Here’s some grandmotherly advice for lawmakers: Be sure you’re not jumping out of the frying pan and into the fire. In other words, when crafting legislation that will affect hundreds of millions of Americans, keep an eye out for unintended consequences that might make their problems worse.
The Patient Protection and Affordable Care Act—popularly known as Obamacare—is filled with unintended consequences. But the Trump administration is working hard to address some of those; as Centers for Medicare and Medicaid Services (CMS) Administrator Seema Verma explains, “we are following through on our commitment to protect those left behind by Obamacare.”
One way CMS is doing this is by continuing to “grandmother” certain kinds of health insurance policies, a practice it started last year.
Those “left behind” by the ACA include millions of Americans whose income disqualifies them for Medicaid and who do not have employer-supported health insurance. The full brunt of the escalation in health insurance costs has fallen on them as members of the American middle class. For them, what was expensive before the ACA is now far beyond anything they can possibly pay.
Even when they do pay, their care isn’t better. ACA enrollees are denied services nearly 20 percent of the time, even if their medical professional believes they need those services.
Subsidies through ACA exchanges help some individuals, but are not a real answer.
First, subsidies funnel money to insurance companies, not to providers or patients. Subsidies can help people purchase insurance but do not provide better access to care. Second, for those with incomes above the June 2018 median household income of $62,175, the subsidies do little to defray astronomical health care costs.
In 2017, CMS ruled that certain insurance policies would be allowed, “grandmothered” in the vernacular, though they had before been prohibited by restrictive ACA insurance regulations.
(When the ACA was enacted, it allowed some “grandfathered” plans to continue for a time. These “grandmothered” plans are distinct from those.)
These non-compliant plans could be offered for sale, including Association Health Plans or AHPs and short-term, limited duration policies. For 2019, CMS has continued grandmothering these policies.
ACA supporters decried this move as undermining the ACA, calling the short-term policies “junk policies.” Now, at the behest of some Democratic states’ attorneys general, a federal judge has ruled that AHPs violate the ACA; that ruling will be appealed, because CMS believes that giving consumers more choices, especially affordable ones, was the right move. And CMS is right.
The recently released CMS 2019 Exchange Open Enrollment Period Final Report found enrollment dropped by 2.5 percent or 300,000 individuals from the 2018 enrollment of 11,700,000. This decline is likely attributable to an improved economy with more people employed and having greater income.
Every year since Obamacare was implemented in 2013, the cost of health insurance has increased. In 2017, the average increase was 23 percent, and in 2018, it was 31 percent. Overall, the cost of health insurance premiums has more than doubled in five years.
In 2019, premium costs in the Exchanges declined 1.5 percent. This was the first drop in consumer cost since Obamacare was implemented and may be due to the lower cost of grandmothered policies.
The effect of grandmothering on the non-exchange individual market is still being studied, but the results so far are favorable. A study of 28 Association Health Plans across 13 states demonstrated significant savings on average, and a much greater savings than the 1.5 percent cost decline in the exchanges. The exchanges enrolled just over 11 million individuals, while the individual private market includes 51,680,000 Americans.
CMS is now refining a rule that would lessen restrictions placed by Obamacare on employer contributions to Health Reimbursement Accounts. Depending on how the new rule is worded, employees could have greater control on how and where their money is spent.
In 2017, CMS started Drug Dashboards, which provided the public with information regarding drug manufacturers, their prices and especially increases, as well as spending data for thousands of drugs in Medicare and Medicaid. This was a start at achieving transparency. Now the public knows where its medication money is going.
In Medicaid, CMS encouraged the states to seek waivers of Medicaid regulations so that the states can do Medicaid their way. Seventeen states have submitted waiver requests and six have already been approved. Two waivers that include work requirements, in Arkansas and Kentucky, have been struck down in court. While states differ in the regulations they seek to waive, most requests involve the addition of personal responsibility such as work requirements and greater flexibility on how the state spends its Medicaid funds.
Here’s another piece of grandmotherly advice: There’s no secret to success; it’s all just hard work. The ACA is a burden on Americans, emptying our wallets and restricting our choices, while foisting upon us insurance that fails to provide timely care. CMS is now doing the hard work of making reforms—from grandmothering in less-expensive policies to increasing transparency and reviewing waiters—that will lighten that burden.