Danger, Will Robinson: Trump's (delayed?) ACA proposal is even WORSE than I thought

(with apologies to "Weird Al" Yankovic)

Yesterday, Politico reported that the Trump 2/3 White House was planning on rolling out his own counterproposal to Democrats demand that the enhanced ACA tax credits (which are still scheduled to expire just 36 days from now) be extended (preferably permanently, but at the bare minimum by at least a few years).

According to the Politico story, the Trump proposal supposedly included the following provisions:

• An extension of the enhanced tax credits at current thresholds for most enrollees for two years

• Bringing back the "Subsidy Cliff" hard cut-off of any financial help at 700% of the Federal Poverty Level (FPL)

• The addition of a mandatory minimum monthly premium for all enrollees, most likely $5/mo

• Switching CSR expenses from the current arrangement (baked into gross premiums) to federal reimbursement payments (which would kill Silver Loading, which would hurt millions of lower-income enrollees while only helping a tiny number of higher-income ones)

• Some sort of "option" for people to convert a "portion" of their premium tax credits into funds for a dedicated Health Savings Account (HSA) instead...as long as they enroll in Bronze plans

As I noted, the first two of these conditions are barely acceptable, while the third one pushes me over into the "No" column, and the last two put me firmly in the HELL NO column...especially when each of the five provisions would be magnified greatly by the other four.

However, it turns out that Politico didn't even include all of the ugly requirements included in the "framework" which was supposedly going to be introduced yesterday.

In a story last night about how the rollout was apparently "delayed" due to instant and massive backlash by Congressional Republicans at the thought of extending the enhanced tax credits under any circumstances, CNN included some additional details about Trump's proposed "framework" proposal:

The framework floated a range of other conservative priorities, such as expanding the availability of plans outside the ACA exchanges and imposing new restrictions on the use of federal funds for gender-affirming care or health care for undocumented immigrants.

...and there was even more detail included in this piece by the conservative Washington Times:

...One option is a requirement that everyone pay 2% of their income, or at least $5 per month, for lower-tier plans.

...The draft of the White House plan would allow those in lower-tier plans, such as the bronze-level or catastrophic plans, to put money into health savings accounts.

It would also codify the “program integrity rule” to further help root out fraud, waste and abuse.

I should note that there's some overlap between a few of these, as several of the bullets (re gender-affirming care, undocumented immigrants and the $5/mo minimum) were actually already included in the "program integrity rule" referenced at the end; I'll address this below.

With that in mind, let's take a look:

• "EXPANDING PLANS OUTSIDE THE ACA EXCHANGES"

This could refer to any of several ideas, but it most likely means codifying Trump's reversal of a Biden-era rule which put restrictions on so-called "Short-Term, Limited Duration" healthcare plans (which I generally refer to as "ShortAss Plans" since I tend to lump them in with "Association Plans" as well as other non-ACA compliant "healthcare plans" like "Sharing Ministry" or "Farm Bureau" plans).

As Amy Lotven explained back in August:

The Trump administration affirmed it will be leveraging an executive order on deregulation to amend the Biden-era rule that limited the duration of short-term plans to no more than four months, and says it will not enforce the current rule, including the time restrictions and new consumer notification requirements, in the interim.

...“Until future rulemaking is issued and applicable, the Departments do not intend to prioritize enforcement actions for violations related to failing to meet the definition of ‘short-term, limited duration insurance’ in the 2024 final rules, including the notice provision,” the memo says. HHS also encourages states to adopt the same approach.

Short-term, limited duration health plans do not have to adhere to Affordable Care Act requirements, like guaranteed issue or coverage of the 10 essential health benefits, and are less expensive then comprehensive coverage.

Many stakeholders and Democratic lawmakers consider the coverage “junk” due to its narrow benefits that can leave consumers who get sick with large medica bill, but many Republicans lawmakers and experts believe short-term plans are a valid option for some consumers and the government should not eliminate choice.

Again, "Short-Term, Limited Duration" plans (STLDs) are exactly the type of junk insurance which the ACA was designed to curtail: They generally can cherry-pick their enrollees, deny coverage or charge more for those with pre-existing conditions, don't have to include coverage of stuff like maternity care, mental health services, pediatric care, etc; they often include annual or lifetime limits on coverage and so forth.

The ACA didn't ban STLDs, which can make sense for some people under very limited circumstances, but it did discourage them, and some states have banned them outright while others have placed strong restrictions or regulations on them.

The Obama Administration limited STLDs to be just that: Short-term coverage only, for a limited duration: You could only enroll in a STLD for up to 3 months per year. Trump 1.0 reversed that & opened the flood gates on them (defeating the entire reason they're called "short term" or "of limited duration"); the Biden Administration reversed that by restricting them to 4 months, and now Trump 2.0 has reversed that again.

I've always strongly opposed STLDs (and related types of junk plans), but until 2021 I was willing to accept that they were a necessary evil as long as the original premium tax credit formula--including the 400% FPL Subsidy Cliff--was in place. Put more simply, there's a significant population of Americans who were stuck between a rock and a hard place where they weren't eligible for federal tax credits but also couldn't afford to easily (or at all) pay full price for an ACA-compliant policy. For that population, I had to grudgingly admit that STLDs, with all of their dangers and shortcomings, might be the only viable option.

All of that changed when Congressional Democrats passed, and President Biden signed, the American Rescue Plan Act into law in 2021: With the tax credit formula beefed up to the levels it should have been in the first place and the dreaded Subsidy Cliff eliminated, there was no longer any justification at all for anyone to enroll in an STLD except under very rare circumstances.

Now, in theory expanding STLDs wide open shouldn't cause nearly as much damage in a world where the enhanced tax credit formula exists since the market for them should be far smaller...but again, Trump wants codify his "Junk Plans for All!" policy permanently while only extending the enhanced tax credits for two years.

Even worse, it's possible (this is difficult to tell from the wording of the CNN story) that Trump is even proposing to allow ACA tax credits to be used for STLDs, which--if this is the case--would basically undermine the ACA market.

The whole rationale for the tax credits in the first place is that adding regulations like guaranteed issue, community rating, essential health benefits, etc etc are the reason why ACA-compliant plans have a relatively high list price in the first place; therefore, the government is providing financial help so people can actually afford them.

If that same financial help can be used for any piece of shit "plan" on the market, it utterly defeats the point. This would be like if the now-defunct $7,500 EV tax credit could be applied towards any gas guzzling Internal Combustion Engine lemon that gets 3 miles per gallon. The point of the tax credits is to encourage as many people as possible to enroll in comprehensive healthcare plans which don't discriminate against people based on their medical history/condition.

• MAKING EVERYONE PAY AT LEAST 2% OF THEIR INCOME

I already covered the mandatory $5/month bullet yesterday, but this "2% of their income" business is troubling for a different reason. Depending on what it actually means (which is always difficult to tell with this particular Regime), it could completely contradict the current enhanced tax credit formula, which states that anyone who earns less than 200% FPL ($31,300/year for a single adult) only has to pay between 0 - 2% of their income in premiums for the benchmark Silver plan.

Now, $5/month for someone earning exactly 100% FPL ($15,650) would be about 0.4% of their income...but someone who earns, say, 175% FPL ($27,388/yr) currently only has to pay 1% of their income for the benchmark Silver plan ($23/month). So...I'm not sure what to make of this "at least 2%" business, but it's not good no matter what.

• HSAs FOR CATASTROPHIC PLANS

Again, I already covered the massive problems with the "HSAs for All!" proposal yesterday, but even then I was operating on the assumption that this would be limited to Bronze plans. Catastrophic plans--which are part of a separate risk pool from "Metal Level" ACA plans, with good reason--aren't currently eligible for ACA tax credits...again, with good reason.

If Trump is planning on letting "a portion of" tax credits be converted into HSA funds to be used with Catastrophic plans, it's very close to going down the same route as letting them be used for STLDs: This would undermine the ACA market by draining it of younger, healthier enrollees while leaving older, sicker enrollees in the ACA risk pool...thus turning it into a de facto "High Risk Pool" market by default.

• GENDER-AFFIRMING CARE / UNDOCUMENTED IMMIGRANTS

The CNN article doesn't go into detail about either of these, but with the Washington Examiner piece mentions "codifying the program integrity rule," I'm assuming it's referring to codifying these provisions from last spring:

Prohibiting Coverage of Specified Sex-trait Modification Procedures as an EHB

CMS is finalizing that, effective beginning in plan year 2026, issuers subject to EHB requirements (that is, non-grandfathered individual and small group market plans) may not cover specified sex-trait modification procedures, as an EHB. In the final rule, CMS is also adding a definition of the term “specified sex-trait modification procedure” in response to comments and specifying that certain services would not qualify as a “specified sex-trait modification procedure” under this definition.

This policy will not prohibit issuers of coverage subject to EHB requirements from voluntarily covering specified sex-trait modification procedures, nor will it prohibit states from requiring coverage of such services, subject to the rules related to state-mandated benefits at 45 CFR § 155.170. This policy will align EHB with the benefits covered by typical employer-sponsored plans, as required by the applicable statute.

In other words, they're throwing transgender folks under the bus, which is hardly surprising but is still appalling.

It doesn't mean that insurance carriers can't cover gender-affirming services, but it does mean those services can't have APTC subsidies applied towards them if they're included in the policy...which not only means that a lot more transgender folks will have to pay more for such services, it also means carriers will be less likely to choose to include them as part of their policies at all.

Affirming Previous Interpretation of “Lawfully Present” Definition

CMS is finalizing amendments to the definition of “lawfully present” to exclude DACA recipients, returning to the interpretation adopted in the 2012 Interim Final Rule (77 FR 52614). This change will make DACA recipients ineligible to enroll in a Qualified Health Plan (QHP) through the Marketplace, for premium tax credits, APTC, and cost-sharing reductions (CSRs), and for Basic Health Programs (BHPs) in states that elect to operate a BHP, reversing the 2024 DACA Rule. This policy aligns with statutory requirements and ensures that subsidies are reserved for eligible individuals.

Oof. This screws over up to 580,000 DACA recipients (although more realistically only around 100,000 of them are likely to be eligible for various reasons) for...absolutely no good reason whatsoever, other than Trump/MAGA hating immigrants...even those who have lived here virtually their entire lives.

Really, there's no other logical reason not to let DACA recipients enroll in ACA exchange plans or to be eligible for APTC susidies, CSR subsidies or BHP programs.

The Trump Regime already implemented both of these cruel, pointless policies over six months ago. However, there's a major difference between the Trump Regime issuing administrative rules about these restrictions and Congress actually codifying them into law.

For one thing, about half of the other provisions included in the Trump CMS "Integrity Rule" last spring have been shot down (at least temporarily) by a federal judge...in some cases because they can only go through via actual legislation.

For another, any changes made via administrative or regulatory moves (including executive orders) are temporary: They can be reversed by the next Administration. If any of the provisions above were to be baked into legislation passed by Congress and signed into law by Trump--and if such provisions were made permanent, unlike the 2-year extension of the enhanced tax credits--then that's exactly what would happen unless a future Congress & President were to reverse them.

The so-called "Affordability & Integrity Rule" includes a bunch of other horrible policy changes as well (again, some of these have had the kibosh put on them by a federal court for the moment). If the entire thing were to be baked into Trump's "proposal" then all of them would presumably be included as well.