The recent attempts to rollback provisions of the Affordable Care Act will hit Arkansas particularly hard because of our unique – and extremely successful – health insurance system.
Last week, President Trump announced two executive decisions that will cause enormous amounts of turmoil in the insurance marketplace, and undermine the coverage gains made under the Affordable Care Act (ACA). Combined with the administration’s previous decision to gut funding for outreach and enrollment assistance, these actions will have a devastating impact on Arkansans’ ability to afford comprehensive health insurance coverage.
End of Cost Sharing Reductions
Last week, the Trump Administration decided to end cost-sharing reduction (CSR) payments to insurers that keep out of pocket costs affordable for people with low to moderate income. An analysis by the non-partisan Congressional Budget Office (CBO) found that ending CSR payments would:
- Raise premiums on the marketplace by 20% on average
- Cause some insurers to withdraw from the individual marketplace entirely
- Increase the uninsured rate
- Cost the federal government more money than making the CSR payments
That will send insurance costs skyrocketing across the country, but in Arkansas, it will be particularly devastating. That’s because the Arkansas Works program, which covers consumers at or near the poverty level, uses Medicaid funding to buy private insurance on the insurance marketplace.
This arrangement has led to Arkansas having historically low uninsured rates and much lower premium increases than other states have experienced in recent years. For example, last year, premiums in Arkansas increased an average of 2 percent, compared to neighboring states like Oklahoma and Tennessee that saw premium hikes greater than 60 percent. Low-income Arkansans on Arkansas Works have also seen a reduction in emergency room visits, which reduces uncompensated care in hospitals and saves the state money. For more information on the positive impact of Arkansas Works, please see this brief explanation of expanded coverage in Arkansas.
Insurers in Arkansas have already asked for double-digit rate increases for next year in response to the announcement that federal CSR payments will end In the future, some insurers might decide to exit the market entirely.
Update: In a news story on October 17, Governor Hutchinson shared that the Medicaid program will continue to cover premiums for people who have insurance through Arkansas Works. He said it wouldn’t affect the state budget, at least for now, because premium increases will be offset by ending cost-sharing reduction payments (which the state would have paid a small part of). An Arkansas Democrat-Gazette article also references comments from DHS that the state will spend less by removing 60,000 people from the program due to changes in the eligibility requirements to be implemented in January 2018. However, those people may now have to buy insurance on the private marketplace, where costs have risen because of the new White House policy.
Impact of the Executive Order
Also, last week, President Trump issued an executive order that instructs federal agencies to find ways to:
- Allow insurers to sell plans which don’t cover essential health benefits like maternity care or mental health treatment
- Roll back limits on selling short-term health insurance plans
- Expand the sale of skimpier “association health plans” that are often provided to small businesses.
The combined impact of these changes would be to totally destabilize the individual marketplaces, and expose more consumers to plans with fewer benefits and more cost-sharing requirements. Worst, these plans could charge premiums based on health status, which could price people with pre-existing conditions out of insurance altogether.
It’s also worth noting that there is bipartisan agreement from the National Governor’s Association and the National Association of Insurance Commissioners against offering bare-bones health plan that won’t offer adequate coverage.
These actions are totally unnecessary and harmful to families who need affordable coverage and to health care providers like doctors, nurses, and our hospitals. The level of uncertainty surrounding these decisions is harmful for the state economy, as well as for families who will face new barriers to coverage.
Arkansas leaders should speak out against this unnecessary change that will hit our state particularly hard, and members of Congress should act immediately to fix this issue before millions of Americans are left uninsured.