Republicans in Washington couldn’t repeal and replace Obamacare—so the Trump administration apparently wants to let Alabama and Idaho go ahead an do it on their own instead.
On Thursday, federal regulators issued a long document inviting state lawmakers to knock down or rewrite fundamental pieces of the health care law, while offering a number of radical ideas for how they might go about it. Some of them are similar to proposals the GOP batted around during its flailing effort to drive a stake through the Affordable Care Act in 2017.
One on of the administration’s suggestions is to restructure the law’s insurance subsidies, which help low and middle-income Americans pay their monthly premiums, so that they’re tied to age instead of income. (This would effectively give more help to high-earners and less to low-earners). Another is to let people spend those subsidies on cheap health plans that don’t meet all of Obamacare’s coverage requirements. (This would likely drive up costs for some people who needed more comprehensive coverage).
It’s not clear that these sorts of changes would hold up in court. But if they did, such moves would likely undercut Obamacare’s consumer protections, including for Americans with pre-existing conditions.
The new guidance is just the latest step in the Trump administration’s long quest to dismantle much of Obamacare through executive fiat. The Department of Health and Human Service has already resurrected the sort of junk health insurance the ACA was meant to ban, by issuing rules making it easier for insurers to sell so-called “short-term, limited duration” plans. These policies don’t have to meet Obamacare’s basic coverage requirements, and companies that sell them are allowed to deny or underwrite customers based on their health, which makes them a dirt-cheap option for, say, young male crossfit fanatics. And thanks to the death of the individual mandate—which required individuals to obtain comprehensive insurance like what’s sold on the exchanges or pay a fine—Americans are basically free to rely on those plans as their primary insurance, creating a parallel market to the Obamacare exchanges.
Trump also wants to give states more leeway to opt-out of or restructure parts of Obamacare under what are known as Section 1332 waivers. This part of the law was intended to let states experiment with ways to provide to provide health insurance to their residents that was equally as comprehensive and affordable as what they would receive under the ACA. But under Trump, federal regulators are trying to turn the waivers into a tool states can use to deregulate their markets, while making them easier to apply for. (Previously, states needed to pass a law in order to implement a waiver; now a governor can do it with an executive order, giving power to Republican executives in divided state governments.)
The guidance released on Thursday gives state officials four different “waiver concepts”—which are basically broadly sketched out conservative reforms they could try in their insurance markets. Changing the way subsidies are structured and which plans they could pay for are the most dramatic. Regulators specifically suggest letting insurance shoppers use their tax credits on short-term and catastrophic plans. That would more or less obliterate Obamacare’s essential benefit rules, which currently require subsidy-eligible plans to cover a baseline package of medical services. It would also drive up the cost of comprehensive coverage, since younger, healthier people would almost certainly opt for cheaper plans. Obamacare exchange customers who get subsidies wouldn’t necessarily be hurt, since the tax credits cap premiums as a share of their income. But sick people who earn too much for subsidies could find themselves paying more for the coverage they need.
All of this needs a giant caveat, however: It’s not at all clear that the Trump administration has the authority to approve the sorts of changes in its guidance document. I spoke with Christen Linke Young, a former Department of Health and Human Services Official under the Obama administration who is now a fellow at the USC-Brookings Schaeffer Initiative for Health Policy. She explained to me that while the Trump administration has tried to lower the legal guard-rails Obamacare included to prevent states from abusing 1332 waivers, it hasn’t eliminated them entirely, and it’s not clear anybody could design waivers along the lines it has proposed while staying within their rules. The guidance document, she noted, doesn’t even provide a clear roadmap for how to legally design these reforms, and doesn’t state that the administration would approve them. It’s a bit like the Department is fishing for ideas from the states to see if anyone can come up with a workable plan—a request for proposals about how to screw over patients with pre-existing conditions, so to speak.
“There’s so much less here than meets the eye,” she told me. Sick insurance customers in Mississippi better hope she’s right.
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