In case you haven't heard, President Trump really, really wants to get rid of the Affordable Care Act (ACA), the hallmark legislation of former President Barack Obama that bears his name (Obamacare). While Trump offered dozens of proposals during his campaign, none stood out more, or was leaned on more heavily, than the promise of repealing Obamacare once in office.
Yet Obamacare is still the law of the land, and we're now into September. Despite Republicans controlling both houses of Congress, no consensus can be reached on how to best repeal and replace Obamacare. One GOP faction, known as the Freedom Caucus, wants as complete a break from the ACA as possible, while more moderate Republicans fear that scaling back on Obamacare would hurt their low-income and sicker constituents. Healthcare in America is at an impasse.
Donald Trump has previously threatened to "go nuclear" on Obamacare
For Donald Trump, a deadlock on healthcare isn't acceptable. Recently, the president has intimated that if Congress is unable to make progress in repealing and/or replacing Obamacare, he would consider his "nuclear option." Essentially, he'd pull the plug on cost-sharing reductions (CSRs), which are the subsidies paid to marketplace enrollees earning between 100% and 250% of the federal poverty level to help cover some of the costs associated with copays, coinsurance, and deductibles.
The battle over CSRs began all the way back in 2014 when the GOP-controlled House sued Sylvia Burwell, who was then Secretary of the Department of Health and Human Services (HHS). The GOP alleged that only Congress can apportion subsidy funding for CSRs, and since it hadn't, payouts to millions of eligible low-income folks were being made illegally. Following two years of legal battles, in May 2016, District of Columbia Judge Rosemary Collyer sided with the Republicans. However, her order was immediately stayed given the expectation of an appeal from the Obama administration, which did come in. This same appeal still stands today, having been extended twice by the Trump administration.
In order for Trump to eliminate CSR payments to the 7.05 million people who qualified for them as of the end of the 2017 enrollment period, all he'd have to do is drop the appeal. If he did so, some $9 billion to $11 billion in payments wouldn't head out to low-income individuals and families, leading to one of two scenarios. Either the folks who are reliant on CSRs to lower their medical care costs won't go to the doctor or they'll go and simply not pay the bill. Either way, it's bad news for insurance companies, which have in many instances been requesting double-digit percentage premium hikes in response to this CSR uncertainty, and therefore bad for consumers as a whole.
Trump takes a new shot at Obamacare
However, going "nuclear" has been just a threat up until this point. This past week, though, the Trump administration delivered what could be its first direct blow against Obamacare.
On Thursday, HHS officials announced that it would be slashing outreach funding on Obamacare from $100 million in 2017 to just $10 million for the upcoming enrollment period. Outreach funding encompasses the advertising and marketing that's designed to increase enrollment in Obamacare and make consumers aware of their healthcare options. Said HHS spokeswoman Caitlin Oakley: "A healthcare system that has caused premiums to double and left nearly half of our counties with only one coverage option is not working. The Trump administration is determined to serve the American people instead of trying to sell them a bad deal."
And that's not the only cut coming to Obamacare for the 2018 enrollment period. HHS officials also announced that they're slashing funding for navigators by 41% from the previous year to just $36.8 million in 2018. Navigators are individuals and organizations that help consumers search for coverage options and answer questions. The Trump administration cited a lack of navigators reaching their objectives as the reasoning behind the funding cut.
Seeing outreach and navigator funding cut is a particularly worrisome blow given that a frightening number of Americans are clueless when it comes to health insurance. A Morning Consult poll earlier this year found that 35% of Americans were unaware that Obamacare is just another name for the ACA. What's more, a survey from PolicyGenius observed that just 4% of respondents correctly understood all four of the following key healthcare terms: deductible, coinsurance, copay, and out-of-pocket maximum. Without this funding, it seems only logical to assume that Obamacare's patient pool will fall notably in 2018, giving insurers even more reason to keep away. At this point, the ACA's future is more uncertain than ever.
What's next for Obamacare?
The key issue that's been previous discussed is Obamacare's lack of pull with younger adults who are critical to the sustainability of the program. With the ACA opening the floodgates for sicker individuals, young and healthy adults were expected to add balance for insurers. However, the Shared Responsibility Payment (SRP), which is the penalty consumers pay for not purchasing health insurance, has been nowhere near the cost of a full-year of unsubsidized healthcare, coercing many young people to remain uninsured.
The Kaiser Family Foundation previously estimated that the average SRP for a household would be $969 in 2016, which compares to an average unsubsidized bronze plan cost of more than $3,700 in 2017, according to HealthPocket. Until this gap is closed and young adults are properly incentivized to enroll, Obamacare will struggle to be sustainable over the long run.
At the same time, the GOP's proposals aren't exactly benefiting everyone, either. While various proposals from Congress have shown favorability toward getting more younger adults to enroll, it's coming at the expense of the elderly and low-income folks who could see their subsidies cut or eliminated.
There's simply no clear path for healthcare in America at the moment, and that's a scary thing for consumers, insurers, and investors.
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