WASHINGTON — With Senate Republican leaders vowing to try and scrap the 2010 health-care law next week, millions of Americans with federally subsidized insurance plans are in danger of having those plans snatched from them the next time around.
Although Senate Majority Leader Mitch McConnell, R-Ky., may not have the votes to abolish Obamacare, President Donald Trump and congressional Republicans could threaten the stability of the individual insurance market by cutting federal dollars that make those policies affordable.
In particular, Trump and Republicans could eliminate federal dollars that help millions of middle-income people pay out-of-pocket expenses and deductibles on their federally subsidized plans, a move “that would be deliberately sabotaging the” markets, said Kenneth Thorpe, a professor of health policy at Emory University in Atlanta.
Even as Vice President Mike Pence said Friday, “Obamacare is collapsing all across the country as we speak,” a number of analysts regard the accusation as exaggerated and contend that the federally subsidized individual marketplace will survive.
They acknowledge the marketplaces, also known as exchanges, need to be overhauled to attract younger and healthier people and curb the rapidly rising premiums of individual policies sold to more than 12 million people.
Just last month, Anthem announced plans to drop out of Ohio’s Obamacare marketplace, a move that would leave more than 10,000 people in 18 counties without access to a federally subsidized insurance plan. Anthem said the “individual market remains volatile,” saying one reason was “the lack of certainty” about whether the cost-sharing payments would continue.
“It’s fair to say the individual market is smaller and less healthy than we hoped and desired,” said Katherine Hempstead, senior adviser at the Robert Wood Johnson Foundation, a health philanthropy in Princeton, New Jersey.
“It still provides an extremely important function,” she said. “There is a very strong desire on these people to have health insurance. They don’t have another place to get health insurance. The markets are going to suffer, but they are not going to die.”
Ohio Gov. John Kasich, who opposed the exchanges created by Obamacare, urged lawmakers to revise them. In an interview with The Dispatch, Kasich said “you don’t have healthy people in with sick people” in the Obamacare exchanges, “so your pool is rickety-rockety, which means you’ve got a problem.”
Others, however, say the exchanges are deeply flawed, leading to rapidly increasing premiums and fewer insurance companies taking part. Rep. Warren Davidson, R-Troy, said “we’re not getting at … the cost drivers.”
Instead, Davidson wants to allow insurance companies to offer less-expensive plans that cover fewer services, saying “the reality is states all have some sort of requirement anyway, so it’s not like, ‘Oh, gee, there’s no standard at all.’”
Obamacare was designed to extend insurance to the roughly 46 million Americans in 2010 who were not insured by their employers, not old enough to qualify for Medicare or earned too much money to be eligible for Medicaid, the joint federal and state program that provides coverage for low-income people.
The number of uninsured Americans dropped by 40 percent because the law expanded eligibility for Medicaid while creating a federally subsidized marketplace where middle-income people could buy individual plans.
Here is how those marketplaces worked: The federal or state governments established exchanges in each state on which insurance companies offered four policies — bronze, silver, gold and platinum. A family of four earning as much as $98,000 a year could use federal tax credits to buy any of those plans.
For families of four earning up to $61,000 a year, there was an additional benefit. If they bought a silver plan, the federal government offered cost-sharing subsidies to reduce deductibles or other out-of-pocket expenses.
The Kaiser Family Foundation, a nonpartisan health-research organization in Washington, calculated that 7.1 million of the 12.2 million people who bought policies through the exchanges receive cost-sharing payments, concluding that the payments reduced out-of-pocket expenses for the typical family by roughly $5,500 a year.
House Republicans, who all voted against Obamacare, challenged the cost-sharing payments in federal court, contending that President Barack Obama spent the money without a specific congressional appropriation. A federal judge ruled in favor of the GOP but allowed the payments to continue while the case was appealed.
The Trump administration said last April that cost-sharing payments would continue. But if Trump reverses himself or Congress kills the payments, they could send seismic tremors through the exchanges.
In a letter to the Trump administration this month, Marilyn Tavenner, president and chief executive officer of America’s Health Insurance Plans, which represents the insurance industry, warned that “without a strong commitment” to the cost-sharing payments, Americans “will have fewer, if any, plan choices for 2018, and options that remain in the market will have significantly higher premiums, which will make coverage unaffordable for millions of Americans.”
For Republicans, the choice is stark: If they cannot scrap Obamacare in its entirety, they may have to stabilize the exchanges. Sen. Rob Portman, R-Ohio, told Fox News that Congress should “get rid of the mandates. Get rid of all the taxes. Get rid of the stuff that’s actually causing these rates to go up so dramatically.”
“In my own state we now have 19 counties with zero insurance companies in the individual market — another 27 with only one insurer,” Portman said. “That’s not competition. If you just do a repeal, all of the experts tell me a lot more uncertainty and a lot more plans are going to leave, and costs are going to go up even more.”
Kasich appeared to agree, saying “there’s a car in the ditch. We have to get it out. But then after that happens, how do we make the car operate better? What do we do with all the things that support the car? That’s kind of how I look at this. It should be a multi-step process because it is an extremely complicated thing.”