The silver lining in Trump’s health care ‘sabotage’
- President’s plan to end cost-sharing-reduction subsidies will not end up making ordinary citizens pay more for healthcare
Oct 24, 2017-
President Trump once promised a health care plan that would have “much lower premiums and deductibles while at the same time taking care of preexisting conditions.”
That plan may be Obamacare. Trump’s decision to end cost-sharing-reduction
subsidies, known as C.S.R.s, and perhaps to derail a bipartisan bill by Sens. Lamar Alexander, Republican of Tennessee, and Patty Murray, Democrat of Washington, that would restore C.S.R. funding through 2019 may actually lead to better coverage for more people paying lower monthly premiums.
That’s because insurers and state regulators prepared a workaround in anticipation of Trump’s move—and at least for 2018, most consumers could benefit from it. To extend that beyond 2018, the Alexander-Murray bipartisan effort should focus less on restoring funding for C.S.R.s and more on modifications that would empower states in customizing their insurance markets.
How does Trump’s move benefit insurance consumers? There are two types of financial help in the Affordable Care Act. One, C.S.R.s, go to insurers, which in turn lower deductibles and co-payments for people who buy “silver” plans and earn from 100 percent (single individual earning $12,060 in 2017) to 250 percent (single
individual earning $30,150 in 2017) of the federal poverty line.
The other is a tax credit to individuals that lowers the cost of monthly premiums. Single individuals qualify for premium assistance if they earn $12,060 to $48,240, and they can buy any “metal” plan—bronze, silver, gold or platinum—on a state or federal exchange. Here’s where the fix came in. Many states—more than 40—allowed insurers to compensate for the loss of C.S.R.s by raising the rates of their silver plans. Because the value of the premium tax credits rises and falls with the price of a silver plan, consumers who qualify will not pay more than a set amount of their income. Instead, the federal government picks up the tab of the rising costs.
In other words, insurers are allowed to claim subsidies, but through a different, more lucrative channel. It will also, not coincidentally, cost the government more than if it had simply paid the subsidies in the first place, because of the cost of covering higher premium rates for consumers who, by law, receive subsidies.
These consumers are no worse off whether they purchase silver plans or any other “metal” plan, which might include lower-deductible gold plans that also feature lower out-of-pocket expenses. The Congressional Budget Office expects all states to quickly adopt these strategies that protect their local health insurance markets.
But these are limited strategies: They will make it more complicated to shop for a plan. And they do not immediately help people who do not receive premium tax credits on the exchange.
Here’s where the Alexander-Murray bill could help these individuals, by making the process for approving state waivers to customize their insurance markets faster, simpler and more straightforward.
States can already apply for waivers from Affordable Care Act regulations. Alaska and Minnesota have received waivers for reinsurance, which helps pay very costly claims without increasing premiums for everyone else. Alaska’s waiver led to a 16 percent to 22 percent drop in premiums that nonsubsidized individuals pay for their insurance. Minnesota’s program dropped some rates by 13 percent, while the largest increases were under 3 percent.
The Alexander-Murray bill would allow states to use off-the-shelf “me too” waivers with fast approval. It would also require the development of standard reinsurance waivers, which would allow states to use these waivers to lower premiums for nonsubsidized buyers.
The bill also allows for wider sales of catastrophic plans, which have very high deductibles but are usually the lowest monthly premium plans that satisfy the individual mandate. Right now only people who are under 30 or who have a hardship exemption can purchase a catastrophic plan. The bipartisan proposal in the Senate would allow anyone to buy a catastrophic plan, which could lead to lower premiums for nonsubsidized buyers.
By pulling the plug on C.S.R. subsidies, Trump can claim that he will provide a better deal on health insurance for more Americans. He and his fellow Republicans should declare victory, with or without a version of the Alexander-Murray bill—and check health care reform off their legislative list.
—©2017 The New York Times
Published: 24-10-2017 08:09