Health Care

Health care leaders brace for Obamacare sabotage

Tom Huebner
Tom Huebner, the CEO of Rutland Regional Medical Center, speaks as Kevin Mullin, the chair of the Green Mountain Care Board, looks on. Photo by Erin Mansfield/VTDigger
Vermont’s health care leaders are bracing for what would happen if President Donald Trump makes good on his promise to dismantle the Affordable Care Act through executive action.

The president has already started to roll back federal regulations that are meant to stabilize insurance markets, and leaders say that if the Trump administration takes more actions, insurance prices could go up and low-income people could suffer.

“I do worry about the retribution piece,” said Tom Huebner, the CEO of Rutland Regional Medical Center and the New England representative to the American Hospital Association, which fought Trump’s efforts to repeal the Affordable Care Act.

He said hospitals, doctors and other provider groups fought the effort to repeal the Affordable Care Act, so the federal government might make a variety of changes to the law “to sort of just get us back.”

Under the Trump administration, the Internal Revenue Service has announced that it would accept tax returns from Americans who do not pay the fine implemented under the Affordable Care Act for those not having health insurance.

That fine is part of the Affordable Care Act’s “individual mandate” and is designed to make sure that young, healthy people buy health insurance to spread out the cost of care for older, sicker people, and therefore keep health insurance premiums as low as possible.

Without the mandate, experts predict a phenomenon called adverse selection, in which young, healthy people refuse to buy health insurance, so insurance premiums for older, sicker people go up beyond what they can afford. That would then cause even fewer people to buy health insurance and premiums to keep going up, in a cycle sometimes called a death spiral.

Donald Trump
President Donald Trump speaks to Congress. File photo
Additionally, Trump’s Department of Health and Human Services has shortened by six weeks the period during which people can sign up for insurance through exchanges like Vermont Health Connect for the year 2018, and reduced how much money the federal government spends doing outreach to encourage uninsured people to purchase a policy.

But if you shorten the enrollment period and don’t enforce the individual mandate, “you diminish the number of people who are enrolled, and that undercuts the marketplace and puts fewer people in and tends to drive premiums up,” Huebner said.

On Saturday, the day after a repeal vote failed in the U.S. Senate, Trump vowed to stop making billions of dollars of payments to insurance companies to reimburse them for lowering out-of-pocket costs for low-income and lower-middle income people — a federal subsidy program known as cost-sharing reduction.

The program is one of the major parts of the Affordable Care Act designed to help people afford their insurance. However, critics like Trump and Sen. Ted Cruz, R-Texas, call cost-sharing reduction a “bailout” for insurance companies.

Huebner said he worries about losing cost-sharing reduction most “because (Trump) has to agree to continue that literally every month, and he could stop doing it at any time.”

What would happen without cost-sharing reductions?

“It would mean that Vermonters would lose coverage and would not be able to access health care,” Huebner said. “We’d have people getting off the exchange because they couldn’t afford” their premiums.

Cost-sharing reduction in Vermont

In Vermont, around 13,000 people who use Vermont Health Connect use the federal cost-sharing reduction benefit to lower their out-of-pocket costs, according to the Department of Vermont Health Access.

To qualify for the federal subsidies in 2018, an individual must make between about $17,000 and $30,000 a year, or a family of four needs to make between $34,000 and $62,000.

The benefit allows customers to pay a premium for a standard Silver plan on the exchange, but pay out-of-pocket costs that, in some cases, are lower than what customers pay under the more-expensive Platinum plan.

Both insurers on the exchange — Blue Cross Blue Shield of Vermont and MVP Health Care — offer federal cost-sharing reduction subsidies to customers. The federal government then sends monthly payments, totaling about $12 million a year, to the insurance companies to reimburse them for the plans with lower out-of-pocket costs.

“What the feds are saying is that they’re going to stop that monthly payment that goes from the federal government to the insurance company for those plans that have the reduced out-of-pocket costs,” said Robin Lunge, a lawyer who sits on the Green Mountain Care Board.

Robin Lunge
Robin Lunge. File photo by Andrew Kutches/VTDigger
If the government defunded the reductions in 2017, Lunge said, companies would not be able to raise their premiums to make up for the money they spend providing cost-sharing reductions. However, the companies may seek to raise premiums in 2018 to make up for this year’s loss.

“That would go into the company’s financials and obviously impact on the reserves that they have, and it would of course raise the policy issue if it looks like this is a longer-term policy approach for the federal government,” Lunge said.

Andrew Garland, a spokesperson for Blue Cross Blue Shield of Vermont, said the insurer expects to have 10,000 people using cost-sharing reduction in the 2018 calendar year. The federal government will pay the company about $8.7 million to subsidize the members.

The company, which controls about 90 percent of the Vermont Health Connect market, asked regulators at the Green Mountain Care Board in July for permission to raise premiums more than 12 percent in 2018. At a hearing July 20, the chief actuary for Blue Cross testified that without the federal subsidy program, the premium increase request would be 1.9 percentage points higher.

Garland said: “There was no cautionary increase added to cover the eventuality of any change at the federal level. … If there were a change, we would need to work together (with the Green Mountain Care Board and other stakeholders) to figure out what as a system we need to do to keep as many people covered as possible.”

Lunge disagrees with the idea that this is a “bailout.” So does FactCheck.org.

“The insurance company is not making a profit on it,” Lunge said. “What this allows, really, a state or an insurance market to do, is ensure that there’s additional assistance for low, and actually some … middle-income people in Vermont.”

Lunge said the Green Mountain Care Board, which regulates insurance premiums including the ones charged on Vermont Health Connect, takes both Blue Cross and MVP through a regulatory process that ensures the companies are not making profits on cost-sharing reduction subsidies.

“From my perspective it’s a way to ensure that Vermonters can afford their out-of-pocket costs, but the insurance company, it’s not like they get to keep it, because when we review their rates, we look at their actual claims,” Lunge said.

Mike Fisher, the chief health care advocate for Vermont Legal Aid, framed the potential defunding as a consumer issue. He said defunding would mostly hit low-income people, especially ones who need to use their health insurance often.

“This would be targeting lower-income people with high health care needs,” Fisher said. “Just stepping back for a minute, it is sort of the meanest of targets that I can imagine.”

Fisher said Trump has said a lot of outrageous things before, but “to say, ‘I’m willing to hurt lower-income Vermonters … that have high health care needs’ is just particularly mean.”

In addition to cuts to cost-sharing reductions, Fisher warned that there is a whole spectrum of changes that Trump could make at the executive level to sabotage the Affordable Care Act.

“I don’t know the extent to what could be done, but I think it’s a lot,” he said.


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Erin Mansfield

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  • Peter Chick

    The ACA was destined to failure from the get go.

  • The whole thing is crashing down anyway. Might as well keep with a uniquely American tradition: only once it fails, will we fix it. Good luck insurance companies! The loss won’t be too profound. It’s only cash, after all.

  • Dick Tracy

    The headline itself reveals that VT Digger is no longer the centrist unbiased entity that it purports to be. Sabotage? Could not that term be applied to every attempt to reduce funding of ANY program? We could just as well apply the term “sabotage” to Democrat opposition to virtually everything and anything that the President has attempted, not the least of which are over 100 federal post appointment nominees that have not been acted on. This did not happen to Obama when the GOP controlled the legislative branch. POINT: how is it that not enforcing a mandate somehow “undermines the marketplace”? Ever Since FDR, our federal government has been undermining every market at which it tilts its lance. Not matter how well intended Government is an external, artificial, and extraneous force that changes economic dynamics by creating new incentives and disincentives. Regarding health insurance, government policies have virtually eliminated competition. Small wonder that prices soar when the competition is eliminated. POINT Mansfield also writes that Trump has started to roll back “federal regulations that are meant to stabilize insurance markets.” Perhaps stabilization is what those regulations were INTENDED to do, but how has that worked out? Around the nation premiums are up and deductibles are up. Is this what passes for market stabilization?

    • Douglas Tolles

      This individual is correct. The term “sabotage” shows an inherit bias on the part of the headline writer. Since when is it “sabotage” to let a bad idea naturally fail?

    • Gary Murdock

      It’s been this way since election day. I found that my Rolaids consumption rate dropped considerably when I started to base my decision to read an article on what’s in the headline. Now I usually just scroll down to read the comments, since the content is all to predictable and follows a well established pattern. Vermont relies on federal dollars for over half the state budget, there is a risk that those funds may be reduced, Vermont is panicking at the prospect, the rest of the country be damned. There, I just described everything that will be written until Trumps term ends.

    • Mary Reed

      Your thesis depends on healthcare being a marketplace commodity. US healthcare started out as that (with some large doses of charity for good measure) and has long been treated, in great part funded, and viewed as a marketplace commodity. The reality of healthcare today, however, is that it is highly complex, diverse infrastructure on which we all, sooner or later, depend. It is infrastructure that must be continually built and maintained if it is to address the real needs of the many 100’s of millions who need it. Our diverse federal, state, county/ municipality/ town highway, road, and street systems are analogous. The costs of subsidizing those people who cannot pay what the ‘market’ demands for their ‘share’ to access the healthcare infrastructure are very small compared to the actual costs of building and maintaining the infrastructure. Treating and funding it as a commodity, and depriving it of shared tax dollars, will not simply collapse the ACA. The ACA is an integral part of the healthcare infrastructure; collapsing it threatens the entire infrastructure….Nero fiddled while Rome burned, and “He who troubleth his own House shall inherit the Wind’.

    • Moshe Braner

      This from those who (rightly) complain about immigration laws not being enforced? The “mandate” is the law, and thus should be enforced. It was made the law because the only way to pay for those who get sick is if everybody pitches in. If you end up not getting sick you should count your blessings.

  • John McClaughry

    Erin and Huebner neglected to mention that a Federal court has ruled that Trump cannot make CSR payments unless Congress appropriates money for CSR, which it has not. (Obama appealed the ruling last year, but Trump has not dropped it, and has continued month by month to make the (currently) unlawful payments. So Huebner seems to be saying, “I don’t care if it’s against the
    law, we want the payments.”
    Technically, Robin Lunge may be right that CSR is not an insurance company “bailout” – it’s a multibillion dollar inducement to the insurers not to walk away from Obamacare Exchanges, in which they are losing billions.
    Want to rescue Obamacare? Enforce the individual mandate (“penalty tax” with fines, jail sentences and reeducation camps, for people who decline to purchase overpriced government-specified health insurance. No thanks.

    • Neil Johnson

      And the irony is, they said we’ll have the healthy subsidize the older folks. What is the first thing they did? Exempt adults from 18-26 from paying any healthcare. It was and is a scam of unthinkable proportions.

      I could see exempting students perhaps. But it really defeated the whole purpose, unless it was only done to buy votes so the lobbyists could get their ACA, with all the taxes finally coming due after President Obama Left office. Yes the major tax portions from a bill in 2008 didn’t start until this year, 2017.

      We’ve been sold down the river once again by the DNC and RNC.

    • JohnGreenberg

      John’s first paragraph overlooks a key fact: namely, that the judge stayed her own decision: “Judge Collyer enjoins further CSR payments until Congress appropriates
      funding. But she stays the effect of her decision pending certain
      appeal, which the administration has 60 days to file. The D.C. Circuit,
      which soon goes into its summer recess, will likely not hear the case
      until the fall and may not decide it until next year. Whatever a panel
      of the D.C. Circuit decides, both sides are likely to request en banc
      review by the full circuit or Supreme Court review. Only then will we
      know what, if any, final consequences the decision may have.” http://healthaffairs.org/blog/2016/05/12/judge-blocks-reimbursement-of-insurers-for-aca-cost-sharing-reduction-payments/

      • John McClaughry

        That’s true, but that’s not a key fact. The Harry Reid-stacked DC Circuit is perfectly content to let this appeal drag out interminably, with Trump either making more illegal CSR payments, or Trump dropping the (Obama) Administration’s appeal, or Trump stopping the CSR payments , which would make the Exchanges implode, an issue the Democrats would very much like to have.

        • JohnGreenberg

          Unless I missed Harry Reid’s presidency, if the DC Circuit is “stacked,” it wasn’t Harry Reid that did the stacking. The rest of your reply boils down to this: you don’t like the fact that the court stayed its decision, so now the decision, you declared before was “a key fact,” isn’t.

          • John McClaughry

            My point was that both Erin and Huebner neglected to mention the key fact that a Federal court held that the CSR payments are ILLEGAL. If a federal judge held that some Trump action was illegal, and he kept on doing it, people like you would be howling for impeachment. But liberals are demanding that Trump continue the illegal payments until their friends on the DC circuit can overturn Judge Collyer’s opinion.
            You must have been dozing when Senate Majority Leader Harry Reid (D-Nev) triggered the “nuclear option” to push four liberal Obama nominees onto the DC Circuit.

          • JohnGreenberg

            1) “If a federal judge held that some Trump action was illegal, and he kept
            on doing it, people like you would be howling for impeachment.” Not if the judge stayed her opinion!
            2) Harry Reid invoked the nuclear option because Senate Republicans used the filibuster to block the president of the United States from exercising HIS constitutional duty to appoint judges. (Facts and figures here: http://www.politifact.com/truth-o-meter/statements/2017/apr/09/ben-cardin/did-senate-republicans-filibuster-obama-court-nomi/

  • Gerry Silverstein

    I would agree with some of the other comments that the use of the word “sabotage” in the title indicates an unprofessional journalistic bias by the author (although in truth this reality plagues both liberals and conservative writers). As John McClaughry notes in his comment there are defined legal issues involved in the CSR. Those who support the CSR payments cannot simply insist on them continuing because they deem them appropriate and necessary. In a country that is structured by the “rule of law”, one cannot pick and choose which laws to follow and which laws to ignore.

  • Edward Letourneau

    “…sabotage” Vt Digger is following the leftest line. Its not sabotage if the congress does not appropriate the money.

  • Jon Corrigan

    What does this have to do with health care?
    Perhaps VTDigger should limit lobbyists to one post a day.

    • JohnGreenberg

      First, it corrects a false statement in the preceding comment.

      Second, I’m not a lobbyist.