Trump Administration Gives States New Ways to Rewrite Obamacare

Who gets health insurance subsidies, and how they're used, could drastically change if states take the federal government's guidance released on Thursday.
by | November 30, 2018
CMS Administrator Seema Verma, right, listens as President Donald Trump speaks. (AP/Evan Vucci)

SPEED READ:

  • The Trump administration's new guidance allows states to change who receives health insurance subsidies and how they are used.
  • The new rules undermine the Affordable Care Act and could lead to the proliferation of health plans that offer fewer benefits and consumer protections.
  • CMS Administrator Seema Verma discussed the new guidance at the conservative American Legislative Exchange Council conference on Thursday.
 

The Trump administration released new guidance for states on Thursday that would undermine major tenets of the Affordable Care Act (ACA), or so-called Obamacare, President Obama's signature health reform law.

Most notably, the new "State Empowerment and Relief Waiver Concepts" urge states to start offering federal subsidies to people buying plans that don’t comply with the ACA. It would be a boost to short-term and association health plans, which offer fewer benefits and consumer protections but at a lower cost.

By introducing these concepts, the Trump administration is accomplishing some of the same goals -- and in some instances, taking them further -- that Congressional Republicans had in mind when trying to repeal and replace the ACA in 2017, Larry Levitt, senior vice president of the nonprofit Kaiser Family Foundation, told The Washington Post.

The Centers for Medicare and Medicaid Services (CMS) is also giving states the option to put subsidies into a “consumer-driven” account that people could use for health-care costs other than monthly premiums. It’s a similar approach that CMS Administrator Seema Verma took in Indiana, where she helped redesign the state's Medicaid program.

States will now also have some freedom to decide who is eligible for subsidies. Under the ACA, anyone with an income 400 percent of the federal poverty line is eligible for subsidies on the insurance marketplace. This new guidance would allow states to tweak or add to that regulation, perhaps prioritizing younger, healthier populations over lower-income residents.

Finally, states will have more flexibility to establish reinsurance programs, which use government funds to protect insurance companies from the most expensive patients and bring down premiums for everyone. Reinsurance has been used in several states since the beginning of the ACA to hold down costs.

As HHS released this information, Verma gave remarks at the conservative American Legislative Exchange Council (ALEC) on Thursday outlining and defending this plan.

“For far too long, states have looked to Washington with a 'mother, may I?' approach," Verma said. "Washington has placed unworkable restrictions on the states, in the process undermining the very goal of its own policy, which was to make insurance more accessible by making it more affordable.”

But many health experts say the federal government’s recent actions regarding the Affordable Care Act are what's driving up health costs and driving down the insured rate. The Trump administration has, among other things, repealed the ACA's individual mandate, which required everyone to have health insurance, reduced the open enrollment period by weeks, cut ACA outreach and marketing funding by more than 90 percent, and made it easier to buy short-term and association health plans that don't comply with the ACA. (States are fighting the latter move either by banning or restricting the sale of those plans or by taking the matter to court.)

As a result, fewer people appear to be signing up for insurance: At the open enrollment midway point, 2.4 million had signed up, compared to 2.8 million this time last year. According to a Georgetown University report, last year was the first time the number of uninsured children rose in a decade. The Congressional Budget Office predicts that an additional 5 million people will lack health insurance in 2027.

Verma fought back on those assertions.

"No one can say that this [is] due to the Trump administration. This chaotic and declining market is what the administration inherited in 2017," she said at the ALEC conference.

Premiums have finally showed some stabilization this year, with the price of average plans decreasing by 1.5 percent across the country.

Many opponents of the Trump administration’s approach to the Affordable Care Act argue that it chips away at the consumer protections and that more popular aspects of the law could also end up on the chopping block -- like protecting people with preexisting conditions and allowing young adults to stay on their parents' insurance until they’re 26.

Verma says those concerns are overblown.

“Critics of state flexibility will always assume the worst. Indeed, cynics will always be able to imagine negative ways states might screw up if given some flexibility," she said. "But if a state does get something wrong -- unlike the federal government -- states have the flexibility and the incentive to fix it."

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