The Trump administration has released a new blueprint that would allow states to direct financial assistance to health plans outside of Affordable Care Act marketplaces.
The move opens the door for consumers to apply health insurance subsidies funded under the act toward plans that do not meet its original standards for comprehensive coverage.
Administration officials say the new rules would give consumers more options to find affordable plans. Democratic lawmakers countered that directing people away from ACA marketplaces would drive up healthcare costs and eliminate protections for people with pre-existing conditions.
A Reversal Of The ACA
The proposal represents a reversal of how the government has subsidized health insurance under the ACA, also commonly known as Obamacare.
In 2018, the federal government provided an estimated $55 billion to subsidize the cost of ACA health insurance plans. These subsidies were available to anyone who earned a salary up to four times the poverty level, meaning that the vast majority of people purchasing ACA insurance saw some of their costs offset through subsidies.
But the subsidies could only be used on ACA plans, all of which met the law’s standards for covering pre-existing conditions and providing basic care.
The new proposal would change this. It would allow states to dedicate the funds earmarked for ACA subsidies in new directions that include plans that do not meet Obamacare standards.
The Specifics of the Trump’s Administration’s Waiver Proposal
Through a guidance issued by the Centers for Medicare and Medicaid Services (CMS), the Trump administration is proposing to create four waivers allowing new avenues where subsidy money could be directed.
Individual states could implement these policy changes, or 1332 waivers, as soon as 2020 after receiving approval from CMS.CMS is ready to greenlight statewide proposals that radically change how Affordable Care Act payment help is used. Click To Tweet
In one avenue, the money could be put toward short-term health insurance plans, which provide limited coverage for limited periods of time.
These plans, traditionally targeted at travelers, students and people between jobs, only kick in to lessen the financial impact an unexpected injury of serious illness. They do not cover preventive healthcare or pre-existing conditions. However, if subsidized through the ACA, these plans could become much more affordable.
The guidance would also allow the subsidies to go toward private health insurance or privately managed accounts that people could use to pay for health insurance premiums and out-of-pocket expenses.
Under another proposed waiver, states could direct subsidies toward high-risk pools or create new groups and programs that would be eligible for financial assistance. For instance, states could craft subsidies to get more young people covered or reach other targets.
CMS head Seema Verma pledged that the waivers would give consumers more choices and allow states control over the ACA instead of the federal government.
“It was such a mistake to federalize so much of healthcare policy under the ACA,” Verma said in public remarks.
The Proposal Would Raise Costs, Democrats Say
Democrats responded to the proposal saying that undermined the ACA’s intention to provide comprehensive, low-cost coverage.
In a letter, Reps. Frank Pallone Jr. (NJ) and Richard Neal (MA) criticized the plan for supporting insurance plans that did not cover pre-existing conditions.
Noting the wording of the guidance, they also raised concerns about whether it opened the door for the government to limit the availability of affordable insurance plans.
“The new 2018 guidance allows states to simply show that a comparable number of residents have access to meaningful coverage regardless of whether they actually have it or not, thereby allowing the secretary to approve waivers that do not provider that is affordable or as comprehensive as under the ACA,” the congressmen wrote.
The proposed guidance could also result in higher ACA premiums if a large number of consumers are directed away from the marketplace, or if ACA plans become less subsidized as a result of the money being funneled into new directions.
Consequences for Consumers
In general, however, it has been difficult to predict how insurance plans will change from year-to-year.
Nonetheless, the proposal would almost certainly make these kinds of coverage more affordable:
Short-term health insurance: If subsidized, short-term health insurance plans would become much cheaper. Monthly premiums would be virtually eliminated, and deductibles could shrink as well.
Association plans: Association plans are a type of health insurance that allows groups of people with the same jobs or who live in the same geographic area to band together in an insurance group. These plans are specifically mentioned under the new guidance. And once again, if subsidized, these plans would become cheaper.
High-risk pool coverage: The new guidance could also bolster high-risk coverage pools, making them more affordable, because states would be able to direct money toward them under one of the proposed waivers. These pools allow people who had been denied coverage due to a pre-existing condition to join together into a coverage group.
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