President Trump brags that he has “gutted” the Affordable Care Act, but statistics released this week by his own Department of Health and Human Services show that it’s holding up well against his onslaught, with nearly 90% of all enrollees experiencing affordable, stable or even declining premiums.
The exceptions are enrollees earning too much to receive premium subsidies. They’re getting hammered by premium increases overwhelmingly caused by Trump policies. Consequently, they’re being forced out of the health insurance market in droves.
Who are they? They’re in households earning more than 400% of the federal poverty line, which would be $48,560 for an individual and $100,400 for a family of four.
“The high-price plans on the individual market are unaffordable and forcing unsubsidized middle-class consumers to drop coverage,” Seema Verma, administrator of HHS’s Centers for Medicare and Medicaid Services, said Monday.
As ACA expert Charles Gaba riposted on his blog, “Instead of hurting lower-income enrollees (which was [Trump’s] intent), he ended up helping them … while hurting middle-class enrollees (unsubsidized) instead. … Your boss shot the wrong hostages.”
Overall, according to the figures released by the agency, 10.6 million Americans had signed up for ACA coverage by February and paid their first month’s premium. That was about 3% ahead of the 10.3-million enrollment at the same moment in 2017, the agency said.
The increase came in the face of Trump administration policies that would have the effect of discouraging enrollment. Among other steps, Trump last year canceled reimbursements due insurers for reductions in out-of-pocket costs for their lowest-income customers, which resulted in a raft of premium increases for 2018. He also reduced the open-enrollment period for 2018 policies from three months to six weeks, and slashed the marketing and outreach budget for the ACA by about 90%, so information about the open-enrollment cutback was harder to come by.
Uncertainties about Trump policies and a years-long effort by congressional Republicans to repeal the ACA injected more uncertainty into the individual market. Those factors alone prompted insurers to raise 2018 rates by an average of 17% nationwide, Gaba has estimated.
Enrollees eligible for subsidies, however, were largely insulated from those rate hikes. That’s because the subsidies increase as premiums rise. In 2018, according to HHS figures, monthly premiums rose an average of 27%, to $597.20 per month. But the average subsidy rose by 39.4%, to $519.89 per month from $373.06. That means the average net premium, counting the subsidy, actually fell in 2018 to $77.31 from $97.46.
The federal government picked up the difference: Its share of ACA premiums rose to $51.3 billion from $41.3 billion, an increase of more than 24%.
Unsubsidized customers responded to the challenge of higher premiums by abandoning their health coverage in droves, HHS reported. The trend began in 2017, after Trump’s inauguration. That year, subsidized enrollments fell by about 223,000, or 3%. But unsubsidized enrollments fell by 1.3 million, or 20%.
Although the enrollment gap between subsidized and unsubsidized customers had been growing larger even before Trump’s inauguration — subsidized enrollment was 23% larger than unsubsidized in 2014 and 32% larger in 2016 — the discrepancy exploded in 2017, reaching 61%.
The burden on unsubsidized customers is partially an artifact of the Affordable Care Act’s design, which cuts off all premium assistance the moment a household’s income exceeds 400% of the poverty level. Democrats, including presidential candidate Hillary Clinton, have advocated revising the system to bring subsidies to more households, but Republicans have refused.
A proposal advanced by the Center for American Progress, a progressive think tank, would eliminate the “subsidy cliff” by instituting a premium cap on a sliding scale based on income. For households earning more than 150% of the poverty level, the government would cover any premium costs exceeding 10% of income. A family earning $150,000, for instance, would have to pay no more than $15,000 a year for coverage.
Trump’s answer to the premium increases caused by his own policies has been to undercut the law even further by eliminating the consumer protections that make health insurance worth buying. These include requirements that all policies cover essential health benefits such as maternity care, hospitalization and prescription drugs, and opening the marketplace further to short-term junk insurance that carries lower premiums but offers substandard coverage.