States Need to Step In and Save Their Health Care Markets From Donald Trump

SACRAMENTO, CA - OCTOBER 27:  California Governor Jerry Brown announces his public employee pension reform plan October 27, 2011 at the State Capitol in Sacramento, California.  Gov. Brown proposed 12 major reforms for state and local pension systems that he claims would end abuses and reduce taypayer costs by billions of dollars.  (Photo by Max Whittaker/Getty Images)
California Gov. Jerry Brown needs to step up. Max Whittaker/Getty Images

Since failing to repeal-and-replace Obamacare in its entirety, Donald Trump and the Republican Party have undertaken a marginally quieter, piece-by-piece dismantling of the law that’s weakened and removed some of its core features. According to a new analysis released this week by the Urban Institute, those changes could leave millions more uninsured and send premiums almost 20 percent higher across the country by 2019.

The good news is that states still have the power to keep their health insurance markets from becoming casualties of Trump’s attack. Lawmakers just need to show a little political courage.

After John McCain gave Trumpcare a fatal thumbs down last year, the White House and the GOP took several steps to undermine the Affordable Care Act. Most importantly, the tax bill the Republican Congress passed in December repealed the law’s individual mandate. The requirement that all Americans buy health insurance or pay a fine was long considered a linchpin of Obamacare, intended to keep premiums affordable by balancing the market between sick and healthy customers. While there were legitimate questions about the mandate’s effectiveness at forcing people to buy health plans in recent years, it’s widely believed that its demise will push up the price of coverage and result in more people being uninsured, either by choice or because they won’t be able to afford a plan.

Trump has also taken some steps to sabotage Obamacare all on his own. Right before this year’s open-enrollment period, he directed the government to stop making payments to health carriers that were meant to reimburse them for offering lower-income Americans discounted insurance. The move didn’t break Obamacare’s markets, as some feared it might, but it did warp insurance prices in strange ways. More recently, the administration proposed new rules that would make it easier for Americans to enroll in short-term insurance plans that don’t adhere to the Affordable Care Act’s consumer protection rules. These extremely cheap policies, which typically offer minimal benefits, are technically designed to fill temporary gaps in people’s coverage, such as when they’re between jobs, and are medically underwritten, meaning the insurers can reject applicants because of pre-existing conditions or charge much higher premiums to older customers.

The last White House became concerned about how short-term plans were distorting the insurance market when it realized that some younger Americans were choosing to buy them instead of the more comprehensive coverage offered on Obamacare’s exchanges, even though it meant they’d have to pay the individual mandate’s tax penalty. So in late 2016, the Obama administration enacted a new regulation limiting temporary insurance policies to just 90 days. The Trump administration would now like to extend that limit back to a year. Once the individual mandate finally disappears in 2019, it seems likely that many young people will go back to cheaper short-term coverage, siphoning healthy customers from the Obamacare market and driving up premiums for those remain on it.

How much damage could all of this do? Quite a bit, according to the Urban Institute’s analysis. Overall, it estimates that the steps Trump and the Republicans have taken will leave 8.95 million additional Americans without comprehensive health coverage as of 2019—a 3.3 percent drop in coverage compared to if the laws hadn’t changed. Of that group, 4.75 million would be entirely uninsured; the rest would buy short-term coverage. The overall size of the Obamacare-compliant individual market would drop by a whopping 39 percent, while premiums would rise by 18.2 percent, since the remaining customers would have higher health costs.

Some states will feel the effects of Trump’s sabotage more than others. There are six states—Massachusetts, New York, New Jersey, Vermont, Oregon, and Washington—that ban short-term insurance policies. In those places, Urban expects premiums to rise by 8 percent on average, compared to 18.2 percent in states that place no limits on such plans. In Massachusetts, which has its own version of the individual mandate in place thanks to Romneycare, Urban doesn’t believe the GOP’s moves will increase premiums at all. The think tank also predicts the state’s uninsured rate will rise by a relatively small percentage.

More states should follow Massachusetts’ example. Pass a mandate, pass a short-term insurance ban if they don’t have one already, and Trump-proof their insurance markets. Of course, requiring people to buy coverage is politically unpopular. But just banning short-term insurance while letting the mandate disappear would be a double-edged sword. According to the Urban Institute’s analysis, it would probably keep premiums on the Obamacare market lower. But it would also leave more people entirely uninsured. The better choice is to simply reinstate the system that Trump has wrecked.

Even if just a few large states went the Bay State’s route, it would make a profound difference. As of now, Urban thinks the number of Californians without comprehensive health coverage could rise by more than 2 million, or 70 percent, thanks to the demise of the mandate and new rules about short-term insurance. There’s no good reason for lawmakers in Sacramento to just stand by and watch that play out.

But they might. As the San Francisco Chronicle editorial board wrote in December, a statewide insurance mandate is unlikely to muster the two-thirds majority needed to pass California’s legislature. Lawmakers have talked about creating a re-insurance fund instead, which would potentially keep premiums lower by picking up the cost when insurers get stuck with especially expensive patients. But Urban thinks states that already have reinsurance funds, such as Minnesota and Alaska, would still see large price spikes.

It’s worth pausing to appreciate just how much of Obamacare’s achievement Trump is poised to undo. The law is credited with getting an additional 20 million Americans insured. Trump’s attempts to disassemble the law one bit at a time could reverse up to almost half that progress. It’s now up to the states to not let that happen.