In his high-stakes strategy to overhaul the federal health law, President Donald Trump is threatening to upend the individual health insurance market. But if the market actually breaks, could anyone put it back together again?
The question is more than theoretical. Since Jan. 20, the Trump administration has already acted to depress enrollment in Affordable Care Act plans, has instructed the IRS to back off enforcement of the requirement that most people have health insurance or pay a penalty and threatened to withhold billions of dollars owed to insurance companies. All of those actions make it more difficult for insurers to enroll the healthy people needed to offset the costs of the sick, who make it a priority to have coverage.
The president himself has made his strategy clear in interviews and tweets. “The Democrats will make a deal with me on healthcare as soon as ObamaCare folds — not long,” Trump tweeted March 28. “Do not worry, we are in very good shape!”
But the individual insurance market is not in such good shape.
A growing number of insurers are asking for double-digit premium increases or deciding to leave the market altogether. In the latest announcement, Anthem said Tuesday that it was pulling out of the Ohio marketplace, where it serves more than 10,000 customers, next year. And while most analysts say the market probably would eventually rebound, in the short term things could get messy.
“Is the administration doing what it needs to do to stabilize the market? No, they’re doing the opposite,” says Kevin Counihan, CEO of the insurance exchange program during the Obama administration.
Trump’s biggest weapon by far is refusing to reimburse insurance companies for billions of dollars in payments the law requires them to make to help policyholders with incomes up to 250 percent of the federal poverty level, about $30,015 for an individual and $61,500 for a family of four, afford their deductibles and other out-of-pocket payments. These “cost-sharing subsidies” are being challenged in an ongoing lawsuit filed by Republican House members against Health and Human Services in 2014, and Trump can effectively end them at any time by dropping the suit.
Meanwhile, major insurance companies like Aetna and Humana have already announced that they won’t participate in the health exchange market for 2018.
Other insurance companies have said they would like to stay in, but only if they are granted huge rate hikes, citing the uncertainty of whether the Trump administration will repay them for the cost-sharing discounts and whether it will enforce the health law’s “individual mandate” that requires most people to have coverage or pay a fine.
In Pennsylvania, for example, insurers are seeking premium increases of less than 10 percent for 2018 – but warn that if the mandate to have insurance is not enforced or cost-sharing reductions are not paid, those increases could balloon to 36 percent or more.
Those who follow the market closely say the exits and requests for large premium increases are no surprise. “It’s just been one thing after another in this market,” says Kurt Giesa, an actuarial expert at the consulting firm Oliver Wyman. He said if the administration follows through on its threat not to fund the cost-sharing subsidies for the rest of the year, “that could be the straw that breaks the camel’s back.”
Giesa pointed out that it’s not just insurance companies that would suffer if the individual insurance market is crippled. “That strategy of crashing the market has real human consequences,” he says. “There are 15 million-plus people relying on that.”
That group includes not only people who purchase insurance through the “health exchange” state marketplaces, but also those who purchase insurance on their own, usually because they earn too much to get federal assistance paying their premiums. Premium subsidies are available to those who earn less than 400 percent of the poverty level, about $48,240 for an individual and $98,400 for a family of four.