President Trump was elected promising to repeal the Affordable Care Act (ACA). On his first day in office he issued an executive order intended to turn back ACA implementation. He has maintained a constant drumbeat of statements attacking the law, often claiming that it has already been destroyed or crippled. ACA supporters assert that the president’s actions mirror his words; that he is deliberately “sabotaging” enforcement of the ACA. Indeed, a first-of-its-kind lawsuit was recently filed claiming that President Trump is violating his constitutional duty to “take care that the laws be faithfully executed.”
Though there is a great deal of truth in this charge, it does not capture the complexity of the Trump administration’s approach to the ACA, particularly in regard to the reforms of the individual market. In fact, while the administration has undermined certain individual market programs, reduced or eliminated the federal role in administering others, and created an alternative individual health insurance market independent of the ACA, it has continued to implement other ACA programs that stabilize and support the individual market.
Administration Attacks on the ACA
Some Trump administration actions have clearly undermined ACA initiatives. A recent Government Accountability Office report, for example, criticizes the administration for greatly scaling back ACA outreach and education programs, including funding for the navigators who help consumers find coverage. The administration’s termination of reimbursement payments to insurers for reducing cost-sharing for low-income enrollees threatened to destabilize the ACA markets, although swift reactions by state regulators averted chaos. The Trump administration has also effectively ended the SHOP small business marketplace program.
Creating an Alternative Insurance Market
The administration is also trying to create an alternative individual health coverage market independent of the ACA. The Labor Department’s Association Health Plan (AHP) rule significantly expands the ability of AHPs to cover individuals and small groups subject only to permissive large-group consumer protections. The administration’s short-term limited duration coverage rule allows the marketing of more plans completely free from all ACA insurance reforms. The administration contends these measures will enable individuals, particularly those who do not receive subsidies, to access lower-cost coverage. It acknowledges, however, that as healthy people shift to the alternative market, the cost of ACA-compliant coverage will increase, while short-term products may not offer adequate protection for some who choose them.
Reducing the Federal Role
Moreover, the administration has dramatically reduced the federal government’s role in administering the ACA. It has transferred to the states responsibility for ensuring that health insurers offer adequate provider networks and access to essential community providers. Recent rules allow states to alter their essential health benefit requirements, reduce transfers among insurers under the risk adjustment program, and diminish required insurer medical-loss ratios. The administration is also transferring responsibility for marketplace enrollment from the federal marketplace to private web brokers through its enhanced direct enrollment program. Increased reliance on the states or the private sector to implement the ACA risks uneven, and in some instances ineffective, enforcement and consumer protection.
Enforcing the ACA and Stabilizing Insurance Markets
But while the administration has excoriated the ACA in tweets and other public statements, and has issued regulations and guidance that undermine some of its programs, it has continued, by and large, to enforce the law as written. When Idaho proposed the creation of state-based plans that violated some ACA provisions, the Centers for Medicare and Medicaid Services (CMS) informed Idaho that the agency would take over ACA enforcement if the state failed to do so. When a New Mexico judge invalidated the risk adjustment program, the administration issued a new final rule to keep it in place.
Indeed, the administration has continued to take steps that have either been intended to, or have had the effect of, stabilizing ACA individual market coverage. The first ACA rule issued by the administration in the spring of 2017 included a number of provisions, including limiting special enrollment periods, that insurers had argued (rightly or wrongly) would be market stabilizing. CMS has encouraged, and has now granted, seven state innovation waivers to allow reinsurance programs that have the effect of reducing individual market premiums and thus shoring up ACA enrollment. CMS and Internal Revenue Service career staff and contractors continue to efficiently process marketplace applications and enrollments, conduct trainings and information sessions, certify qualified health plans, and carry out other essential ACA activities. Finally, the federal marketplace and call center operated effectively during the 2017 open enrollment period.
Where Is the Trump Administration Heading?
It is nevertheless apparent that the Trump administration is chafing under its ongoing responsibility for enforcing and administering the ACA. The Department of Justice has taken the position in litigation brought by Texas and other Republican-led states that the ACA’s individual mandate is unconstitutional and that its guaranteed issue and community rating requirements, as well as its ban on preexisting condition exclusions, should be invalidated. The administration apparently continues to enforce these provisions while awaiting the outcome of that litigation.
More than 18 months into the Trump presidency, the ACA remains largely in place. The cost of coverage in the individual market for people who lack subsidies has grown substantially, in large part because of the instability created by administration and congressional repeal efforts. But having endured the shock of Trump’s first year in office, marketplace premiums and insurer margins are stabilizing and new insurers are entering some markets. Unsubsidized enrollment in the individual market has shrunk dramatically but enrollment in the subsidized market has contracted only marginally. It is clear that the availability of premium tax credits has been a stabilizing force that has offset the shocks the individual market continues to absorb.
The number of the uninsured continues to remain stable, at least through early 2018, and remains well below 2013 levels. Most of the gains the ACA has achieved continue. But if Congress fails to take action to consolidate those gains (by expanding access to subsidies, for example), and if administration policies continue to undermine insurance markets, those gains may soon erode.