The United States’ reliance on private health insurers and medical providers sets it apart from the rest of the developed world, where government has a much heavier hand in health care.
Those who want to keep that independence should be strengthening the private sector’s ability to deliver affordable coverage. Instead, the Trump administration is doing just the opposite. It is sabotaging the private insurance market, harming consumers in the process, as it escalates its death-by-1,000-cuts attack on the Affordable Care Act (ACA).
With insufficient congressional votes to repeal former President Barack Obama’s signature law, the mission to unravel it has fallen to the president’s appointees running key federal health agencies. They have weakened the law in myriad ways. Among them: pushing the sale of skimpy health plans that would siphon healthy people out of the insurance market and drive up the cost of comprehensive coverage for those who need it. Another strategy: shutting down the healthcare.gov website during peak times when consumers needed to access it to buy health insurance.
The latest targeting of the law gets into health policy weeds but merits a spotlight because it’s a sneaky way to further undermine the private insurance market and, by extension, the ACA. On July 7, the federal Centers for Medicare and Medicaid Services abruptly announced that it plans to halt or delay $10.4 billion in “risk adjustment” payments between insurers selling plans in the individual health insurance market. This is where people who don’t get coverage through an employer or a government program such as Medicare typically buy coverage.
The risk adjustment program, which doesn’t use taxpayer dollars, is a long-established mechanism to spread risk and promote market stability. Health plans that wind up with healthier and less-expensive enrollees transfer funds to insurers with disproportionately sick and costly-to-care-for patients. Consumers benefit because this program helps keep premium prices down, discourages insurers from cherry-picking healthy customers and entices firms to compete in the small, volatile individual market.
Tinkering with these payments means that some insurers will not get the funds they were counting on, while others will get to keep money they would have paid out. The sums involved could be substantial, with three Minnesota insurers potentially taking a $71.7 million financial hit, according to Star Tribune reporter Chris Snowbeck’s analysis. The trade industry group America’s Health Insurance Plans has warned that halting the payments will “increase premiums” while “reducing coverage options.’’
While federal officials have said that they had to suspend the risk adjustment program because of a court case, legal experts have criticized the move as unnecessary. Coming on the heels of other moves to destabilize the market, suspicion of the administration’s motives is justified.
Federal officials did announce late Thursday measures that appear to somewhat soften the blow of their decision. Nevertheless, they’ve still added to insurers’ uncertainty about market stability.
Unintended consequences should give pause to those working to weaken the ACA. If the individual insurance market becomes unworkable, alternatives will more than likely include heavier involvement by the government.
“Everything that Trump and the GOP do to undermine the ACA increases the chances of single-payer insurance,’’ said Ezra Golberstein, a University of Minnesota associate professor in health policy and management. “Moderate Dems who like private-sector solutions will reasonably conclude they have no good-faith partners in the GOP who understand insurance markets.”
Many, including ACA defenders, will view more government involvement as an improvement and embrace the chance to make it a reality. The ACA’s critics will not, but when they’ve done everything possible to subvert the private sector’s role in ACA reforms, they shouldn’t wonder why that moment has come.