According to a new Department of Health and Human Services report, premiums for Obamacare plans will rise significantly across the country in 2018. The report states the average cost for the benchmark silver plan will increase by about 37%. On the upside, tax credit subsidies are also on the rise, which means 80% of enrollees will find coverage for under $75 per month, up from 71% in 2017.
But tax credit subsidies are a double edged sword, as more insurance options are drawing healthy people away from Obamacare plans. Insurance operates as a pool, where the majority of those paying their premiums without filing claims subsidize those who do file claims. Without the necessary critical mass of healthy enrollees, Obamacare will collapse in on itself, which is likely President Trump's plan.
In contrast to campaign rhetoric, the "repeal and replace" of Obamacare is a bit more nuanced than the average stump speech might have led voters to believe. The laws set in place by the Affordable Care Act ensured the system was entrenched beyond the scope of a simple executive order.
A viable alternative system would be necessary to achieve a full replacement of Obamacare, but even that would require a transitional period, and after seven years, Congressional Republicans still haven't coalesced on that important first step. In the meantime, President Trump is relying on the power of the pen to dismantle the program from the outside in, and recent actions can be closely tied to the rise in healthcare premiums.
On October 12, the President signed an order directing agencies to issue new regulations loosening some of the requirements of Obamacare. The slackened guidelines means that small businesses and other groups can can acquire health coverage through association health plans (AHPs). Since AHPs have lower minimum benefit standards, the overall cost is lower, attracting healthy people away from Obamacare plans.
There also has been no new appropriation for the monthly cost-sharing reduction payments for insurers. The payments were written into the ACA as a way to reduce the cost to insurers selling discounted plans to low-income families. While the legal mechanism is still in place, the associated funds have been separated, leaving no legal way for the payments to be made, a move even some House Republicans disagree with.
Democrats say that Presidents Trump's actions are his attempt to sabotage Obamacare, signing executive orders as an end run around Congress in the face of numerous frustrated attempts at passing legislation.
Despite the polarizing nature of the healthcare debate there is a consensus that President Trump's actions are destabilizing the market, and newly proposed bipartisan legislation sponsored by Senators Lamar Alexander (R-Tenn.) and Patty Murray (D-Wash.) is attempting to reach a short term compromise.
The best way to help families is to pass the bipartisan legislation Chairman Alexander and I have proposed, which has strong support from Democrats and Republicans and would help lower health care costs this coming year.
The bill may be a nonstarter, however, as Senate leaders have promised not to bring it to floor unless President Trump signals his support for it.