The Biggest Issue in Healthcare Reform Today

Now that the GOP’s plan to remake healthcare by fiat seems to be failing, the Trump administration has once again pulled out one of its aces in the hole. Funding of cost sharing subsidies is the biggest issue today in the debate, viewed by the health insurance industry as “the single most destabilizing factor in the individual market.” Based upon a court ruling made during the Obama administration, this funding can be cut off at any point.

The Commonwealth Fund recently reported that 58% of Americans purchasing coverage on the exchange receive these federal cost sharing subsidies, cutting their share of costs from the 30% typically required under a silver plan to as low as 15%. If funding is taken away plan premiums would still be subsidized, but costs paid by patients at the time care is rendered would not be. For eligible Americans earning less than 250% of the federal poverty level this will make out-of-pocket costs untenable and many will drop coverage, upsetting the market further.

Trump’s tactic of waiving this threat is nothing short of bullying. And insurance carriers are becoming increasingly concerned that they can’t predict whether it will happen. They can make decisions on known factors but uncertainty leads to conservatism. With loss of subsidies, payments would have to be recouped and they may not have a way to do so. As a result, it is hastening the insurers’ flight from offering products on the exchanges. Meanwhile subsidy beneficiaries, many of whom voted for Trump, are also growing increasingly uneasy.

Last week Senator Schumer proposed a bipartisan effort to develop fixes to healthcare. Can we all call our congressperson and encourage this initiative? We need to try to take politics out of healthcare.

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