The President on, Thursday October 12, took two actions designed to weaken the individual insurance market. Although the first action of the day, an Executive Order to deregulate markets, drew the most initial attention, it is the second action on Cost Sharing Reductions (CRS) that could have the most immediate impact.
The Executive Order is an order to agencies (HHS, Labor Department and Treasury) to develop new regulations and guidance that will weaken current insurance policy protections. The announcement on the CRS was that the Administration would not continue the CSR subsidies that lower some co-pays and deductible for some lower and middle-income purchasers. These subsidies are the funds that were under lawsuit first by the Speaker of the House John Boehner (R-OH). They have been under a questionable legal status so much so that the President has threatened to withhold the approximate $7 billion since last November’s election.
On Thursday night the White House announced they would do just that after bluffing for nearly 10 months. Some new insurance rates for 2018 had already factored in this action but the President’s action will likely add to an incentive for insurance companies to pull out of some markets.
It is unclear how both states and the industry will respond. Some states are likely to file lawsuits and the same may be true of the insurance industry. Ironically the President’s action is not likely to save the $7 billion in subsidies because in some cases it will cause increased federal coverage through tax credits. At the same time however, some policy prices could go up squeezing coverage for some people and in other instance some companies could drop out of providing coverage.
The executive order may take some time, at least when it comes to regulations. It would allow insurance companies to violate the minimum standards established by the ACA such as required coverage for mental health and substance use treatment, maternity coverage and other protections. It allows cross-state policies that in theory would create more competition. Advocates fear that some companies will develop cheap policies that would appeal to young and healthier people and as a result leave older population with greater health issues in a more expensive pool. That would drive up premiums.
|As CWLA has noted… according to research by Dr. Frank and Dr. Glied, a full repeal of the ACA would result in a loss of coverage for 2.8 million people with a substance use disorder, including 220,000 people who have an opioid addiction. Additionally, it would eliminate mental health coverage to 1.2 million people with a serious mental health disorder.|
There had been efforts by Senator Lamar Alexander (R-TN) and Patty Murray (D-WA) to fix these subsidies as part of a short-term bipartisan patch. Those discussions disrupted when the Senate tried another final repeal vote on the Graham-Cassidy repeal/block grant bill. Several Republican members who supported a repeal of the ACA were opposed to pulling the subsidies without a repeal enacted. It is unclear where this latest action will take them, in support of the President of their party or trying to protect customers in their own states.
Add these subsidy payments to a list of items Democrats may demand be part of any government funding deal when a government shutdown is possible on December 8.