President Trump announced two major policy changes yesterday; one will do little to affect healthcare markets and insurance, the other will have a drastic and almost immediate impact.
Cost Sharing Reimbursement payments help those making less than 250% of the poverty level pay for deductibles and other costs.
Ending CSR payments will force health insurers to:
- increase premiums by almost one-fifth to offset the loss of CSRs; this is already happening in many markets…many had already done this, but others are sure to do so immediately
- and/or stop selling insurance immediately and cancel policies already in effect, ending coverage for poorer Americans.
Here’s the funny thing; ending CSRs will INCREASE costs to the taxpayers because people who no longer get the payments will get tax credits – and others will too..
The reaction from many in Congress was negative; CSRs had been funded in the Republicans’ bills to repeal the ACA, and several House and Senate Republicans expressed concern that the President’s move would harm their voters.
This may be an unwise political move as well;
Trump’s supporters (51%)…[and] eight in 10 Americans (78%) say President Trump and his administration should do what they can to make the current health care law work.
Trump’s other Executive order will have far less impact on insurance markets. In sum, the order allows insurance companies to sell policies across state lines and offer stripped down policies
The first – selling across state lines:
- is already allowed in 3 states, and no insurers participate because mandates do influence costs, but the underlying cost of insurance is the cost of care.
- Contradicts Republican orthodoxy – and ACA repeal efforts – that keep states in control of insurance markets. The across-state-line sale of insurance guts state insurance regulatory authority.
As does the part of the order allowing sale of stripped down policies. These plans, known variously as association health plans, multiple employer welfare arrangements (MEWAs), and multiple employer plans (MEPs), have a pretty crappy history. Allowed years ago, many went belly-up leaving healthcare providers unpaid and members uncovered.
There’s a lot of detail to these, (see here) but the real issue is simple – policyholders often get screwed, and, like selling across state lines, MEWAs flout state regulation of insurance.
What does this mean for you?
These orders will further screw up the health insurance industry. The real effect will be to push us closer to single payer, a result unintended and with far more drastic consequences.