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As Obamacare enrollment nears end, battle lines are drawn over the law's future

HealthCare.gov is accepting new applications for Affordable Care Act insurance coverage for 2019 until Dec. 15, 2018. (HealthCare.gov)

The Republican legislative effort to kill the Affordable Care Act may be dead, but even a united Democratic majority in the House may not be able to stop President Donald Trump from chipping away at the provisions of President Barack Obama’s signature health care law.

As open enrollment for 2019 nears its end, the Trump administration is taking aggressive new steps to address what it sees as failures in the current health care system and promote alternatives to the sometimes-pricy health insurance plans that provide all the benefits mandated by the ACA, often called Obamacare.

After issuing guidance last month to revamp the State Innovation Waivers allowed under Section 1332 of the ACA—now referred to as “State Relief and Empowerment Waivers”—the Department of Health and Human Services released four “waiver concepts” Thursday intended to encourage states to take advantage of the flexibility they are being granted to augment the law’s requirements.

“The Trump Administration is committed to empowering states to think creatively about how to secure quality, affordable healthcare choices for their citizens,” HHS Secretary Alex Azaar said in a statement. “The specific examples laid out today show how state governments can work with HHS to create more choices and greater flexibility in their health insurance markets, helping to bring down costs and expand access to care.”

HHS believes the four concepts would allow states much more flexibility in using federal dollars they are allocated while still falling within the framework of Section 1332. These options include directing the subsidy funds to private accounts, creating a separate state-operated subsidy program, allowing patients to buy non-ACA plans with the money, and setting up reinsurance programs to help cover high-cost enrollees.

No state has asked to do something like this yet, and they have generally been skittish about seeking 1332 waivers in the past. The concepts offer a roadmap to follow if a state wants to direct federal subsidies away from the ACA markets, though.

Allowing subsidies to be used for plans that do not provide the essential benefits required by the ACA could be “incredibly dangerous,” according to Swapna Reddy, a clinical assistant professor at the College of Health Solutions at Arizona State University. If a state directs more subsidy dollars to cheaper non-ACA plans, the sicker patients who need comprehensive coverage will see their premiums rise.

“What you might be left with in these exchanges are a bunch of high-need individuals and they don’t really have options to go to these proposed cheaper plans,” Reddy said.

That is assuming the changes to the 1332 waiver program are legal, and some experts say they may not be since this was all done through guidance documents rather than the standard rulemaking process. Under the ACA, state waiver proposals must fit within certain guardrails of affordability, coverage, comprehensiveness, and federal deficit neutrality, and this arguably alters the government’s interpretation of those terms.

“There are serious questions about whether the policy articulated in the guidance is a permissible interpretation of the underlying statute, but, at the very least, it is likely invalid for the agency to attempt to make this policy without a full rulemaking process,” said Christen Linke Young, a fellow at the USC-Brookings Schaeffer Initiative for Health Policy, in a blog post last week.

The Trump administration has taken several previous steps that also could be either undermining the ACA markets or improving consumer choices. Most notably, the Tax Cuts and Jobs Act President Trump signed last December zeroed out the tax penalty for not enrolling in an insurance plan.

The administration has loosened up restrictions on short-term health plans, which are typically cheaper than ACA exchange plans but are not required to provide as many benefits. Rather than covering someone for just a few months, those plans can now run for 364 days and be renewed for up to three years.

It is also now easier for businesses to form association health plans. Critics warned that such plans could also result in skimpy coverage that sidesteps the ACA’s regulations, but according to Modern Healthcare, most AHPs that have so far taken advantage of the new policy are offering the essential health benefits mandated by the ACA and charging lower premiums than exchange plans.

Administration officials insisted during a background briefing Monday that they believe those who take advantage of the lower-cost, less comprehensive options will be people who were priced out of the ACA markets or never sought insurance on them in the first place.

“We’re comforted by the fact that those who would be interested in either AHPs or short-term plans were already out of the market. They, more often than not, didn’t qualify for a subsidy and so we’re paying an unsubsidized premium that they couldn’t afford,” one senior official said. “And so, we see this as broadening the insurance market.”

Reddy acknowledged nobody can predict exactly what the consequences of offering healthier consumers cheaper alternatives will be, but she pointed to states like California that attempted to create high-risk pools prior to the ACA to control costs without much success.

“What we can say is in the past when we had places with high-risk pools, it wasn’t necessarily a good experience That’s kind of how we ended up with the need for the ACA in the first place,” she said.

According to HHS, all this contributes to the goal of promoting health care choice and competition, and a new government report released Monday details further reforms officials are recommending.

“Many government laws, regulations, guidance, requirements and policies, at both the federal and state level, have reduced incentives for price- and non-price competition, increased barriers to entry, promoted and allowed excessive consolidation, and resulted in healthcare markets that lack the benefits of vigorous competition. Increasing competition and innovation in the healthcare sector will reduce costs and increase quality of care—improving the lives of Americans,” the report states.

The report calls for policies that reduce restrictions on the health care workforce and labor markets, , develop value-based payment models, scale back government mandates and barriers to competition, and give consumers more control over their health care dollars.

Reddy agreed that consumers need more choice and competition in the health insurance market. President Obama envisioned shopping for insurance on the ACA markets like shopping for a TV on Amazon, but it never worked out that way. Many people were left with few options offering sky-high premiums and deductibles.

“We can’t sugarcoat that. That’s a reality,” she said.

After eagerly joining the markets at first, many insurers fled or ratcheted up premiums in the early years as they hemorrhaged money. However, the markets in many states have greatly improved, and offering competing plans with more limited benefits now could halt that progress.

“This injection of an option that’s cheaper, less comprehensive I think is very dangerous for the stability of the existing market,” Reddy said.

The report was released in the middle of a truncated ACA enrollment season, which is set to end Dec. 15. The Trump administration has shortened the enrollment window and significantly slashed budgets for promotion and for the “navigators” who help users through the process.

Amid those changes, it appears enrollment has slowed for 2019 in many states. Sign-ups are down by about 9 percent from last year despite relatively low premium increases, and a new Kaiser Family Foundation poll shows only about 25 percent of those who are uninsured or buy their own insurance know the deadline is approaching in less than two weeks.

The dip in enrollment is believed to be driven by several factors, many of which were expected. The Congressional Budget Office estimated millions would drop coverage if the mandate was repealed, and insurers attempted to account for that effect when setting premiums for 2019. Also, about 400,000 Virginians are expected to be added to Medicaid after the state voted to expand the program.

Now that short-term health plans and association plans are on the table, it seems likely some patients are transitioning to those. The surging job market could also mean more Americans will receive health care benefits through their employer in 2019 as well.

Experts caution enrollment has spiked closer to the deadline before, and people who are happy with their current ACA plans could just stick with them if premiums are not rising by much. It will be a few weeks before it is clear exactly how many fewer people are enrolled for next year.

“It’s important to recognize the markets are righting themselves, but they need to be supported in order to do so,” Reddy said.

Democrats celebrated the presumed end of the Obamacare repeal effort after they secured a majority in the House of Representatives last month, but their power to protect the law will be somewhat limited in the face of a Republican House and president.

Preserving protections for those with pre-existing conditions became a focal point of many Democratic campaigns in the weeks before Election Day. President Trump and some Republicans also claimed to support that goal, but common ground on how to do it will be hard to find.

“Number one is health care, making absolutely sure people with pre-existing conditions are protected from discrimination,” Rep. Suzanne Bonamici, D-Ore., told KATU last month when asked what Democrats’ priorities will be in 2019. “We have had a lot of conversations about that, and addressing the spiraling cost of prescription drugs.”

Looming over all this is an impending decision from a federal judge in Texas that could invalidate the entire law. Republican state attorneys general have argued the ACA is unconstitutional now that the individual mandate penalty is gone, and Trump’s Justice Department is not defending the law, though more than a dozen Democratic attorneys general are.

Republicans sought an injunction that would halt implementation of the law nationwide, and Judge Reed O’Connor is expected to release his ruling soon. Any outcome would likely be appealed and potentially wind up in front of the Supreme Court.

Once they take control in January, House Democrats could pass a resolution to intercede in the case and fight to preserve the law. There has also been talk of legislation that would shore up protections for pre-existing conditions in the event the ACA is axed, but lawmakers are less united on whether that step is necessary.

“Everybody’s trying to figure out what we can do to tweak what’s there,” Rep. Debbie Dingell (D-Mich.), told Politico recently. “Can we amend it, and strengthen it?”

The dozens of recommendations in the Trump administration’s new report are unlikely to gain much traction among Democrats, and the Trump administration’s attempts to work around Congress to implement them will surely face stiff opposition and legal challenges. Still, Reddy said the public should be paying attention to these policy debates because they could have far-reaching consequences.

“Things like 1332 waivers seem super wonky and a little boring, but this is the stuff that really changes and influences the options available for consumers It’s health insurance and it tends to be a matter of life and death,” she said.

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