Even Without Congress, The Trump Administration Can Still Redo Obamacare
Updated July 19 at 2:30 p.m. ET
Repealing the Affordable Care Act was at the top of Republicans' policy wish list ever since the law was passed in 2010. Seven years later, having gained the White House and majorities in both houses of Congress, the GOP apparently has failed to repeal that law, also known as Obamacare.
However, that doesn't mean Obamacare itself is untouchable. While Congress faltered, the White House still has lots of power.
"There are things the Trump administration might do that could prop up the markets, and there are things they might do that could help the markets explode, if that's what they want to happen," says Cynthia Cox, who studies Obamacare's effects on private insurance at the Kaiser Family Foundation.
Here are a few possible changes:
1. Cut off the subsidies
One of the biggest threats to the Affordable Care Act has been a lawsuit filed by House Republicans that could have ended what are called cost-sharing subsidies, which help people limit their out-of-pocket expenses.
As Kaiser Health News' Julie Rovner reported last year, the suit, filed in 2014, "charged that the Obama administration was unconstitutionally spending money that Congress hadn't formally appropriated, to reimburse health insurers who were providing coverage to working-poor policyholders."
Last spring, a judge sided with House Republicans, but allowed the subsidies to remain in force pending appeal.
With Trump's election, his administration took responsibility for the appeal.
Should the Trump administration decide to drop that appeal, it would be quick, easy and potentially crippling to Obamacare. Trump reportedly wants to stop making the payments, Politico recently reported.
That might sound like a simple decision for a president who detests the Affordable Care Act, but it could come with heavy political consequences.
"If they stop defending the litigation, then they have to stop reimbursing insurers for the [subsidies] and the markets would crater," says Sabrina Corlette,a research professor at Georgetown University's Center on Health Insurance Reforms. "It seems politically risky to think voters wouldn't blame them for that. The Congress could step in and appropriate the money, but it's hard to see that getting buy-in from the far right."
Perhaps with those political realities in mind, some in the GOP have said they are willing to spend that money anyway. In March, some top House Republicans said they wanted to keep the subsidies going.
2. Remove the individual mandate's teeth
The Trump administration can't do away with the mandate requiring individuals to have health insurance on its own, but it can greatly weaken it. Doing so would be another way to seriously undermine the Affordable Care Act.
One way is through the IRS. That individual mandate is about tax incentives — fail to get insurance, and you have to pay a penalty. So to hobble Obamacare, the Trump administration can decide not to enforce that penalty.
In fact, the IRS already took a small step in that direction earlier this year. The agency said it will not reject "silent returns" — tax returns on which a person declines to say whether they have insurance.The IRS explained in a statement that this year, for the first time, the agency had been set to reject those silent returns. But Trump's January executive order on Obamacare changed that, telling the heads of executive branch offices to "waive, defer, grand exemptions from, or delay" parts of the act.
"Consistent with that, the IRS has decided to make changes that would continue to allow electronic and paper returns to be accepted for processing in instances where a taxpayer doesn't indicate their coverage status," the IRS said. "However, legislative provisions of the ACA law are still in force until changed by the Congress, and taxpayers remain required to follow the law and pay what they may owe."
In other words, a lot still won't change here — the penalties remain the law of the land.
However, the IRS' statement left considerable uncertainty about what enforcement would now look like, as the Society for Human Resource Management reported in February.
One other option here, Cox says, is that the Trump administration could loosen up the rules on who can get hardship exemptions. People with particularly tough circumstances — homelessness, domestic violence, bankruptcy — can currently apply to get an exemption from any penalties for not holding insurance. The Trump administration could approve more people in more circumstances for those hardships, Cox says. (Likewise, the administration could also approve fewer people if it wanted to.)
Were the administration to approve more waivers, it could mean fewer people in the marketplaces. And to the degree that that pulls healthy people out, it would create sicker pools that create more costly coverage, which in turn could cause more people to drop out.
3. Let states be looser in defining "essential health benefits"
The ACA requires that health plans cover 10 "essential health benefits" — health services in basic, broad areas like emergency services, prescription drugs and maternity care. And the administration has a few paths for changing exactly what those are — changes that could weaken some people's health care but also maybe nudge more insurers into the marketplaces.
The federal government laid out and defined the benefits (known among health care wonks as EHBs), but the nitty-gritty of a state's essential health benefits can be found in its "benchmark plan."
"Right now each state has picked a small group plan or similar plan that would have existed before the ACA and used that as a benchmark for what all the plans in each state now have to cover," Cox says.
The Trump administration could loosen that, giving plans much more wiggle room for what services they include or exclude, Cox added.
"Price could come back in and say, 'We've changed how each state can define their [essential health benefit] plan as long as it looks reasonably like an employer plan,' " she says.
4. Redefine the EHBs
The administration could also simply tweak the EHBs by broadening or narrowing the definitions of some of the 10 broad benefit categories.
For example, one of the 10 benefits set by law includes preventive care. But the law itself didn't say exactly what that meant — rather, the Obama administration defined what exactly preventive services are through regulation.
That means the Trump White House could undo some of that through regulation, making particular benefits disappear. Contraception, for example, is a part of the preventive service EHB, and the Obama administration also made sure that in many plans, that birth control is copay-free. HHS Secretary Tom Price has opposed that rule in the past.
Once again, loosening rules around essential health benefits could reduce the kinds of things people get coverage for, but it could also potentially nudge more insurers into a state's exchanges, Cox says. That could address a key Obamacare problem: Some areas of the country only have one insurer in their marketplaces.
5. Let states experiment more
States can apply for waivers to deviate from the ACA as written in some way — the idea, Cox says, is to "allow for some experimentation or innovation at the state level" to improve the system. States could pass laws that change their health care system, then apply to the federal government for the waiver.
Price has promoted waivers as ways for states to alter their health care systems. Under a Trump administration that's no fan of the ACA, approved waivers might look substantially different than they would have under Obama.
For example, California had passed a law and filed a waiver that would have allowed people in the state illegally to get health insurance on the state exchange (though they would not have been allowed to get federal subsidies). When Trump won the presidency, California withdrew the waiver.
An administration so opposed to illegal immigration likely wouldn't have approved that kind of change. But the Trump administration might be more open to conservative tweaks.
One example might be in states that didn't expand Medicaid, and now have higher premiums and more unhealthy people in their individual market, Cox says. The idea here is that sicker people could have moved out of the exchanges and into Medicaid, had those states opted into a Medicaid expansion offered to them under Obamacare.
"There may be some conservative states where they are allowed to expand Medicaid if they have work requirements — waivers or exemptions that the Obama administration would not have allowed," she added.
Likewise, Alaska filed a waiver creating a reinsurance program — in a basic sense, a pool of money that comes from insurers and helps pay for particular health conditions — which the Centers for Medicare and Medicaid Services recently approved. The Affordable Care Act had something similar for a three-year transition period — insurers paid into a pot, which then reimbursed insurers for people's medical costs that were particularly high, between $45,000 and $250,000.
Price highlighted this effort in his statement, signaling to other states that they could potentially get approval for their own reinsurance plans.
6. Let the architecture crumble
It takes a lot of upkeep to keep Obamacare running — the exchange websites need to hum along, and people need to be ready to answer the helpline. But the administration could hypothetically make a lot of that a lower priority, Georgetown's Corlette says, essentially letting the system atrophy.
"The Price administration [at HHS] can redirect resources so they would have a fair amount of flexibility for how they direct resources for the fall enrollment," Corlette says.
In his first week on the job, Trump killed the advertising surrounding the Affordable Care Act, as well as outreach, as Politico explained:
"Emails are no longer being sent out to individuals who visited HealthCare.gov, the enrollment website, to encourage them to finish signing up. Those emails had proven highly successful in getting stragglers to complete enrollment before the deadline."
Take all of this to its logical conclusion, and even these fixes could lead to a sicker mix of people in the markets.
"If you're a sick person, you're going to do whatever it takes to get that coverage," Corlette says. "You will sit on the phone for two hours. You will hit the refresh button. If you're healthy, you're going to say, 'Forget it.' "
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