AHCA Failure: Trouble Ahead

Summary: The ACA exchanges need active support from the Trump Administration in order to work. This active support includes preserving cost-sharing reductions (CSRs) and making administrative changes that encourage insurer participation. With the failure of the AHCA, the Trump Administration is unlikely to provide that support. Without that support, premiums will go up, copays will go way up, insurers will continue to withdraw, and many Americans will be left with no coverage options.

HealthSherpa is the largest private enrollment platform for the Affordable Care Act (“Obamacare”), with over 820,000 people enrolled over the last three open enrollments. A number of people have asked for our perspective on the failure of the American Health Care Act (AHCA), the Republican proposal to, ‘repeal and replace’ the ACA.

Many commentators and pundits on both sides of the aisle are celebrating the failure of the AHCA. Our reaction is a little more cautious as we take stock of the initial reactions from the Trump Administration and the Speaker of the House:

As we play the movie forward, there are reasons to be concerned:

1. The ACA is in real trouble, with premiums climbing by double-digit percentages and insurers pulling out. We at HealthSherpa are on the front lines and have seen this firsthand - with a couple of notable exceptions, insurers simply do not want ACA customers under the current law.
2. There's also a great deal of uncertainty right now, with even insurers who are positively predisposed towards the ACA feeling a lot of concern, paring back their expansion plans and limiting their presence on the ACA exchanges.
3. Finally, there's the pending legislation concerning cost-sharing reductions (CSR) which are a critical component of how the ACA exchanges work. For legal reasons, CSRs will actually go away unless the Trump administration actively defends them.

Under the ACA, the Department of Health and Human Services (HHS) has a lot of authority and responsibility to implement the law and keep things running smoothly. Behind the scenes, HHS under Tom Price (Trump's appointee) has been hard at work shoring up the ACA exchanges by trying to make them more insurer friendly in order to entice insurers back into the market. If the political will to do that work is gone, all Trump and Price have to do is nothing and the ACA could collapse. Premiums would go up significantly and large parts of the country will have zero insurance plan options on the ACA exchanges. CSRs would go away, making healthcare treatment unaffordably expensive for many of those who are able to enroll in an ACA plan. And unregulated alternatives would proliferate, exposing consumers to the risks of being underinsured and having to pay the fine for not having insurance.

From a legislative standpoint, Democrats can propose measures to fix the parts of the ACA that are broken, but without a significant number of Republican votes, those will likely go nowhere. For Democrats, it will be difficult to message that changes are needed after all the effort expended to defend the ACA. For Republicans in the House and Senate, it will be untenable to vote for a Democratic plan to fix the ACA after their, ‘repeal and replace’ plan failed. Even if a plan to shore up the public exchanges made it through Congress, President Trump would be unlikely to sign it, unless it could be packaged/positioned as a Republican proposal.

Given the political fallout that the Administration has already faced with the failure of the AHCA, at this point, when premiums skyrocket and enrollment numbers fall, the Administration can now say, “we tried to fix it, this is not our fault.” And, at least from the quotes above, that seems to be the plan. Once the public exchanges well and truly fail, the GOP can revisit the AHCA after the 2018 midterm elections. When they do, they will likely pursue more of their desired legislative changes, and they will have much more widespread support and a broader mandate. In the meantime, a lot of people could lose their health coverage, and with it, their access to healthcare.