The Silver Lining in Trump’s Health Care ‘Sabotage’
President Trump once promised a health care plan that would have “much lower premiums and deductibles while at the same time taking care of pre-existing conditions.”
That
plan may be Obamacare. Mr. Trump’s decision to end
cost-sharing-reduction subsidies, known as C.S.R.s, and perhaps to
derail a bipartisan bill
by Senators Lamar Alexander, Republican of Tennessee, and Patty Murray,
Democrat of Washington, that would restore C.S.R. funding through 2019
may actually lead to better coverage for more people paying lower
monthly premiums.
That’s
because insurers and state regulators prepared a workaround in
anticipation of Mr. Trump’s move — and at least for 2018, most consumers
could benefit from it. To extend that beyond 2018, the Alexander-Murray
bipartisan effort should focus less on restoring funding for C.S.R.s
and more on modifications that would empower states in customizing their
insurance markets.
How
does Mr. Trump’s move benefit insurance consumers? There are two types
of financial help in the Affordable Care Act. One, C.S.R.s, go to
insurers, which in turn lower deductibles and co-payments for people who
buy “silver” plans and earn from 100 percent (single individual earning
$12,060 in 2017) to 250 percent (single individual earning $30,150 in
2017) of the federal poverty line.
The
other is a tax credit to individuals that lowers the cost of monthly
premiums. Single individuals qualify for premium assistance if they earn
$12,060 to $48,240, and they can buy any “metal” plan — bronze, silver,
gold or platinum — on a state or federal exchange.
Here’s where the fix came in. Many states — more than 40 — allowed insurers to compensate for the loss of C.S.R.s by raising the rates of their silver plans.
Because the value of the premium tax credits rises and falls with the
price of a silver plan, consumers who qualify will not pay more than a
set amount of their income. Instead, the federal government picks up the
tab of the rising costs.
In
other words, insurers are allowed to claim subsidies, but through a
different, more lucrative channel. It will also, not coincidentally,
cost the government more than if it had simply paid the subsidies in the
first place, because of the cost of covering higher premium rates for
consumers who, by law, receive subsidies.
These
consumers are no worse off whether they purchase silver plans or any
other “metal” plan, which might include lower-deductible gold plans that
also feature lower out-of-pocket expenses.
Pennsylvania
is a good example of this new dynamic. In that state, final 2018
premiums for silver plans increased faster than all others. As a result,
a 21-year-old earning $31,000 in Lebanon County can buy a gold plan for
less per month than a single Saturday night movie ticket. Last year,
that same individual would have had to spend $180 for a silver plan with
a much higher deductible.
The Congressional Budget Office expects all states to quickly adopt these strategies that protect their local health insurance markets.
But
these are limited strategies: They will make it more complicated to
shop for a plan. And they do not immediately help people who do not
receive premium tax credits on the exchange.
Here’s
where the Alexander-Murray bill could help these individuals, by making
the process for approving state waivers to customize their insurance
markets faster, simpler and more straightforward. .
States
can already apply for waivers from Affordable Care Act regulations.
Alaska and Minnesota have received waivers for reinsurance, which helps
pay very costly claims without increasing premiums for everyone else.
Alaska’s waiver led to a 16 percent to 22 percent drop in premiums that nonsubsidized individuals pay for their insurance. Minnesota’s program dropped some rates by 13 percent, while the largest increases were under 3 percent.
The
Alexander-Murray bill would allow states to use off-the-shelf “me too”
waivers with fast approval. It would also require the development of
standard reinsurance waivers, which would allow states to use these
waivers to lower premiums for nonsubsidized buyers.
The
bill also allows for wider sales of catastrophic plans, which have very
high deductibles but are usually the lowest monthly premium plans that
satisfy the individual mandate. Right now only people who are under 30
or who have a hardship exemption can purchase a catastrophic plan. The
bipartisan proposal in the Senate would allow anyone to buy a
catastrophic plan, which could lead to lower premiums for nonsubsidized
buyers.
By
pulling the plug on C.S.R. subsidies, President Trump can claim that he
will provide a better deal on health insurance for more Americans. He
and his fellow Republicans should declare victory, with or without a
version of the Alexander-Murray bill — and check health care reform off
their legislative list.
