“In addition, the administration is proposing other changes that could to lead to the sale of cheaper and less comprehensive policies at a cost of reducing consumer protections. States would gain more flexibility in defining what constitutes essential health benefits. Individuals would be allowed to purchase health insurance across state lines, which would give people in a state with tougher regulations the ability to purchase from another state where regulations are lower and insurance is cheaper. Regulations governing small employers that group together to create their own plans (called “association health plans”) would be modified to permit less comprehensive policies. And the sale of short-term policies would be permitted [13], [14]. Such plans do not have to cover mandated “essential health benefits” under the ACA or comply with pre-existing condition regulations. They are currently limited to no more three months, but the Trump Administration is discussing extending that time period, perhaps up to a full year [15]. Overall the result would be a market containing some bare-bones plans, which are mostly attractive to healthy people. By drawing these healthy individuals away from the exchanges, premiums on the exchanges would likely increase.

“The cost-sharing subsidies have been one of the most contentious issues – but also the one on which prominent members of Congress are striving to reach a bipartisan solution. The most common plan under the individual exchanges, called Silver, has annual deductibles that average more than $3000 for those with individual coverage [16]. Since costs like these are unaffordable to many people purchasing on the exchanges, the ACA also specified sharply reduced cost sharing for those with incomes below 250% of the FPL. The insurer pays them and is reimbursed by the federal government. However, the ACA legislation did not include a funding source for these subsidies, and thus, a federal court ruled them unconstitutional. The Obama administration was in the process of appealing the court ruling when President Trump was elected, and he chose not to continue with the appeal.

“Loss of the cost-sharing subsidies alone means that premiums will rise by an estimated 19% in 2018, varying from 7% to 38% by state [17] – and by far more (between 35% and 90%) over a three-year period [18]. This is on top of other premium increases resulting from higher than anticipated service utilization. (Premium increases from repeal of the individual mandate will not occur until 2019.) While the size of premium increases varies a great deal by state, they were substantial during the 2018 open enrollment period (which ended on 15 December 2017 in the federal marketplace) – an average increase of 34% for Silver plans [19]. Elimination of the subsidies, however, may have unintended consequences. This is because insurers raised premiums in Silver plans the most to offset anticipated cuts to cost-sharing subsidies, which only apply to those plans in the 4-tier exchange plans (Bronze, Silver, Gold, Platinum). Premium subsidies to those below 400% of the FPL, which are required by law and are not affected by this executive order, are calculated using the price of the second cheapest Silver plan. Thus, subsidies will increase for many consumers, allowing them to afford more generous Gold-tier plans, should they choose to purchase them. Interestingly, it is estimated that the net effect of elimination of the cost-sharing subsidies will be to increase federal spending by an average of $3 billion a year over the next ten years. This is because the increase in premium subsidies resulting from higher premiums for Silver plans will exceed the reduction in cost-sharing payments made by the federal government to health insurers [20].

Source: Thomas Rice, Lynn Y. Unruh, Ewout van Ginneken, Pauline Rosenau, Andrew J. Barnes, Universal coverage reforms in the USA: From Obamacare through Trump, Health Policy, Volume 122, Issue 7, 2018, Pages 698-702, ISSN 0168-8510, https://doi.org/10.1016/j.healthpol.2018.05.007. http://www.sciencedirect.com/science/article/pii/S0168851018301544