Seema Verma rolls out Trump's "ACA Replacement Plan" in case the GOP wins #TexasFoldEm: Simply claim that "Obamacare Sucked Anyway!"

I spent the past few weeks up to my ears in Medical Loss Ratio analyses, so a lot of ACA/healthcare developments slipped by or got backlogged. There were stories which are technically separate but which are pretty obviously joined at the hip...and the fact that they both came out right on top of each other is pretty telling.

First, this story by Paige Cunningham at the Washington Post:

The Health 202: White House may have given up on health plan it says it is writing

A former White House staffer and several congressional aides and activists say they’ve been told the Trump administration has moved away from seeking an Obamacare replacement and is instead focused on damage control should a judge rule next month to topple the entire law.

Trump made waves earlier this year by promising to come up with yet another Obamacare replacement plan, but a high-stakes case before the Court of Appeals for the 5th Circuit is threatening him and other Republicans seeking reelection with a political wild card, as it could result in millions of Americans losing coverage as the election season heats up.

“There seems to be a decreasing appetite for the ‘big plan’ reveal and instead just focusing on responding to the 5th Circuit with prudence and a minimum of hysteria,” a former senior administration official wrote me in an email yesterday.

Of course, in order to "give up" on a replacement healthcare plan, they would've had to be working on one in the first place...which is likely complete nonsense. The closest they've come to doing anything on this front appears to be a half-hearted dusting off of the ill-fated Graham-Cassidy bill from a couple of years ago.

According to Cunningham, however, even that is likely nothing more than a phantom:

But conservative groups say they’ve not been told about an Obamacare replacement plan, even though their buy-in would almost certainly be sought by the White House.

“Although we’ve had discussions with the White House on health care, we’ve heard nothing from the White House on a health-care plan,” said Jason Pye, vice president of legislative affairs for FreedomWorks.

The very next day, the Trump Administration effectively rolled out this brand-new "Obamacare Replacement Plan", in a manner of speaking. Specifically, CMS Administrator Seema Verma posted the following entry on the official CMS blog:

Thank Obamacare for the Rise of the Uninsured

The U.S. Census Bureau released their annual report on health insurance coverage in the United States which shows the number of uninsured Americans rose from 2017 to 2018. As usual, critics of President Trump have been quick to blame the Administration’s healthcare policies for this increase. But a review of key facts suggests the rising uninsured rate stems largely from Obamacare’s failure to deliver affordable health insurance premiums and has created a new class of uninsured.

(sigh) OK, let the debunking begin...

While Obamacare promised affordable health insurance for every American, and even penalized those who refused to buy it, the law did nothing to control underlying costs

This is a flat-out lie. The ACA didn't do enough to control costs, but it does include some provisions...including, I should note, the very Medical Loss Ratio (MLR) provision which is resulting in nearly $1.4 billion in excessive premiums being rebated back to the policyholders this year alone, for a total of over $5.3 billion being rebated since 2012.

It also includes a provision which limits how much insurance companies can deduct for CEO and other employee salaries. Those are just on the insurance industry itself. For actual healthcare providers, the ACA includes...or did include, prior to the law being manipulated, features like these (this is from 2011):

  • Established the Independent Payment Advisory Board (IPAB) with the intent of forcing policy-makers to limit Medicare cost increases
  • Contains measures to encourage health care providers to band together in accountable care organizations (ACOs) to better coordinate services
  • Aims to incentivize hospitals to promote high-quality care and avoid unnecessary readmissions. Specifically, Medicare payments will be reduced for hospitals with high rates of potentially preventable readmissions
  • Adds an annual wellness visit to the guaranteed Medicare benefit package, which the CBO estimates will cost $3.6 billion over 10 years.
  • Eliminates copayments for preventive care visits, so that as the care the patient is seeking has been shown to provide some benefit in the future.
  • The ACA significantly increases the government’s ability to monitor and punish those who abuse the Medicare and Medicaid programs.

Again, I'm not saying how effective these were, but saying that the law does "nothing" to control costs is simply inaccurate.

The very structure of the law which imposed billions of dollars in new, costly regulations also led to higher and higher insurance premiums.

"The very structure of the law" translates as "Not allowing insurance carriers to deny coverage to sick people." Yes, if you can no longer deny coverage to people with cancer or diabetes ("costly regulations"), I suppose the cost of treating the sick does indeed increase ("higher premiums").

As a result, when President Trump took office in 2017, average individual market health insurance premiums in states using had already doubled when compared to 2013, the year before Obamacare’s main regulations took effect. 

As I noted two years ago, while it's certainly true that premiums in 2017 were significantly higher than in 2013, the report which claims that 2017 premiums were 105% higher than they were in 2013 was simply wrong. It only included the 39 states operating off of HealthCare.Gov. When you added in the other 11 states (+DC) which operate their own exchanges, the increase dropped to 84% higher. I know, that's still big increase, but 84% is not 105% no matter how you spin it.

As I also noted, some of that increase was going to happen no matter what. The trend over the years strongly suggested that if the ACA had never been passed, premiums would have increased by an average of 7-9% per year anyway...which means they'd have gone up around 36% between 2013 and 2017 no matter what. Put another way, over 40% of the 4-year increase was gonna happen either way.

...Average premiums went up by another 26 percent in 2018.

The chutzpah here is incredible. Yes, average unsubsidized premiums did increase around 26% in 2018 (officially it was projected to be around 29%, but the actual average dropped slightly as people shopped around for better values)...but the biggest single reason for that 26% increase was Donald Trump's decision to cut off CSR reimbursement payments. Fully half of the 2018 hikes were due specifically to the CSR cut-off...and that's not coming from me, that's according to many of the insurance carriers themselves in their official actuarial rate filings.

At the same time individual market premiums were spiking out of control, Centers for Medicare & Medicaid Services (CMS) data show a substantial enrollment drop among unsubsidized people on the individual market who do not receive federal premium tax credits. In just two years, from 2016 to 2018, unsubsidized enrollment declined by 2.5 million people, a 40 percent drop.

Yes, that's true...and again, a significant chunk of that was due to the 13%+ rate hike for unsubsidized premiums caused by Trump's attempt to "blow up" (his words) the ACA exchanges. Subsidized enrollees were protected from these rate hikes, but anyone earning more than 400% of the Federal Poverty Level (who were indeed already suffering from high premiums by this point) were screwed even more.

I do appreciate Seema Verma's apparent call on Congress to resolve this particular problem by passing H.R. 1868, which would remove the 400% FPL cap and beef up the subidy formula, however!

These numbers clearly show Obamacare has created a serious affordability problem on the individual market—and this was all put in motion before President Trump took office. Let’s remember that insurers’ process for setting rates for 2018 was well under way at the beginning of 2017 when President Trump took office and based on policies set in place under the Obama Administration.

Yes, the process did indeed START in early 2017, but the carriers had to scramble to resubmit higher rates later in 2017 when it became apparent that Trump was going to cut off CSR reimbursement payments...otherwise known as illegally stiffing federal contractors out of billions of dollars owed to them. In order to make up the lost revenue, most carriers jacked up premiums even more at the last minute, either spreading the cost across all plans or limiting them to Silver plans only, a practice known as "Silver Loading".

Simply put, there are too many people without subsidies who cannot afford coverage under Obamacare. For example, when a 60-year old couple in Grand Island, Nebraska making $70,000 a year—which is just slightly too much to qualify for Obamacare’s premium subsidy—is faced with paying $38,000, over half of their yearly income, to buy a silver plan with an $11,100 annual maximum out-of-pocket limit. We should not be surprised if they make the tough decision to drop their coverage. With a similar cold reality facing millions of American families, it was inevitable that Obamacare’s affordability crisis would eventually show up in the rates of uninsured Americans.

This paragraph is actually mostly true, to be honest: Premiums for unsubsidized enrollees were indeed already getting to be too high prior to Trump taking office. I agree with that, and I wrote about this problem many times before 2017. The problem is that Trump's policies have sped up the process, taking an existing problem and making it far worse by cutting off CSR payments, slashing the marketing & outreach budgets by 90%, zeroing out the mandate penalty and so forth.

The data show that the number of uninsured with incomes greater than 400 percent of the federal poverty line (FPL)—the cutoff point to qualify for federal tax credits—increased by 1.1 million in 2018. The number of uninsured with incomes between 300 and 399 percent of FPL who might qualify for smaller Obamacare tax credits, but still must pay a large portion of premium on their own, increased by 500,000. The total increase in the number of uninsured with incomes higher than 300 percent of FPL represents 85 percent of the 1.9 million additional uninsured.

Together these data show how Obamacare created an entirely new class of uninsured individuals, among those with middle to higher incomes who don’t quality for government subsidies and can’t afford coverage because of skyrocketing premiums.

...all of which is a strong argument for passing H.R. 1868, which would not only expand federal tax credits to those earning more than 400% FPL, but would also beef up the formula below the 400% threshold to make it more generous. Great idea, Seema!

Much of the news coverage has claimed the decline in the number of uninsured was driven by the decline in people covered by Medicaid. Yet, this simply does not square with the fact that the Census data also reported no statistically significant change in the number of uninsured with incomes lower than 138 percent of FPL, the people most likely to be eligible and enrolled in Medicaid. These numbers help explains why the uninsured rate went up at the same time the poverty level went down.

I'm going to turn the Medicaid issue over to Eliot Fishman of Families USA, who had a nice thread on Twitter debunking Verma on this point:

Clearly this is becoming the administration line, and multiple national reporters have been asking me about accuracy. It simply does not line up with the numbers: overall coverage losses exactly line up with Medicaid losses and Medicaid losses are concentrated in specific states

— Eliot Fishman (@FishmanEliot) September 12, 2019

2. We clearly should be watching closely for where unsubsidized marketplace disenrollers have ended up and to what extent they are covered off exchange, and whether that is junk coverage allowed by this administration.

— Eliot Fishman (@FishmanEliot) September 12, 2019

3. But the EXCLUSIVE focus on unsubsidized individual market participants is pathological. Acting like they are the only people who matter is a key factor that warped all the Republican ACA repeal bills in 2017. That didn't work out well.

— Eliot Fishman (@FishmanEliot) September 12, 2019

4. Kids uninsurance has gone up the second straight year. Does @SeemaCMS want to defend more uninsured kids in 2020 by pointing to irrelevant premiums in the individual market? Better: lets work with states and in congress to fix Medicaid problems AND marketplace affordability.

— Eliot Fishman (@FishmanEliot) September 12, 2019

Getting back to Verma...

For instance, we’ve issued a series of rules to strengthen the market that delivered on a number of policies industry analysts and state officials had been recommending for years. We’ve also approved 12 waivers for states to create their own reinsurance programs that fund people with higher healthcare costs. By taking these costs out of the individual market risk pool, these programs have all resulted in lower premiums for everyone else, ranging from a 6 percent reduction in Rhode Island to a 30 percent reduction in Maryland.

Yes, reinsurance waivers are a good thing which I've been pushing for for years now...the thing is, Section 1332 Reinsurance Waivers were ALREADY PART OF THE ACA since the day it was signed into law by President Obama. The only reason they're a thing now is because a) the federal reinsurance program didn't sunset until the end of 2016 (just before Trump took office), and b) Section 1332 didn't allow them to go into effect until the beginning of 2017 (again, right when Trump took office). The hard work to develop these waivers was done by the state legislators and governors.

I do give Verma some credit for approving these waivers, mind you...after all, she could have rejected them...but it's a hell of a stretch for her to try and take credit for them, especially when they're part of the very law she's otherwise trashing.

After taking these steps, we are beginning to see positive results. After multiple years of double digit premium increases, average individual market premiums across the country declined by 1.5 percent in 2019, the very first time since Obamacare started. We’re also seeing a boost in competition among health insurers. For 2019, there are 23 more issuers participating on than 2018. As a result, only five states have one issuer, compared to ten states last year. Competition means more options and lower prices for consumers.

Again, this is simply factually wrong. ACA-compliant individual market premiums actually did sill increase in 2019, albeit by only around 2.8% on average nationally. The 1.5% reduction figure only refers to Silver benchmark plans, I believe, and even then it only includes plans sold on-exchange; the 2.8% increase includes all metal levels both on and off-exchange.

Furthermore, as I analyzed in painstaking detail last year, the Trump/GOP zeroing out of the ACA's individual mandate penalty caused average 2019 premiums to be around 8% higher than they would have been otherwise. Again, that's not just me saying that--this is exactly what many of the carriers themselves stated in their formal rate filings with state insurance departments.

Nonetheless, critics continue to claim the Administration’s policies, including the decisions to stop making cost-sharing reduction payments and to reduce navigator and outreach funding through the Exchange have contributed to the uninsured rate. Yet, a federal district judge concluded Congress never appropriated funding for these CSR payments. The President’s budget recommends appropriating these funds, but without further action by Congress the Administration is following the law.

That's true...but the same judge also strongly recommended that the then fully-Republican-controlled Congress actually fix the problem...which they failed to do. Furthermore, since then, three more federal judges have ruled that the federal government has to pay out the CSR funds to the carriers regardless of whether they were formally appropriated by Congress or not.

As law professor Nicholas Bagley noted, "If this holds up on appeal, insurers could buy us the damn border wall."...his point being that Trump's CSR decision, which is already costing the federal government billions of dollars more than it would have if the payments had continued, could potentially increase the cost to taxpayers by billions more.

In regards to navigator and outreach funding, CMS data continue to show stable enrollment on the Exchange suggesting these decisions had no impact on enrollment. Likewise, there was not a substantial change in enrollment after the previous administration increased from $51 million to $100 million for the 2017 benefit year. In fact, enrollment actually dropped after this large investment. By implementing other efficiencies on the Exchange, we were able to reduce the Exchange user fee on insurers for 2020, which will result in lower premiums, a direct benefit to consumers.

This is nonsense. There's solid evidence that the incoming Trump Administration cutting off all marketing during the critical final two weeks of the 2017 Open Enrollment Period was largely responsible for a drop of a half million enrollees. Furthermore, navigators and outreach funding doesn't just help enroll people in exchange plans, they also help people enroll in Medicaid...which is where the largest drop in coverage has been found over the past two years.

The Administration has also taken steps to promote more flexible and affordable coverage options that don’t have to comply with all of Obamacare’s costly requirements. The Congressional Budget Office (CBO) projects premiums for these options will be substantially less than what is currently available. These more affordable premiums will help expand coverage to around 1 million people who would have otherwise been uninsured, according to the CBO.

"More flexible and affordable" translates as "misleading junk plans riddled with a long history of fraud, fine print, gotcha language and gaping gaps in coverage". Yes, the premiums are indeed lower...because they tend not to cover much of anything.

The rate of uninsured may continue to rise as long as Obamacare is in effect. Even its supporters have acknowledged its failures, which is why many of them have given up on Obamacare and are calling for more government through Medicare for all.

Translation: The rate of uninsured, which dropped substantially as long as Obamacare was operated by Obama, will continue to rise as long as it's being administered by Trump.