Q&A: Obamacare 101: Trump threatens to let the Affordable Care Act fail. Can he?


President Trump has said he wants to “let Obamacare implode” as a way to force Democrats to negotiate a deal over replacing the Affordable Care Act. How real is that threat, and how imminent?

Here are some key questions and answers.

Obamacare 101 is a periodic primer on the debate over repealing and replacing the Affordable Care Act »

Can the Trump administration cause the healthcare law to collapse?

Not entirely, and not all at once, but the administration does have the ability to cause some amount of chaos in certain parts of the healthcare system.

Causing chaos in health coverage sounds bad. Why would Trump want to do that?

At least some administration officials believe that if more people have trouble getting coverage, pressure will increase on Congress to either repeal the Affordable Care Act entirely or make big changes in it. So far, Republicans have not been able to agree on a plan to do that.

Which parts of the system are most vulnerable?

Two different government programs help provide coverage for low- and middle-income working-age people and children. One is the marketplace for individual healthcare plans, which the Affordable Care Act created. The other is Medicaid, which the law expanded.

There’s not much the administration can do to undermine Medicaid without getting a law through Congress, at least in the short term. It’s a program jointly run by the states and the federal government, and the states have a lot of authority over what is covered and who benefits.

The individual marketplace is more at risk.

Which of those involves more people?

Medicaid is far larger. Roughly 75 million Americans are covered by Medicaid and the related Children’s Health Insurance Program. That’s more than 1 in 5 Americans.

About 10 million people have purchased coverage on the Obamacare marketplaces in 2017. Remember that most working-age Americans get health insurance through their jobs.

Under the law, low- and middle-income people buying health plans on the marketplaces can get government subsidies to make premiums more affordable.

What could the administration do to cause the individual market to implode, as Trump says?

Think of this in two buckets. Some actions the administration could take would passively allow the marketplaces to become less stable. That would cause a slow erosion.

There are also steps they could take to actively sabotage the markets, which could cause trouble much faster.

What would cause slow erosion?

Officials could stop marketing and outreach efforts that encourage people to sign up during open enrollment periods. They could refuse to enforce the requirement that people buy insurance or pay a tax — a step that officials already have said they will take. And they could stop trying to keep insurance companies in the markets.

None of those actions would cause the markets to collapse overnight, but they would destabilize them over time by driving out healthy people, which causes costs to rise, which in turn drives out more healthy people. That’s what’s known as a death spiral, and it could happen at least in some parts of the country eventually.

What would cause harm quickly?

The biggest issue involves money that has the bureaucratic-sounding name of cost-sharing reductions.

Basically, the government tells insurers that they need to hold down the insurance deductibles and co-payments that they charge low-income people.

That costs the insurers money. To make the insurers whole, the government is supposed to reimburse them. For more detail, here’s an explainer.

Every month, Washington sends insurers checks that total close to $600 million. And every month since he took office, Trump has raised the possibility that he might cut the money off, although he hasn’t actually done so.

If Trump cut off the payments, what would insurers do?

Some insurers would raise premiums to cover the higher costs, as several have already said they plan to do. Others would probably pull out entirely and stop selling insurance in the individual market.

When’s the next deadline?

In late August.

Could Congress stop Trump from doing that?

Yes, and it’s quite possible that they will since many Republican members of Congress fear that chaos in the markets would be bad for their constituents, not to mention their political futures.

I’ve been hearing that in many parts of the country there already are no insurers selling individual policies. Is that true?

Only in some fairly limited areas. As of July, 38 counties in the U.S. with about 25,000 people covered by individual policies were at risk of having no insurer in the coming year, according to a study of insurance company data by the Kaiser Family Foundation. Those counties were located in three states: Nevada, Indiana and Ohio.

But about one-fifth of consumers live in a county with just one insurer, Kaiser’s data showed. That number has grown a lot since last year.

The places with only one insurer are mostly rural and concentrated in a few states, mostly in the South and Southwest, although Alaska is also heavily affected.

That’s largely because rural areas, where the population is spread out and doctors and hospitals are more scarce, cost more to insure.

Those states are mostly Republican, right?

Yes, that’s one reason why Republican members of Congress have been as concerned as Democrats about the issue.

It also reflects the fact that many Republican states have actively impeded the Affordable Care Act from working. Not surprisingly, those states are among the ones with the biggest problems.

Who would get the blame if the insurance market soured?

Trump has said in his tweets and speeches that he believes the public would blame Democrats because they’re the ones who put the Affordable Care Act into place.

Few Republican lawmakers are confident that’s true, and recent polling indicates that the public holds the Republicans responsible since they control both houses of Congress and the White House.

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