Four Steps Trump Can Take to Hasten Obamacare Implosion

In wake of crushing Senate defeat, administration has options to accelerate demise of health law

by Brendan Kirby | Updated 21 Nov 2017 at 1:30 PM

With the wee-hours failure to pass even a modest partial repeal of Obamacare in the Senate, the ball now moves to the executive branch.

President Donald Trump’s administration has considerable power to improve the health care system within the confines of the Affordable Care Act — or make mischief and hasten its demise. The president tweeted in the early-morning hours Friday after the Senate vote that allowing the system to collapse is the best course of action.

“3 Republicans and 48 Democrats let the American people down. As I said from the beginning, let ObamaCare implode, then deal. Watch!” he tweeted.

Trump has oscillated for months over whether to simply let Obamacare run its natural course, with rising premiums and shrinking markets, or keep pushing Congress to pass reform. If he chooses to try to turn up the heat on Congress, here are four things he could do, according to experts.

1.) Cut off payments to insurance companies to help lower-income customers pay out-of-pocket expenses. The Affordable Care Act has two main subsidies for people who buy insurance on government-run health care exchanges. People making up to 400 percent of the federal poverty line are eligible for subsidies to help pay monthly premiums. Those making up to 250 percent of the poverty line can also get help with deductibles and out-of-pocket costs through payments to insurance companies known as cost-sharing reduction (CSR) subsidies.

The only problem is that Congress never authorized the payments, and a federal judge ruled last year that they are illegal. The subsidies have continued, however, while the government appealed the case. The Trump administration has decided on a month-by-month basis to keep those payments going.

The administration could simply drop the appeal and stop the payments immediately. Two states have sought to intervene in the lawsuit to defend the payments, and insurance companies could file new lawsuits. Congress also could decide to explicitly authorize the subsidies. But supporters and opponents of Obamacare agree that no other executive action would do more to undermine the Affordable Care Act.

"And [it's] the quickest thing, for sure," said Karen Pollitz, a senior fellow at Kaiser Family Foundation. "That could lead issuers all over the country to re-evaluate their participation in 2018."

Kaiser estimates the government will pay some $10 billion this year in CSR payments.

Edmund Haislmaier, a research fellow at The Heritage Foundation's Institute for Family, Community and Opportunity, told LifeZette that eliminating those payments would particularly hit smaller insurers that focus on Medicaid-managed plans and coverage for poorer people.

"You get rid of the cost-sharing subsidy, and these [insurers] go away," he said.

Senate Minority Leader Chuck Schumer (D-N.Y.) urged his colleagues to continue the payments. He called Trump's tweet "not presidential" and criticized the notion that the president would want to let the law fail.

"That is small. That is not what a president does," he told reporters at a news conference Friday. "And I hope our Senate colleagues, our House colleagues on his side of the aisle would turn a deaf ear on that … So this idea of sabotage is a very bad thing, and Donald Trump doesn't even get it politically because if he sabotages the system, it's going to hurt him as well as hurting millions of people."

2.) Cut off subsidies for members of CongressWhen Congress passed the Affordable Care Act in 2010, lawmakers required themselves and their staffs to buy insurance through the exchange so they would live under the same system they imposed on self-employed Americans and others who get coverage in the individual market.

But the Office of Personnel Management during the Obama administration shielded Congress from the full impact, authorizing the government to pay 75 percent of the premium — up to a maximum amount — for members of Congress and their employees.

"If you really want to hit them where they live and put them in the same situation their constituents are in … this is the way to do it."

Critics contend those payments are illegal. The Trump administration could reverse the Obama policy, requiring lawmakers to pay the full premium. So a representative or senator with a $4,000 premium who now pays $1,000 would have to kick in an additional $3,000.

Haislmaier said that such a move might give members of Congress personal incentive to act.

"If you really want to hit them where they live and put them in the same situation their constituents are in … this is the way to do it," he said. "It might get Congress to appreciate the effects more."

3.) Ease up on penalizing people for not having insurance. Perhaps the single-most unpopular part of Obamacare is the mandate that people buy insurance, but supporters argue it is fundamental in guaranteeing that the insurance pools are balanced enough for companies to operate. They contend that since the law requires insurance companies to take anyone, regardless of health status — and cannot charge more because of those pre-existing conditions — the mandate is the only reason people don't simply wait until they are sick to sign up.

Pollitz, the Kaiser Family Foundation fellow, said the Internal Revenue Service has looked for ways to back off enforcement since Trump signed an executive order in January. For instance, the tax agency this year did not systematically reject returns filed by people who did not answer a question asking whether they had insurance.

Pollitiz also said the secretary of the Department of Health and Human Services has wide discretion to grant hardship exemptions to taxpayers who say they cannot afford insurance. Handing out large numbers of exemptions could erode participation in the insurance market, leading to a pool of customers who are older and sicker, she said.

Haislmaier is one of a number of conservative health scholars who believe the Congressional Budget Office overestimates the impact of the mandate on people's decisions to buy insurance.

"Most of us think it has a much more modest impact," he said.

4.) Stop trying to persuade people to buy insurance. One of the simplest and least visible ways the Trump administration might undermine Obamacare is to simply stop trying to prod people to sign up in the first place.

The Obama administration spent hundreds of millions of dollars trying to help and encourage enrollment in the online exchanges. This included measures like advertising and paying people to recruit and guide customers through the enrollment process.

The Trump administration in January canceled ads that already had been paid for. Pollitz said it had an effect.

"We saw for the first time enrollment dip the last week of open enrollment," she said.

Pollitz said the Trump administration is cutting back on paying people to help with enrollment. The Obama administration laws year awarded $63 million to so-called "navigators" and another $22 million to other people assisting enrollees.

Pollitz also noted that the administration has shortened the enrollment period to six weeks for 2018. It will run from November 1 to a hard end on December 15. The Obama administration had given people until the end of January to sign up for coverage each year.

Another step the Department of Health and Human Services could take is to stop allowing for customers who are current with their payments to be automatically re-enrolled if they do not pro-actively sign up. Pollitz said she has no indication that the administration is considering this but added that it would reduce enrollment.

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