Health Groups Project Millions Will Lose Coverage, Lawsuit Planned

With an executive order and late-night announcement, President Donald J. Trump has placed the constructs of the Affordable Care Act (ACA) in jeopardy. The moves have drawn the ire of nonprofits and state attorneys general and would potentially alter the responsibilities of organizational employers.

In a joint statement of 18 organizations, including the American Cancer Society, American Heart Association, and National Health Council, the executive order is described as potential move to price millions of Americans out of coverage. “Together, these actions would likely split the market between those who need the comprehensive benefits provided under current law and those who are currently healthy and can gamble with substandard coverage,” the statement reads.

Tom Nickels, executive vice president of the American Hospital Association, stated that the executive order might have the consequence of destabilizing individual and small-group markets. The further consequence would be that millions of Americans with chronic conditions, as well as those struck by unforeseen illness or injury, might be without comprehensive, affordable options. Planned Parenthood, in a related release, estimated that the executive order could place maternity coverage for 13 million women at risk. Without insurance, a vaginal birth can cost $30,000 out of pocket while a C-section can cost $50,000, per the release.

“President Trump’s act is sabotage, plain and simple, and women will pay the price,” said Dawn Laguens, executive vice president of Planned Parenthood Federation of America. “Millions of people across the country have spoken out against the attacks on health care and rejected every congressional effort to repeal Obamacare and undermine reproductive health care access. President Trump is ignoring them.”

The executive order prioritizes association health plans (AHPs) short-term, limited-duration insurance (STLDI), and health reimbursement arrangements (HRAs). The order further directs the secretaries of the Treasury, Labor, and Health and Human Services to propose regulations consistent with those priorities within the next 60 days.

The AHP expansion would potentially enable unrelated employers to band together across state lines, something that is currently prohibited, with the idea of increasing bargaining power, said Judith Wethall, partner at McDermott Will & Emery in Chicago, Ill., who specializes in employee health and welfare programs. HRAs, which are essentially pots of money that employers can provide to employees to purchase health insurance instead of providing insurance as an employer, are currently limited to support for retirees and companies with 50 or fewer employees. The regulations flowing from the executive order would presumably expand beyond those exceptions and enable employers to get out of having to provide insurance altogether.

STLDIs are patchwork policies that individuals can use for up to three months, typically in between jobs, and are often less robust in coverage. They are currently limited to three-month use, with the idea of preventing the building of patchwork policies, Wethall said. Expansion of STLDIs would enable the expansion of longer-term, less-robust coverage plans, she said.

The practical effects of such regulation are not known at the moment, Wethall said, and it is unclear how such expansions might be used. Large organizations, for instance, might avoid expanding HRAs as providing health insurance is seen as a recruiting and employee-retention tool.

In a separate announcement late Thursday evening followed by a series of tweets on Friday, Trump additionally announced plans to cut subsidy payments supporting the Affordable Care Act.
New York Attorney General Eric Scheiderman announced in a press conference Friday afternoon that New York, in coordination with about a dozen other states, will file suit in the United States District Court for the Northern District of California to challenge the subsidy cutoff. New York, with 16 other states and the District of Columbia, successfully intervened in the United States Court of Appeal for the District of Columbia’s ongoing United States House of Representatives v. Price, Schneiderman said. The court, there, has acknowledged that losses in subsidies would drive up insurance premiums and lead to increases in uninsured Americans, he added.

The states’ argument will be that the ACA is the law of the land and that the payments are integral to its function, Schneiderman said. “This is an effort to blow up the system,” he said.

Absent legislative action, insurers continuing to participate in the ACA marketplace will continue to have to provide enrollee subsidies without federal reimbursements, per the Urban Institute. Preliminary findings by the Urban Institute, provided to The NonProfit Times, identified three scenarios potentially created by the decision not to pay the subsidies:

1. Insurers will build such costs into subsidies for silver-level marketplace premiums, an increase of about 23 percent. The more generous federal tax credit might lead about 600,000 more people to enroll in marketplace coverage, but at a cost of about $7.2 billion more in 2018 than would otherwise be spent on subsidies and tax credits;

2. Insurers leave the marketplace to avoid losses associated with non-reimbursement. This would lead to an estimated increase in uninsured Americans of 9.4 million and a decrease in federal spending of $40.7 billion for 2018; or,

3. Congressional legislation permits insurers to sell coverage without subsidies to low-income enrollees. An estimated 4 million would lose insurance and non-group premiums would rise by 12 percent.

Elizabeth G. Taylor, executive director of the National Health Law Program, criticized Trump’s decision to cease subsidy payments, saying that it will punish low-income individuals and families and make costs more expensive for middle-class families.

“Candidate Trump ran for the White House promising greater health care coverage for families and that no one would lose health care coverage under his great plan,” Taylor said. “But President Trump has no intention of providing health care for the people of this country. He is proving every day that he is out to reverse the gains made under the ACA, with or without Congress. Today’s action was his cruelest yet.”