President Donald Trump has taken two executive actions that will have a major impact on the healthcare that millions of Americans receive. Emphasis on executive actions meaning the President, not the Congress or the Senate, took these actions himself without a single vote from either house of Congress. Republicans renamed the Affordable Care Act Obamacare because of executive orders by former President Barak Obama, President Trump’s executive orders are so substantial that it’s appropriate to rename Obamacare Trumpcare.
An executive order loosening rules surrounding the offering of health plans by small businesses, as well as rules about enrollment in short-term health insurance plans that are less expensive and less comprehensive than Obamacare health plans. Federal agencies will rewrite the rules to allow plans to be larger and sold across state lines. Because those plans won’t have the same minimum coverage requirements as Obamacare, the premiums will be cheaper and the healthcare received will be bare bones. The order also directs federal agencies to consider reversing an Obama administration directive that limited enrollment in short-term insurance plans that don’t meet minimum coverage requirements to three months, President Trump wants that extended up to a year.
The White House announced that the administration will halt Cost Sharing Reduction (CSR) payments, no longer reimbursing insurers for the cost-sharing reductions they are legally required to make for low-income individuals. The Affordable Care Act requires insurers to reduce cost sharing for individuals who enroll in silver plans and have household incomes not exceeding 250 percent of the federal poverty level. These provisions reduce the out-of-pocket limit for these enrollees—particularly for those with incomes below 200 percent of poverty—and sharply reduce deductibles, coinsurance, and copayments. The payments cost around $7 billion a year currently.
Action 2 is the biggest game changer and the most toxic to the Affordable Care Act. Ending the CSR payments has been well analyzed in a report from the Congressional Budget Office. It will drive up premiums as insurers attempt to cover the cost of the reductions. As premiums go up, so will premium tax credits. Indeed, the government will probably pay more in premium tax credits than it saves in cost-sharing reduction payments. Individuals who earn too much to receive tax credits will be particularly hard hit by the premium increases.
Ending the CSR payments could also drive more insurers out of the exchanges. Under their contract with the federal exchange, insurers may terminate participation if cost-sharing reduction payments are terminated.
Unfortunately for all Americans President Trump’s vision for “making America great again” doesn’t include making healthcare great. By ignoring the facts of Obamacare and not identifying ways to repair it President Trump can’t keep his campaign promise of better healthcare, but he can choke the life out of Obamacare and revive it as TRUMP CARE.