President’s Actions on Healthcare Threaten Health Coverage Affordability, Balloon Federal Deficit

October 13, 2017
Statement from Close the Gap Idaho

Over the last two days, the President took actions that will raise individual and small group market premiums, destabilize the health insurance marketplace and lead to dramatic cost increases for Idahoans with pre-existing conditions. An executive order (EO), issued by the President on October 12, followed by the decision to end cost-sharing payments to insurance companies that support affordable coverage for millions of Americans, could unravel the health insurance marketplace in Idaho. Approximately 95,097 Idahoans receive coverage on the Your Health Idaho health insurance exchange.

Yesterday’s EO directs federal agencies to consider allowing parallel, “non-compliant” association health plans and short-term catastrophic insurance plans, to operate outside of state insurance marketplaces. These parallel market plans could offer skimpier coverage and providers could charge different rates, depending on a person’s health status. This action could negatively impact over 660,000 Idahoans with pre-existing conditions that would likely face huge rate increases when younger, healthier people leave the current marketplace.

“This recent health care executive order jeopardizes the ability of thousands of Idaho cancer patients, survivors and those at risk for the disease from being able to access or afford health insurance,” said Luke Cavener, Idaho government relations director for the American Cancer Society Cancer Action Network (ACS CAN).“Exempting an entire set of health plans from requirements to cover certain benefits like prescription drugs or specialty care and allowing expansion and renewability of bare-bones, short-term plans will split the insurance market and put many Idahoans at risk in the event of an unexpected health crisis,” Cavener concluded.

The administration’s subsequent decision to end cost-sharing reductions (CSR)to insurers that keep health insurance affordable for consumers would lead to skyrocketing costs, losses in coverage and could potentially increase the federal deficit. In a Congressional Budget Office (CBO) analysis released in August that looked at the impact of ending CSR payments, the CBO concluded such action would raise federal budget deficits by $6 billion in 2018, with deficits reaching $194 billion over 10 years; raise marketplace premiums for “silver-level” plans by 20 percent on average; raise the number of uninsured Americans by 1 million in 2018; and raise the share of the nation’s population living in areas with no marketplace insurers by 5 percent in 2018.

The President’s actions will also have severe consequences for the state of Idaho. The Idaho Department of Insurance has already indicated that silver plan premiums will be 40 percent higher in 2018 because they are priced to cover the loss of CSR payments. Department of Insurance director, Dean Cameron, indicated that if the federal government would commit to fund CSR payments, premiums would look drastically better, and would be “reduced by over 20 percent.”

“While we can’t be certain how the President’s actions will be implemented, further instability could well upend the individual and small group insurance markets, leading to higher costs for lower quality coverage for a majority of Idahoans,” said Brian Whitlock, CEO of the Idaho Hospital Association. “Idahoans need more, not less certainty about the availability and affordability of their health coverage. We are talking about policy choices that impact one-sixth of the country’s economy. We need our healthcare system to be a fine-tuned machine, and these recent actions are throwing a wrench in the system.”