Obamacare

The White House’s One-Two Punch to Obamacare: A Knockout Blow to the ACA?

Posted by Robert A. Chu on October 16, 2017
ACA, Affordable Care Act / No Comments

Health insurance application form with money and stethoscopeIn moves that stunned and alarmed insurers, providers, and consumers alike, on October 12, the White House issued an announcement and an Executive Order that appear to be purposefully designed to decimate the Exchanges under the ACA:

  1. The White House announced that the government will stop making cost-sharing reduction payments to insurance companies under Obamacare.  According to the White House, there is no appropriation for such payments.  As the Exchange plans will still be obligated to bear the costs of the cost-sharing reductions, premiums for Exchange plans that remain in the market would be expected to rise dramatically.  Many Exchange plans have termination provisions which allow them to terminate their 2018 contracts if the cost-sharing subsidies stop.  On October 13, eighteen states and the District of Columbia sued the administration to restore the funding.
  2. The President also issued an Executive Order requiring the relevant agencies to consider regulations or guidance (1) allowing more employers to form association health plans (AHPs) and (2) expanding the availability of short-term, limited-duration insurance (STLDI).  If the regulations come to fruition, younger and healthier people are expected to be siphoned from Exchange products and into cheaper AHPs and STLDI plans (that potentially offer skimpier coverage), creating adverse selection.  Premiums will rise for those left in the Exchanges.

Is the ultimate goal of these moves the total destruction of the Exchanges?  Are they bargaining chips designed to bring Congress back to the table to fix the “problems” with the ACA?  If the latter, will Medicaid spending cuts sought by many Republicans be part of that discussion?  Stay tuned.

Robert A. Chu

Robert A. Chu

Rob Chu is an associate in the firm’s Health Law Group, focusing on the litigation of health law matters. Upon graduation from Villanova School of Law, Rob was awarded the ABA-BNA Award for excellence in the study of health law. Rob earned an MBA from Villanova University and Master of Public Health from Yale University.

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