Last week President Trump launched what he hopes will be the beginning of the end of the Affordable Care Act.
Frustrated by the inability of Congressional Republicans to repeal and replace Obamacare, the president signed an executive order — his 49th in less than nine months — eliminating federal subsidies that help low-wage earners meet their deductibles and co-pays for health care. The decision is designed to affect the 6 million Americans who earn between 100 percent and 250 percent of the federal poverty level — about $12,000 to $30,000 for a single individual — and receive their insurance on the healthcare exchanges.
What Mr. Trump may not have bargained for is how eliminating the subsidies, funneled through the health insurance industry, will hit middle-class wage earners. Without the $7 billion in subsidies, insurance companies say they will be forced to raise rates on their most popular plan, the silver, by 20 percent for 2018, according to the Congressional Budget Office. Those hit hardest from this increase will be those who make between $48,000 and $98,400 and buy their own health insurance without any help from Uncle Sam.
If it was Mr. Trump’s inclination to punish the poor, that is orchestrated to backfire.
As the law is written, the ACA requires that a person’s insurance premium cannot exceed a set percentage of his income. So if health insurance rates skyrocket, so do their tax credits to help cover their out-of-pocket health care expenses.
If this scenario plays out, the federal government can expect to pay much more in health care expenses than originally planned. Experts tag the additional costs as much as double, from $100 to $200 billion over the next 10 years.
THIS DISASTER has been in the making ever since the ACA was enacted in 2010 and Congress failed to fund the mandate that insurance companies provide affordable health care.
While Mr. Trump’s move last week does nothing to solve the problem, it perhaps makes its solution all the more imperative.
Already, lawsuits are in the making by states and insurance companies demanding the federal government uphold its end of the bargain by paying these subsidies.
Even wider ramifications loom, including insurance companies pulling out altogether from the ACA, leaving an estimated 20 million Americans without coverage.
TO ADD insult to injury, Mr. Trump’s executive order also allows small businesses to band together across state lines to offer plans that can eschew many of the dictates of Obamacare. Such plans may be able to outright reject or charge higher rates for those with pre-existing conditions such as diabetes or heart disease as well as exclude benefits associated with preventive care such as annual check-ups as well as maternity leave.
The low-cost, low-coverage plans will appeal to some employers, to the detriment of employees.
Besides the obvious risk to the country’s overall goal of improving health outcomes, such a move would force the health care exchanges to carry a higher percentage of the chronically ill, further eroding the needed buy-in of healthy and younger clients.
Mr. Trump believes only those who can afford health care deserve it.
That kind of mindset sends the country on a downward spiral.