The Trump administration’s project to undermine the Affordable Care Act insurance exchanges is now complete. Its latest rule will allow employers to funnel tax-exempt cash to employees to buy health plans.
Workers could use the cash—comparable to the vouchers once proposed for Medicare—to buy plans that meet ACA standards. Or, they could use a separate account to buy short-term or limited-benefit plans, which include ones that discriminate against people with pre-existing conditions.
This follows on previous administration moves to discourage ACA sign-ups. It cheered the elimination of the individual mandate. It cut the advertising and navigator budgets that helped people sign up. And it cut the cost-sharing reimbursements for insurers, which were designed to keep the exchange-based plans affordable.
The result? Since this president took office, the nation’s uninsured rate has climbed to 13.4% from 10.9%. That represents an additional 7 million Americans without coverage despite the economy being at full employment.
The latest rule was written with the upcoming election in mind. It will be rushed into place for the 2020 enrollment season. In a Rose Garden ceremony, the president called it “a monumental victory for small businesses, for their workers and previously uninsured Americans who will now have access to high-quality health plans of their choice.”
Who could be against more choice?
It’s only when you look below the surface that you discover what those choices are likely to be. At least some of these new “health reimbursement arrangements” (HRAs) can be used for short-term plans with limited benefits or for catastrophic plans with huge deductibles.
Moreover, if an employer no longer offers an employer-provided health plan, an employee that accepts HRA cash could be cut off from receiving premium tax credits on the ACA exchanges. Just 83% of employees signed up for the health coverage offered by their employers in 2018, according to the Employee Benefit Research Institute.
Some employers that choose to offer these new HRAs will do the right thing and steer their workers to plans that supplement their increasingly inadequate workplace coverage. The Centers for Disease Control and Prevention estimates that 40% of Americans are now in high-deductible plans that require families to spend at least $2,600 before their coverage kicks in. That, along with skyrocketing out-of-pocket costs for drugs, has sent healthcare affordability to the top of the nation’s political agenda.
But even this benign use of HRAs will require small employers, the ones most likely to use the new program, to navigate through a dense thicket of complex rules defining eligibility. While the president predicted 11 million people would sign up for coverage under the new rule, a more likely outcome will be full employment for insurance brokers and employee benefit consultants.
The president’s constant refrain about Obamacare being a “failure” is nothing more than a self-enacting prophecy. The reality is that after a rocky rollout, enrollment on the exchanges eventually reached 12.7 million in 2016. It has since fallen to 11.4 million.
Obamacare can work. In Massachusetts, where the model originated in 2006 under Republican Gov. Mitt Romney, the uninsured rate in 2019 is under 3%.
The administration’s constant attacks on Obamacare have set the stage for relitigating the best path forward to universal coverage, where the U.S. is still an outlier among all industrialized nations. At least six Democratic Party candidates have embraced some version of Medicare for All. The rest back either Medicare for More or bold action to shore up the exchanges and Medicaid expansion.
The president hasn’t been able to take us back to 1950s-style insurance coverage—yet. Only his re-election with a Republican Congress could achieve that. But what he has succeeded in doing is reopening the intra-Democratic Party debate that led to the creation of Obamacare in the first place.