Trump to Stop Healthcare Subsidies?
Trump is using the current “emergency” to repeal Obamacare. What would this really mean?
First, Trump has already stripped the ACA. He did this by eliminating the requirement that everyone carry insurance, or a penalty will be imposed. As a result, insurance companies are now, again, offering insurance to individuals which can be purchased outside the exchanges. This is in addition to reaping the significant profits that setting up these exchanges has provided them.
Second, insurance company contracts in most states do not hold an individual responsible for the failure of the federal government to pay subsidies due. This means that, for this year, policies cannot be canceled if the federal government doesn’t pay. The insurance company’s recourse is to sue the government for monies owed. It also means that, if the government isn’t going to offer subsidies, insurance companies are not likely to offer exchange policies in 2020. Only those who can afford individual policies offered outside the exchanges will be able to obtain coverage. This is where people who have insurance coverage through the exchange become vulnerable.
Third, under the law, federal subsidies to the states for those who purchase insurance policies through the exchanges are being reduced over time. As the number of subsidy declines, are the states going to be able to fill the gap? Some states have passed additional taxes. California has increased gasoline and cigarette taxes. But, these taxes are unlikely to cover the declines in the federal subsidies. There seems to be no plan for the states to raise money to cover these shortfalls. In that sense, one might look at this as an acceleration of bad things to come.
As far as coverage for preexisting conditions and family members under 26, these laws can be easily adopted at the state level. If a state mandates this coverage, carriers must provide this coverage if they want to offer policies in that state.
The problem has been the same one that has plagued us since the passage of the Affordable Care Act; which represented a big win for insurance companies and big pharma and a big loss for those who purchase insurance. Higher deductibles, the introduction of ever-increasing co-insurance costs in addition to higher co-pays, and the significant increase in employee contributions to health insurance are only a few of the ways the costs of healthcare has been transferred from insurance companies to individuals.
Remember, making people buy insurance is not the same as giving them access to low-cost healthcare.
Whether or not Trump can stop the subsidies is unclear, but the continued increase in cost absorbed by the consumer will continue.