Imagining Obamacare in 2020

Fast forward three years. This is what health care will look like.

This is an effort to imagine the Affordable Care Act in 2020, projecting forward from what the Trump administration is doing and says it will do to change the law. As the saying goes, predictions are hard — especially about the future. But think of this more as informed extrapolation; this is what Obamacare will likely look like if the Trump administration keeps going down the path it is on.

As the calendar turns from 2019 and 2020, the Affordable Care Act is in disrepair — but it’s still here.

Over the past three years, Republicans never found a plan to repeal and replace the health care law that they could actually pass. But the dream that they could still end the law entirely prevented any bipartisan measure to stabilize the law from being enacted.

President Donald Trump, meanwhile, has nicked and cut the ACA wherever he could. He’s kept the flow of money to health insurers for cost-sharing reductions shut off. His administration has all but ended enforcement of the individual mandate. Every fall, his health department spends one-tenth on Obamacare advertising and outreach that Trump’s predecessor did. The president still tells Americans as often as he can that Obamacare is done, it’s finished, and will soon be wiped from the earth.

He has done his best to hasten that end. Millions of Americans are now buying short-term health insurance for a full year — plans where insurers can discriminate based on a person’s medical history and offer a limited set of benefits. Without the mandate penalty, it’s as good as ACA coverage as far as the federal government is concerned. As a result, premiums for traditional ACA coverage — the kind that can’t discriminate against preexisting conditions — have shot up instead of plateauing.

Trumpcare, as some have begun calling it, appears to be markedly less stable than Obamacare was in 2017. The law’s insurance markets have shrunk, becoming increasingly concentrated with sicker people who need health insurance no matter what and lower-income people who receive the most generous federal aid under the law.

When people logged onto Healthcare.gov in the fall of 2019, they still had insurance options, though more and more of them found only one insurance company to choose from. The people whose income qualified them for the ACA’s tax subsidies could still find affordable coverage, available for as little as $150 a month. But when somebody making too much for that assistance checked their choices — like a single woman making $75,000 a year — they didn’t see any prices that most middle-class people would be comfortable paying every month.

The people who knew they need health care this year paid up anyway and took the blow to their bank account. Others sought the less-comprehensive coverage Trump has made more readily available. They did find lower premiums but they must hope that they don’t receive a devastating diagnosis or have an accident over the next 365 days.

Still others took advantage of the Trump administration’s decision to stop enforcing the individual mandate and have simply gone without coverage declined to pay the fee.

The ACA is now some hybrid of a high-risk pool and a Medicaid-plus program, a market where the sickest and poorest Americans get coverage. The rest of America has moved to a secondary market of Trump’s own making, one with all the flaws of individual insurance before the health care law was passed in 2010.

As a result, the ranks of the uninsured have ticked up in recent years, after falling from 2014 to 2017.

There could have been a better future for Obamacare. It would not quite be the ideal that its authors imagined, but it would work as an effective safety net, a program that helps make health insurance affordable for tens of millions of lower-income Americans. It could function, it could be stable, and it could be improved

But that’s not the world we live in.

“Had we had a different administration, we would be there today,” John Bertko, a former Obama administration official who is now the chief actuary for California’s Obamacare marketplace, told me back in October 2017. “But the disruption and the discontinuity this administration has introduced has probably pushed us off.”

Where Obamacare was in 2017

In reality, even before Trump, Obamacare was troubled. The law did a good job of bringing in the heavily subsidized, lower-income people into the markets. But the law had struggled to keep insurance affordable for people who don’t receive that federal assistance.

“The safety net features of the ACA are more or less locked in place,” John Graves, a health policy professor at Vanderbilt University, told me. “Where things are fraying are the backstop element of the ACA.”

These numbers tell the story: People who received the most assistance were far more likely to sign up on the law’s marketplaces than people who received less aid or none at all.

 Avalere

Some of those higher-income people bought insurance off the law’s markets. But there, too, evidence suggested that people who didn’t receive federal assistance were starting to fall off as Trump took office and rates were still rising.

 WSJ/Oliver Wyman

The ACA had become, in practice, a way to insure lower-income Americans and to protect people against discrimination for their medical history. But the tradeoff was that insurance had become unaffordable or undesirable for the younger and healthier people asked to pay higher rates and for people who didn’t receive the law’s generous financial aid.

“That’s not a terrible way to think about social insurance,” Craig Garthwaite, a conservative health economist at Northwestern University, said. “But it is below the expectations or the hopes that I had for the marketplaces, for sure.”

But, within that context, the law was reaching an equilibrium. Health plans knew what the Obamacare market looked like and they were pricing accordingly. After a few years of more dramatic rate hikes, plans were looking at single-digit increases as they went into 2018. A built-in market, upwards of 10 million people, was receiving substantial aid and was therefore protected from these premium increases.

And Democrats had plans to fix its flaws and build on its successes. In the 2016 election, Hillary Clinton, the Democratic nominee, had a plan to help lower out-of-pocket costs for more Americans, add a public option to the law’s marketplaces, and allow older Americans 55 and over to buy into Medicare, which would have made the remaining Obamacare markets younger and healthier.

But then Trump won.

How Trump made Obamacare into Trumpcare

In his first year, Trump pursued a failed bid to repeal and replace the ACA. He stopped payments to health insurers to compensate them for the discounts they are required to offer lower-income Americans on out-of-pocket costs. He also cut advertising for Obamacare enrollment and outreach. He sowed confusion about whether the ACA’s individual mandate would be enforced. Policy experts and health insurers agreed that the president had pushed 2018’s premiums substantially higher than they otherwise would have been.

He used his bully pulpit every day to tell the American people that this federal program was bad and would soon be gone. “Obamacare is finished, it’s dead, it’s gone,” Trump said in October 2017. “There is no such thing as Obamacare anymore.”

The president also started to open routes for people to buy coverage that didn’t comply with the ACA’s mandates in the executive order he signed in October 2017.

That was just year one.

“So far, the Trump administration has not shown any interest in running the program effectively,” Larry Levitt, senior vice president at the Kaiser Family Foundation, told me in 2017. “The marketplace requires some amount of care and feeding to succeed.”

With every nick and cut, the White House drove costs for Obamacare ever higher, hastening trends that were already underway, but that everyone seems to agree could have been reversed.

“I can’t tell you that life would have been better with Hillary Clinton when it comes to Obamacare,” Bob Laszewski, a consultant with close ties to the insurance industry who was the most bearish person I talked to about the law, told me. “But I think we would have had a much better chance to deal with the problem.”

Instead, the Trump administration slashed Obamacare advertising by 90 percent and funding for its enrollment assistance program by 40 percent. Pro-Obamacare advocates estimated that enrollment in the law’s markets would decline by as many as 1 million people next year as a result. The people who will drop out are healthier, leaving a sicker and more expensive market behind.

Obamacare’s individual mandate had not quite been as effective at bringing people into the market as hoped, but it was nevertheless an important piece of the law. But top Trump officials suggested that the mandate either wouldn’t be enforced at all or the administration will carve out large exemptions.

Here again, the people who will leave the market under a weaker mandate are younger and healthier, leaving an older and sicker pool behind.

“The mandate is so fundamental conceptually to being able to sell insurance under these market rules, anything that relaxes it is going to have a destabilizing effect,” said Elizabeth Carpenter, senior vice president at Avalere.

Trump also issued an executive order, directing his administration to issue new regulations that expand association health plans and short-term insurance, neither of which are subject to some of Obamacare’s core insurance rules, like the law’s mandate for plans to cover certain essential health benefits.

Short-term insurance in particular effectively reconstructed the pre-ACA markets, allowing insurers to deny people coverage based on their medical history and cover a limited set of services to appeal only to younger and healthier customers. If the Trump administration deems those policies in compliance with the mandate — marrying the weak mandate with deregulated insurance — some experts believe the consequences could be substantial.

“That’ll suck the healthy people out of that market so fast,” Laszewski said.

As a result, by 2020, enrollment on the ACA markets has stagnated. But there is a baseline for Obamacare, given its structure, that Trump couldn’t push the law below. Millions of people who receive subsidies to make insurance affordable have stayed.

“You’re likely to see stagnant if not negative growth in the individual market and continued uncertainty,” Carpenter said. “Fundamentally, at the end of the day, the exchange market will end up being a low-income subsidized market.”

Health insurers didn’t abandon the law’s market. The incentives were too good: They can price their rates as high as they want, and those 9 million people should continue to buy their plans because they are protected from the hikes by the federal subsidies.

So at least one health insurance plan is still available in every county. But it hasn’t been pretty, with the Trump administration sowing uncertainty and doing as little as it can to help sustain the market. The scramble we saw in 2017 to fill counties that were at risk of having no insurers — while successful — has become routine.

“I think it’ll be hard for there to be large swaths of the country to not have at least one insurer,” David Anderson, a health policy researcher at Duke University said. “But there could be an annual mad dash that we get used to fill empty counties.”

This is the status quo that Trump has created: A bifurcated market, where sicker and poorer people stayed in Obamacare, and healthier, middle-class people exited. Some states that run their markets with minimal federal involvement, like California and New York, have been insulated from the White House’s meddling. The rest have been left to the president’s whims.

The people most at risk are higher earners who need real health insurance. If you’re an older and middle-class person who makes too much for the ACA’s assistance but needs real health insurance, you’ve been left to choose between paying rising premiums on the Obamacare markets — rates that Trump has driven higher — or you take your chances with cheaper, but less comprehensive, coverage that Trump brought back.

It is ugly. It is inefficient. But that’s the health care system Trump has built.

“What we’re talking about here, this thing over a period of years, transitioning to a high-risk pool versus short-term medical,” Laszewski said. “Can it work? Yeah, we just stashed the sick people in Obamacare. It’ll become a backwater Medicaid.”

Meanwhile, the next presidential election is 11 months away.