Congressional Republicans have been trying to sabotage the Affordable Care Act (ACA) since it was first enacted. Under the Trump administration, those efforts have accelerated as the president and congressional Republicans seek to discredit the law. President Donald Trump has been clear about his goal, saying, “[T]he best thing we can do politically speaking is let Obamacare explode.” And Sen. Lindsey Graham (R-SC) put it equally bluntly, tweeting that “the ‘Collapse and Replace’ of Obamacare may prove to be the most effective path forward.”
These efforts to undermine the market have real consequences. While the ACA marketplace was poised for a successful year in 2018, efforts by President Trump and congressional leaders to sow uncertainty and hurt the markets are having real effects. To help people understand who is undermining the individual insurance market and how they’re doing it, the Center for American Progress Action Fund is tracking these sabotage efforts and their effects.
We will be updating this page periodically to account for new developments in these sabotage efforts. This page was last updated on June 14, 2017.
The ACA marketplace was working
Prior to these sabotage efforts by the president and Congress, the ACA marketplace was working well. Independent analysts have noted that insurers had better financial results in 2016 than in the prior year, and they are predicted to do even better in 2017, which has been borne out in the experience to date of a number of insurers. And the nonpartisan Congressional Budget Office (CBO) has said that the ACA marketplace would remain stable in the absence of legislative changes.
Looking at the data for 2017, economists and independent analysts agree that far from opponents’ claims of a market entering a death spiral, the ACA marketplace continues to do well. Despite significant premium increases in 2017, marketplace enrollment has been steady, and the net premium paid by the vast majority of enrollees was unchanged from 2016, thanks to tax credits provided by the ACA.
While premiums increased significantly in 2017, analysts believe this is a one-time occurrence resulting from earlier underpricing and the phaseout of transitional ACA programs that helped lower premiums in the first few years. And these increases have brought prices in line with the CBO’s estimate of premium levels in the individual market. As a result, predictions were that premium increases for 2018 would range from the high single digits to the low to mid teens.
President Trump and congressional Republicans are sabotaging the ACA marketplace
Forecasts of a positive 2018 for the ACA marketplace have been cast into doubt by deliberate efforts by the administration to sow uncertainty. Most significant are the Trump administration’s threats to withhold billions of dollars in required payments to insurers—known as cost sharing reduction (CSR) payments—and to undermine enforcement of the individual mandate. By reducing insurers’ funding and creating a costlier risk pool, these two issues alone could raise premiums almost 35 percent. There is also a question of whether the Trump administration will vigorously conduct outreach this year so that people know when and how to obtain coverage through the ACA marketplace, as well as the concern that Congress will pass an ACA repeal bill that devastates the individual insurance market. All this uncertainty has real consequences, as some issuers will choose to leave the market and others will increase prices to account for the possibility that these threats are carried out. The Center for American Progress has estimated that Trump’s uncertainty rate hike could cost people up to $1,000 next year in increased premiums. And as proposed rates are being filed, it’s clear that sabotage efforts are driving up prices.
Sabotage is carried out through two principle means: policy changes that hurt the ACA marketplace and threats by policymakers to inflict further damage to the market in order to scare away insurers and drive up prices.
Policies that are undermining the ACA marketplace
- On January 20, President Trump issued an executive order that directs agencies to take all legal steps to undermine the ACA, including by weakening enforcement of the individual mandate.
- As a result of the order, on February 14, the IRS canceled a new policy that would improve enforcement of the individual mandate.
- On January 26, the Trump administration canceled millions of dollars’ worth of outreach efforts to inform people of the availability of ACA health plans during a crucial moment of the enrollment period for 2017 coverage. The former chief marketing officer for HealthCare.gov estimated that this reduced enrollment by almost 500,000 people.
- On February 23, the Trump administration extended by another year an exemption from ACA requirements for certain health insurance plans. This policy change will keep healthier, less expensive enrollees out of the ACA marketplace, increasing prices for everyone else.
- On April 18, the U.S. Department of Health and Human Services (HHS) issued a so-called Market Stabilization rule. HHS acknowledged that “there is some uncertainty regarding the net effect on enrollment, premiums, and total premium tax credit payments” and that the effect of the rule on enrollment and premiums could be negative; HHS is certain, however, that the rule will transfer money from consumers to insurance companies. The rule will have many negative consequences, including:
- Lowering premium tax credits for enrollees, resulting in an increase in the amount they will pay for care
- Cutting the enrollment period in half, which will likely decrease enrollment
- Expanding the number of people subject to burdensome paperwork when they seek coverage after a qualifying event such as losing a job or having a child, which will decrease the number of healthy people who sign up for health coverage and raise costs for everyone
- On May 4, the House majority passed the American Health Care Act, which would result in 23 million people losing coverage and destabilize the individual health insurance market in states that contain one-sixth of the U.S. population.
- On May 5, House leaders refused to clarify in the annual spending bill that they will fully fund CSR payments, allowing President Trump to continue to threaten to cancel the payments and thereby exacerbating uncertainty for insurers.
- On May 22, the Trump administration asked the D.C. Court of Appeals for a three-month extension in House v. Price, a lawsuit brought by House Republicans during the previous administration to try to end CSR payments, which will extend uncertainty for insurers beyond the August rate filing date, guaranteeing massive premium increases in the absence of congressional action.
- On May 23, President Trump proposed in his budget to reduce funding for HealthCare.gov by 21 percent, which would decrease enrollment and make insurance more expensive.
Select threats from policymakers about the ACA marketplace
- June 7: Trump says that “Obamacare is in a total death spiral. The problems will only get worse if Congress fails to act.”
- May 22: Centers for Medicare & Medicaid Services (CMS) Administrator Seema Verma reportedly threatened to withhold payments unless insurers agreed to support the ACA repeal bill.
- May 19: Trump reportedly wanted to end CSR payments, telling an aide, “Why the hell would we [continue payments]?”
- May 11: In an interview with The Economist, Trump said, “You know when people say, ‘Oh, Obamacare is so wonderful,’ there is no Obamacare, it’s dead. Plus we’re subsidising it and we don’t have to subsidise it. You know if I ever stop wanting to pay the subsidies, which I will.”
- April 30: Trump tweeted, “You can’t compare anything to ObamaCare because ObamaCare is dead. Dems want billions to go to Insurance Companies to bail out donors.”
- April 23: Trump tweeted, “ObamaCare is in serious trouble. … it dies far sooner than anyone would have thought.”
- April 21: Office of Management and Budget Director Mick Mulvaney said that the administration will use CSRs as a bargaining chip to get funding for President Trump’s border wall.
- April 18: CMS Administrator Verma refused to tell insurers that CSR payments will be made.
- April 12: Trump threatened to withhold CSR payments to force Democrats to negotiate with him to replace the ACA.
- April 4: In an interview with The New York Times, Trump said, “[T]he easiest thing for me to do would be to not do health care. … If I don’t do that, other things happen. And I think it’s time that we have—because, look—what’s going to happen is Obamacare is not sustainable. It’s over. It will be anywhere from six months to a year. It’s over. It’s over.”
- April 4: During a congressional hearing, HHS Secretary Tom Price did not commit to funding outreach and enrollment efforts that would help ensure a large and healthy risk pool for 2018.
- March 24: Trump said, “[T]he best thing we can do politically speaking is let Obamacare explode.”
- March 20: HHS launched a new website to provide “relief” from the ACA.
- March 9: House Speaker Paul Ryan (R-WI), in discussing the ACA repeal bill, falsely claimed that the ACA markets are in a “death spiral.”
- January 12: Speaker Ryan falsely claimed that the ACA markets are in a “death spiral.”
As sabotage efforts continue, insurers, regulators, and industry analysts are clear that they’re having an effect.
Select comments from insurers on the effects of sabotage:
- America’s Health Insurance Plans (AHIP)
- “‘AHIP’s position and unwavering focus on cost-sharing subsidies remains the same—we need swift action and long-term certainty on this critical program,’ a spokeswoman for the group said. ‘It is the single most destabilizing factor in the individual market, and millions of Americans could soon feel the impact of fewer choices, higher costs and reduced access to care.’” (CNBC, May 22)
- “Funding for CSRs that benefit low and modest-income consumers (under 250 percent of the federal poverty level (FPL)) should be guaranteed and continue without interruptions at least through 2019. If health plans lack certainty about continued CSR funding, the only operational alternative is to incorporate CSR costs into premiums, which translates into an estimated 15-20 percent premium increase for all consumers in the individual market and higher costs to taxpayers. Even more important, without CSR funding certainty, it will lead to fewer, if any, plan choices for millions of consumers.” (Letter to Orrin Hatch, May 23)
- “‘We are notifying our states that if we do not have certainty that CSRs will be funded for 2018 by early June, we will need to evaluate appropriate adjustments to our filing,’ [Anthem CEO Joseph] Swedish said. Those adjustments could include resubmitting higher rates increases, ‘or exiting certain individual ACA-compliant markets altogether.’” (CNBC, April 26)
- “Without certainty around the critical issue of CSR funding in the coming weeks, Anthem likely will have no choice but to re-evaluate this filing which could include requests for additional rate increases, elimination of certain product offerings, or the exiting of certain individual ACA compliant markets altogether.” (Anthem’s Connecticut rate filing, May 17)
- Regarding leaving the ACA marketplace in Ohio, Anthem said that the “increasing lack of overall predictability simply does not provide a sustainable path forward to provide affordable plan choices for consumers.” (The Wall Street Journal, June 6)
- Association of Washington Healthcare Plans (AWHP), along with Washington State Insurance Commissioner Mike Kreidler
- “AWHP and my office strongly believe that market stability is achieved when issuers can engage in long-range planning in a stable financial and regulatory context. Uncertainty demands a more conservative pricing model for insurance, which means planning for the worst case scenario in terms of utilization and cost of care. Regulatory action should minimize unpredictability, uncertainty, and rapid change–factors that all contribute to instability in the insurance market. Currently, the most significant and immediate drivers of market uncertainty are the weakening of individual mandate enforcement, the uncertain status of cost-sharing reduction funding, and the lack of funding for broader market stabilization measures.“ (Letter to Secretary Price, April 8)
- BlueCross BlueShield of Tennessee
- “Given the potential negative effects of federal legislative and/or regulatory changes, we believe it will be necessary to price-in those downside risks, even at the prospect of a higher-than-average margin for the short term, or until stability can be achieved. These risks include but are not limited to the elimination of Cost Sharing Reduction subsidies (CSRs), the removal of the individual mandate and the collection of the health insurer tax.” (Letter to Tennessee Commissioner of Insurance Julie Mix McPeak, May 9)
- BlueCross BlueShield of North Carolina
- “Still, cost-sharing reductions have a big impact on North Carolinians. That became clear to our actuaries as we looked at proposed rates for 2018. If the federal funding continued, we would have filed an average increase of just 8.8 percent for 2018. That’s a difference of almost 14 percentage points—similar to what’s happening across the nation. … In other words, with the right actions coming out of Washington to stabilize the market, the rate increase from Blue Cross NC would have been between 5 percent and 6 percent. That looks a lot different from the 22.9 percent we filed.” (“Premiums to Rise in 2018 for Affordable Care Act Plans,” May 25)
- “We ultimately filed a 22.9 percent rate increase. We filed that rate based on what we know today. Part of what we know today is that there is no guarantee the cost-sharing reductions will be available in 2018. There is evidence they will not be available. The primary piece of evidence being the House bill, which does not contain an appropriation for the money. The biggest single reason for that rate increase is the lack of the federal funding for CSRs in 2018. We cannot assume nor should we that the money is going to be there based on what we know today. The president and the administration have made several statements about CSRs that don’t give any comfort that they will be available. … The information we’ve seen coming from the administration actually creates more uncertainty rather than creating greater certainty.” (Vox, May 30)
- Blue Shield of California
- “‘All this uncertainty is not helpful,’ warned Blue Shield of California Chief Executive Paul Markovich, who said health plans were being forced to make plans to raise premiums to account for the turmoil, jeopardizing Americans’ coverage.” (Los Angeles Times, May 22)
- CareFirst BlueCross BlueShield
- “[W]e have assumed that the coverage mandate introduced by ACA will not be enforced in 2018 and that this will have the same impact as repeal. Based on industry and government estimates as well as actuarial judgement, we have projected that this will cause morbidity to increase by an additional 20%.” (CareFirst BlueCross BlueShield’s Maryland rate filing, May 4)
- “‘Failure to enforce the individual mandate makes it far more likely that healthier, younger individuals will drop coverage and drive up the cost for everyone else,’ [CareFirst CEO Chet] Burrell said.” (CNN, May 5)
- Community Health Options
- “The individual market rates [of 19.6 percent] also incorporate within the forecast an increase in our rates due to the uncertainty of the marketplace, including the known non-enforcement of the mandate and the resulting expectation of a shrinking risk pool.” (Portland Press Herald, June 5)
- “A spokeswoman for the company, which is a subsidiary of New York insurer EmblemHealth, said the proposed rates reflect legislative and regulatory uncertainties surrounding the ‘weakening of the individual mandate’ and the funding for cost-sharing reduction subsidies, as well as higher medical and pharmacy costs and increased utilization.” (Modern Healthcare, May 10)
- Evergreen Health
- “In Maryland, insurer Evergreen Health … asked for a 27.8% average rate increase for individual plans on and off the state’s ACA marketplace. About half of that hike is driven by uncertainty over the future funding for cost-sharing reduction payments, enforcement of the penalty for not having insurance, and losses from the ACA’s risk adjustment program, CEO Dr. Peter Beilenson said.” (Modern Healthcare, May 10)
- Harvard Pilgrim
- “While we remain committed to the principle of everyone having access to affordable coverage, we can only continue to participate in the [ACA] exchanges if there is stability in this market, and that will only come with immediate action from Washington.” (Portland Press Herald, June 3)
- Molina Healthcare
- “If the CSR is not funded, we will have no choice but to send a notice of default informing the government that we are dropping our contracts for their failure to pay premiums and seek to withdraw from the Marketplace immediately. That would result in about 650,000 to 700,000 people losing insurance coverage in 2017, and we would not participate in [the] Marketplace in 2018 resulting in over 1 million Americans losing health insurance coverage.” (Letter to congressional leaders, April 27)
- “‘If the federal government’s full CSR funding commitments are in jeopardy, we believe that the viability of the exchange market is in immediate jeopardy of failing,’ wrote Peter Adler, who oversees Molina’s plans in Washington.” (Los Angeles Times, May 22)
- New Mexico Health Connections
- “‘Uncertainty breeds higher costs,” [Martin Hickey, CEO of New Mexico Health Connections] says. ‘We have to plan for the worst case scenario until it finally gets decided. We have a lot of things to focus on, we’re grinding out hours over rates, and it doesn’t help that people are running around with zombie bills.’” (Vox, May 8)
- UPMC Health Plan, Highmark Health Plan, Independence Blue Cross, Geisinger Health Plan, and Capital Blue Cross, along with Pennsylvania Insurance Commissioner Teresa D. Miller
- “Putting aside the larger political debate over the ACA, we would like to more immediately address the threat of, and uncertainty related to, rapid changes and a lack of funding. Specifically, the most immediate drivers of instability are the weakening of the individual mandate, the uncertain status of funding for the cost sharing reductions and the absence of funding for overall market stabilization measures. Additional regulatory action should be designed to minimize disruption and instability. The absence of certainty regarding market parameters, and in particular those with direct financial consequence, magnify the risks of market participation in a way that issuers and regulators cannot ignore. This, we fear, could undermine the progress we have made, reduce coverage options and significantly increase prices for millions of vulnerable Pennsylvanians (and others throughout the nation).” (Letter to Secretary Price, April 26)
Select comments from policymakers, regulators, and analysts on the effects of sabotage
- American Academy of Actuaries
- “Actions need to be taken to reduce legislative and regulatory uncertainty and to improve market stability. Continuing uncertainty could lead to additional insurers exiting the market, leaving consumers with fewer insurance choices—or none at all. Improving the market would entail policymakers funding CSR reimbursements, enforcing the individual mandate, directing external funding to offset premiums, and avoiding destabilizing actions.” (“Steps Toward a More Sustainable Individual Health Insurance Market,” April)
- “I think it is the case that the uncertainty we are dealing with is adding to the premium increases this year, said Cori Uccello [senior health fellow] of the American Academy of Actuaries.” (Associated Press, May 17)
- Kevin Brady (R-TX), chairman of the House Ways and Means Committee
- “‘We should act within our constitutional authority now to temporarily and legally fund cost-sharing reduction payments as we move away from Obamacare,’ Mr. Brady said. ‘Insurers have made clear the lack of certainty is causing 2018 proposed premiums to rise significantly.’” (The New York Times, June 8)
- Congressional Budget Office
- “Several factors could lead insurers to withdraw from the market—including lack of profitability and substantial uncertainty about enforcement of the individual mandate and about future payments of the cost-sharing subsidies to reduce out-of-pocket payments for people who enroll in nongroup coverage through the marketplaces established by the ACA.” (CBO Analysis of American Health Care Act, May 24)
- Connecticut Insurance Department
- “Carriers have filed to take into consideration the perceived lack of strong enforcement of the individual mandate, the lack of stability of the risk adjustment mechanism and the evolving participation of carriers in the market.” (“Health Insurance Rate Request for 2018,” May 8)
- Maine Bureau of Insurance
- “‘The uncertainty is extremely problematic,’ said Eric A. Cioppa, the superintendent of the Maine Bureau of Insurance, who said carriers could not fix their rates without knowing the fate of those subsidies. ‘If they don’t get a subsidy, I fully expect double-digit increases for three carriers on the exchanges here.’” (The New York Times, June 4)
- National Association of Insurance Commissioners
- “As long as the court case, House v. Price, remains unresolved and federal funding is not assured, carriers will be forced to think twice about participating on the Exchanges. Even if they do decide to participate, state regulators have been informed that the uncertainty of this funding could add a 15-20% load to the rates.” (Letter to congressional leaders, April 19)
- “Those decisions are being made now, and the rates and forms are being filed in May, June, mid-July—July 17th is the last day. so (sic), decisions have to be made by then, or else the companies are going to start building in what we call ‘loads’. They are just adding more rate increases, just to kind of hedge their bets, if they stay in at all.” (“The Individual Market at a Crossroads,” May 5)
- Oliver Wyman Health
- “Payers may want to revisit their product portfolio to ensure that the plans they will be bringing to market in 2018 reflect the possibility that CSR will not be funded. They should also be prepared for the possibility that competitors could react to defunding by raising rates on silver plans, and that could dramatically change consumers’ preferences.” (“Potential Impact of Defunding CSR Payments,” May 12)
- Pennsylvania Insurance Department
- “Information provided by insurers shows the extent to which instability and changes would impact Pennsylvania’s 2018 health insurance rates. This proves what we already know—instability caused by adverse action from the federal government will do nothing but hurt consumers who are stuck in the middle. The 506,000 Pennsylvanians with Affordable Care Act-compliant plans in the individual market deserve single-digit rate increases like the ones most people will see if Congress and the Trump Administration choose not to risk consumers’ health and financial well-being by jeopardizing the stability of these markets.” (Insurance Commissioner Teresa Miller, June 1)
- Rick Diamond, former actuary with the Maine Bureau of Insurance
- “Health insurance actuaries build rates by estimating claims costs and administrative expenses, and then they tack on a profit margin, explained Rick Diamond, a former actuary with the Maine Bureau of Insurance who is now a consultant. It’s much more difficult for an actuary to make those assumptions when the rules of the market could change at any time, Diamond said, so insurers will ‘err on the side of caution and make sure they don’t lose their shirts.’” (Modern Healthcare, May 10)
- S&P Global Financial Services Ratings Group
- “If the CSR uncertainty is not resolved … and insurance companies want to participate and add in a buffer or a load, that number could again take us back to the rates we have seen in 2017. So, you are looking at 20% or higher rate increases again.” (Director Deep Banerjee, May 5)
- Tennessee Department of Commerce & Insurance
- “Absent that [CSR] funding, I don’t know if we’re going to have much participation in the exchange market in 2018.” (Tennessee Commissioner of Insurance Julie Mix McPeak, June 7)