Republicans in Congress have run into serious trouble with their efforts to overhaul the Affordable Care Act. Congressional leaders are still talking about the possibility of repealing the whole act, or coming up with a way to change or replace it. President Donald Trump is also talking about using executive branch actions to block the health law.
Up till now, the Trump administration has been doing what it can to maintain continuity at the Affordable Care Act public exchange system and the Affordable Care Act subsidy programs. That could change. The administration could, for example, start withholding payments to health insurers through the Affordable Care Act cost-sharing reduction subsidy program. That program helps lower-income users of public exchange coverage pay their deductibles and coinsurance amounts.
The idea that the Trump administration could, in effect, go on strike against the Affordable Care Act raises questions about what an aggressively, intentionally crippled Affordable Care Act system might be like.
Some agents and brokers may hate the idea. Other insurance professionals may see an Affordable Care Act showdown as the only option the administration has to break through paralyzing Washington health policy gridlock. Either way, "Trump showdown care" is as much of a near-future scenario that insurance professionals have to consider as the idea that the country could simply repeal the Affordable Care Act, keep the current system pretty much as is, adopt a system based on the Senate's stalled Better Care Reconciliation Act bill, or even startle everyone by shifting to a true single-payer health care system.
Here are some thoughts about how "Trump Showdown Care" world could work.
1. Much will depend on what steps Congress, the courts, federal employees and federal law enforcement agencies are able and willing to take to limit the administration's actions.
The courts could rule, for example, that the Trump administration has a legal obligation to run Affordable Care Act programs, such as the act's health insurance premium tax credit subsidy program, as well as it can while the act is still in effect. Or, Congress could pass an ordinary bill, with a veto-proof majority, requiring Trump to continue to keep the Affordable Care Act system intact, at least temporarily.
If, however, Trump's Centers for Medicare and Medicaid Services refuses to make Affordable Care Act subsidy program payments, or it turns off the computers that run HealthCare.gov, and federal law enforcement agencies and Congress decline to step in, it's not necessarily clear what force could compel the administration to keep the Affordable Care Act system intact.
If law enforcement agencies sit on the sidelines, the Trump administration might simply be able to return the laws and regulations back to where they were in 2009 by declaring that this should happen, even if a majority of lawmakers in both the House and the Senate oppose that.
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For insurance professionals, the key point is that this is a good time to pay close attention to agent groups' legislative affairs people.
2. Issuers might pull individual major medical coverage off the shelves in many markets.
Health insurers typically have project margins on major medical coverage of 10% or less, even in good years. Insurers can't afford the kinds of big losses that could result from inaccurate assumptions.
Republicans, meanwhile, have proposed Affordable Care Act changes that could skew enrollee health risk in hard-to-predict ways. If Trump Showdown Care makes the disruption even worse, insurers may have no choice but to cancel plans to offer individual coverage for 2018, because they would have no way to design and price 2018 products in a prudent fashion.
Federal efforts to withhold subsidy payments could force some insurers to get permission from state regulators to cancel policies that are already in force, or, if state regulators refuse to give such permission, to enter state-supervised receivership, rehabilitation or liquidation proceedings. The hot new insurers in 2018 could be the state guaranty funds that back insolvent insurers.
For insurance professionals, the best way to cope with this possibility is to make sure clients have major medical coverage in place, in the hope that they will be able to keep their coverage through any period of disruption, or at least be first in line for guaranty fund assistance or emergency health coverage programs.
3. Issuers of products that compete with individual major medical coverage, such as short-term health insurance, might rejoice at first, thanks to a decline in competition from individual major medical coverage, but explosive growth might eventually force them to cap sales.
