If the Trumpcare bill fails, Congress might strengthen Obamacare instead

Here’s what bipartisan tweaks to Obamacare might look like.

Senate Majority Leader Mitch McConnell of Ky., listens to a question while speaking with the media after he and other Senate Republicans had a meeting with President Donald Trump at the White House, Tuesday, June 27, 2017, in Washington. CREDIT: AP/Alex Brandon

With the prospects for Trumpcare in the Senate looking grim, lawmakers from both sides of the aisle have started to publicly talk about tweaking Obamacare rather than repealing it outright.

Majority Leader Mitch McConnell (R-KY) has already threatened to work with Democrats to stabilize the Affordable Care Act (ACA) if the bill does not pass. Last week, he said during a public event in his home state of Kentucky that “some kind of action with regard to the private health insurance market must occur” if Senate Republicans fail to pass their health plan. This Wednesday, Vox broke the news that House Democrats will introduce their own plan to address market stabilization this week.

If Congress does make a serious effort to strengthen the ACA rather than dismantling it, the primary challenges will include reducing premiums on the private markets and making sure more insurers continue to provide coverage in rural counties. In order to make decisions about how they will provide coverage in 2018, insurers need to know whether or not cost-sharing subsidies, which help low-income people access health care, will be permanent, and whether the individual mandate will be enforced.

Cynthia Cox, associate director for the program for the Study of Health Reform and Private Insurance at Kaiser Family Foundation, said her analysis shows that insurers were on their way toward regaining profitability and that premiums increases for 2018 would have been small, if not for the political uncertainty created by Republican attempts to repeal Obamacare.

“What we’re seeing is that insurers are requesting high double-digit premium increases,” Cox said. “So what may have otherwise been a one-time market correction is turning into a second year of high premium increases that this time is driven more by politics than the market.”

Insurers are already responding to those uncertainties by dropping out of the market. Compared to last year’s filings with the Centers for Medicare & Medicaid Services to sell plans on the ACA marketplace, applications to offer coverage in 2018 fell 38 percent.

Congress could help stabilize the market through by guaranteeing cost-sharing reduction subsidies — thereby taking them out of the hands of the Trump administration, which has repeatedly threatened their survival. If those subsidies were guaranteed, insurers may feel more comfortable lowering premiums, since premiums would need to increase by 19 percent if insurers were to compensate for lost cost-sharing reduction payments.

Congress could also encourage insurers to enter markets where there are fewer or no insurers by exempting them from the health insurance tax and making the Federal Employees Health Benefit Program available to those in underserved counties, according to one proposal for bipartisan legislation offered by the Center for American Progress.

Cox said a stability fund, as mentioned in the Republican health care bill, or reinsurance program of some kind would also help stabilize the markets, especially in rural counties.

“It might take some additional money to encourage insurers to stay in the market, and to gain confidence in the market,” Cox said. “That might hold this market steady in the meantime, while repeal and replace is being discussed, or if this repeal bill fails altogether.”

The plan crafted by 10 House Democrats, which Vox explains in more detail, would include some of these ideas. Democrats propose to create a permanent fund to offset costs of patients with pre-existing conditions to the tune of $15 billion in annual funding. The plan also makes cost-sharing reduction subsidies permanent and directs the Trump administration to enforce the individual mandate by making penalties for going without insurance more severe.

The Trump administration is encouraging a different approach if the Senate Republicans’ Obamacare replacement goes up in flames. In an interview with radio host Rush Limbaugh on Monday, Vice President Mike Pence endorsed immediately passing ACA repeal and crafting a replacement later, provided the repeal takes effect over the course of a few years.

“The president’s made it very clear. You know, we believe if they can’t pass this carefully crafted repeal and replace bill — do those two things simultaneously — we ought to just repeal only,” Pence told Limbaugh. “And then have enough time built into that legislation to craft replacement legislation in a way that’s orderly …”

Cox said an immediate repeal would “throw the market into chaos,” however, because insurers need time to understand what the regulations they’ll be operating under, the government needs time to write the regulations, and states need to time to adjust their markets and regulations.

“I think any realistic plan that is a repeal without a replacement plan needs to go into effect at least a couple years out from now. There is no way that you can have immediate repeal and not destabilize the market,” Cox said.

If Republicans were to work with Democrats on this legislation, they would have to do it as soon as possible — in a month at latest — or the markets could significantly destabilize, Cox said.

“While insurers are still working on setting premiums and participation for next year, if this drags on into the fall, that’s too late for insurers to make changes for next year,” Cox said. “There needs to be action fast to clarify what the rules are going to be for 2018 and possibly to also provide some stability funds targeted at these areas.”