Obamacare didn’t fail. It didn’t get repealed. It didn’t collapse. After one year of President Trump, Obamacare doesn’t really look all that different than it did under President Obama.
After a year of headlines about “sabotage” — some of which ran here at Vox — and a year in which Trump officials dramatically cut advertising for the law and pulled payments to insurers that risked driving them out of the market, the Affordable Care Act seems to be doing more or less fine.
Don’t be mistaken: The Trump administration didn’t help matters. Working overtime to repeal the law, telling the American people that the ACA is dead and gone, slashing advertising by 90 percent and enrollment support by 40 percent, ending key payments to insurers while Congress refused to appropriate them and take the issue off the table — the Republican Party and Trump did everything they could throughout 2017 to undermine Obamacare.
But we learned that the ACA is pretty resilient. The Trump administration released a report on Tuesday saying that 11.8 million Americans enrolled in health coverage for 2018 through the law’s insurance marketplaces, down just a tick from the 12.2 million sign-ups in 2017.
Sure, Obamacare’s marketplaces are not exactly, on the whole, a robust and competitive market. For millions of people, insurance is still unaffordable. But for millions of others, the law is providing them with meaningful financial protections against medical bankruptcy.
“At this point, the marketplaces are really functioning more broadly in their role as an extension of the public safety net than in their role as a competitive market,” John Graves, a health policy professor at Vanderbilt University, told me.
But for the 10 million or so people who do receive financial help, they seem to be here to stay — and they’re still coming in: 27 percent of this year’s Obamacare customers were new, according to the Centers for Medicare and Medicaid Services. The law’s structure protects them from premium hikes and gives insurers a guaranteed customer base that encourages plans to stay in the market, even if the patients are older and sicker than they would like.
This is reflected in the 2017 numbers: 11.8 million enrollees, 83 percent of whom received premium subsidies, which left them with an average monthly premium of $89.
“Overall, this report suggests a remarkably stable market, which is hardly the sense you’d get from the political debate,” said Larry Levitt, senior vice president with the Kaiser Family Foundation.
Why Trump’s sabotage didn’t derail Obamacare
In one remarkable way, a step that Trump took that appeared to undercut the ACA actually might have helped it.
The president decided last fall to end payments to health insurers known as cost-sharing reductions, which compensate them for reducing the out-of-pocket maximums of their lowest-income patients. It’s true that Trump was able to do so because House Republicans had been succeeding in their lawsuit to declare the payments unlawful without congressional approval.
But the White House should have known that the move would drive up the cost for federal taxpayers and could risk pushing insurers away from the market, leaving some people without any insurance options. Not to mention, Republicans in Congress have always had the option of simply approving the payments and rendering the issue moot. They just refuse to do so because they don’t want Obamacare to function as it’s supposed to.
What Trump might not have known, though, is how insurers and state insurance commissioners would respond. They found a clever workaround: Obamacare’s subsidies are based on the cost for one type of plan: a silver plan, which covers 70 percent of medical costs. Customers can also purchase bronze (which cover 60 percent of costs) or gold (80 percent) or platinum (90 percent) plans.
What insurers did, working with state officials, is jack up the rates for only silver plans to make up for losing the cost-sharing payments that Trump ended. That increased the size of the subsidies Obamacare customers received, which often made bronze plans free for people or made gold plans even cheaper than their less generous alternatives.
Nobody has covered this issue better than David Anderson at Duke University. Using the new CMS data, he created this nifty map, which shows that in some counties in states that aggressively deployed this strategy, more than half of customers purchased a gold plan for 2018.
“The numbers clearly show that the termination of CSR funding largely backfired if the intent was to undermine the marketplace,” Levitt said. As previously noted, the boost to the premium subsidies led to customers paying less out of pocket every month than the year before.
As for the administration’s other actions to undermine the law, namely dramatic cuts to advertising and outreach, it’s more difficult to discern why they didn’t have a more negative effect. Trump officials defended those efforts as inefficient relative to their costs and touted this enrollment as the most cost-effective yet. But CMS also pulled out of relatively cost-free events with state-level activists.
In an ideal world, enrollment would keep going up and 12 percent of Americans are still uninsured — significantly lower than when the law was enacted, but far from universal coverage. But absent that, and despite these headwinds, the ACA markets are proving quite stable.
There is a working theory with some academic support, described to me by a state health care official last year, that at a certain point, a program becomes so ingrained in the public consciousness that it no longer requires robust outreach. We may be reaching that point with the ACA. Three-fourths of the marketplace’s customers were returning. They know the deal by now, and they want health insurance.
“The demand for health insurance is pretty sticky,” Katherine Hempstead, a senior adviser at the Robert Wood Johnson Foundation, told me. “Most people don’t give it up lightly.”
This is what Obamacare is now
One group is left out in the cold under what Obamacare has become: People making more than 400 percent of the federal poverty level ($81,000 for a family of three) don’t receive any help from the federal government to buy their insurance. They bear the full brunt when insurers hike their premiums to account for Trump-inspired uncertainty or the GOP’s repeal of the individual mandate.
The two parties have two different answers for them: Democrats want to increase both the subsides that people receive and the eligibility limits so more people get them. Republicans, under regulations being proposed by the Trump administration, want to expand non-Obamacare insurance, which might be cheaper but doesn’t afford people the same financial protections if they have a medical emergency or a preexisting condition.
“There is an untenable affordability gap between low- versus moderate-income people in the individual market,” Hempstead said. “The current policy proposals are designed to make it easier to have no insurance or inferior insurance, but many would consider that to be the wrong way to fix the problem.”
We also haven’t yet seen the full impact of the administration’s proposal to expand association health plans or short-term insurance plans, neither of which have to abide by the ACA’s rules for preexisting conditions or the repeal of the individual mandate. The net effect is expected to be that fewer young and healthier people will buy insurance, which would in turn drive up costs even more. Young customers started to fall off in 2017; it could only get worse from here.
Nevertheless, 2017 provided a clearer picture of what Obamacare is likely to be: a relatively stable market for lower-income people to buy insurance with generous federal assistance. It is not a robust market where competition drives down prices. But it works, for what it is, and the law’s Medicaid expansion (which covers upward of 15 million people) and its protection for people with preexisting conditions will remain on the books as long as the Republican dream of repeal is dead.
There is little Trump can do to totally change that trajectory. He can work at the margins, and Trump officials have indicated, for example, that they might evaluate whether they should block the strategy used by insurers and states to boost the financial aid people received. They can approve Medicaid work requirements for the expansion population, which will likely cull people from the program. The regulations expanding non-Obamacare insurance will be finalized in the coming months. There will likely be an annual fall scramble to make sure there is at least one insurer in every county.
Paradoxically, Obamacare has become more popular than ever under Trump, yet many Americans believe the law will soon fail. The truth is Obamacare is mostly working as a social safety net to provide nearly 30 million people with health insurance.
It has not been the path to universal health coverage that its authors might have hoped — and it isn’t likely to work any better under a hostile White House. But it isn’t, whatever the president might say, imploding.