Semro column: A dubious strategy
May 16, 2018
This month, former Health and Human Services Secretary Tom Price finally admitted publicly that the repeal of the individual mandate (which requires the purchase of health insurance coverage) in last year's tax law will increase health insurance premiums for a lot of Americans.
To quote him directly: "There are many, and I'm one of them, who believe that that actually will harm the pool in the exchange market, because you'll likely have individuals who are younger and healthier not participating in that market, and consequently, that drives up the cost for other folks within that market."
Even though he's now trying to walk that comment back, he was right when he said that the repeal provision in the new tax law will drive up premiums in the individual health insurance market. After all, the purpose of the mandate was to allow that market to better absorb and distribute risk in order to restrict premium cost growth and reduce uncompensated care costs for treating the uninsured.
Health care experts have always understood the impact of repealing the mandate. In November of 2017, the non-partisan Congressional Budget Office projected that the repeal would cause health insurance premiums to rise by about "10 percent in most years" over the next decade. They also projected that, by 2027, the repeal alone would increase the number of uninsured Americans (both voluntary and involuntary) by 13 million.
In return, the repeal would reduce the federal deficit by $338 billion over 10 years. That's roughly 22 percent of the $1.5 trillion of debt that's projected to be created by the new tax law. Arguably, the repeal pays for about one-fifth of the tax cuts.
But more importantly, the mandate repeal is just one part of a larger strategy to destabilize the individual health insurance market while at the same time pushing the argument that "Obamacare" is in a death spiral.
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No one is suggesting for a moment that the Affordable Care Act doesn't have problems. It obviously does. But those problems could be fixed. Social Security, Medicare and Medicaid had problems, too, but opponents of those programs made the conscious decision to improve them rather than destroy them. As a result, generations of Americans have benefited from those programs and their repeal today would be political suicide.
What's different here is that the ACA has been turned into a partisan punching bag culminating in repeal-and-replace bills that were so unpopular they couldn't get through Congress. But it doesn't end there.
Since February of 2017, the Trump Administration and Congress have literally taken dozens of actions to destabilize ACA insurance markets.
Some of the most drastic include: reducing funding for open enrollment promotion and outreach by 90 percent; slashing budgets for health care navigators that assist consumers; cutting open enrollment periods in half; ending cost-sharing reduction (CSR) payments to insurers that lower costs for 6 million low and middle-income Americans (an action that will also increase premiums for non-subsidized policy holders); refusing to allow a bipartisan market stabilization bill from even coming to the floor for a vote; creating new rules promoting Association Health Plans to the detriment of the individual and small group insurance markets; allowing states to impose work requirements on Medicaid eligible Americans;
Also, extending short-term "skimpy plans" and allowing them to bypass ACA requirements (see last month's column); repealing the individual mandate (which along with the extension of skimpy plans are projected to increase premiums in Colorado by 18.3 percent next year); and, most recently, on April 9, finalizing a new rule that would allow states and insurers to scale back benefits, weaken risk adjustment, impose enrollment barriers, reduce the transparency of insurance premium settings, and weaken Medical Loss Ratio standards for insurers in the individual market.
These actions and the uncertainty and confusion they've created have led to real consequences for real people.
According to a Commonwealth Fund survey in March of 2018, 4 million Americans have lost health insurance coverage since 2016. In addition, the uninsured rate for lower income adults rose from 20.9 percent in 2016 to 25.7 percent in March of 2018.
The Commonwealth Fund concluded that these coverage declines are the result of two factors:
1. Lack of federal legislation to improve specific weaknesses in the Affordable Care Act.
2. Specific actions taken by the current administration that have exacerbated those weaknesses.
From a purely political perspective, the uninsured rate for adults who identify themselves as Republicans jumped from an all-time low of 9.9 percent in April of 2016 to 13.9 percent by March 2018. And, according to a study this year from the Urban Institute, nine states — North Dakota, South Dakota, Alabama, Rhode Island, Arizona, Nebraska, Texas, Wisconsin and West Virginia — are projected to see average premium increases of 20 percent or more in 2019. The president won eight of those states in the last election.
Bob Semro of Glenwood Springs is a former health policy analyst for the Bell Policy Center, and a legislative and senior advocate.