can reduce the state’s uninsured rate to “European [levels] of 1 or 2 percent … even without the single-payer options.”
That would place California on a strikingly different trajectory from red states, which are embracing the Trump rollback. With the Trump administration’s approval of Arkansas’s request earlier this week, three red states have now imposed work and reporting requirements that will limit access to Medicaid; the administration says 17 other states are considering similar ideas. Few red-state officials have raised objections to Trump’s moves to unravel the ACA’s mechanisms to share risk.
Sabrina Corlette, a research professor at Georgetown University’s Center on Health Insurance Reforms, cautions that state-level responses that could preserve risk-sharing “are not necessarily slam-dunk issues even for a very progressive state.” Like many experts, she believes blue states are less likely to impose their own individual mandate—historically an unpopular idea—than to limit the short-term plans. And even that’s not guaranteed, because the plans can be attractive to some middle-class customers seeking cheaper alternatives. The end result? States may slow Trump’s unraveling of the ACA, but very few are likely to entirely prevent it.
Yet that may prove a very mixed blessing for the GOP in the midterm elections. The Urban Institute forecasts that the administration’s moves against the ACA could increase insurance premiums on the exchanges by fully 18 percent next year. Larry Levitt, the senior vice president for health reform at the Kaiser Family Foundation, told me that Congress could offset most of that possible increase by passing “reinsurance” legislation from Republican Senator Susan Collins of Maine and Democratic Senator Bill Nelson of Florida. Their bill would reimburse insurers for covering the most expensive patients. But with the administration privately demanding exorbitant concessions in exchange for accepting such a plan, the measure’s prospects appear dim.
That means health insurers are likely to announce major premium increases during the next ACA open-enrollment period—just weeks before the midterms. In a January national Kaiser poll, three-fifths of Americans said they would blame Trump and the GOP for any further ACA problems. By creating the conditions for big premium hikes this fall, Republicans in Washington and the states appear determined to test that proposition.
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