Would the Trump White House really let Obamacare markets fail and plunge millions of insurance plans into chaos? Trump has repeatedly declared his desire to “let Obamacare fail” and “let Obamacare explode.” The idea is that as health markets collapse, Republicans would gain political leverage and Democrats would have to cooperate on repealing the Affordable Care Act and replacing it with something else.
The administration has been sending conflicting signals all year on how it will handle Obamacare. With repeal plans dead for now, Trump actually has a massive amount of power over insurance costs and the viability of the markets, without any help from Congress. The system was designed to give the administration a huge amount of discretion in its implementation, and it’s all perfectly legal. Here are five ways he could nudge — or shove — Obamacare toward collapse if he chose to.
1: Stop incentivizing people to buy insurance.
Right after taking office in January, Trump signed an executive order directing agencies to waive provisions of Obamacare that would “impose a fiscal burden.” At the time, Trump was vowing that Obamacare repeal was imminent.
The order seemed to target Obamacare’s individual mandate to buy insurance or pay a tax penalty. But now that Republicans are stuck with Obamacare for the foreseeable future, repealing the individual mandate without putting something else in place would mean millions of healthy people fleeing the markets, according to projections from the nonpartisan Congressional Budget Office.
So far this hasn’t happened. The Trump administration has continued to enforce the individual mandate and exemptions are actually down slightly in 2017. While this could be due to normal fluctuations, the Trump administration has also made contradictory moves to strengthen the markets by being more strict on granting exemptions.
The result has been a tangle of contradictions. The White House killed a planned reform to make it harder to dodge the individual mandate while filing your taxes, but enacted stricter enforcement of the marketplace rules than the Obama administration. It’s not clear which path Trump will ultimately commit to, but how his team enforces the individual mandate will play a key role in the markets’ survival.
And Trump’s January executive order could have other implications as agencies, now knowing that Obamacare isn’t going anywhere anytime soon, decide how to implement it.
2: Neglect open enrollment.
Obamacare markets depend on getting a large number of people to sign up for insurance plans during the enrollment period at the turn of the new year. To encourage this, the Obama administration poured resources into advertising the enrollment period and opening up many avenues for people to sign up.
The Trump administration has decided to cut enrollment advertising by 90%, from $100 million to $10 million. It is also cutting the “navigator” program, which provides grants to nonprofits to help Americans sign up for health insurance. Health and Human Services staff are also pulling out of Obamacare enrollment events across the country. The White House also shortened the enrollment period itself by half. It will now run from the beginning of November to mid-December this year and the site will be down for maintenance from midnight to noon on all but one Sunday during that period.
“Sick folks are always the first ones to sign up for health insurance, but for the healthy it must be sold,” said Jonathan Gruber, who served as an adviser to former president Obama on the ACA. “When you do things like get rid of outreach, limit the open enrollment period, and cut back on phone line hours, you end up excluding healthy folks. That raises the premiums for everyone else.”
3: Let healthy people leave Obamacare and start their own insurance pools.
Trump has said that he will sign an executive order to let people buy insurance through health associations. The idea, pushed by Kentucky Sen. Rand Paul, is that people with common interests can band together to pool their purchasing power and buy insurance as a group.
While this would work well for some people, it comes with a huge caveat. These groups could select only healthy people as members and sign up for off-market plans, leaving sick (and thus expensive) people behind on the regulated markets. This would push prices up for people still on Obamacare and could potentially lead to a full-on death spiral.
One expert referred to the policy as “repealing the ACA without Congress,” while another said it would “completely destroy the individual market.” It’s not clear whether HHS Secretary Tom Price's resignation will put this plan on hold or potentially alter it.
4: Ignore the states.
A big part of all of the Republican plans to repeal Obamacare was giving states the freedom to craft their own system. Even Democrats broadly agree that changes need to be made to improve the law. But bafflingly, the White House so far hasn’t approved any state reforms.
Oklahoma applied for a federal waiver to make several changes to its system. The state has struggled with insurers leaving the Obamacare markets, a large uninsured population, and prices almost doubling between 2015 and 2017 for those who remain. The state argued its changes would have reduced premiums by 30% next year.
The Trump administration, which has to approve these changes, didn’t sign off on them or reject them. Instead it gave no response at all. An expected September deadline for approval came and went with no notice, and Oklahoma eventually withdrew its request altogether.
While Oklahoma rages about its situation, other states are now in the dark about whether their own waiver requests will be similarly neglected. This adds to an already uncertain landscape after Price resigned in the midst of a scandal over his use of private jets in office.
5: Cut off the taps.
Some of the biggest impacts on the Obamacare markets come from the things the Trump administration is not doing.
It could have prevented premiums increasing by 20%, according to Congressional Budget Office projections, if it had committed to continue funding a key Obamacare subsidy. The subsidy, known as cost-sharing reduction payments or CSRs, helps insurance companies pay for low-income patients.
Republicans have traditionally railed against the payments as an insurance industry bailout. But to stop paying them while Obamacare still exists would actually be $194 billion more expensive over a decade, according to the CBO. That’s because cutting off CSRs would spike premiums for low-income patients, which in turn means a spike in the federal tax credits that help them buy insurance.
So far Trump has taken a mercurial approach to CSRs. He hasn’t committed to funding them in the future but also continues to pay them out month after month. Without any long-term guarantee that the funding will continue, insurance companies set more expensive premiums for next year based on the assumption the CSRs could be cut off.
A bipartisan bill to guarantee the payments, at least in the short-term, and stabilize the markets is being negotiated by Senate Health Committee Chair Lamar Alexander and ranking Democrat Patty Murray. This bill would guarantee CSR funding and give states more flexibility in crafting rules.
While a deal seems to be essentially done, it is currently held up by a lack of sufficient support in Congress. House Speaker Paul Ryan has said he would block any bipartisan bill that reinforces Obamacare, and it’s not clear whether the bipartisan fix has a chance.