Don’t tell President Trump, but cutting off extra Obamacare subsidies to insurers could actually improve – not ignite – the very insurance marketplaces he wants to undermine.
Weirdly enough, slightly more people – not fewer -- could receive health insurance by 2020 were the president to terminate the controversial cost-sharing payments, otherwise known as CSRs, which compensate insurers for discounts they must offer their lowest-income customers.
That’s the rather unconventional conclusion the Congressional Budget Office came to last week after analyzing the effect on the Obamacare marketplaces should the president eliminate the monthly subsidy payments, as he’s repeatedly threatened to do over the past few weeks (to the chagrin of some Republicans in Congress). And perhaps this is one CBO report that the Trump administration could like.
The report's conclusion twists the conventional narrative that without the CSR payments the marketplaces would essentially implode because insurers would flee under unsustainable losses. In fact, the CBO concluded that withholding the payments to insurance companies would actually cause the government to spend more money on subsidies for monthly premiums, which a wider swath of Americans can access.
“Cutting off [cost-sharing reduction] payments would be chaotic, but ironically, enrollees could end up better off,” Larry Levitt, a senior vice president at the nonpartisan Kaiser Family Foundation, told me.
Don’t get us wrong, the uncertainty caused by Trump’s refusal to commit long-term to the subsidy payments certainly isn’t good for insurers. They’re trying to set rates for 2018 without knowing whether to expect some $7 billion from the government to cover their losses for the discounts on deductibles, co-payments and other out-of-pocket expenses the Affordable Care Act requires them to provide.
The Trump administration did decide to provide the August CSR payment, but is refusing to say whether it will make payments in September or beyond. It is creating this uncertainty even as insurers in many states need to make a final decision about their marketplace participation and prices next year.
“The president is working with his staff and his Cabinet to consider the issues raised by the CSR payments,” is all a White House spokesman would tell The Health 202 yesterday.
But here’s the perverse reality: If Trump halted the payments, and Republicans in Congress refused to fund them too, there’d be some waves in the marketplaces -- but probably not the tsunami that many had predicted.
Yes, the fraction of people living in areas with no marketplace insurer would be greater over the next two years – but about the same starting in 2020, the CBO concluded. And in that same year, about one million more people would have coverage than if the CSR payments had continued. Confusing? Here’s why:
-- Because insurers would still have to offer discounts even without payments from the federal government, they’d raise monthly premiums for mid-grade “silver” plans by an average 20 percent to make up the costs (customers must buy a silver plan to get any CSR).
-- But subsidies would also rise alongside premiums, because they are linked to the cost of the second lowest-cost “silver” plan. Around 85 percent of marketplace customers are eligible for subsidies, so they’d be sheltered from the premium hikes.
“There’s not a lot of people that would be affected substantially by these premium increases,” Bret Schroeder, a health-care industry expert for PA Consulting, told me.
-- Furthermore, these subsidized consumers could have greater purchasing power because premiums for less-comprehensive “bronze” plans wouldn’t change much. So in some cases, the larger subsidies may entirely cover the monthly premium if these folks purchased a cheaper plan.
“It’s a backdoor way of increasing premium subsidies,” Levitt told me.
The CBO report didn’t generate much buzz last week, probably because it’s the middle of August recess and those of us who are smart are napping on a beach somewhere. But its ramifications – that these embattled Obamacare subsidies may not be quite as essential to marketplace health as many assumed – rattled some health policy wonks with whom I spoke.
“I fell out of my chair,” said Chris Condeluci, a former Republican Senate Finance Committee staffer who now runs his own policy shop, CC Law & Policy.
The idea that cancelling the CSRs would ultimately improve the uninsured rate – albeit by a relatively small percentage – is “100 percent opposite of what stakeholders, carriers, ACA supporters have been saying,” Condeluci said.
Here’s one way to think about it.
Erasing the CSRs just shifts federal money away from one pot of government assistance and into another pot, one that is less directly targeted at the lowest-income enrollees. While only those between 100 and 250 percent of the federal poverty level can secure the discounts, virtually anyone between 100 and 400 percent of the poverty level can get subsidies to pay part or all of their monthly premiums.
“What would happen is the net premiums stay the same because the tax subsidies would replace the [cost-sharing reduction] payments,” Schroeder said.
The government would save $16 billion a decade from now by not compensating insurers for the discounts. But the federal deficit would be $26 billion because its burden to pay larger premium subsidies for more enrollees would be greater.
Here's what the president tweeted last month:
If a new HealthCare Bill is not approved quickly, BAILOUTS for Insurance Companies and BAILOUTS for Members of Congress will end very soon!— Donald J. Trump (@realDonaldTrump) July 29, 2017
If ObamaCare is hurting people, & it is, why shouldn't it hurt the insurance companies & why should Congress not be paying what public pays?— Donald J. Trump (@realDonaldTrump) July 31, 2017
So maybe President Troump should think again on this subject.
“This effort to make the marketplaces implode could actually make them stronger,” Levitt said.
AHH: Speaking of the Obamacare marketplaces, they are looking healthier than they appeared earlier this year. Now just a single county -- Ohio's Paulding County -- will lack a marketplace insurer in 2018, according to an analysis by the Kaiser Family Foundation. KFF reports that a previously "bare" county in Wisconsin will now have an insurer. And last week, Centene Corp. agreed to enter Nevada's marketplace in 14 counties where consumers had previously faced no options next year, the Wall Street Journal reported.
OOF: Now the main concern is how many counties have just one marketplace insurer -- and how many of those insurers are proposing big rate hikes next year. Iowa's lone Obamacare insurer has requested a 57 percent rate increase, citing uncertainty over how the Trump administration will handle the health-care law, The Hill reports. In a revised rate request, Medica last week asked for an increase 13 percentage points higher than its original request filed in June.
"We remain hopeful the federal government will fund the cost-sharing reductions, but we are working with the Iowa Insurance Division to help consumers understand the implications of lack of this funding,” Geoff Bartsh, Medica vice president of individual and family business, said in a statement. “We regret the disruption this creates for consumers.”
OUCH: Jonathan Gruber, the influential health-care wonk often called an architect of Obamacare, has settled a fraud investigation with Vermont over allegations that he billed the state for work he himself didn't do. Gruber had been advising the state over its now-abandoned single-payer plan, the Washington Examiner's Kimberly Leonard reports.
“Under his $450,000 contract with the state, Gruber was supposed to submit monthly invoices describing the work he did and how much he was billing for his work," Kimberly writes. "The attorney general's office said Gruber filed at least two invoices that were false that pertained to work performed by a research assistant who was working for him."
Gruber denied committing fraud, but to resolve the case he agreed to forgo an additional $90,000 in payments the state owed him. The case was settled under the state's Civil False Claims Act, which the attorney general's office determined he had violated. It's not the first time the Massachusetts Institute of Technology economist has found himself in hot water. Gruber, known for his candid style, came under fire back in 2014 with his comments arguing the "stupidity of the American voter" helped President Obama pass the Affordable Care Act.
Here's the throwback video:
--As Trump visits Arizona today, he will find a place where his agenda and unconventional leadership style have consumed the political landscape and elevated the state’s status in the national fight for control of power in Washington in 2018, the AP's Josh Hoffner reports. Remember how Sen. John McCain (R-Ariz.) was the third vote against the Senate's health-care bill last month? And then there's Arizona's other senator, Jeff Flake.
"It was Arizona senator John McCain who cast the vote that derailed Trump’s effort to repeal the health care law," Josh writes. "The other Arizona senator, Jeff Flake, has become the poster child for Republicans who buck the president’s agenda and feel his wrath on Twitter. The president is almost certain to back a GOP challenger to Flake in 2018, complicating Republican efforts to maintain control of the Senate."
Bonus read from my colleagues Sean Sullivan and Ed O'Keefe on why congressional Republicans want the White House to stop meddling in Flake's 2018 reelection bid.
--Trump has faced a flood of protest from industry and nonprofit groups exiting his advisory councils in hoards and cancelling events at his Mar-a-Lago Club after his controversial remarks on the Charlottesville protests. On Saturday, the Preservation Foundation of Palm Beach, Fla., a charity focused on the ritzy island’s architectural landmarks, had planned to hold a dinner dance at Mar-a-Lago next March but said it would find another venue.
That decision means that Trump’s club has lost nine of the 16 galas or dinner events that it had been scheduled to host during next winter’s social “season” in Palm Beach -- many from medical or health-oriented groups like the Cleveland Clinic, the American Cancer Society, the American Red Cross and Susan G. Komen.
Susan G. Komen, the nation’s largest breast-cancer fundraising group, said it would seek another venue after hosting its “Perfect Pink Party” gala at Mar-a-Lago every year since 2011. And the American Red Cross said it would cancel its annual fundraiser at the club because “it has increasingly become a source of controversy and pain for many of our volunteers, employees and supporters,” the charity said in a statement.
"These losses could reduce the club’s revenue by hundreds of thousands of dollars by each event, and deny President Trump his dual role as president and host to the island’s partying elite," The Post's Drew Harwell and David Fahrenthold write. "If he returns to the club for weekends next winter, the president could often find its grand ballrooms quiet and empty....These cancellations all followed the president’s remarks on the march of neo-Nazi and white supremacist groups in Charlottesville, Va., in which the president said their side had included some 'fine people.'"
Just after President Trump delivered his nationally televised speech detailing his Afghanistan strategy last night (see 12 takeaways from my colleague James Hohmann), House Speaker Paul D. Ryan (R) held his own public forum back home. At a CNN town hall meeting in Racine, Wis., Ryan addressed a range of issues, including tax reform, saying it will be much easier to get passed than an Obamacare overhaul. As House Republicans return to Washington this fall, they're expected to turn their attention to a sweeping tax overhaul since their health-care bill is indefinitely stalled in the Senate.
"I believe it's going to be far easier for us to do tax reform than it was, say, for health-care reform," Ryan said, pointing to Senate rules prohibiting Republicans from including certain provisions like medical malpractice changes in a budget reconciliation bill. "Tax reform is different."
Speaker Paul Ryan says it will be “easier” to pass tax reform than health care reform https://t.co/SGH11uGDw3— CNN Politics (@CNNPolitics) August 22, 2017
Randy Bryce, Ryan’s likely Democratic opponent in 2018, used the forum as a marketing opportunity. Bryce purchased time for two 30-second advertisements that ran during the broadcast in the Republican’s district, my colleague Dave Weigel reports.
In the first spot, designed like the sort of question-from-voters videos that are often used at town halls, Bryce fires off three questions, starting with one on the CBO's coverage estimates that the American Health Care Act (the House health-care bill Ryan backed) would result in 23 million fewer insured people. Bryce then says: “Donald Trump is clearly a racist. When will you censure him in Congress?”
The second ad starts — as Democrats expect many 2018 spots to begin — with footage from the Rose Garden celebration of the AHCA’s passage:
Bryce, who said he'd applied to attend the forum but was turned down by CNN, kept up a steady stream of tweets instead. Like this one, where he said Ryan should give up his tax effort and work on a bill for a Canadian-style socialized health-care system instead:
Top House Democrat Nancy Pelosi (D-Calif.) had a response, too:
A few more good reads:
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- Association of Maternal and Child Health Programs and the National Institute for Health Care Management Foundation hold a webinar on access for maternity care providers.
Watch highlights from the Great American Eclipse:
A doctor explains why just glancing at the eclipse without the right sun glasses is a really bad idea:
But Trump did it anyway: