People who support the Affordable Care Act (ACA) breathed a sigh of relief when House Speaker Paul Ryan announced that he did not have the votes to pass the ACA’s replacement, the American Health Care Act. Had the bill passed, the independent Congressional Budget Office (CBO) estimated that millions of people who currently have affordable health insurance through the ACA would lose coverage. While Congress’ immediate inability to dismantle the ACA may be a relief for some, there is still reason for concern. In the coming months, the administration will make many decisions that could strengthen, maintain, or severely compromise the program.
Many in Congress and the current administration argue that the ACA is doomed to failure. They say that the ACA marketplace is unstable and will implode because rising health insurance costs will result in people choosing not to purchase coverage. But the CBO essentially dismissed this claim. This is because most people who purchase coverage in the marketplace get premium tax credits to help them pay for insurance. Since the amount of their credit is tied to the cost of premiums, when premiums go up, so does the credit. Almost 500,000 North Carolinians who signed up for coverage this year were eligible for tax credits.
So what is the concern? More than 350,000 North Carolina residents were also eligible for cost-sharing subsidies that reduce out-of-pocket payments, making it more likely that they can afford needed medical care. While the ACA requires insurers to provide cost-sharing subsidies to eligible individuals who purchase coverage through the ACA, Congress never appropriated direct funding for that purpose. The Obama administration used other funding to support the cost-sharing subsidies but the Trump administration could choose to stop paying for the subsidies. This would mean that insurers would have to cover the cost. In North Carolina, this could lead to insurers deciding that their participation in the ACA market is too costly, leaving up to half a million of our residents with eligibility for credits and subsidies, but no health insurance plan to buy.
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There are also other reasons for those who support the ACA to be wary. Another concern centers around the extent of participation of healthy, younger people in the marketplace. The ACA, anticipating this concern, includes a tax penalty for individuals who do not have health insurance. President Trump, in his first executive order, ordered all executive agencies to use their discretion “to the maximum extent permitted by law,” to waive or defer any fee, tax penalty, or regulatory burden on individuals, families, businesses, or providers. While the ACA requires people to have coverage or pay a penalty, the administration may stop enforcing that provision. Healthy people might drop coverage if they believe the IRS will no longer impose a penalty for failing to have health insurance coverage. This could lead to market instability, if the only people who choose to purchase coverage are those with high medical costs.
Finally, the U.S. Department of Health and Human Services (HHS) is responsible for hundreds of administrative decisions that affect the ease of insurers’ participation in the marketplace. HHS, if it chooses, has many opportunities to create new barriers to insurers’ participation. In a few months, health insurers must notify HHS of their intent to participate in next year’s marketplace. If the Trump administration has not signaled its intent to maintain the marketplace, we may see more insurers decide not to offer plans.
While Congress and the administration could take steps to undermine the ACA, they could also take steps to address some of the ACA’s problems. The American Health Care Act (AHCA) included provisions that could be a starting point for bipartisan support. For example, the AHCA would have appropriated $100 billion over 10 years for a patient and state stabilization fund. States would have flexibility to determine how to use their share of the allocation. For example, states could provide reinsurance to insurance companies to help insurers pay for higher cost claims, potentially reducing premium rates for others in the individual market. States could also use the funding to promote insurer participation in the individual and small group market, or to help people with insurance coverage reduce their out-of-pocket costs.
As Speaker Ryan said, the ACA is currently the law of the land. Therefore, we should take this opportunity to work together in a bipartisan manner to strengthen the ACA so that all Americans can have access to meaningful and affordable coverage.
Pam Silberman is a professor and Rebecca Slifkin an associate professor at the UNC Gillings School of Global Public Health. This article reflects their opinion, not that of the university.