In October, as Republicans in Congress moved on from a failed effort to pass health care reform legislation, President Donald Trump took a series of steps to alter the administration of the Affordable Care Act on his own.
He issued an executive order to create additional paths for individuals and small businesses to purchase insurance that does not comply with all of the law's regulations. He also cut off a series of subsidy payments to health insurers that a federal court had ruled were illegal. These moves were preceded by a decision in September to reduce the money spent encouraging people to sign up for insurance through government-run exchanges.
Supporters of the law, better known as Obamacare, argued that these actions amounted to intentional sabotage. Some close to Trump seemed to agree. At a conference for conservative activists, Steve Bannon, a former senior adviser to the president, approvingly said that cutting off payments to insurers would destroy the exchanges.
The reality is likely to be less dramatic. Trump's executive order will take a long time to implement, and may have little if any effect. The reduction in advertising spending may reduce enrollment slightly, but probably not by a huge amount. And while cutting off insurer subsidies may cause some initial turbulence, in the long run it could result in more subsidized health coverage, and greater federal spending on the law, because Obamacare increases taxpayer-funded subsidies when premiums rise for typical plans.
Trump's executive order calls for agencies to facilitate the purchase of health insurance across state lines, specifically by looking for ways to expand the use of association health plans, which let small businesses band together to buy insurance that isn't subject to all of Obamacare's regulations. It also instructs federal agencies to look for ways to make it easier for individuals to access short-term insurance plans that are similarly exempt from Obamacare's rules.
Both instructions are geared toward creating an escape hatch from the law, if only at the margins. Some worry this will draw healthy people away from the exchanges, forcing insurers to raise prices on plans. This would likely be true of any attempt to allow the purchase of coverage outside of the health law's architecture.
The actual effect of Trump's push will probably be limited, however. The order itself formally changes nothing about the administration of the law. It simply asks executive agencies to consider making changes with certain goals in mind. The federal rulemaking process is notoriously slow, and general enrollment under the health law takes place during a limited window at the end of each year. Whatever changes do occur will likely not take effect until late 2018 at the earliest.
The most significant of Trump's actions is the decision to cut off subsidies to insurers. Known as cost-sharing reduction (CSR) payments, they reimburse insurers for providing mandatory services to low-income beneficiaries. While they're authorized by statute, Congress never appropriated money to fund them. Thus, they were held to be unconstitutional. The Obama administration paid them anyway; Trump's decision, which came months too late, finally brought the law into constitutional compliance.
The policy outcomes could be complex. Although both supporters and detractors of Obamacare have portrayed the cutoff as an attack on the law, the Congressional Budget Office (CBO) estimated that, after a period of instability in which about a million fewer people would be covered than projected under the status quo, starting in 2020 the effect would be to increase health insurance coverage rates.
Obamacare's individual subsidies for typical plans rise with the cost of coverage, meaning most enrollees are insulated from premium hikes. The CBO predicts that cutting off CSR funds will raise premiums but also increase subsidies, eventually making subsidized plans more attractive to buyers. The end result would be for Obamacare to cover about a million more people—and for the federal deficit to rise accordingly.
That presumes, of course, that these actions aren't reversed. A future president could change executive branch policy, just as Trump has. Several states have already launched legal challenges to the CSR cutoff.
And although Trump's moves came in response to Congress' inability to pass reform legislation, lawmakers could always step in. Indeed, in the days after Trump's announcements, a bipartisan group of senators released a plan to restore funding for both the advertising and the subsidy payments. The biggest effect of Trump's actions may be to prompt Congress to do its job.