What would an Affordable Care Act repeal mean in New Hampshire 

  • Kelli Midgley, center, an English teacher from Baltimore, joins people gathered at the Supreme Court to honor the late Justice Ruth Bader Ginsburg in Washington, Saturday, Sept. 19, 2020. Ginsburg's death leaves a vacancy that could be filled by a more conservative justice by President Donald Trump. (AP Photo/J. Scott Applewhite) J. Scott Applewhite

Monitor staff
Published: 9/30/2020 4:58:05 PM

It’s no longer a distant hypothetical: the Affordable Care Act, the sweeping health care bill signed by President Barack Obama in 2010, could be struck down within the next year.

A challenge to the law snaking through the federal appeals system the past two years will land at the Supreme Court for oral arguments in November. If successful, that challenge could see part or all of the law eliminated by the court on constitutional grounds in 2021.

So what would the fall of “Obamacare” mean for the Granite State? One possibility, say some health care analysts, is a “death spiral” for the individual market.

It sounds extreme, but the effects support the grim nickname.

Federal support for low-income residents purchasing insurance could evaporate. Premiums could increase for individual plans. Healthy consumers could leave the individual exchange, driven out by high prices. Sick consumers could remain. Insurance carriers, burdened by increasingly untenable financial constraints, could bail soon after.

“Unless there’s an alternative funding instead – some sort of block grant, some sort of federal infusion – then those premiums are going to have to be fully paid for by individuals,” said Tyler Brannan, director of health economics at the New Hampshire Insurance Department. 

“Which means we’d see an essentially out of pocket spike for people.”

The subject of health care and health insurance has been at the front of voters’ minds for years now. It dominated considerations for many Americans ahead of the 2018 Congressional mid-term elections, according to polling, and on Tuesday night it led the first presidential debate between Joe Biden and Donald Trump.

Now, the possibility of an abrupt collapse of the biggest overhaul to the health insurance system in decades puts individual states in a precarious spot. Without federal intervention or a replacement option, the system could begin to unravel.

Here’s how.

Starting in 2014, the ACA required each state to set up a health insurance marketplace for individuals who can’t get insurance from their employers. 

In New Hampshire, around 40,000 people signed up in the first year. The vast majority of people in the state get insurance through work. Those 40,000 on the individual market – who have now grown to 44,412 in 2020 – were whipsawed by high premiums in initial years that were mitigated by price drops later on.

But many of those buying insurance on the individual market have also had a boost: federal subsidies. The ACA allowed two means of financial assistance for low income people to buy insurance. They could get tax credits off of the cost of the premiums – the advanced premium tax credits. They could also benefit from “cost sharing reductions” – payments made by the government to insurance companies to lower the minimum deductions and the co-pays for qualifying patients on the plans.

Those subsidies have dramatically reduced the cost of a plan for an individual making under 400% of the federal poverty level, which amounts to about $100,000 combined income for a family of four.

But they’re tied to the ACA. If the ACA goes away, the subsidies do too. 

The effect would be dramatic for those getting financial assistance. The average premium for someone getting the tax credit on the individual market is $151 a month, according to the University of New Hampshire's Institute for Health Policy and Practice.

Without the subsidy? The average is $540 a month. 

“Most people are getting a premium subsidy,” said Brannen. “They’re not paying the $400. Without those premium subsidies, if the ACA is repealed ... who’s going to continue paying that $400 for a premium? It’s only going to be sicker people.”

It’s impossible to predict how many people would stop getting health insurance as a result. People are free to leave; the individual mandate was eliminated in 2017 under the Republican Tax Cuts and Jobs Act. Some might stay on. 

Still, 73% of those on the individual market requested those tax credits. If all of the federally subsidized consumers left, only about 12,000 of the 44,000 would still be in the New Hampshire market.

That’s a dire situation for insurance carriers, who typically aim for a broad pool of healthy and sicker individuals to pay premiums and bring down the rates for everyone. If enough people were driven out – especially healthy people who typically help costs stay low – premiums could shoot up, driving more people out. Eventually, insurers could leave the market altogether.

It’s a doomsday scenario that could play out in practically every state and send Washington into a political frenzy over what comes next and how to stop the bleeding. But in the meantime, there are ways for New Hampshire to mitigate the damage, says Brannen.

For one, the state could reopen its high-risk pool. That’s the option that existed before the ACA. The pool allowed people who were sicker or had pre-existing conditions to access subsidized insurance. The insurance was subsidized by assessments levied on other insurance plans; those with healthier consumers would need to pay fees to help support the high-risk consumers. 

The state could also continue to pursue a “reinsurance” program. Reinsurance is a mechanism where insurers are encouraged to take on higher risk patients by getting financial supports of their own – “insurance for insurers.” The idea: a way to prop up a market that’s fairer for patients of all risk levels.

New Hampshire politicians have already helped launch a reinsurance market. Democratic Sen. Dan Feltes pushed to create a stabilization mechanism through Senate Bill 228, which was not ultimately passed by the House and Senate; Gov Chris Sununu has since obtained a “1332 waiver” from the federal government to get the same system up and running by 2021. 

But that system relies right now upon subsidies going to insurance carriers – cost-sharing reductions – the very same subsidies that could go away.

Without those subsidies, maintaining a reinsurance program would be harder. The state might need to use further assessments on insurance carriers to pay for the program, something Sununu has opposed in the past.  

Whatever it did, the Legislature would likely need to move fast to approve a system that will keep the markets balanced, Brannen said.

For now, the prospect of an ACA repeal has become a political lightning rod in the final stages of election season – including in the fight for New Hampshire governor. 

Feltes, the Democratic nominee, has accused Sununu of implicitly supporting the repeal of the ACA by the Supreme Court by approving of the process by which President Donald Trump is seeking to nominate a new justice. 

A spokesman for Sununu, Ben Vihstadt meanwhile rejected the criticism, pointing out that New Hampshire has joined a multi-state effort to defend the Affordable Care Act against the lawsuit seeking to tear it down, putting it at odds with the U.S. Department of Justice. Sununu also signed a bill sponsored by Feltes in 2019 that enshrines some of the Affordable Care Act patient protections into state law, such as protections for pre-existing conditions, maternity benefits, and primary care. 

Both candidates say they have plans for how to deal with a sudden repeal of the ACA. If elected, Feltes would keep protections for pre-existing conditions and look for ways to stabilize costs through high risk pools and additional Medicaid waivers, he said in an interview Tuesday. 

Vihstadt said that Sununu stands by Senate Bill 4, which protected patients with protecting pre-existing conditions, that he would continue supporting the state’s reinsurance program, and that he would press Washington for the continuation of cost-sharing reduction payments even if the law were struck down.  

(Ethan DeWitt can be reached at 369-3307, edewitt@ cmonitor.com, or on Twitter at @edewittNH.)

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