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.
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.
If a new HealthCare Bill is not approved quickly, BAILOUTS for Insurance Companies and BAILOUTS for Members of Congress will end very soon!
— Donald J. Trump (@realDonaldTrump) July 29, 2017
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.
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.