In the absence of legislation around immigration reform, Barack Obama used executive actions to create policy, i.e. now we have DACA. Taking a similar page out of the presidential playbook, Donald Trump is using executive orders to bring about a retrenchment from the Affordable Care Act.
Today there was not one, but two, EOs that will increase uncertainty in the health insurance marketplaces, such as Covered California.
- Association Health Plans and Short-term Insurance: AHPs are plans for small businesses (and maybe self-employed individuals) who band together. Both AHPs and short-term plans can lead to a broader range of cheaper insurance options- in part because neither one has to meet ACA or state requirements, e.g. these plans do not have to cover essential health benefits such as prescription drugs (required for the marketplace plans). Healthy people who don’t need comprehensive coverage will be drawn to the cheaper AHPs and short-term plans, leaving behind sicker people in the marketplaces. The more sick people are packed into the marketplace, the higher premiums will go.
- Cost-sharing subsidies: These are payments that the federal government makes to help cover the costs of co-payments, deductibles, etc., for low-income people buying insurance in the marketplaces (over half of buyers). Without the subsidies, health insurance plans will (and have already, due to uncertainty) increased premiums.
Both EOs could also make the cost of doing business in the marketplaces too high, and insurance plans may simply drop out.
*Now both EOs are likely to trigger lawsuits from states (1) and insurance companies (2) so it’s likely not much will happen yet. (2) can also be resolved by an act of Congress.
However, Congress has not yet renewed funding for the Children’s Health Insurance Program, employers are not required to offer plans with contraceptive coverage, and Puerto Rico–still struggling for clean drinking water and electricity– is on a Medicaid block grant.
I try to conclude these posts with a summary for implications for disparities- but they all seem to come to the same conclusion: if these EOs come to pass in the absence of other reforms, disparities by income, race and ethnicity, and gender, are all likely to widen. For all the new choices available, those with chronic and pre-existing conditions will likely see their premiums go up.
Mitch McConnell has called off the vote on Graham-Cassidy, so the last ACA repeal/replace bill for this budget reconciliation cycle is off to rest. For now. If Congress can pass a budget resolution (simple majority) they can then trigger another opportunity for budget reconciliation, and another opportunity for ACA repeal/replace under a simple majority.
There are no winners in this situation. There are still many problems in access, quality and spending in our healthcare system, both related and unrelated to the ACA. Of course, I am biased towards coming up with thoughtful, evidence-based solutions– whether they come up in reconciliation or bipartisan effort.
Graham crackers as building blocks, get it?
The Senate has 17 days left to pass a health care bill under the reconciliation process (reminder: that way they only need 50 votes to pass). Sen. Lindsey Graham (R-SC) and Bill Cassidy (R-LA) have been working on a last-ditch effort to repeal and replace the Affordable Care Act, mainly by removing many of the law’s subsidies and mandates, and shifting the funding to a block-grant formula. Their selling point is to shift control to the states and move towards greater equality in funding between states. More flexibility means more market reforms, including a wider variety of health insurance plan choices and cheaper plans.
What could possibly go wrong?
- The downside is when different groups disagree on what is a fundamental protection that should apply to all in the U.S.- or not. Cassidy-Graham eliminates: the tax credits for purchasing health insurance, the subsidies to reduce cost-sharing for low-income individuals, Medicaid expansion, regulations that block raising premiums for individuals with pre-existing conditions (the ban on underwriting), the requirement for coverage of essential health benefits, the individual mandate and the employer mandate.
- States get more freedom to set up their healthcare insurance markets, at the expense of removing guarantees of coverage for low-income individuals. It is entirely possible that a given state could come up with a better solution for covering their low-income populations; it is not required.
- Local control, with less money. Funding is tied to a rate of increase lower than medical inflation, so total ACA spending goes down by one third in 2026 and by 100% in 2027. Maybe not a bad thing IF states can figure out how to get better care for fewer dollars- but it’s not clear that they can.
- States will have to contribute a small percentage but it’s possible that their spending drops off too. The AHCA/BCRA proposals to convert Medicaid to a per capita cap and offer a block grant are in Cassidy-Graham also.
- Increasing “fairness” between states: allocation of dollars in the block grant are determined by a complicated formula that essentially shifts money away from states that expanded Medicaid and enrolled more individuals in ACA, i.e. states that made the most progress in expanding coverage to low-income populations, to those that did not.
- Repeal of the Public Health and Prevention Fund.
As we saw with welfare reform, states have large variation in how and whether they choose to support disadvantaged populations. Increased flexibility, lower funding, and no standards means that disparities by income (and as they are correlated, race and ethnicity) go up.