Breaking Down the Current State of the ACA

Melissa Andel, MPP, director of health policy at Applied Policy outlined the most up to date policy changes that could impact how insurers participate in ACA marketplaces in 2018.

During her session at AMCP Nexus 2017,  “Current Status of the Affordable Care Act,” Ms Andel outlined how the marketplaces are currently faring, how recent policy decisions by the Trump Administration will likely impact the marketplaces,  and the numerous legislative actions taken by congress in 2017 related to the ACA.

Ms Andel began her presentation by giving the audience a clear understanding of what the ACA marketplaces looks like today. She noted that the marketplaces only cover 4% of Americans and suggested that marketplaces are not in as bad a shape as current media coverage suggests. She also highlighted that the real dysfunction is related more to health care access than it is health insurance coverage. 

The ACA has had a positive impact on health insurance coverage in the United States, according to Ms Andel’s presentation, with 30 million Americans having gained insurance since its implementation, which reduced the uninsured rate to about 9%—the lowest in the country’s history.

She also emphasized that the financial outcome for insurers was beginning to look positive in 2017.

“Believe it or not, in 2017 insurer financial performance actually looked like it was beginning to stabilize,” Ms Andel said. She cited data showing that in 2017, average individual market gross margins per member per month increased from a steady plateau of about $45 between 2011 and 2016, to $99.43 in 2017. 

Trump Administration’s Actions

Ms Andel gave a timeline of the recent actions taken by the Trump Administration that could significantly impact how the ACA functions. 

“There is a series of actions by the Trump Administration that could—and I really do mean this—potentially undermine the marketplace enrollment and risk pools in 2018,” Ms Andel said. 

However, Ms Andel stressed that plans are unlikely to really see any effects of these efforts in the short-term.

“Plans need to be prepared  to deal with an uncertain situation for the foreseeable future,” she said. “2018 is already planned and baked, we’re going to have to start preparing for 2019 in a couple of months—but I think it is going to be 2020 at the earliest before we start to see a fundamental change, if we do see a change at all.”

Ms Andel highlighted how the current Administration recently decreased funding for ACA enrollment outreach by 90%, advised HHS employs not to participate in state-based enrollment promotion, taken steps with the IRS to allow taxpayers to not answer questions regarding health insurance status, shortened open-enrollment, and added maintenance downtime of healthcare.gov during the enrollment period. 

However, the most talked about change by President Trump, according to Ms Andel, was the recent decision to stop reimbursing health insurers for their cost sharing reductions. 

She explained that 57% of ACA enrollees receive cost-sharing reductions—a process through which insurance companies reduce costs for active health care users on a monthly basis and then reconcile those reductions with the federal government to receive reimbursement at the end of the month. 

Ms Andel explained that President Trump’s decision to cut the CSR payments could actually help consumers get better health care but would end up costing the federal government more money. According to her presentation, premium tax credits are tied to the second cheapest silver plan on the market, and insurers are required by law to provide the CSRs regardless of reimbursement, therefore to offset lost revenue insurers would likely raise the cost of the 2nd cheapest silver plan. In this scenario, Ms Andel said the consumers would likely be able to purchase gold plans for cheaper than silver plans, giving them access to better benefits—because their premium tax credits would increase.

Additionally, premium increases would likely increase the other ACA subsidies, which are tax funded—resulting in an increase in the federal deficit. According to Ms Andel, the CSR program costs about $7 billion annually. She said the CBO estimated that not paying CSRs would cost the federal government $200 billion over 10 years.

Ms Andel also highlighted the recent bipartisan deal by leaders on the Senate HELP committee that would restore the CSR funding if passed. She noted that currently this plan is on hold after a failed attempt by Republicans to push through a Medicaid block grant bill derailed its momentum.

CMS State Innovation Waivers 

Since the new Administration took over, States have been encouraged to file for 1332 waivers that would allow them to alter aspects of the ACA such as the essential health benefits requirements, individual and employer mandates, and the metal tiers. 

In order to do so, state innovation waivers must be reviewed an approved by the HHS. Currently, only 3 states have been approved for waivers, Alaska, Hawaii, and Minnesota—which focused on developing reinsurance plans and altering the employer mandate. 

As a result of the HHS review process, several states have been working closely with the HHS to develop waiver plans and applications. However, states like Oklahoma and Iowa recently hit road bumps, when they found out their waivers were not going to be approved. Ms Andel suggesting this could be a result of President Trump ordering the HHS to reject all ACA waivers.

“[Iowa senator] Joni Ernst has made public statements that she thinks President Trump is telling HHS to deny all waivers,” she said.  

Looking Forward

Ms Andel stressed that substantive ACA reform is unlikely to happen any time soon because the parts of the ACA favored by the public are funded by the parts of the ACA that aren’t favorable among congress, such as the individual mandate and the taxes. 

However, she noted that Republicans have indicated they will take up health care repeal again in 2018.

“I think that it is unlikely that a legislative fix is going to change anything in the next couple of years substantially,” Ms Andel concluded. “We might see small changes here and there but I don’t think we are going to see a wholesale repeal.” 

Recent reports suggest that Ms Andel’s predictions regarding the future of the ACA may be correct. ACA open enrollment started on November 1, and early data suggests that a record amount of enrollees signed up for an ACA marketplace plan in the first few days.

—David Costill