More than 40,000 Mainers who begin signing up Wednesday for Affordable Care Act insurance may do a double take when selecting a plan on the individual marketplace. Many of those plans will offer free monthly premiums.
Health experts say that’s an unintended consequence of the Trump administration’s decision this year to end payments to insurance companies for cost-sharing reductions, which had helped low-income people buy health insurance.
“It’s good for now,” said Steve Butterfield, public policy director for Consumers for Affordable Health Care, an Augusta-based health advocacy group. “It’s hard to be optimistic when the repeatedly stated and tweeted goal of this administration is to destroy the ACA. But here’s a decision that for this year, for a lot of people, their premiums will be going down.”
That’s because insurance companies and states devised workarounds to counteract the Trump administration’s moves, which resulted in free premium options for many low-income residents in Maine and across the country.
About 80,000 Mainers bought health insurance last year on the ACA individual marketplace, which is designed to provide subsidized coverage for those who don’t have access to employer-based insurance, such as the self-employed, part-time workers or those employed by small businesses. The ACA, through the marketplace and the expansion of Medicaid, has resulted in more than 20 million Americans gaining health insurance.
President Trump and congressional Republicans have been trying to repeal and replace the law since he took office in January, but those efforts have so far failed in Congress. Maine Sen. Susan Collins, a moderate Republican, was one of three Republicans to buck the party and preserve the ACA by one vote during a dramatic late-night session in July.
Trump then took executive actions to undermine the law, cutting the enrollment period in half – it now opens Wednesday and runs through Dec. 15 – and slashing advertising and outreach budgets.
He also ended payments to insurance companies for cost-sharing reductions, which lowered out-of-pocket costs such as deductibles and co-payments for low-income people. Trump said in an October media availability that “Obamacare is finished. It’s dead.”
More than 40 states – including Maine – responded with a workaround. In Maine, insurers filed a set of rates that anticipated the payments ending. The rates offset the loss of payments by increasing the premiums for “silver” plans, the middle tier in the three-tiered system of bronze, silver and gold plans offered on the ACA marketplace. Bronze plans have the lowest premiums and highest deductibles, while gold plans have the highest premiums, lowest deductibles and most benefits. Silver plans are in the middle.
“We didn’t issue an order saying insurance companies had to do this, but we all took a step back and looked at what was the most equitable decision we could make,” said Eric Cioppa, who heads the Maine Bureau of Insurance.
Because the gold and bronze plans’ subsidies are based on the cost of the second-lowest silver plan, that resulted in flat premiums but more generous subsidies for gold and bronze plans. The larger subsidies led to free bronze plans at some income levels and to lower-cost gold plans.
A 40-year-old single Mainer earning about $12,000 to $27,000 a year can get a free bronze plan, based on a Press Herald review of plans offered at Community Health Options, a Maine-based cooperative insurer. The zero-premium bronze plans are available regardless of age, family size or place of residence in Maine, as long as the person signing up earns between 100 percent and 225 percent of the federal poverty level. The insurance itself is not entirely free, because there are co-payments and deductibles. For one free-premium bronze plan, for example, generic prescription drugs cost $5 and the annual deductible is $4,000.
About half of the 80,000 Mainers in the marketplace would be eligible for free premiums, according to enrollment data published by the Kaiser Family Foundation.
Butterfield, at Consumers for Affordable Health Care, said the free plans will be a good choice for many with low incomes. He said the prospect of free coverage also may encourage young and healthy people with low incomes to sign up.
“There’s very clear research that indicates that cost is not a barrier to getting smarter care, cost is a barrier to getting any care. Anything we can do to remove cost barriers is a win,” Butterfield said.
Depending on how enrollment goes, the free bronze plans may help the individual marketplace by attracting the young and healthy. Those who don’t sign up for insurance are required to pay a penalty when they file their taxes.
“If it’s free, it becomes a question of ‘why not sign up?’ ” said Mitchell Stein, a Maine-based health insurance expert. “The administration’s actions may result in drawing more young, healthy people to the market.”
Stein cautioned that a zero-premium bronze plan may not be the best for everyone. People who are older or have more health needs may still wish to purchase a silver or gold plan, he said. Gold plans could be especially attractive for Mainers earning between 250 percent and 400 percent of the federal poverty level, because people in that category, while eligible for subsidies, do not qualify to receive other reductions that help people purchase silver plans.
Another unintended effect of the Trump administration’s decision will be an increase in ACA costs for the federal government. Paying insurers the cost-sharing reductions was less expensive, according to the Congressional Budget Office, and ending them will cost federal taxpayers an extra $194 billion over the next 10 years.
Kevin Lewis, president and CEO of Community Health Options, said enrollees need to shop carefully for plans because the cost of premiums has changed so much.
“They really need to shop and think through all the options,” Lewis said. “There are some really good values in bronze plans and gold plans.”
Community Health Options has about 30,000 of the 80,000 enrollees in the 2017 marketplace.
A bipartisan bill supported by Sen. Collins is attempting to restore the cost-sharing reductions, but it’s unclear whether it will pass Congress or whether Trump would support the deal. Collins also partnered with Sen. Bill Nelson, D-Florida, to introduce a reinsurance bill that would help stabilize the ACA marketplace.
The new premium structure has not resolved the problem of rising costs for people who earn more than 400 percent of the federal poverty level, or $97,200 for a family of four. Those who earn that much don’t qualify for subsidies and bear the full brunt of premium increases.
Butterfield said that until there’s an administration and Congress that’s intent on supporting the ACA, the unintended consequences of ending the cost-sharing reduction payments is not much comfort to those who want to expand insurance coverage. He said other efforts to undermine the ACA are more likely to have the desired effect. In October, Trump signed an executive order to create “association health plans” that may destabilize the individual market.
“There are some benefits to doing this, but this is a really messed up way to get there when you have an administration doing whatever they can to sabotage the law left, right and center,” Butterfield said. “This may have backfired on the Trump administration, but my concern is not everything they are going to do is going to backfire.”
Joe Lawlor can be contacted at 791-6376 or at: